UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
______________
Form 8-K
______________
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of
Report (Date of earliest event reported): May 9, 2019
EASTMAN KODAK COMPANY
(Exact
name of registrant as specified in its charter)
|
NEW JERSEY |
1-87 |
16-0417150 |
|
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
|
343 State Street
Rochester, NY 14650 |
|
(585) 724-4000 (Registrant’s telephone number, including area code) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12
⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
⃞ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ⃞
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ⃞
Securities registered pursuant to Section 12(b) of the Act:
|
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
| Common stock, par value $0.01 per share | KODK | New York Stock Exchange |
Item 2.02 Results of Operations and Financial Condition
On May 9, 2019, Eastman Kodak Company (the "Company") issued a press release describing its first quarter 2019 financial results. A copy of the press release is furnished as Exhibit (99.l) to this report.
Within the Company's press release, reference is made to the following non-GAAP financial measures:
- Operational EBITDA; and
- Revenues and Operational EBITDA on a constant currency basis.
The Company believes that these non-GAAP financial measures represent important internal measures of performance as used by the Company's management. Accordingly, they are provided with the belief that this information will assist in properly assessing the underlying performance of the Company. In addition, the Company's management believes that the presentation of the non-GAAP financial measures allows the user of the information to assess the Company's financial results on a more comparable basis. Whenever such information is presented, the Company has complied with the provisions of the rules under Regulation G and Item 2.02 of Form 8-K.
Item 9.01 Financial Statements and Exhibits
|
(d) |
Exhibits |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date May 9, 2019
|
|
EASTMAN KODAK COMPANY |
|
|
(Registrant) |
|
|
/s/ Eric Samuels |
|
Eric Samuels |
|
|
Chief Accounting Officer and Corporate Controller |
|
|
(Chief Accounting Officer and Authorized Signatory) |
Exhibit 99.1
Kodak Reports First-Quarter 2019 Financial Results
ROCHESTER, N.Y.--(BUSINESS WIRE)--May 9, 2019--Eastman Kodak Company (NYSE: KODK) today reported financial results for the first quarter 2019, including a net loss of $18 million on revenues of $291 million and continued growth in key product areas.
Highlights include:
- GAAP net loss of $18 million for the quarter ended March 31, 2019, compared to a GAAP net loss of $25 million for the quarter ended March 31, 2018.
- Revenues for Q1 2019 of $291 million compared to revenues for Q1 2018 of $318 million.
- Operational EBITDA for the quarter of negative $6 million compared to Operational EBITDA of negative $9 million in the prior-year period.
-
Key product lines achieved strong year-over-year growth for the first
quarter 2019:
- Volume for KODAK SONORA Process Free Plates grew by 22 percent.
- Annuity revenues for the KODAK PROSPER inkjet platform grew by 12 percent.
- The company ended the quarter with a cash balance of $240 million.
- The company completed the sale of its Flexographic Packaging Division to Montagu Private Equity LLP on April 8, 2019 and used the net proceeds to pay down $312 million of its term debt.
“Completing the sale of our Flexographic Packaging Division and using the net proceeds to significantly pay down our term debt was a major step toward strengthening our financial position,” said Jim Continenza, Kodak’s Executive Chairman. “Our focus has shifted to completing the refinancing of the remaining balance of our debt and realigning our business to better serve customers and achieve our goal of generating cash.”
For the quarter ended March 31, 2019, revenues decreased by approximately $27 million compared with the same period in 2018. Kodak ended the quarter with a cash balance of $240 million, down from the December 31, 2018 cash balance of $246 million.
“We significantly paid down our term debt and delivered continued strong performance in our key growth areas of SONORA Process Free Plates and in PROSPER inkjet annuities,” said David Bullwinkle, Kodak’s CFO. “We expect to secure new financing for our remaining term debt by the end of May, which will further strengthen our balance sheet.”
