ROCHESTER, N.Y.–(BUSINESS WIRE)–Eastman Kodak Company (NYSE: KODK) today reported financial results for
the full year 2018, including a net loss of $16 million on revenues of
$1.3 billion and continued growth in key product areas.
Highlights include:
“I look forward to working with my team to help Kodak become cash-flow
positive and build long-term value for shareholders,” said Jim
Continenza, Kodak’s newly appointed Executive Chairman. “Our priorities
will be to increase operational efficiency and focus on core
competencies to achieve our growth objectives.”
For the year ended December 31, 2018, revenues decreased by
approximately $61 million compared with the same period in 2017. Kodak
ended the year with a cash balance of $246 million, down from the
December 31, 2017 cash balance of $343 million.
“We generated cash in the fourth quarter of 2018 and delivered strong
performance in our key growth areas of SONORA Process Free Plates and in
PROSPER inkjet annuities,” said David Bullwinkle, Kodak’s CFO. “We
expect to close soon on the sale of our Flexographic Packaging Division
and will use the proceeds to significantly reduce our term debt and
strengthen our balance sheet. In addition, we plan to secure new
financing for our remaining term debt, which will allow us to focus on
our operations and return to consistent cash generation.”
|
Revenue and Operational EBITDA FY 2018 vs. FY 2017 |
||||||||||||||||||||||||||||
| ($ millions) | ||||||||||||||||||||||||||||
| FY 2018 Actuals | PSD | EISD | SSD | CFD | AM3D | EBPD | Total EK | |||||||||||||||||||||
| Revenue | $ | 895 | $ | 136 | $ | 84 | $ | 189 | $ | 4 | $ | 17 |
$ |
1,325 |
||||||||||||||
| Operational EBITDA * | $ | 27 | $ | 4 | $ | – | $ | (19 | ) | $ | (14 | ) | $ | 3 | $ | 1 | ||||||||||||
| FY 2017 Actuals | PSD | EISD | SSD | CFD | AM3D | EBPD | Total EK | |||||||||||||||||||||
| Revenue | $ | 942 | $ | 144 | $ | 85 | $ | 198 | $ | 1 | $ | 16 |
$ |
1,386 |
||||||||||||||
| Operational EBITDA * | $ | 49 | $ | 3 | $ | (1 | ) | $ | (18 | ) | $ | (27 | ) | $ | 4 | $ | 10 | |||||||||||
|
FY 2018 vs. FY 2017 Actuals
B/(W) |
PSD | EISD | SSD | CFD | AM3D | EBPD | Total EK | |||||||||||||||||||||
| Revenue | $ | (47 | ) | $ | (8 | ) | $ | (1 | ) | $ | (9 | ) | $ | 3 | $ | 1 | $ | (61 | ) | |||||||||
| Operational EBITDA * | $ | (22 | ) | $ | 1 | $ | 1 | $ | (1 | ) | $ | 13 | $ | (1 | ) | $ | (9 | ) | ||||||||||
|
FY 2018 Actuals on constant currency ** vs. FY 2017 Actuals B/(W) |
PSD | EISD | SSD | CFD | AM3D | EBPD | Total EK | |||||||||||||||||||||
| Revenue | $ | (61 | ) | $ | (10 | ) | $ | (2 | ) | $ | (11 | ) | $ | 3 | $ | 1 | $ | (80 | ) | |||||||||
| Operational EBITDA * | $ | (17 | ) | $ | – | $ | 1 | $ | (3 | ) | $ | 13 | $ | (1 | ) | $ | (7 | ) | ||||||||||
* Total Operational EBITDA is a non-GAAP financial measure. The
reconciliation between GAAP and non-GAAP measures is provided in
Appendix A of this press release.
** The impact of foreign exchange represents the 2018 foreign exchange
impact using average foreign exchange rates for the twelve months ended
December 31, 2017, rather than the actual exchange rates in effect for
the twelve months ended December 31, 2018.
