Exhibit 99.1
Kodak Reports 1st-Quarter Net Income of 4 Cents Per Share;
Sales Rise 1 Percent to $2.740 Billion
ROCHESTER, N.Y.--(BUSINESS WIRE)--April 23, 2003--Eastman Kodak
Company (NYSE:EK):
EPS from Continuing Operations, Excluding Charges and
Other Items, Total 14 Cents
Eastman Kodak Company today said that first-quarter net income, in
accordance with Generally Accepted Accounting Principles (GAAP) in the
U.S., totaled 4 cents per share and that sales rose 1%.
Kodak's GAAP net income for the quarter included a loss from
continuing operations of 1 cent per share and earnings from
discontinued operations of 5 cents per share. Excluding the impact of
previously announced focused cost reductions and other non-operational
items, earnings from continuing operations were 14 cents per share,
consistent with the company's forecast.
For the first quarter of 2003:
-- Sales totaled $2.740 billion, an increase of 1% from $2.706
billion in the first quarter of 2002. Excluding foreign
exchange, sales declined 4%.
-- The company reported net income of $12 million, or 4 cents per
share, compared with net income of $39 million, or 13 cents
per share, in the first quarter of 2002. The earnings from
discontinued operations of $15 million, or 5 cents per share,
in the first quarter of 2003 represent certain tax benefits.
-- Earnings from continuing operations, excluding the impact of
focused cost reductions and other non-operational items, were
$39 million, or 14 cents per share. The after-tax
non-operational items include a charge of $30 million, or 10
cents per share, related to the previously announced focused
cost reductions; a charge of $13 million, or 5 cents per
share, in connection with the acquisition of technology
qualifying as in-process research and development activities;
a charge of $7 million, or 3 cents per share, in connection
with an intellectual property settlement; and a tax benefit of
$8 million, or 3 cents per share, related to the donation of
certain patents. There were no similar significant items in
the year-ago quarter.
"In these difficult times, Kodak continues to deliver on its
commitment to shareholders by managing well those things within our
control and by pursuing our strategies for growth," said Chairman and
Chief Executive Officer Daniel A. Carp. "We contained costs and
strengthened the financial position of the company by paying down
debt, compared with the year-ago level, and by driving money-saving
operational improvements through our Kodak Operating System. We also
benefited from the company's broad-based product portfolio, as solid
demand for Health Imaging and Entertainment Imaging products and
services helped offset the reduced demand for consumer film caused by
the weak economy.
"Kodak continues to execute on its growth strategies by
introducing new products and services that reinforce our heritage as
the company driving innovation and ease of use in traditional and
digital imaging markets," Carp said. "The EasyShare Printer Dock 6000,
for example, fulfills two of our four strategies: to make digital
easier and to generate the increased printing of pictures. The
EasyShare LS633 zoom digital camera is the first to use our
innovative, award-winning OLED flat-panel display technology,
reflecting our strategy to create new businesses in new markets. And
the success of our new Vision2 color-negative motion-picture film is
an example of our strategy to maximize the value of film. Executing on
these strategies today will put Kodak in a better position to
accelerate growth when the economy recovers."
Other first-quarter 2003 details from continuing operations:
-- Kodak's use of cash was much lower than the historical average
in the first quarter, which is traditionally the company's
smallest revenue quarter of the year.
-- For the quarter, operating cash flow was a negative $98
million, compared with a negative $46 million from the first
quarter of 2002. The $98 million use of cash in the first
quarter of 2003 included an acquisition totaling $54 million
and a $21 million use of cash related to the acquisition of
in-process research and development activities, while the
year-ago quarter included no significant acquisitions. Net
cash provided by continuing operations, as determined under
GAAP, in the first quarter of 2003 was $87 million, compared
with $84 million in the year-ago period. Additions to
properties, acquisitions and investments in unconsolidated
affiliates, which accounts for the difference between
operating cash flow and net cash provided by continuing
operations, totaled $185 million and $130 million in the first
quarter of 2003 and the first quarter of 2002, respectively.
(Kodak defines operating cash flow as net cash provided by
continuing operations, as determined under GAAP, plus proceeds
from the sale of assets minus capital expenditures,
acquisitions, investments in unconsolidated affiliates and
dividends.)
-- The company's debt totaled $2.704 billion at the end of the
quarter, and capital (total debt plus total shareholders'
equity) totaled $5.568 billion, resulting in a debt-to-capital
ratio of 48.6%, compared with 53.1% in the year-ago period.
