Kodak Reports Earnings, Will Cut 3000 Jobs
Friday, April 20, 2001
ROCHESTER, N.Y., April 17, -- Eastman Kodak Company today reported revenues of $2.975 billion and net earnings of $150 million, or $.52 per share for the first quarter of 2001, in line with guidance provided by the company in January. On an operational basis, excluding a charge of $.02 per share, net earnings were $.54 per share. The company also announced it expects to take a restructuring charge of approximately $375 million to $450 million pre-tax, primarily in the second quarter, but with a portion to be taken in the third quarter. The charge is expected to include a reduction of about 3,000 to 3,500 jobs worldwide. The restructuring will address a number of initiatives currently in the planning stages and is focused on continuing improvement in Kodak's cost structure and operational effectiveness. The anticipated pre-tax savings from these actions are expected to total approximately $50 million in 2001 and have a run-rate impact, by the end of 2002, between $200 million and $250 million. Additional information will be provided at the company's upcoming investor meeting, scheduled for May 2 in New York City. For the first quarter: Sales totaled $2.975 billion, a decline of 4% from $3.095 billion in the first quarter of 2000. Excluding adjustments to the business portfolio and the negative impact of currency, sales were down 1% from a year ago. Net earnings were $150 million, or $.52 per share, compared with $289 million, or $.93 per share in the first quarter of 2000. Excluding a 2001 charge of $.02 per share, related primarily to the exit of an equipment manufacturing facility, net earnings were $.54 per share on an operational basis, compared with $.95 per share on an operational basis last year. Earnings were reduced by lower gross profit margins, the adverse effects of foreign exchange and higher interest expense, reflecting higher debt levels. Earnings from operations were $262 million, compared with $456 million in the comparable 2000 quarter. "These results are in line with the expectations we set last December and reaffirmed in January when we reported year-end 2000 results," said Daniel A. Carp, Chairman and Chief Executive Officer. "The slowdown in photo industry activity, which essentially flattened out in this quarter, is entirely consistent with the overall slowdown in the U.S. economy. We see nothing in the form of negative trends unique to our industry. We had a modest increase in our U.S. film share in the quarter, despite a highly competitive market, and we are confident that any improvement in the economy will have a corresponding effect on our business. "The restructuring we are announcing today will enable us to build a stronger, more competitive business by taking out cost in a very strategic and targeted way," Carp noted. "We will continue to work hard to position ourselves to take advantage of an eventual economic upturn, but like many others in corporate America today, we are hesitant to speculate as to when that upturn will occur. Consumer Imaging segment sales totaled $1.397 billion, down 7%. Adjusted for portfolio changes and currency impact, sales were down 5%. Earnings from operations for the segment were $61 million, compared with $184 million a year ago. While sales of most major product categories were down, worldwide sales increased for one-time-use cameras, APS film, reloadable cameras and Picture Maker kiosks and related media. Health Imaging sales were $561 million, up 5%. Adjusted for currency, sales were up 9%. Earnings from operations for the segment were $108 million, down 8% from $118 million in last year's quarter. Sales of Dry View media and computed radiography products were up substantially in the quarter. Kodak Professional sales were $367 million, a decline of 11%. Adjusting for unfavorable exchange, sales were down 8%. Earnings from operations for the segment were $49 million, compared with $68 million a year ago. The business continued to experience lower sales to Kodak Polychrome Graphics. Other Imaging segment sales were $650 million, up 1%. Adjusted for currency and portfolio changes, sales were up 4% from a year ago. Earnings from operations for the segment were $44 million, compared with $86 million a year ago. The segment saw higher sales of motion picture products and services, as well as sharply higher sales in commercial and government services. Digital camera sales recovered late in the quarter as the company regained market share for the quarter.