When Kodak made Brownies, folks said, "Cheese!" Now the inventor of the Brownie camera has abandoned consumer photography altogether to focus on imaging for businesses. Kodak, which has staked its future on commercial printing, makes presses and imprinting systems, as well as technology to print documents, publications, and product packaging for corporate customers. It also serves the motion picture industry with motion imaging products, services, and technology for studios, labs, and independent filmmakers. Founded in 1880 by George Eastman, Eastman Kodak emerged from bankruptcy in 2013 after restructurings made it a smaller company focused on commercial printing products and services.
Kodak emerged from bankruptcy with two reportable segments. Graphics, Entertainment, and Commercial Films (GECF), which generated nearly 70% of the company's total revenue in 2014, provides digital and traditional products and services to commercial printers, direct mail, book publishing, newspapers and magazines, and the motion picture industry, among others.
The Digital Printing and Enterprise (DP&E), which brought in 30% of total revenue, supplies customers in the creative, in-plant, data center, commercial prints, packaging, newspaper, and digital service bureau markets with software, hardware, and media products. Digital Printing includes both Kodak's Inkjet Printing and Electrophotographic Printing equipment and related consumables and services.
For 2015, the company planned to divide its operations into seven segments: Print Systems, which will serve graphic arts and commercial print customers with printing plates; Enterprise Inkjet Systems, which will serve existing and future inkjet printing customers; Micro 3D Printing and Packaging, which will serve packaging customers and display OEM partners; Software and Solutions, which includes Kodak Technology Solutions; Consumer and Film, which includes consumer inkjet solutions, motion picture and commercial films, synthetic chemicals, and brand licensing; Intellectual Property Solutions, which includes licensing and R&D services unrelated to the other segments; and Eastman Business Park.
Rochester, New York-based Kodak generates roughly 35% of its revenue from the US, and another 35% from the Europe, Middle East, and Africa (EMEA) region. About 20% of total revenue comes from the Asia Pacific region, while the Canada and Latin America region produces another nearly 10%. The company has manufacturing operations in Rochester; Dayton, Ohio; Weatherford, Oklahoma; and Columbus, Georgia. Outside of the US, its manufacturing facilities are located in Canada, China, Germany, Japan, and the UK.
Sales and Marketing
Graphics products and services are sold worldwide either directly through Kodak or indirectly through dealers. The company's motion picture products are sold directly to studios, independent filmmakers, and laboratories.
Eastman Kodak spent $13 million on advertising in 2014, compared to $20 million and $66 million in 2013 and 2012, respectively.
Note: Upon emerging from bankruptcy, Kodak adopted fresh start accounting methods that are not comparable to financials in the years prior to 2014.
In its first full year as a newly-formed business, Eastman Kodak's revenue fell by 11% to $2.1 billion in 2014, mostly because its Digital Printing and Enterprise income declined by 17% as ink sales for Consumer Inket Systems and inkjet component and electrophotographic unit sales fell. Reduced sales volume of its motion picture products in its Entertainment Imaging and Commercial Films businesses also caused significant headwinds to the company's top-line growth.
Eastman Kodak also reported a net loss of $123 million in 2014 as selling, general and administrative expenses, R&D spending, and restructuring costs ate into its small gross profit margins. The company's operations used $128 million in cash for the year, though cash levels improved compared to 2013 mostly thanks to higher intellectual property licensing income, lower reorganization payments, and lower interest expenses on the company's long-term debt.
Eastman Kodak has been undergoing profound transformation as it's gone through heavy restructuring in recent years. The company reaffirmed its strategy in 2015 to focus on investments in imaging and printing products and services for businesses. Some of its target areas are in commercial inkjet, packaging and functional printing solutions (including Micro 3D), and enterprise services. During 2014, Kodak expanded its printing plate manufacturing to help it meet global demand and realigned the business into seven reportable segments instead of two with the intention of reducing costs.
Additionally, Eastman Kodak has been looking to reposition itself in the film industry. In 2015, the company managed to get supply agreements with all six major Hollywood studios (20th Century Fox, Walt Disney, Warner Bros, NBC Universal, Paramount Pictures, and Sony Pictures). But with sales declining in the sector, the company has been pursuing other avenues in film production technologies in growth applications such as touchscreens for smartphones and tablet computers.
The company also has plans to expand its sales and customer relationships beyond US borders, especially into emerging markets like Asia, Latin America, and Eastern Europe. To this end in 2014, the company opened its Asia Pacific Technology Center in Shanghai to bring its tech-based printing services to the Asian market.
Restructuring with the goal of emerging from bankruptcy dominated 2013. Actions taken by Kodak during the year to reduce its cost structure and someday return to profitability included the continued wind down of the consumer inkjet business, reducing manufacturing capacity in the US and the UK, layoffs in France, and other targeted reductions in service, sales, and other areas.
In its January 2012 bankruptcy filing, Kodak listed more than 100,000 creditors and debts totaling $6.75 billion. The Bank of New York Mellon, which served as a trustee for other bondholders, was its top creditor with claims of more than $650 million. There were some well-known companies on the list, including Sony, Nokia, Wal-Mart, Target, Best Buy, OfficeMax, Disney Studios, and CVS Health. On the plus side, Kodak's more than $5 billion in assets included properties in New York, Colorado, and Oklahoma. The company emerged from Chapter 11 in September 2013.