-- Gross profit on an operational basis was 30.6%, compared with
31.8% in the year-ago period. GAAP gross profit was 30.1% in
the first quarter, compared with 31.8% in the year-ago
quarter. The exclusion of $14 million in accelerated
depreciation accounts for the difference between operational
and GAAP gross profit.
-- Selling, general and administrative expenses on an operational
basis were 20.2% of sales, up from 20.0% in the year-ago
quarter. GAAP SG&A expenses were 20.7% in the first quarter,
compared with 20.0% a year ago. The exclusion of $12 million
for an intellectual property settlement accounts for the
difference in operational and GAAP SG&A.
-- Days sales outstanding (DSO) decreased approximately 11 days
from the first quarter of 2002 and decreased approximately 2
days quarter sequentially, reflecting effective management of
receivables. The DSO calculation includes the impact of
reclassifying rebates as an offset to receivables for the last
four quarters. Without the rebate reclassification, the
improvement in DSO was 5 days.
-- Inventory turns increased to 5.4 turns in the first quarter of
2003 from 4.9 in the year-ago period. The inventory turn
calculation excludes the impact of the LIFO reserve on
inventory for the last four quarters. Including the impact of
the LIFO reserve, inventory turns on a GAAP basis increased to
7.3 turns from 6.2 in the year-ago period.
-- The board of directors last week declared a semi-annual cash
dividend of 90 cents per share on the outstanding common stock
of the company, payable July 16 to shareholders of record at
the close of business on June 2.
The segment results from continuing operations for the first
quarter of 2003 are as follows:
-- Photography segment sales totaled $1.798 billion, down 1%. The
segment posted a loss from operations of $25 million on an
operational basis, compared with earnings from operations of
$16 million a year ago. On a GAAP basis, the loss from
operations was $46 million in the first quarter of 2003. The
exclusion of $21 million for in-process R&D charges accounts
for the difference in operational and GAAP earnings from
operations for the segment. Highlights for the quarter
included a 32% increase in sales of Digital & Applied Imaging
products and services; a 17% increase in sales of
Entertainment Imaging products and services; and a slight
increase in share in the U.S. consumer film market, even as
difficult economic conditions and high retailer inventories
reduced sales of consumer film in the U.S.
-- Health Imaging sales were $549 million, up 5%. Earnings from
operations on an operational and GAAP basis for the segment
were $109 million, up from $76 million in the year-ago period.
Highlights included higher-than-expected sales of the newly
introduced Kodak DirectView Computed Radiography long-length
imaging system.
-- Commercial Imaging sales were $372 million, up 7%. Earnings
from operations on an operational and GAAP basis were $44
million, compared with $48 million in the year-ago period.
-- All Other sales were $21 million, down from $24 million.
Losses from operations on an operational and GAAP basis
totaled $17 million, compared with losses of $7 million in the
year-ago period. The All Other category includes Sensors,
Optics and miscellaneous businesses, as well as the Kodak
Display business.
Earnings Outlook:
-- Significant volatility exists in the company's operational
business estimates for the future. If current trends continue
into the second quarter, it is possible that second-quarter
operational earnings could fall into the range of 60 cents per
share to 80 cents per share. However, if a pick-up in consumer
film consumption occurs, there could be upside to this
estimate. As a result, Kodak currently expects full-year
earnings to come in at the low end of the non-GAAP range of
$2.35 to $2.95 per share provided by the company in January.
"While we continue to make progress driving operational
improvements and delivering new products, we face external challenges
beyond the control of any business today," Carp said. "Our
first-quarter results reflect an unprecedented combination of events
in recent times. Consumers have cut back significantly on travel and
vacation spending, and that has impacted picture-taking.
"Our commercial operations turned in an excellent performance
given economic conditions," Carp said. "Cinematographers have embraced
the new Vision2 motion-picture film and Health Imaging continues to
improve its operational execution."
"In this environment, Kodak will continue to work hard to generate
cash and look for opportunities to make the company more cost
competitive," Carp said. "We will allocate resources so that they
align with our strategies for growth and the performance of the
company's businesses.
"We also are strengthening our growth potential with the arrival
of Antonio Perez as President and Chief Operating Officer," Carp said.
"With Antonio's help, we will seek new and more profitable ways to
increase the printing of pictures as digital photography becomes more
popular, consistent with our four strategies for growth - maximize the
value of film; making digital easy; driving output in all its forms;
and developing new businesses in new markets. Once the economy
rebounds, we intend to have Kodak positioned to take full advantage of
the opportunities available to us in the $385 billion infoimaging
market."
Certain statements in this press release may be forward looking in
nature, or "forward-looking statements" as defined in the United
States Private Securities Litigation Reform Act of 1995. For example,
references to the Company's 2003 revenue, earnings and cash flow
expectations are forward-looking statements.
Actual results may differ from those expressed or implied in
forward-looking statements. The forward-looking statements contained
in this press release are subject to a number of risk factors,
including the successful:
-- Implementation of product strategies (including category
expansion, digitization, OLED, and digital products);
-- Implementation of intellectual property licensing strategies;
-- Development and implementation of e-commerce strategies;
-- Completion of information systems upgrades, including SAP;
-- Completion of various portfolio actions;
-- Reduction of inventories;
-- Improvement in manufacturing productivity;
-- Improvement in receivables performance;
-- Reduction in capital expenditures;
-- Improvement in supply chain efficiency;
-- Implementation of restructurings, including personnel
reductions;
-- Development of the Company's business in emerging markets like
China, India, Brazil, Mexico, and Russia.
The forward-looking statements contained in this press release are
subject to the following additional risk factors:
-- Inherent unpredictability of currency fluctuations and raw
material costs;
-- Competitive actions, including pricing;
-- The nature and pace of technology substitution, including the
analog-to-digital shift;
-- Continuing customer consolidation and buying power;
-- General economic and business conditions.
-- Other factors disclosed previously and from time to time in
the Company's filings with the Securities and Exchange
Commission.
Any forward-looking statements in this press release should be
evaluated in light of these important risk factors.
Editor's Note: For additional information about Kodak, visit our
web site on the Internet at: www.kodak.com/
Eastman Kodak Company and Subsidiary Companies
CONSOLIDATED STATEMENT OF EARNINGS - UNAUDITED
(in millions, except per share data)
First Quarter
2003 2002
Net sales $2,740 $2,706
Cost of goods sold 1,916 1,846
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Gross profit 824 860
Selling, general and
administrative expenses 566 540
Research and development costs 194 187
Restructuring costs and other 32 0
------ ------
Earnings from continuing
operations before interest,
other charges, and income
taxes 32 133
Interest expense 37 44
Other charges 21 31
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Earnings from continuing operations
before income taxes (26) 58
(Benefit) provision for income taxes (23) 17
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(Loss) earnings from continuing
operations (3) 41
Earnings (loss) from discontinued
operations, net of income tax
benefits of $15 and $1 for the
quarters ended March 31, 2003 and
2002, respectively 15 (2)
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NET EARNINGS $ 12 $ 39
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Basic and diluted net (loss) earnings
per share:
Continuing operations $ (.01) $ .14
Discontinued operations .05 (.01)
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Total $ .04 $ .13
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Number of common shares used in
basic earnings per share 286.3 291.3
Incremental shares from
assumed conversion of options 0.3 0.0
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Number of common shares used in
diluted earnings per share 286.6 291.3
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Cash dividends per share $ 0 $ 0
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SUPPLEMENTAL INFORMATION - UNAUDITED
(in millions)
Provision for depreciation $ 202 $ 185
After-tax exchange gains (losses)
and effect of translation of net
monetary items - (11)
Cash dividends declared - -
Capital expenditures 111 92
Cash and marketable securities 608 528
Net Sales from Continuing Operations by Reportable Segment and All
Other - Unaudited
(in millions)
First Quarter
2003 2002 Change
Photography
Inside the U.S. $ 687 $ 799 -14%
Outside the U.S. 1,111 1,015 + 9
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Total Photography 1,798 1,814 - 1
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Health Imaging
Inside the U.S. 238 248 - 4
Outside the U.S. 311 273 +14
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Total Health Imaging 549 521 + 5
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Commercial Imaging
Inside the U.S. 213 189 +13
Outside the U.S. 159 158 + 1
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Total Commercial Imaging 372 347 + 7
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All Other
Inside the U.S. 11 11 0
Outside the U.S. 10 13 -23
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Total All Other 21 24 -13
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Total Net Sales $2,740 $2,706 + 1%
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Earnings (Loss) from Continuing Operations Before Interest, Other
Charges, and Income Taxes by Reportable Segment and All Other -
Unaudited
(in millions)
First Quarter
2003 2002 Change
Photography $ (46) $ 16 -388%
Percent of Sales (2.6%) 0.9%
