SEC Filing | Eastman Kodak Company

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kodk-10q_20220331.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:

March 31, 2022

☐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 May 4, 2022, the registrant had 78,919,997 shares of common stock, par value $0.01 per share, outstanding.

EASTMAN KODAK COMPANY

Form 10-Q

March 31, 2022

Table of Contents

		Page
Part I.—Financial Information

Item 1.	Financial Statements	8
	Consolidated Statement of Operations (Unaudited)	2
	Consolidated Statement of Comprehensive Income (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	26
	Liquidity and Capital Resources	33
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36
Item 4.	Controls and Procedures	38

Part II. —Other Information

Item 1.	Legal Proceedings	38
Item 1A.	Risk Factors	39
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39
Item 6.	Exhibits	40
	Index to Exhibits	40
	Signatures	41

[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
	March 31,
	2022			2021
Revenues
Sales	$	234		$	209
Services		56			56
Total revenues		290			265
Cost of revenues
Sales		220			185
Services		37			40
Total cost of revenues		257			225
Gross profit		33			40
Selling, general and administrative expenses		43			46
Research and development costs		9			8
Restructuring costs and other		—			1
Other operating income, net		—			(1	)
Loss from operations before interest expense, pension income excluding service cost component, other charges, net and income taxes		(19	)		(14	)
Interest expense		9			4
Pension income excluding service cost component		(30	)		(25	)
Other charges, net		3			—
(Loss) earnings from operations before income taxes		(1	)		7
Provision for income taxes		2			1
Net (loss) income	$	(3	)	$	6

Basic net (loss) income per share attributable to Eastman Kodak Company common shareholders	$	(0.08	)	$	0.17
Diluted net (loss) income per share attributable to Eastman Kodak Company common shareholders	$	(0.08	)	$	0.16

Number of common shares used in basic and diluted net (loss) income per share
Basic		78.7			77.8
Diluted		78.7			80.6

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

[2]

EASTMAN KODAK COMPANY

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Unaudited)

(in millions)

	Three Months Ended
	March 31,
	2022			2021
NET (LOSS) INCOME	$	(3	)	$	6
Other comprehensive income (loss), net of tax:
Currency translation adjustments		5			(1	)
Pension and other postretirement benefit plan obligation activity, net of tax		—			6
Other comprehensive income, net of tax		5			5
COMPREHENSIVE INCOME, NET OF TAX	$	2		$	11

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

[3]

EASTMAN KODAK COMPANY

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Unaudited)

	March 31,			December 31,
(in millions)	2022			2021
ASSETS
Cash and cash equivalents	$	309		$	362
Trade receivables, net of allowances of $7 and $7, respectively		182			175
Inventories, net		247			219
Other current assets		50			49
Current assets held for sale		2			2
Total current assets		790			807
Property, plant and equipment, net of accumulated depreciation of $446 and $441, respectively		147			140
Goodwill		12			12
Intangible assets, net		32			34
Operating lease right-of-use assets		45			47
Restricted cash		58			54
Pension and other postretirement assets		1,049			1,022
Other long-term assets		54			55
TOTAL ASSETS	$	2,187		$	2,171

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND EQUITY
Accounts payable, trade	$	182		$	153
Short-term borrowings and current portion of long-term debt		1			1
Current portion of operating leases		12			13
Other current liabilities		139			142
Total current liabilities		334			309
Long-term debt, net of current portion		256			253
Pension and other postretirement liabilities		375			382
Operating leases, net of current portion		42			45
Other long-term liabilities		200			205
Total liabilities		1,207			1,194

Commitments and Contingencies (Note 6)

Redeemable, convertible preferred stock, no par value, $100 per share liquidation preference	$	198		196

Equity
Common stock, $0.01 par value		—			—
Additional paid in capital		1,165			1,166
Treasury stock, at cost		(10	)		(10	)
Accumulated deficit		(599	)		(596	)
Accumulated other comprehensive income		226			221
Total shareholders’ equity		782			781
TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND EQUITY	$	2,187		$	2,171

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

[4]

