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KODAK REPORTS SLIGHTLY LOWER SALES,

    ROCHESTER, N.Y., July 28 /PRNewswire/ -- Eastman Kodak Company (NYSE: EK) today reported slightly lower sales and higher net earnings for the second quarter of 1993 in its first quarterly report since announcing plans to spin-off Eastman Chemical Company.
    The Kodak results were generally better than expected in a period of economic weakness and when compared with a good quarter a year ago.
    For the second quarter, net earnings were $371 million, or $1.13 per share, an increase of 3 percent from $361 million or $1.11 per share in the 1992 second quarter.  Net earnings for the second quarter were reduced by an extraordinary charge of $12 million or $.04 per share related to an early extinguishment of some debt.  The 1993 second quarter earnings include $79 million in net earnings from discontinued operations, reflecting Eastman results.  Sales from continuing operations in the second quarter were $4.27 billion, down slightly from $4.29 billion a year ago.
    For the half-year, the company posted a loss of $1.65 billion or $5.05 per share, reflecting adjusted first quarter charges of $2.17 billion ($6.64 per share) as a result of adopting two new financial accounting standards relating to postretirement (SFAS No. 106) and postemployment (SFAS No. 112) benefits.  These charges relate to liabilities for the projected cost of health care and other benefits for current and retired employees, but will have no incremental effect on the company's cash outflow.  The $2.17 billion charge has been increased from the $2.03 billion reported in the 1993 first quarter results to reflect the complete early adoption of SFAS No. 112.
    Net earnings for the half year before the cumulative effect of changes in accounting principle were $520 million or $1.59 per share, compared with $506 million or $1.56 per share for the first half of 1992, equivalent to a 3 percent increase.  (Note: Reported first half 1992 net earnings of $658 million or $2.03 per share reflect the beneficial effect of a change in accounting for income taxes that added $152 million or $.47 per share to 1992 results.)
    Worldwide sales from continuing operations for the first half of 1993 were $7.81 billion, essentially level with the first half of 1992.
    Commenting on the results, Kodak Chairman, President and Chief Executive Officer Kay R. Whitmore said:  "Very strong demand in June and good continuing control of costs during a period of economic weakness in many parts of the world led Kodak to better than expected results in the 1993 second quarter.
    "An excellent operating margin of nearly 24 percent in the Imaging segment and continued improvement in the rate of earnings on our business in the Information segment, from a negative 3 percent a year ago to a positive 5 percent in the most recent quarter, were encouraging signs.
    "In the Imaging segment, shipments of color film bounced back with strength late in the quarter, motion picture products ran well ahead, and professional product shipments held about level in a market depressed by cutbacks in advertising activity.
    "In Information, copier placements were about level and shipments of graphic arts products increased, with significant margin improvement in these businesses.  In this segment, the sales comparison was adversely affected by the inclusion in 1992 of divested units.
    "Health segment sales showed strong momentum late in the quarter, driven by volume gains for many key products.  Clinical diagnostics and Sterling Winthrop set the pace for the segment, while Health Sciences posted moderate gains.  L&F sales were down slightly.
    "Due to the previously announced decision to spin-off Eastman Chemical Company, results of what was the Chemicals segment are being reported now as discontinued operations.  Chemicals sales advanced due to strong demand for plastics, fine chemicals, and polymers.
    "Altogether, the second quarter and first half represent a satisfactory beginning which was consistent with our operating plan for 1993.  We continue to believe the company will generate moderately higher sales this year, solid earnings from operations, and positive cash flow.
    "Beyond that, I can report good progress on development of plans that will improve our operating effectiveness, our cash flows, and our ability to pay down debt."
    IMAGING SEGMENT:  Worldwide earnings from operations for the quarter were $475 million, down 2 percent from the $483 million reported in 1992, based on sales of $2 billion which compared with $2.04 billion in the 1992 second quarter.  For the first half, worldwide earnings from operations were $608 million, up 4 percent from the $587 million reported in 1992, based on sales of $3.40 billion which compared with $3.46 billion in the 1992 first half.
    Earnings from operations decreased slightly for the quarter, as the effects of cost escalation, lower effective selling prices and unfavorable foreign currency rate changes were nearly offset by manufacturing productivity and the benefits of increased unit volumes. For the year-to-date, operating earnings increased slightly, as manufacturing productivity gains, the benefits from increased unit volumes, lower marketing and administrative expenses and lower research and development expenditures more than offset cost escalation, lower effective selling prices and the unfavorable effects of foreign currency rate changes.