About Kodak
Kodak is a technology company focused on imaging. We provide – directly
and through partnerships with other innovative companies – hardware,
software, consumables and services to customers in graphic arts,
commercial print, publishing, packaging, entertainment and commercial
films, and consumer products markets. With our world-class R&D
capabilities, innovative solutions portfolio and highly trusted brand,
Kodak is helping customers around the globe to sustainably grow their
own businesses and enjoy their lives. For additional information on
Kodak, visit us at kodak.com,
follow us on Twitter @Kodak,
or like us on Facebook at Kodak.
Cautionary Statement Regarding Forward-Looking Statements
This press release includes “forward-looking statements” as that term is
defined under the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include statements concerning Kodak’s plans,
objectives, goals, strategies, future events, future revenue or
performance, capital expenditures, liquidity, investments, financing
needs and business trends and other information that is not historical
information. When used in this press release, the words “estimates,”
“expects,” “anticipates,” “projects,” “plans,” “intends,” “believes,”
“predicts,” “forecasts,” “strategy,” “continues,” “goals,” “targets” or
future or conditional verbs, such as “will,” “should,” “could,” or
“may,” and similar expressions, as well as statements that do not relate
strictly to historical or current facts, are intended to identify
forward-looking statements. All forward-looking statements, including
management’s examination of historical operating trends and data, are
based upon Kodak’s expectations and various assumptions.
Future events or results may differ from those anticipated or expressed
in the forward-looking statements. Important factors that could cause
actual events or results to differ materially from the forward-looking
statements include, among others, the risks and uncertainties described
in more detail in Kodak’s Annual Report on Form 10-K for the year ended
December 31, 2018 under the headings “Business,” “Risk Factors,” “Legal
Proceedings” and/or “Management’s Discussion and Analysis of Financial
Condition and Results of Operations—Liquidity and Capital Resources,”
and in other filings Kodak makes with the U.S. Securities and Exchange
Commission from time to time, as well as the following: Kodak’s ability
to improve and sustain its operating structure, cash flow, profitability
and other financial results; Kodak’s ability to achieve cash forecasts,
financial projections and projected growth; Kodak’s ability to achieve
the financial and operational results contained in its business plans;
Kodak’s ability to comply with the covenants in its various credit
facilities; Kodak’s ability to repay, refinance or extend the maturity
of its outstanding first lien term loans prior to their maturity date of
September 3, 2019 or prior to June 5, 2019, the date on which Kodak’s
revolving credit facility will terminate unless such repayment,
refinancing or extension has occurred or the revolving credit facility
has been amended; Kodak’s ability to consummate the sale of its
Flexographic Packaging segment when expected and to discontinue, sell or
spin-off certain other businesses or operations or otherwise monetize
other assets; Kodak’s ability to fund continued investments, capital
needs and restructuring payments and service its debt and Series A
Preferred Stock; changes in foreign currency exchange rates, commodity
prices and interest rates; Kodak’s ability to effectively anticipate
technology trends and develop and market new products, solutions and
technologies; Kodak’s ability to effectively compete with large,
well-financed industry participants; continued sufficient availability
of borrowings and letters of credit under Kodak’s revolving credit
facility, Kodak’s ability to obtain additional financing if and as
needed and Kodak’s ability to provide or facilitate financing for its
customers; the performance by third parties of their obligations to
supply products, components or services to Kodak; and the impact of the
global economic environment on Kodak.
There may be other factors that may cause Kodak’s actual results to
differ materially from the forward-looking statements. All
forward-looking statements attributable to Kodak or persons acting on
its behalf apply only as of the date of this press release and are
expressly qualified in their entirety by the cautionary statements
included or referenced in this press release. Kodak undertakes no
obligation to update or revise forward-looking statements to reflect
events or circumstances that arise after the date made or to reflect the
occurrence of unanticipated events, except as required by law.
APPENDICES
A. NON-GAAP MEASURES
In this full year 2018 financial results news release, reference is made
to the following non-GAAP financial measures:
Kodak believes that these non-GAAP measures represent important internal
measures of performance. Accordingly, where they are provided, it is to
give investors the same financial data management uses with the belief
that this information will assist the investment community in properly
assessing the underlying performance of Kodak, its financial condition,
results of operations and cash flow.