Revenue and Operational EBITDA Q1 2019 vs. Q1 2018
| ($ millions) | |||||||||||||||||||||||||||||
| Q1 2019 Actuals | PSD | EISD | KSD | BFID | AM3D | EBPD | Total EK | ||||||||||||||||||||||
| Revenue | $ | 192 | $ | 32 | $ | 14 | $ | 49 | $ | 2 | $ | 2 | $ | 291 | |||||||||||||||
| Operational EBITDA * | $ | 5 | $ | - | $ | (1 | ) | $ | (7 | ) | $ | (2 | ) | $ | (1 | ) | $ | (6 | ) | ||||||||||
| Q1 2018 Actuals | PSD | EISD | KSD | BFID | AM3D | EBPD | Total EK | ||||||||||||||||||||||
| Revenue | $ | 216 | $ | 31 | $ | 16 | $ | 52 | $ | 1 | $ | 2 | $ | 318 | |||||||||||||||
| Operational EBITDA * | $ | 3 | $ | - | $ | 1 | $ | (7 | ) | $ | (4 | ) | $ | (2 | ) | $ | (9 | ) | |||||||||||
|
Q1 2019 vs. Q1 2018 Actuals
B/(W) |
PSD | EISD | KSD | BFID | AM3D | EBPD | Total EK | ||||||||||||||||||||||
| Revenue | $ | (24 | ) | $ | 1 | $ | (2 | ) | $ | (3 | ) | $ | 1 | $ | - | $ | (27 | ) | |||||||||||
| Operational EBITDA * | $ | 2 | $ | - | $ | (2 | ) | $ | - | $ | 2 | $ | 1 | $ | 3 | ||||||||||||||
|
Q1 2019 Actuals on constant currency ** vs. Q1 2018
Actuals
B/(W) |
PSD | EISD | KSD | BFID | AM3D | EBPD | Total EK | ||||||||||||||||||||||
| Revenue | $ | (15 | ) | $ | 2 | $ | (2 | ) | $ | (2 | ) | $ | 1 | $ | - | $ | (16 | ) | |||||||||||
| Operational EBITDA * | $ | 1 | $ | - | $ | (2 | ) | $ | 1 | $ | 2 | $ | 1 | $ | 3 | ||||||||||||||
* 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 three months ended March 31, 2018, rather than the actual exchange rates in effect for the three months ended March 31, 2019.
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,” in the corresponding sections of Kodak’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2019, 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 discontinue, sell or spin-off certain businesses or operations or otherwise monetize assets, including the completion of the deferred sale of the China assets of Kodak’s Flexographic Packaging segment that was sold, and the ability of the Flexographic Packaging segment that was sold to perform during 2019 and 2020 at levels that will entitle Kodak to earn-out payments; 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 first-quarter 2019 financial results news release, reference is made to the following non-GAAP financial measures:
- Operational EBITDA; and
- Revenues and Operational EBITDA on a constant currency basis.
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 three months ended March 31, 2018, rather than the actual exchange rates in effect for the three months ended March 31, 2019.
The following table reconciles the most directly comparable GAAP measure of Net Loss to Operational EBITDA for the three months ended March 31, 2019 and 2018, respectively:
| (in millions) | ||||||||||||||
| Q1 2019 | Q1 2018 |
$ Change |
||||||||||||
| Net Loss | $ | (18 | ) | $ | (25 | ) | $ | 7 | ||||||
| Depreciation and amortization | 15 | 18 | (3 | ) | ||||||||||
| Restructuring costs and other (1) | 2 | 2 | - | |||||||||||
| Stock based compensation | 3 | 2 | 1 | |||||||||||
| Consulting and other costs (2) | 3 | 3 | - | |||||||||||
| Idle costs (3) | 1 | 1 | - | |||||||||||
|
Former CEO separation agreement compensation |
2 | - | 2 | |||||||||||
| Interest expense (1) | 3 | 2 | 1 | |||||||||||
| Pension income excluding service cost component (1) | (27 | ) | (32 | ) | 5 | |||||||||
| Other charges, net (1) | 1 | 16 | (15 | ) | ||||||||||
| Loss from discontinued operations, net of income tax (1) | 6 | - | 6 | |||||||||||
| Provision for income taxes (1) | 3 | 4 | (1 | ) | ||||||||||
| Operational EBITDA | $ | (6 | ) | $ | (9 | ) | $ | 3 | ||||||
Footnote Explanations:
| (1) | As reported in the Consolidated Statement of Operations. | |
| (2) | Consulting and other costs are primarily professional services and internal costs associated with certain corporate strategic initiatives. | |
| (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 and the costs, net of any rental income received, of underutilized portions of certain properties. | |
| (4) | The impact of foreign exchange represents the foreign exchange impact using average foreign exchange rates for the three months ended March 31, 2018, rather than the actual exchange rates in effect for the three months ended March 31, 2019. | |
B. FINANCIAL STATEMENTS
| EASTMAN KODAK COMPANY | ||||||||||
| CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) | ||||||||||
| (in millions) | ||||||||||
| Three Months Ended March 31, | ||||||||||
| 2019 | 2018 | |||||||||
| Revenues | ||||||||||
| Sales | $ | 224 | $ | 248 | ||||||
| Services | 67 | 70 | ||||||||
| Total net revenues | 291 | 318 | ||||||||
| Cost of revenues | ||||||||||
| Sales | 205 | 231 | ||||||||
| Services | 46 | 49 | ||||||||
| Total cost of revenues | 251 | 280 | ||||||||
| Gross profit | 40 | 38 | ||||||||
| Selling, general and administrative expenses | 59 | 58 | ||||||||
| Research and development costs | 11 | 13 | ||||||||
| Restructuring costs and other | 2 | 2 | ||||||||
| Other operating expense, net | — | — | ||||||||
| Loss from continuing operations before interest expense, pension income excluding service cost component, other charges (income), net, and income taxes | (32 | ) | (35 | ) | ||||||
| Interest expense | 3 | 2 | ||||||||
| Pension income excluding service cost component | (27 | ) | (32 | ) | ||||||
| Other charges, net | 1 | 16 | ||||||||
| Loss from continuing operations before income taxes | (9 | ) | (21 | ) | ||||||
| Provision for income taxes | 3 | 4 | ||||||||
| Loss from continuing operations | (12 | ) | (25 | ) | ||||||
| Loss from discontinued operations, net of income tax | (6 | ) | — | |||||||
| NET LOSS | $ | (18 | ) | $ | (25 | ) | ||||
The notes accompanying the Company’s first quarter 2019 Form 10-Q are an integral part of these consolidated financial statements.