EASTMAN KODAK COMPANY

CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

	Three Months Ended
	March 31,
(in millions)	2022			2021
Cash flows from operating activities:
Net (loss) income	$	(3	)	$	6
Adjustments to reconcile to net cash used in operating activities:
Depreciation and amortization		7			8
Pension income		(26	)		(21	)
Change in fair value of the Preferred Stock and Convertible Notes embedded derivatives		3			1
Non-cash changes in workers' compensation reserves		(4	)		—
Stock based compensation		2			3
(Increase) decrease in trade receivables		(9	)		8
Increase in inventories		(32	)		(22	)
Increase in trade payables		31			24
Decrease in liabilities excluding borrowings and trade payables		(13	)		(22	)
Other items, net		1			(1	)
Total adjustments		(40	)		(22	)
Net cash used in operating activities		(43	)		(16	)
Cash flows from investing activities:
Additions to properties		(5	)		(1	)
Net cash used in investing activities		(5	)		(1	)
Cash flows from financing activities:
Net proceeds from Term Loan Credit Agreement		—			215
Net proceeds from Convertible Notes		—			25
Net proceeds from Series C Preferred Stock		—			99
Proceeds from sale of common stock		—			10
Repurchase of Series A Preferred Stock		—			(100	)
Debt issuance costs		—			(2	)
Preferred stock cash dividend payments		(1	)		(4	)
Treasury stock purchases		—			(1	)
Net cash (used in) provided by financing activities		(1	)		242
Effect of exchange rate changes on cash, cash equivalents and restricted cash		—			(4	)
Net (decrease) increase in cash, cash equivalents and restricted cash		(49	)		221
Cash, cash equivalents and restricted cash, beginning of period		423			256
Cash, cash equivalents and restricted cash, end of period	$	374		$	477

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

[5]

EASTMAN KODAK COMPANY

CONSOLIDATED STATEMENT OF EQUITY (DEFICIT) (Unaudited)

(in millions)

	Three-Month Period Ending March 31, 2022
	Eastman Kodak Company Common Shareholders
	Common Stock		Additional Paid in Capital			Accumulated Deficit			Accumulated Other Comprehensive Income		Treasury Stock			Total			Redeemable Convertible Preferred Stock
Equity (deficit) as of December 31, 2021	$	—	$	1,166		$	(596	)	$	221	$	(10	)	$	781		$	196
Net loss		—		—			(3	)		—		—			(3	)		—
Other comprehensive income (net of tax):
Currency translation adjustments		—		—			—			5		—			5			—
Preferred stock cash dividends		—		(1	)		—			—		—			(1	)		—
Preferred stock in-kind dividends		—		(1	)		—			—		—			(1	)		1
Preferred stock deemed dividends		—		(1	)		—			—		—			(1	)		1
Stock-based compensation		—		2			—			—		—			2			—
Equity (deficit) as of March 31, 2022	$	—	$	1,165		$	(599	)	$	226	$	(10	)	$	782		$	198

[6]

EASTMAN KODAK COMPANY

CONSOLIDATED STATEMENT OF EQUITY (DEFICIT) (Unaudited) (cont’d)

(in millions)

	Three-Month Period Ending March 31, 2021
	Eastman Kodak Company Common Shareholders
	Common Stock		Additional Paid in Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Treasury Stock			Total			Redeemable Convertible Preferred Stock
Equity (deficit) as of December 31, 2020	$	—	$	1,152		$	(620	)	$	(446	)	$	(9	)	$	77		$	191
Net income		—		—			6			—			—			6			—
Other comprehensive income (loss) (net of tax):
Currency translation adjustments		—		—			—			(1	)		—			(1	)		—
Pension and other postretirement liability adjustments		—		—			—			6			—			6			—
Repurchase of Series A preferred stock		—		—			—			—			—			—			(100	)
Exchange of Series A preferred stock		—		92			—			—			—			92			(92	)
Expiration of Series A preferred stock embedded derivative		—		11			—			—			—			11			—
Issuance of convertible, redeemable Series B preferred stock, net				(95	)											(95	)		93
Issuance of common stock		—		10			—			—			—			10			—
Issuance of convertible, redeemable Series C preferred stock, net		—		—			—			—			—			—			97
Preferred stock cash dividends		—		(1	)		—			—			—			(1	)		—
Preferred stock deemed dividends		—		(2	)		—			—			—			(2	)		2
Series C Preferred stock in-kind dividends		—		(1	)		—			—			—			(1	)