Eastman Kodak Company (EKDKQ) reported in an earnings disclosure that it is making progress towards focusing on its profitable businesses lines, and strengthening operating performance and cost controls, but it also reported a severe decline (27%) in revenue. The company is in Chapter 11 reorganization with a plan to emerge in 2013.
Quarterly Earnings improved for its Commercial and Consumer segments by a combined total of $82 million as compared to same period last year. Expense reductions reported ahead of revenue declines. Gross profit margin increased by two percentage points due to an enhanced mix of higher-margin consumables. Second quarter loss from continuing operations before interest expense, other income (charges), net, reorganization items, net and income taxes improved by $79 million compared to the prior-year quarter.
Cash balance at the end of the quarter was reported at $1.257 billion.
Revenue of $1.077 billion in the second quarter was down 27% from the year-ago quarter, reflecting the exit of digital cameras, reduced sales of traditional products, participation choices across its businesses, and the negative impact of currency exchange. Overall, the company reported a net loss of $299 million, compared to $179 million in the second quarter of 2011. Before reorganization items, the second quarter net loss was $139 million, an improvement of $40 million over the prior-year quarter. Second quarter reorganization items totaled $160 million, primarily reflecting second quarter non-cash provisions for allowed reorganization claims.
In an effort to replay creditors from its Chapter 11 bankruptcy filing, the company is selling its 1,100 digital patents. The company filed for Chapter 11 protection in January of 2012 as a result of not advancing its products to the digital age where photography and film production gravitated. Rivals Apple (APPL), Google (Goog), Microsoft (MSFT), Samsung and HTC are reportedly all interested as camera technology is essential to the smartphone product and marketplace. The sale of 1,200 patents could not only help Eastman Kodak escape from the Chapter 11 filing, but could provide a windfall for the struggling pioneer of photography and film products. Though unconfirmed, the bidding could escalate to several billion dollars from initial bids of several hundred million. The prize of control of the patents could help the winner considerably as it would become the patent holder and licensee to its competitors, a key position in a highly competitive game.
A mid-August outcome of the auction is expected.