| EASTMAN KODAK COMPANY | ||||||||||
| CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Unaudited) | ||||||||||
| (in millions) | ||||||||||
| March 31, | December 31, | |||||||||
| 2019 | 2018 | |||||||||
| ASSETS | ||||||||||
| Cash and cash equivalents | $ | 240 | $ | 246 | ||||||
| Trade receivables, net of allowances of $8 and $9, respectively | 201 | 232 | ||||||||
| Inventories, net | 249 | 236 | ||||||||
| Other current assets | 53 | 51 | ||||||||
| Current assets held for sale | 116 | 113 | ||||||||
| Total current assets | 859 | 878 | ||||||||
| Property, plant and equipment, net of accumulated depreciation of $431 and $422, respectively | 233 | 246 | ||||||||
| Goodwill | 12 | 12 | ||||||||
| Intangible assets, net | 58 | 60 | ||||||||
| Operating lease right-of-use assets | 49 | - | ||||||||
| Restricted cash | 8 | 11 | ||||||||
| Deferred income taxes | 155 | 160 | ||||||||
| Other long-term assets | 164 | 144 | ||||||||
| TOTAL ASSETS | $ | 1,538 | $ | 1,511 | ||||||
| LIABILITIES, REDEEMABLE, CONVERTIBLE PREFERRED STOCK AND EQUITY (DEFICIT) | ||||||||||
| Accounts payable, trade | $ | 160 | $ | 149 | ||||||
| Short-term borrowings and current portion of long-term debt | 396 | 396 | ||||||||
| Current portion of operating leases | 23 | - | ||||||||
| Other current liabilities | 191 | 213 | ||||||||
| Current liabilities held for sale | 25 | 20 | ||||||||
| Total current liabilities | 795 | 778 | ||||||||
| Long-term debt, net of current portion | 18 | 5 | ||||||||
| Pension and other postretirement liabilities | 368 | 379 | ||||||||
| Operating leases, net of current portion | 35 | - | ||||||||
| Other long-term liabilities | 163 | 179 | ||||||||
| Total liabilities | 1,379 | 1,341 | ||||||||
| Commitments and Contingencies (Note 10) | ||||||||||
| Redeemable, convertible Series A preferred stock, no par value, $100 per share liquidation preference | 175 | 173 | ||||||||
| Equity (Deficit) | ||||||||||
| Common stock, $0.01 par value | — | — | ||||||||
| Additional paid in capital | 615 | 617 | ||||||||
| Treasury stock, at cost | (9 | ) | (9 | ) | ||||||
| Accumulated deficit | (213 | ) | (200 | ) | ||||||
| Accumulated other comprehensive loss | (409 | ) | (411 | ) | ||||||
| Total shareholders' deficit | (16 | ) | (3 | ) | ||||||
| TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND EQUITY (DEFICIT) | $ | 1,538 | $ | 1,511 | ||||||
The notes accompanying the Company’s first quarter 2019 Form 10-Q are an integral part of these consolidated financial statements.
CONTACT:
Media:
Nick Rangel, Kodak, +1
585-615-0549, nicholas.rangel@kodak.com
Investors:
Bill Love, Kodak, +1 585-724-4053, shareholderservices@kodak.com