Health Imaging $ 109 $ 76 + 43%
Percent of Sales 19.9% 14.6%
Commercial Imaging $ 44 $ 48 - 8%
Percent of Sales 11.8% 13.8%
All Other $ (17) $ (7) -143%
Percent of Sales (81.0%) (29.2%)
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Total of segments 90 133 - 32%
Percent of Sales 3.3% 4.9%
Restructuring costs and other (46) -
GE settlement (12) -
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Consolidated total $ 32 $ 133 - 86%
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Percent of Sales 1.2% 4.9%
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Net Earnings (Loss) From Continuing Operations by Reportable Segment
and All Other - Unaudited
(in millions)
First Quarter
2003 2002 Change
Photography $ (35) $ 3
Percent of Sales (1.9%) 0.2%
Health Imaging $ 80 $ 50 + 60%
Percent of Sales 14.6% 9.6%
Commercial Imaging $ 20 $ 24 - 17%
Percent of Sales 5.4% 6.9%
All Other $ (14) $ (6) -133%
Percent of Sales (66.7%) (25.0%)
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Total of segments $ 51 $ 71 - 28%
Percent of Sales 1.9% 2.6%
Restructuring costs and other (46) -
GE settlement (12) -
Interest expense (37) (44)
Other corporate items 3 2
Tax benefit - contribution of patents 8 -
Income tax effects on
above items and taxes
not allocated to
segments 30 12
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Consolidated total $ (3) $ 41 -107%
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Percent of Sales (0.1%) 1.5%
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Eastman Kodak Company and Subsidiary Companies
CONSOLIDATED STATEMENT OF FINANCIAL POSITION - UNAUDITED
(in millions)
March 31, Dec. 31,
2003 2002
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 597 $ 569
Receivables, net 2,073 2,234
Inventories, net 1,197 1,062
Deferred income taxes 534 512
Other current assets 164 157
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Total current assets 4,565 4,534
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Property, plant and equipment, net 5,336 5,420
Goodwill, net 981 981
Other long-term assets 2,433 2,434
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TOTAL ASSETS $13,315 $13,369
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and other current
liabilities $ 3,179 $ 3,351
Short-term borrowings 1,659 1,442
Accrued income taxes 513 584
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Total current liabilities 5,351 5,377
OTHER LIABILITIES
Long-term debt, net of
current portion 1,045 1,164
Postretirement liabilities 3,406 3,412
Other long-term liabilities 649 639
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Total liabilities 10,451 10,592
SHAREHOLDERS' EQUITY
Common stock at par 978 978
Additional paid in capital 849 849
Retained earnings 7,609 7,611
Accumulated other comprehensive loss (709) (771)
Unearned restricted stock (4) -
------- -------
8,723 8,667
Less: Treasury stock at cost 5,859 5,890
------- -------
Total shareholders' equity 2,864 2,777
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TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $13,315 $13,369
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Eastman Kodak Company and Subsidiary Companies
CONSOLIDATED STATEMENT OF CASH FLOWS - UNAUDITED
(in millions)
Three Months Ended
March 31
------------------
2003 2002
Cash flows relating to operating activities:
Net earnings $ 12 $ 39
Adjustments to reconcile to
net cash provided by operating activities:
(Gain) loss from discontinued operations (15) 2
Equity in losses from unconsolidated
affiliates 23 22
Depreciation and amortization 202 185
Provision for deferred taxes 10 2
Decrease in receivables 155 144
Increase in inventories (116) (52)
Decrease in liabilities excluding
borrowings (211) (224)
Other items, net 27 (34)
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Total adjustments 75 45
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Net cash provided by continuing
operations 87 84
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Net cash provided by (used in)
discontinued operations 19 (2)
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Net cash provided by operating activities 106 82
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Cash flows relating to investing activities:
Additions to properties (111) (92)
Acquisitions, net of cash acquired (54) (6)
Investments in unconsolidated affiliates (20) (32)
Marketable securities - purchases (19) (31)
Marketable securities - sales 17 17
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Net cash used in investing activities (187) (144)
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Cash flows relating to financing activities:
Net increase in borrowings
with original maturity of
90 days or less 264 221
Proceeds from other borrowings 193 289
Repayment of other borrowings (365) (386)
Exercise of employee stock options 12 3
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Net cash provided by financing activities 104 127
------ ------
Effect of exchange rate changes on cash 5 (2)
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Net (decrease) increase in cash and cash
equivalents 28 63
Cash and cash equivalents, beginning
of year 569 448
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Cash and cash equivalents, end of quarter $ 597 $ 511
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