Kodak post profits, spins off imaging businesses, steps toward exiting from chapter 11

Things seem to be looking better for Kodak, I wonder if they’ll still try to get rid of the film business.

Kodachrome_Box-287x300From PhotoRumors : Kodak post profits, spins off imaging businesses, steps toward exiting from chapter 11

Press releases:
Kodak Announces Comprehensive Settlement with U.K. Pension Plan, Moving Kodak toward Exit from Chapter 11

Eastman Kodak Company today announced a comprehensive settlement agreement with the U.K. Kodak Pension Plan (KPP), its largest creditor, with respect to its Chapter 11 Plan of Reorganization. Under the agreement, which will be filed with the U.S. Bankruptcy Court, Kodak’s Personalized Imaging and Document Imaging businesses will be spun off under new ownership to KPP.

The settlement agreement provides, among other things, for the spin-off of Kodak’s Personalized Imaging and Document Imaging businesses to KPP for cash and non-cash consideration of $650 million.Certain proceeds will be used to support the emergence of Kodak from Chapter 11 and the growth of its Commercial Imaging business. The agreement also settles approximately $2.8 billion of claims by KPP against Kodak and certain of its affiliates.

“In one comprehensive transaction, Kodak will realize its previously announced intention to divest its Personalized Imaging and Document Imaging businesses and settle its largest legacy liability,” said Antonio M. Perez, Kodak Chairman and Chief Executive Officer. “The KPP transaction moves us past several key hurdles in our reorganization, resolving all potential claims worldwide, assuring continued operations outside of the United States, placing our Personalized Imaging and Document Imaging businesses with a new owner that recognizes their value and is focused on their growth and success, and providing the remaining liquidity we require to emerge from Chapter 11. We are very pleased with the transaction, the value it creates for our stakeholders, and the dedication and creativity of KPP that made it possible to achieve this extraordinary result.”

Steven Ross, Chairman of KPP, said, “KPP and Kodak have been working collaboratively since the beginning of the case, and this acquisition provides security for and delivers the greatest value to, the KPP members. Overall, this settlement gives the KPP members greatly improved future prospects whilst being good for Kodak’s employees, its creditors and for UK businesses.

“The businesses that we are acquiring will deliver long-term cash flows to support the plan’s obligations. The financial stability that KPP will provide for the Personalized Imaging and Document Imaging businesses will be beneficial to those businesses’ employees, customers and partners.”

The agreement will be implemented as part of Kodak’s Chapter 11 plan in the United States. At consummation of the spin-off, Kodak and its worldwide affiliates will be released from their obligations to KPP.The UK Pensions Regulator (“the Regulator”) has been kept fully informed of this process and the Regulator has granted clearance in respect of the acquisition. The Regulator has decided that it will approve the release of Kodak Limited, the KPP’s sponsoring employer, from its liabilities to the KPP and the UK Pension Protection Fund has confirmed that it has no objection. Closing of the transaction is subject to the approval of the U.S. Bankruptcy Court, approval by the Regulator and the satisfaction or waiver of other conditions precedent.

Kodak intends to file a draft Chapter 11 plan with the Bankruptcy Court on April 30, and to seek approval of the KPP settlement and related transactions promptly thereafter, withdrawing the previously-filed motion for the standalone sale of the Document Imaging business.

Kodak Posts First Quarter Profit of $283 Million

Eastman Kodak Company today reported $283 million in consolidated net earnings in the first quarter of 2013, compared to a $366 million loss in the prior-year quarter. The profitable quarter reflects improved results of the Commercial Imaging segments and includes a $535 million gain recorded on the sale of Kodak’s digital imaging patent portfolio, partially offset by a $77 million non-cash goodwill impairment charge related to the patent sale.

Both of the company’s Commercial Imaging segments recorded significant improvements in segment earnings. The Digital Printing and Enterprise (DPE) segment reported a segment loss of $8 million for the quarter, an improvement of $81 million from the $89 million segment loss in the prior year quarter. The improvement was driven primarily by the previously announced strategic decision to focus the consumer inkjet business on ink sales, as well as improved operating costs. The DPE segment had a 21 percentage point increase in gross profit margin in the quarter.

The Graphics, Entertainment and Commercial Films (GECF) segment reported $38 million in segment earnings for the quarter, compared to a segment loss of $84 million in the prior year, an improvement of $122 million. The current quarter earnings reflected $31 million in non-recurring brand licensing revenue, which combined with the $61 million reduction in revenue from intellectual property in the prior year resulting from a withholding tax refund, contributed $92 million of the year-over-year improvement. The remaining improvement was driven by pricing actions and operating cost reductions. The GECF segment had a 24 percentage point increase in gross profit margin in the quarter versus the prior year.

“These results demonstrate that we are on track with our strategy to focus on Commercial Imaging, and that we are making operational improvements as Kodak takes the right steps to emerge as a profitable and sustainable company,” said Antonio M. Perez, Chairman and Chief Executive Officer. “We have the right strategy and the right technology and products to extend our leadership in the industry.”

Kodak’s cash balance at the end of the first quarter stood at $1.17 billion, an increase from the $1.14 billion reported at the end of 2012.

Sales from continuing operations totaled $849 million in the quarter, a 9% decrease from the $928 million in the previous year’s quarter.

“Our path to emergence is now clear, and the plan of reorganization we expect to file with the court tomorrow provides a roadmap for the new Kodak,” Perez said. “As we continue to drive improvements in our business to complete our transformation, I am more confident than ever that we will succeed, with the continuing support of our customers and the dedication of our team to serving customers’ needs.”

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