Kodak’s segment measure of profit and loss is an adjusted earnings
before interest, taxes, depreciation and amortization (“Operational
EBITDA”). The change in revenues and Operational EBITDA on a constant
currency basis, as presented in this financial results news release, is
calculated by using average foreign exchange rates for the twelve months
ended December 31, 2017, rather than the actual exchange rates in effect
for the twelve months ended December 31, 2018.
The following table reconciles the most directly comparable GAAP measure
of Net (Loss) Earnings to Operational EBITDA and Operational EBITDA on a
constant currency basis for the twelve months ended December 31, 2018
and 2017, respectively
| (in millions) | ||||||||||||
| FY 2018 | FY 2017 |
$ Change |
||||||||||
| Net (loss) earnings | $ | (16 | ) | $ | 94 | $ | (110 | ) | ||||
| Depreciation and amortization | 70 | 77 | (7 | ) | ||||||||
| Restructuring costs and other (1) | 17 | 38 | (21 | ) | ||||||||
| Stock based compensation | 6 | 9 | (3 | ) | ||||||||
| Consulting and other costs (2) | 14 | 5 | 9 | |||||||||
| Idle costs (3) | 3 | 4 | (1 | ) | ||||||||
| Other operating expense, net (4) | 9 | 28 | (19 | ) | ||||||||
| Goodwill impairment loss (4) | – | 56 | (56 | ) | ||||||||
| Interest expense (4) | 9 | 8 | 1 | |||||||||
| Pension income excluding service cost component (4) | (131 | ) | (152 | ) | 21 | |||||||
| Other expense (income), net (4) | 17 | (37 | ) | 54 | ||||||||
| Benefit for income taxes (4) | (4 | ) | (120 | ) | 116 | |||||||
| Loss (earnings) from discontinued operations, net of income taxes (4) | 7 | (1 | ) | 8 | ||||||||
| Equity in loss of equity method investment, net of income taxes (4) | – | 1 | (1 | ) | ||||||||
| Operational EBITDA | $ | 1 | $ | 10 | $ | (9 | ) | |||||
| Impact of foreign exchange (5) | 2 | 2 | ||||||||||
| Operational EBITDA on a constant currency basis | $ | 3 | $ | 10 | $ | (7 | ) | |||||
Footnote Explanations:
| (1) |
Restructuring costs and other for the twelve months ended December 31, 2018 as reported in the Consolidated Statement of Operations and plus $7 million of inventory write-downs included in cost of revenues for the twelve months ended December 31, 2017. |
|
| (2) |
Consulting and other costs are professional services and internal costs associated with certain corporate strategic initiatives, including the divestiture of the Flexographic Packaging segment and debt refinancing |
|
| (3) |
Consists of third party costs such as security, maintenance and utilities required to maintain land and buildings in certain locations not used in any Kodak operations. |
|
| (4) | As reported in the Consolidated Statement of Operations. | |
| (5) |
The impact of foreign exchange represents the foreign exchange impact using average foreign exchange rates for the twelve months ended December 31, 2017, rather than the actual exchange rates in effect for the twelve months ended December 31, 2018. |
|
|
B. FINANCIAL STATEMENTS |
||||||||
| EASTMAN KODAK COMPANY | ||||||||
| CONSOLIDATED STATEMENT OF OPERATIONS | ||||||||
| (in millions) | ||||||||
| Twelve Months Ended December 31, | ||||||||
| 2018 |
2017 |
|||||||
| Revenues | ||||||||
| Sales | $ | 1,044 | $ | 1,096 | ||||
| Services | 281 | 290 | ||||||
| Total net revenues | 1,325 | 1,386 | ||||||
| Cost of revenues | ||||||||
| Sales | 950 | 968 | ||||||
| Services | 194 | 207 | ||||||
| Total cost of revenues | 1,144 | 1,175 | ||||||
| Gross profit | 181 | 211 | ||||||
| Selling, general and administrative expenses | 225 | 239 | ||||||
| Research and development costs | 48 | 64 | ||||||
| Restructuring costs and other | 17 | 31 | ||||||
| Other operating expense, net | 9 | 28 | ||||||
| Goodwill impairment loss | — | 56 | ||||||
|
Loss from continuing operations before interest expense, pension income excluding service cost component, other charges (income), net, and income taxes |
(118 | ) | (207 | ) | ||||
| Interest expense | 9 | 8 | ||||||
| Pension income excluding service cost component | (131 | ) | (152 | ) | ||||
| Other charges (income), net | 17 | (37 | ) | |||||
| Loss from continuing operations before income taxes | (13 | ) | (26 | ) | ||||
| Benefit for income taxes | (4 | ) | (120 | ) | ||||
| Equity in loss of equity method investment, net of income taxes | — | 1 | ||||||
| (Loss) earnings from continuing operations | (9 | ) | 93 | |||||
| (Loss) earnings from discontinued operations, net of income tax | (7 | ) | 1 | |||||
| NET (LOSS) EARNINGS | $ | (16 | ) | $ | 94 | |||
The notes accompanying the Company’s financial statements contained in
its Annual Report on Form 10-K for the year ended December 31, 2018, are
an integral part of these consolidated financial statements.
