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Kodak burned through cash in 2011

Eastman Kodak Co. burned through more than $763 million in cash in 2011—an amount that underscores its need to file for bankruptcy protection on Jan. 19.

The company finished the year with $861 million in cash, down from $1.6 billion a year earlier, a new filing with the U.S. Securities and Exchange Commission shows.

A big hit for Kodak came on the intellectual property front where revenues from non-recurring IP licensing agreements plunged. The agreements contributed just $82 million in 2011, down from $838 million in 2010 and $435 million in 2009, the SEC filing states.

Chairman and CEO Antonio Perez in November said the company expected to finish the year with $1.3 billion to $1.4 billion in cash. Kodak on Sept. 30 had $862 million in cash—meaning the company generated no additional cash in the final three months, its key quarter in terms of both revenues and profit.

Hitting the full-year cash forecast depended on Kodak executing its operational plans and assumed full-year sales of non-strategic assets totaling some $200 million and IP licensing transactions of $250 million to $350 million, Perez said in November.

Much of Kodak’s cash is outside of the United States, the SEC filings shows. On Dec. 31, some $170 million in cash was held in the United States. That compares with $580 million a year earlier. The company reported roughly $320 million in cash was repatriated, or loaned, from foreign subsidiaries to the United States during 2011. Some $340 million of the cash is held in China, however, where there are limitations related to net asset balances that affect the ability to make cash available to other jurisdictions around the globe, the company said.

Kodak is likely to continue to face liquidity challenges until it is successful in selling its digital imaging patent portfolio. Estimates the portfolio’s value exceed $2 billion.

Standard & Poor’s Rating Services last month noted Kodak has relied on significant proceeds from licensing IP and the sale of non-core assets to fund its transformation into a digital technology company. That cash source, however, shrank dramatically in 2011 and legal ruling on the validity of key patents remains unsettled, it added.

Debtor-in-possession financing provides Kodak with interim liquidity relief, but the factors that drove Kodak into bankruptcy remain, the ratings services said. “Absent a large monetary settlement of its digital patents, we believe that there are risks surrounding Kodak’s liquidity and ability to meet its covenants.”

Ultimately, however, Standard & Poor’s expects proceeds from IP deals to help address Kodak’s liquidity needs.

In its SEC filing late Wednesday, Kodak reported a full-year net loss of $764 million, or $2.84 a share, compared with a loss of $687 million, or $2.56 a share, in 2010. Net sales totaled $6.02 million, down 16 percent from $7.17 billion the year before.

(c) 2012 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email rbj@rbj.net.

 

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