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Kodak plan comes into focus

Rochester Business Journal
May 3, 2013

Over the next five months, Eastman Kodak Co. will seek to persuade creditors and the U.S. Bankruptcy Court to approve its reorganization plan. But more than that, Kodak must emerge from bankruptcy as a successful business.
During more than 15 months in Chapter 11, the company has shed businesses, workers, debts and legacy liabilities. It also has bet its future on commercial imaging.
In the reorganization plan and associated documents it filed this week with the U.S. Bankruptcy Court for the Southern District of New York, Kodak details what it sees as its advantages in tapping a $720 billion market. The company also provides financial expectations for "the New Kodak," including posting an annual profit-if a slight one-in 2015.
The company expects a net loss attributable to Kodak of $56 million in the fourth quarter; it did not provide a full-year figure for 2013. It projects a $100 million net loss in 2014, turning to black ink with a $3 million profit in 2015.
Kodak projects annual revenue of $2.5 billion in 2013, down from $2.6 billion in 2012. Revenue then will grow to $2.6 billion in 2014 and $2.7 billion in 2015, the filings state.
The company projects earnings before interest, taxes, depreciation and amortization of $167 million in 2013, after two consecutive years in which it registered millions of dollars in losses on that basis. EBITDA would grow to $209 million in 2014 and $287 million in 2015, Kodak states.
The company expects to have cash and cash equivalents of $832 million at the end of 2013. That would grow to $855 million at the end of 2014 and $927 million at the close of 2015.

Profit, revenues and cash are expected to grow beyond 2015 as well.

Kodak aims to lead the commercial imaging industry, where it touts conventional and digital technologies that serve the $720 billion commercial, packaging and functional printing market. Its advantages include strong technology, market mix and position.
"Kodak is a recognized leader in these markets, with cash-generative businesses in the large markets and excellent positioning to achieve volume and profitability gains in the growth markets," the company states in the filings.
The company calls itself the leader in inkjet-based digital presses and hybrid solutions, electrophotographic presses, flexo print solutions, digital controllers and work flow software, computer-to-plate output devices, digital printing plates, professional and consulting services, and entertainment and commercial films.
Kodak has been building its commercial imaging portfolio over the past decade or more, through internal development and acquisitions. It became clear in the mid-2000s that the business would become critical to Kodak's future-though not its chief focus.
Kodak plans to operate its commercial imaging portfolio as two business segments: Graphics, Entertainment & Commercial Film, and Digital Printing & Enterprise.
A key trend Kodak sees as benefiting it-ironically, given the damage the digital transformation did to the old Kodak-is investments in the conversion to digital printing. Some 90 percent of all printed media globally uses conventional (or analog) printing, Kodak states.
It also sees key advantages to some of its new technologies. Kodak and its partners will deliver new direct digital printing solutions by 2014 for the packaging marketplace using Kodak's Stream inkjet technology, the company states in the filing.
And using its proprietary SQUAREspot laser writing technology, which enables printing systems to deposit materials on a wide variety of substrates, and Kodak's roll manufacturing conveyance process, Kodak plans to aggressively enter the functional print growth markets.
Both technologies have been developed during the last three years and are ready for market introduction in 2014, the company states.
Kodak said this week that it expects to emerge from Chapter 11 bankruptcy in the third quarter. Its plan for emergence calls for current stock to be eliminated and for the company to swap newly minted shares for some $2.7 billion of unsecured debt.
Kodak, which filed bankruptcy in the early morning hours of Jan. 19, 2012, said late Tuesday night that it had filed its plan of reorganization and disclosure statement. The filings-a 78-page plan of reorganization and the 182-page disclosure document-describe Kodak's post-emergence business plan and detail its plan to shed its debts.
Under the reorganization plan, priority claim holders, secured claim holders and second-lien holders, with combined claims of some $424 million, will get all their money back. General unsecured debt holders, with combined claims of $2.7 billion, will get stock.
The plan was filed the day after Kodak announced it had reached a comprehensive settlement agreement with its largest creditor, the U.K. Kodak Pension Plan, that calls for Kodak to spin off its Personalized Imaging and Document Imaging businesses under new ownership to KPP for cash and non-cash consideration of $650 million.
The company expects the Bankruptcy Court to schedule a hearing in mid-June to determine the adequacy of the disclosures. The company then plans to schedule a vote on the plan by creditors.
"The filing of the plan of reorganization and disclosure statement represents a major milestone in our reorganization: This initiates our emergence process," Chairman and CEO Antonio Perez said. "We now have a clear path forward for Kodak, and we are positioning the company for a profitable and sustainable future."
Kodak, Perez added, has fulfilled the four primary objectives for its Chapter 11 filing: bolstering liquidity; monetizing non-strategic intellectual property; fairly resolving legacy liabilities; and focusing on its most valuable business lines.
The filings also showed the top-line and human costs of Kodak's decline over the past decade. Kodak revenues fell from $13.3 billion in 2003 to roughly $4.1 billion in 2012. The company reduced its global workforce from 63,900 employees to 13,100 over the period.
Kodak headed into 2013 with 3,542 employees here, down from 20,600 in 2003.

5/3/13 (c) 2013 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email

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