Kodak Restructuring

[zsas]

Let's hope they provide profit loss by each segment within the Comm. and Consumer divs

 

[Aristophanes]

There may be good reasons, but one thing it will do is make it no longer possible to see that the Film side is the only one making a profit.

Gee, I wonder why.

Film was not making a profit. Look at the Q3 2011 AR. Go back a decade reading them and their "film and entertainment" side bleeds red ink, writedowns, and asset sales, mostly of depreciated capital.

As a summary, for every $100 Kodak invested in a film asset hoping to make $400 over a 10 year period, they actually only made $60, and had to sell (or destroy) the asset for pennies on the dollar. Kodak sold factory land, and some think that made Kodak a " profit". Capital destruction on the balance sheet is not revenue.

 

[Rudeofus]

Film was not making a profit. Look at the Q3 2011 AR. Go back a decade reading them and their "film and entertainment" side bleeds red ink, writedowns, and asset sales, mostly of depreciated capital.

This is just funny accounting which in theory shows whether a corporation earns money but in practice ends up drawing a misleading picture. Look at the US$ 626 million goodwill depreciation: Kodak made some investments 10 or 20 years ago when things were running smoothly for them, then film sales tanked and in the year 2010 they finally decided to clean up their books for a little tax gain. So what does this mean? Did their buildings and investments just happen to depreciate that much in 2010? And not at all in the year before? Does this reflect in anyway whether they earned money from making and selling film in 2010?

If PE (whom you like to quote fully when he seems to confirm your doom&gloom view) states repeatedly that film made Kodak a profit, he might state this based insights from former colleges inside Kodak which don't make it into corporate fiction literature written for the SEC and professional AAA raters. Also consider that a sizeable amount of their stated losses come from commitments Kodak made when they were a highly profitable near monopoly, and these losses will evaporate together with their debt when they go into chapter 11.

 

[Aristophanes]

Kodak's film operations accounted for the vast majority of its legacy equity and revenues,a s well as its liabilities.

Those pensions and medical commitments, plus land taxes, decommissioning, etc. are also liabilities of the film operations.

Yet film demand has fallen by 10%+ YOY with a severe acceleration in the last 5 quarters, especially for motion picture film.

Revenues continue to decline but those obligations, especially the deferred HR ones, remain a liability against vastly smaller revenues.

It is mathematically impossible for film to have been profitable when outstanding obligations remain high but revenues decline by such staggering amounts. Kodak's rearguard action has been to focus on motion picture film and sell patents.

The concept that film's decline for Kodak being caused by a resource shift to digital is pure fantasy. What resources? The consumer has been abandoning film depriving the company of revenues.

In theory, the only way one can shift film into the black side is to remove those obligations through internal division mapping. This is not GAAP and no one buys that concept, which is one reason why EK is now a penny stock. Flailing about with pensions and patents is management desperation.

EK's debt obligations look to have replaced losses from the film revenues, as well as re-tooled the company for its digital efforts. Digital has growth potential so that could be termed "good" debt, but we'll see because the gamble on the consumer printer market is just that...a gamble. But no one realistically expects film to make a popular comeback so any debt applied to covering lost revenues there can only be "bad" debt because there's no ROI.

As much as we malign Kodak's management, they seem to have been quite good and managing film's decline, buying time and keeping as much loyalty as possible through consolidating products (Portra) and rationalizing their output. Very few companies could have taken a 90%+ collapse of demand, frankly, especially the loss of the pro market. It's their inability to maximize their early digital lead that is the corporate tragedy because it has robbed the company of options and a Ch. 11 will put a huge squeeze on the material supply, distribution, and credit of the whole rump film industry.

 

[CGW]

Kodak.ca folded in 2005 and demolished once-busy cine and specialty film coating alleys in Toronto. Why?

Informed reading of Kodak's published financial statements is about as close to clairvoyance as anyone will get here, Rudeofus. Counterfactual arguments don't cut it.

 

[Rudeofus]

Those pensions and medical commitments, plus land taxes, decommissioning, etc. are also liabilities of the film operations.

Yet film demand has fallen by 10%+ YOY with a severe acceleration in the last 5 quarters, especially for motion picture film.

Revenues continue to decline but those obligations, especially the deferred HR ones, remain a liability against vastly smaller revenues.

These obligations are gone the day Kodak files chapter 11, which seems a given under the current circumstances. After that Kodaks film business might well be profitable for a while, depending of whether they can handle the decline in movie film business. Ask Ilford how they did it. Ask Polaroid how not to do it.

It is mathematically impossible for film to have been profitable when outstanding obligations remain high but revenues decline by such staggering amounts. Kodak's rearguard action has been to focus on motion picture film and sell patents.

At the same time Kodak spent next to zilch on research and development, which saved them a bundle and makes mathematical possibility possible

The concept that film's decline for Kodak being caused by a resource shift to digital is pure fantasy.

Please tell me who claimed that. I have followed most of the threads regarding Kodak but I have not read this anywhere. You'll find more folks blaming HAARP on this than people claiming what you wrote.

In theory, the only way one can shift film into the black side is to remove those obligations through internal division mapping. This is not GAAP and no one buys that concept, which is one reason why EK is now a penny stock. Flailing about with pensions and patents is management desperation.

Bean counters. Making the impossible possible since beginning of capitalism Bernie Madoff's ponzi scheme was possible for much too long that I would trust in GAAP requirements.