| EASTMAN KODAK COMPANY | ||||||||
| CONSOLIDATED STATEMENT OF FINANCIAL POSITION | ||||||||
| (in millions) | ||||||||
| December 31, | December 31, | |||||||
| 2018 | 2017 | |||||||
| ASSETS | ||||||||
| Cash and cash equivalents | $ | 246 | $ | 343 | ||||
| Trade receivables, net of allowances of $9 in each period | 232 | 253 | ||||||
| Inventories, net | 236 | 246 | ||||||
| Other current assets | 51 | 54 | ||||||
| Current assets held for sale | 113 | 62 | ||||||
| Total current assets | 878 | 958 | ||||||
|
Property, plant and equipment, net of accumulated depreciation of $422 and $384, respectively |
246 | 294 | ||||||
| Goodwill | 12 | 12 | ||||||
| Intangible assets, net | 60 | 84 | ||||||
| Restricted cash | 11 | 17 | ||||||
| Deferred income taxes | 160 | 187 | ||||||
| Other long-term assets | 144 | 113 | ||||||
| Long-term assets held for sale | — | 42 | ||||||
| TOTAL ASSETS | $ | 1,511 | $ | 1,707 | ||||
|
LIABILITIES, REDEEMABLE, CONVERTIBLE PREFERRED STOCK AND EQUITY (DEFICIT) |
||||||||
| Accounts payable, trade | $ | 149 | $ | 183 | ||||
| Short-term borrowings and current portion of long-term debt | 396 | 4 | ||||||
| Other current liabilities | 213 | 211 | ||||||
| Current liabilities held for sale | 20 | 21 | ||||||
| Total current liabilities | 778 | 419 | ||||||
| Long-term debt, net of current portion | 5 | 399 | ||||||
| Pension and other postretirement liabilities | 379 | 462 | ||||||
| Other long-term liabilities | 179 | 202 | ||||||
| Long-term liabilities held for sale | — | 4 | ||||||
| Total liabilities | 1,341 | 1,486 | ||||||
| Commitments and contingencies (Note 11) | ||||||||
|
Redeemable, convertible Series A preferred stock, no par value, $100 per share liquidation preference |
173 | 164 | ||||||
| Equity (Deficit) | ||||||||
| Common stock, $0.01 par value | — | — | ||||||
| Additional paid in capital | 617 | 631 | ||||||
| Treasury stock, at cost | (9 | ) | (9 | ) | ||||
| Accumulated deficit | (200 | ) | (174 | ) | ||||
| Accumulated other comprehensive loss | (411 | ) | (391 | ) | ||||
| Total shareholders’ equity | (3 | ) | 57 | |||||
|
TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND EQUITY |
$ | 1,511 | $ | 1,707 | ||||
The notes accompanying the Company’s financial statements contained in
its Annual Report on Form 10-K for the year ended December 31, 2018, are
an integral part of these consolidated financial statements.
Contacts
Media Contact:
Nick
Rangel, Kodak, +1 585-615-0549, nicholas.rangel@kodak.com
Investor Contact:
Bill
Love, Kodak, +1 585-724-4053, shareholderservices@kodak.com
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