Eastman Kodak Company reported a $157 million loss from continuing operations before provision for income taxes in the second quarter, a 49% improvement from the $306 million loss reported in the prior-year quarter. The loss from continuing operations in the quarter was $208 million, compared to $297 million in the prior-year quarter. The current quarter loss includes $101 million in restructuring and reorganization costs and a $51 million provision for income taxes, attributable in part to the establishment of a deferred tax asset valuation allowance outside the U.S.
These results reflect separation of the Personalized Imaging and Document Imaging businesses, which are being spun off to Kodak Pension Plan, the pension plan for U.K. employees, and the discontinuation of certain consumer businesses, including Kodak Gallery and digital cameras. With discontinued operations included, the consolidated net loss for the quarter was $224 million.
Both of the company’s continuing reportable segments maintained their year-to-date momentum, recording improvements in the second quarter. Graphics, Entertainment and Commercial Films (GECF) reported a $5 million segment loss, compared to a $26 million loss in the prior-year quarter. Digital Printing and Enterprise (DPE) reported a $13 million segment loss compared to a $61 million loss in the second quarter of 2012.
“In this quarter we continued our progress in recreating Kodak as a technology company focused on imaging for business, and serving customers worldwide with breakthrough solutions and enterprise services,” said Antonio M. Perez, chairman and CEO. “At the same time, we moved forward significantly with our restructuring, and we remain on track to emerge in the third quarter.”
Sales for the continuing operations in the second quarter were $583 million, compared to $699 million in the prior-year quarter, a decline of 17%. GECF had sales of $371 million, a decline of 17%, reflecting volume declines in Entertainment Imaging and Commercial Films, as well as lower sales for digital plates as the business focused on profitable accounts. DPE had a revenue decline of 11% from the prior-year quarter, primarily attributable to discontinuance of consumer inkjet printer production and lower sales of ink for the installed base of consumer inkjet printers. Partially offsetting these declines was an increase in sales within the commercial inkjet printing business.
As a result of the company’s focus on profitability, the gross profit margin in the quarter from continuing operations improved to 23%, an improvement of more than nine percentage points compared to the same period in the previous year. The company also noted that it remained on track through the first half with its adjusted EBITDA and cash goals.
“Our team is committed to continuing the improvement required to emerge in the coming weeks as a profitable and sustainable company,” Mr. Perez said. “Everyone at Kodak is focused on achieving our EBITDA and cash goals for 2013 and on emerging from Chapter 11 as a company that – having removed excess legacy costs and infrastructure and exited non-core businesses – is leaner, financially stronger, and poised for growth with a great portfolio of businesses in commercial imaging.”
Kodak Reports Improvement in Earnings for Second Quarter