Kodak Lowers Its Guidance for Third Quarter Earnings
Press release from the issuing company
ROCHESTER, N.Y. Sept. 19, 2001--Eastman Kodak Company today said its third quarter earnings will not exceed $.65 per share excluding restructuring and other charges, compared with an earlier guidance range of $.90 to $1.20 per share. The company is scheduled to report third quarter earnings results October 24.
Company executives attributed the reduction in earnings expectations to a decline in sales, as the economy continues to lag, compounded by continuing weakness in the Health Imaging business and clear indications of negative effects from last week's terrorist attacks. Kodak's total sales through the end of August were down 7 percent compared with the same period from a year ago, accelerating the trend of declining revenues seen in the previous three quarters.
The company noted that earnings in its Health Imaging business will be lower than anticipated, due to margin pressures brought about by aggressive price competition in both the digital and traditional segments of that business, and shorter-term operating issues.
"Unfortunately, the U.S. economy is showing signs of further slowing, exacerbated by the Sept. 11 attack,'' said Bob Brust, Chief Financial Officer. "We are also beginning to see weakening economic conditions in other countries around the world. In addition, pricing pressures in our Health Imaging business intensified during the quarter, which combined with operational issues to reduce expected earnings for the quarter.
"Despite these challenges, in the first two months of the quarter, we generated about $200 million in operating cash flow, after dividends,'' Brust said. "Inventories remain more than $300 million below the level of a year ago. Going forward, we will extend our efforts to contain costs and improve operational performance as we adjust to the weakening economy and increased competitive environment.
"While the U.S. consumer film market share is highly volatile in the near term, we see nothing that should prevent us from achieving our full-year goal of maintaining U.S. market share, and the trend remains stable in the rest of the world,'' Brust said. "Separately, we gained share in medical x-ray film, laser printers and computed radiography. These gains have improved Kodak's position in markets that are becoming more competitive.
"As we pursue cost reductions, we will continue to go after non-people-related expenses,'' Brust said. "However, it is inevitable that we will have to eliminate additional jobs.
"Kodak, like other companies, is already seeing signs of weakness related to last week's attack,'' Brust said.
Mr. Brust will host a conference call this morning at 10:30 a.m. eastern time. The phone number to participate in the call is 719-457-2619. The access code is 434317 (request the Kodak meeting). The call will be recorded and available for playback beginning at 2:00 p.m., eastern time, by dialing 719-457-0820 (access code 434317). The playback will be active until 5:00 p.m. eastern time on September 26.
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