SEC Filing | Eastman Kodak Company

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kodk-10q_20210930.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended:

September 30, 2021

☐Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to


Commission File Number
1-00087
EASTMAN KODAK COMPANY (Exact name of registrant as specified in its charter)
New Jersey		16-0417150
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

343 STATE STREET, ROCHESTER, New York		14650
(Address of principal executive offices)		(Zip Code)
(585) 724-4000
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Common	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.01 per share	KODK	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large, accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 4, 2021, the registrant had 78,652,200 shares of common stock, par value $0.01 per share, outstanding.

EASTMAN KODAK COMPANY

Form 10-Q

September 30, 2021

Table of Contents

		Page
Part I.—Financial Information

Item 1.	Financial Statements	2
	Consolidated Statement of Operations (Unaudited)	2
	Consolidated Statement of Comprehensive Income (Loss) (Unaudited)	3
	Consolidated Statement of Financial Position (Unaudited)	4
	Consolidated Statement of Cash Flows (Unaudited)	5
	Consolidated Statement of Equity (Deficit) (Unaudited)	6
	Notes to Financial Statements (Unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	35
	Liquidity and Capital Resources	43
Item 4.	Controls and Procedures	47

Part II. —Other Information

Item 1.	Legal Proceedings	48
Item 1A.	Risk Factors	50
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	50
Item 6.	Exhibits	51

	Index to Exhibits	51
	Signatures	52

[1]

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

EASTMAN KODAK COMPANY

CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)

(in millions, except per share data)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2021			2020			2021			2020
Revenues
Sales	$	231		$	195		$	674		$	568
Services		56			57			169			164
Total revenues		287			252			843			732
Cost of revenues
Sales		206			183			595			533
Services		38			38			117			111
Total cost of revenues		244			221			712			644
Gross profit		43			31			131			88
Selling, general and administrative expenses		43			56			131			138
Research and development costs		8			8			24			25
Restructuring costs and other		—			1			1			9
Other operating expense (income), net		1			(1	)		(6	)		(11	)
Loss from operations before interest expense, pension income excluding service cost component, loss on early extinguishment of debt, other (income) charges, net and income taxes		(9	)		(33	)		(19	)		(73	)
Interest expense		9			3			23			11
Pension income excluding service cost component		(25	)		(26	)		(76	)		(79	)
Loss on early extinguishment of debt		—			2			—			2
Other (income) charges, net		(2	)		432			(1	)		387
Earnings (loss) from operations before income taxes		9			(444	)		35			(394	)
Provision for income taxes		1			1			5			167
Net income (loss)	$	8		$	(445	)	$	30		$	(561	)

Basic net income (loss) per share attributable to Eastman Kodak Company common shareholders	$	0.06		$	(6.94	)	$	0.40		$	(11.34	)
Diluted net income (loss) per share attributable to Eastman Kodak Company common shareholders	$	0.06		$	(6.94	)	$	0.39		$	(11.34	)

Number of common shares used in basic and diluted net income (loss) per share
Basic		78.6			64.8			78.3			50.8
Diluted		80.6			64.8			80.5			50.8

The accompanying notes are an integral part of these consolidated financial statements.

[2]

EASTMAN KODAK COMPANY

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) (Unaudited)

(in millions)

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2021		2020			2021		2020
NET INCOME (LOSS)	$	8	$	(445	)	$	30	$	(561	)
Other comprehensive income (loss), net of tax:
Currency translation adjustments		—		(1	)		3		(17	)
Pension and other postretirement benefit plan obligation activity, net of tax		7		3			21		15
Other comprehensive income (loss), net of tax		7		2			24		(2	)
COMPREHENSIVE INCOME (LOSS), NET OF TAX	$	15	$	(443	)	$	54	$	(563	)

The accompanying notes are an integral part of these consolidated financial statements.

[3]

EASTMAN KODAK COMPANY

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Unaudited)

	September 30,			December 31,
(in millions)	2021			2020
ASSETS
Cash and cash equivalents	$	380		$	196
Trade receivables, net of allowances of $8 and $10, respectively		167			177
Inventories, net		240			206
Other current assets		47			46
Current assets held for sale		2			2
Total current assets		836			627
Property, plant and equipment, net of accumulated depreciation of $440 and $430, respectively		140			152
Goodwill		12			12
Intangible assets, net		35			39
Operating lease right-of-use assets		46			48
Restricted cash		64			53
Other long-term assets		402			317
TOTAL ASSETS	$	1,535		$	1,248

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND EQUITY
Accounts payable, trade	$	151		$	118
Short-term borrowings and current portion of long-term debt		2			2
Current portion of operating leases		18			12
Other current liabilities		141			164
Total current liabilities		312			296
Long-term debt, net of current portion		250			17
Pension and other postretirement liabilities		384			406
Operating leases, net of current portion		40			49
Other long-term liabilities		210			212
Total liabilities		1,196			980

Commitments and Contingencies (Note 8)

Redeemable, convertible preferred stock, no par value, $100 per share liquidation preference	195			191

Equity
Common stock, $0.01 par value		—			—
Additional paid in capital		1,166			1,152
Treasury stock, at cost		(10	)		(9	)
Accumulated deficit		(590	)		(620	)
Accumulated other comprehensive loss		(422	)		(446	)
Total shareholders’ equity		144			77
TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND EQUITY	$	1,535		$	1,248

The accompanying notes are an integral part of these consolidated financial statements.

[4]

EASTMAN KODAK COMPANY

CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

	Nine Months Ended
	September 30,
(in millions)	2021			2020
Cash flows from operating activities:
Net income (loss)	$	30		$	(561	)
Adjustments to reconcile to net cash used in operating activities:
Depreciation and amortization		23			29
Pension income		(63	)		(65	)
Change in fair value of embedded derivatives in the Series A, Series B and Series C Preferred Stock and Convertible Notes		(3	)		382
Loss on early extinguishment of debt		—			2
Net loss (gain) on sales of assets		1			(9	)
Asset impairments		—			3
Stock based compensation		6			18
Non-cash changes in workers' compensation reserves		(4	)		9
(Benefit) provision for deferred income taxes		(1	)		160
Decrease in trade receivables		6			53
Increase in inventories		(38	)		(19	)
Increase (decrease) in trade payables		33			(33	)
Decrease in liabilities excluding borrowings and trade payables		(26	)		(24	)
Other items, net		3			7
Total adjustments		(63	)		513
Net cash used in operating activities		(33	)		(48	)
Cash flows from investing activities:
Additions to properties		(10	)		(13	)
Net proceeds from sales of assets		1			2
Net proceeds from return on equity investment		—			2
Net cash used in investing activities		(9	)		(9	)
Cash flows from financing activities: