SEC Filing | Eastman Kodak Company

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kodk-10q_20220630.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:

June 30, 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 August 1, 2022, the registrant had 79,037,931 shares of common stock, par value $0.01 per share, outstanding.

EASTMAN KODAK COMPANY

Form 10-Q

June 30, 2022

Table of Contents

		Page
Part I.—Financial Information

Item 1.	Financial Statements
	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	29
	Liquidity and Capital Resources	38
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	43

Part II. —Other Information

Item 1.	Legal Proceedings	43
Item 1A.	Risk Factors	44
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 6.	Exhibits	45
	Index to Exhibits	45
	Signatures	46

[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						Six Months Ended
	June 30,						June 30,
	2022			2021			2022			2021
Revenues
Sales	$	266		$	234		$	500		$	443
Services		55			57			111			113
Total revenues		321			291			611			556
Cost of revenues
Sales		234			204			454			389
Services		36			39			73			79
Total cost of revenues		270			243			527			468
Gross profit		51			48			84			88
Selling, general and administrative expenses		41			42			84			88
Research and development costs		9			8			18			16
Restructuring costs and other		—			—			—			1
Other operating income, net		—			(6	)		—			(7	)
Earnings (loss) from operations before interest expense, pension income excluding service cost component, other (income) charges, net and income taxes		1			4			(18	)		(10	)
Interest expense		10			10			19			14
Pension income excluding service cost component		(27	)		(26	)		(57	)		(51	)
Other (income) charges, net		(1	)		1			2			1
Earnings from operations before income taxes		19			19			18			26
(Benefit) provision for income taxes		(1	)		3			1			4
Net income	$	20		$	16		$	17		$	22

Basic net income per share attributable to Eastman Kodak Company common shareholders	$	0.20		$	0.17		$	0.13		$	0.33
Diluted net income per share attributable to Eastman Kodak Company common shareholders	$	0.19		$	0.16		$	0.12		$	0.32

Number of common shares used in basic and diluted net income per share
Basic		78.9			78.5			78.8			78.2
Diluted		90.2			100.6			80.4			93.9

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					Six Months Ended
	June 30,					June 30,
	2022			2021		2022			2021
NET INCOME	$	20		$	16	$	17		$	22
Other comprehensive income (loss), net of tax:
Currency translation adjustments		(10	)		4		(5	)		3
Pension and other postretirement benefit plan obligation activity, net of tax		110			8		110			14
Other comprehensive income, net of tax		100			12		105			17
COMPREHENSIVE INCOME, NET OF TAX	$	120		$	28	$	122		$	39

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

[3]

EASTMAN KODAK COMPANY

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Unaudited)

	June 30,			December 31,
(in millions)	2022			2021
ASSETS
Cash and cash equivalents	$	289		$	362
Trade receivables, net of allowances of $7 and $7, respectively		191			175
Inventories, net		262			219
Other current assets		44			49
Current assets held for sale		2			2
Total current assets		788			807
Property, plant and equipment, net of accumulated depreciation of $443 and $441, respectively		145			140
Goodwill		12			12
Intangible assets, net		32			34
Operating lease right-of-use assets		43			47
Restricted cash		57			54
Pension and other postretirement assets		1,181			1,022
Other long-term assets		51			55
TOTAL ASSETS	$	2,309		$	2,171

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND EQUITY
Accounts payable, trade	$	168		$	153
Short-term borrowings and current portion of long-term debt		1			1
Current portion of operating leases		12			13
Other current liabilities		137			142
Total current liabilities		318			309
Long-term debt, net of current portion		308			253
Pension and other postretirement liabilities		358			382
Operating leases, net of current portion		39			45
Other long-term liabilities		186			205
Total liabilities		1,209			1,194

Commitments and Contingencies (Note 7)

Redeemable, convertible preferred stock, no par value, $100 per share liquidation preference	199			196

Equity
Common stock, $0.01 par value		—			—
Additional paid in capital		1,164			1,166
Treasury stock, at cost		(10	)		(10	)
Accumulated deficit		(579	)		(596	)
Accumulated other comprehensive income		326			221
Total shareholders’ equity		901			781
TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND EQUITY	$	2,309		$	2,171

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

[4]

EASTMAN KODAK COMPANY

CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

	Six Months Ended
	June 30,
(in millions)	2022			2021
Cash flows from operating activities:
Net income	$	17		$	22
Adjustments to reconcile to net cash used in operating activities:
Depreciation and amortization		14			16
Pension income		(49	)		(42	)
Change in fair value of the Preferred Stock and Convertible Notes embedded derivatives		(1	)		—
Non-cash changes in workers' compensation reserves		(8	)		(3	)
Stock based compensation		3			4
Increase in deferred taxes		(2	)		—
(Increase) decrease in trade receivables		(26	)		1
Increase in inventories		(54	)		(30	)
Increase in trade payables		17			27
Decrease in liabilities excluding borrowings and trade payables		(17	)		(20	)
Other items, net		3			4
Total adjustments		(120	)		(43	)
Net cash used in operating activities		(103	)		(21	)
Cash flows from investing activities:
Additions to properties		(9	)		(5	)
Net cash used in investing activities		(9	)		(5	)
Cash flows from financing activities:
Net proceeds from Term Loan Credit Agreement		49			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		(2	)		(5	)
Treasury stock purchases		—			(1	)
Net cash provided by financing activities		47			241
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(5	)		(2	)
Net (decrease) increase in cash, cash equivalents and restricted cash		(70	)		213
Cash, cash equivalents and restricted cash, beginning of period		423			256
Cash, cash equivalents and restricted cash, end of period	$	353		$	469

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

[5]

EASTMAN KODAK COMPANY

CONSOLIDATED STATEMENT OF EQUITY (DEFICIT) (Unaudited)

(in millions)

Six-Month Period Ending June 30, 2022

Eastman Kodak Company Common Shareholders

Common

Stock

Additional

Paid in

Capital

Accumulated

Deficit

Accumulated

Other

Comprehensive Income

Treasury

Stock

Total

Redeemable