Kodak Reports 3Q Sales & Earnings, Will Cut 3500 - 4000 More Jobs
Press release from the issuing company
ROCHESTER, N.Y.--Oct. 24, 2001-- Eastman Kodak Company today reported revenues of $3.308 billion and net earnings of $96 million, or 33 cents per share, for the third quarter of 2001. On an operational basis, earnings were 52 cents per share.
For the third quarter:
-- Sales totaled $3.308 billion, down 8% compared with $3.590 billion in the third quarter of 2000. Sales declined 7% excluding foreign exchange and portfolio changes.
-- Net earnings were $96 million, or 33 cents per share, compared with $418 million, or $1.36 per share, in the third quarter of 2000. Excluding restructuring and other charges totaling $95 million ($67 million after-tax, or 23 cents per share) and an $11 million tax credit (4 cents per share), earnings were $152 million, or 52 cents per share. In the third quarter of 2000, earnings excluding a charge related to the exit of a manufacturing facility were $430 million, or $1.40 per share.
"As we indicated on Sept. 19, the economic downturn intensified in the third quarter, and all signs suggest the weakness will continue into next year,'' said Daniel A. Carp, Chairman and Chief Executive Officer. "I am pleased that in these challenging times, Kodak generated strong cash flow by reducing inventories and restraining capital expenditures. This allowed us to pare debt and positions Kodak to benefit once the economic rebound begins.''
Highlights for the quarter:
-- Operating cash flow was $316 million in the quarter. For the first three quarters of 2001, operating cash flow improved by $330 million from last year.
-- Debt was reduced by $356 million in the third quarter, to $3.493 billion, driven by the positive operating cash flow.
-- Inventories declined $435 million versus the year-ago level to $1.462 billion.
-- The contraction of the U.S. consumer film industry intensified. Monthly retail volume in the quarter declined an average of 5% compared with the year-ago period. In September alone, the year-over-year decline was 13%.
Third-quarter segment results, on an operational basis:
-- Consumer Imaging sales were $1.781 billion, down 8% versus the third quarter of 2000. Earnings from operations for the segment declined 45% to $210 million.
-- Health Imaging sales were little changed at $545 million. Earnings from operations declined 64% to $51 million, reflecting declining sales of traditional products as well as pricing pressures and operational issues that combined to reduce profit margins.
-- Kodak Professional sales declined 13% to $370 million. Earnings from operations declined 52% to $40 million.
-- Other Imaging segment sales fell 10% to $612 million. Losses from operations totaled $4 million versus earnings of $68 million in the year-ago quarter, reflecting sales and gross profit declines in most of the segment's businesses.
-- Kodak will take additional cost reduction actions beginning in the fourth quarter that will result in a worldwide employment reduction of 3,500 to 4,000. During 2001, the company will have completed or initiated cost actions that will result in total employment reduction in the range of 6,500 to 7,500, including the 3,500 to 4,000 announced today. Total estimated pre-tax savings from severance and other non-people actions will be approximately $400 million to $450 million for 2002.
-- Risk factors for the fourth quarter include the deepening economic downturn across the world. If pressures in Consumer Imaging and Health Imaging persist as anticipated, Kodak expects that earnings in the fourth quarter will not exceed 15 cents per share on an operational basis.
"Today's economic times are as challenging as any that Kodak and other U.S. companies have faced in recent decades,'' Carp said. "We are committed to ensuring that Kodak is as financially strong as possible once we emerge from this period of economic contraction. Being fiscally responsible today is the best long-term course of action that we can take for our employees and shareholders.''
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