    For both the quarter and the half-year, worldwide volume gains were led by Kodacolor 35 mm films, single use cameras, and Ektacolor papers. For the quarter, sales to customers in the U.S. were $853 million, essentially level with last year's $857 million, while outside the U.S., sales were down 3 percent to $1.15 billion from $1.18 billion a year ago.  For the year-to-date, sales to customers in the U.S. were $1.36 billion, essentially level  with last year's $1.35 billion, while outside the U.S., sales were down 3 percent to $2.04 billion from $2.11 billion a year ago.
    Sales to customers in the U.S. were level for the quarter and the year to date when compared with sales for the same periods of 1992. Outside the U.S., sales recorded a slight decline for the quarter and the year-to-date as slight increases in unit volumes were more than offset by the unfavorable effects of foreign currency rate changes and lower effective selling prices.
    INFORMATION SEGMENT:  Worldwide earnings from operations for the second quarter were $48 million compared with a loss of $31 million a year ago, based on sales of $953 million which compared with $1 billion a year ago.  For the first half, worldwide earnings from operations were $91 million compared with a loss of $26 million a year ago, based on sales of $1.85 billion which compared with $1.91 billion a year ago.
    For both the quarter and the year-to-date, earnings from operations increased over a year ago, as the benefits from lower manufacturing costs, lower marketing and administrative expenses and lower research and development costs were partly offset by cost inflation.  Margin improvements were especially good in the copier and graphic arts product lines.
    For the quarter, sales to customers in the U.S. decreased 6 percent to $548 million compared with last year's $582 million, while sales outside the U.S. were down 3 percent to $405 million from $419 million a year ago.  For the year-to-date, sales to customers in the U.S. were down 3 percent to $1.07 billion compared with last year's $1.10 billion, while sales outside the U.S. were also down 3 percent to $788 million from $810 million a year ago.
    Sales to worldwide customers for the quarter and the year-to-date were adversely affected by the inclusion in 1992 of divested units.  In addition, outside the U.S., the benefits from increased unit volumes from ongoing businesses were more than offset by the unfavorable effects of foreign currency rate changes in both the quarter and the year-to- date.
    HEALTH SEGMENT:  Worldwide earnings from operations for the quarter were $162 million, down 2 percent from $166 million in the 1992 second quarter, while sales were $1.31 billion, compared with $1.25 billion in 1992.  For the first half, worldwide earnings from operations were $280 million, down 12 percent from $318 million in the 1992 first half, while sales were $2.56 billion, compared with $2.45 billion in 1992.
    Operating earnings for both the quarter and the first half were lower as the unfavorable effects of cost escalation, increased marketing and administrative expenses for the launch of Bayer Select, and increased research and development expenditures, particularly for Sterling Winthrop pharmaceutical products, were only partially offset by the benefits from increased unit volumes.
    Worldwide sales increases for the quarter and the year-to-date were led by Clinical Diagnostics, Sterling Winthrop and Health Sciences.  For the quarter, sales to customers in the U.S. increased 1 percent to $744 million from last year's $737 million, while sales outside the U.S. were up 10 percent to $567 million from $514 million a year ago.  For the first half, sales to customers in the U.S. increased 1 percent to $1.48 billion from last year's $1.46 billion, while sales outside the U.S. were up 9 percent to $1.08 billion from $993 million a year ago.
    Sales to U.S. customers were essentially level for the quarter and the year-to-date when compared with 1992.  Outside the U.S., good gains for the quarter and the year-to-date resulted from significant increases in unit volumes, slightly offset by the effects of unfavorable foreign currency rate changes.
    CHEMICALS SEGMENT:  (Now being reported as discontinued operations.) Worldwide earnings from operations for the quarter were $138 million, up 6 percent from $130 million in the 1992 second quarter, based on sales of $1.03 billion which compared with $973 million last year.  For the first half, worldwide earnings were $250 million, down 6 percent from $265 million in the 1992 first half, based on sales of $2 billion which compared with $1.93 billion last year.
    Operating earnings increased in the quarter primarily due to increased unit volumes, partially offset by higher operating costs. Half-year operating earnings were lower primarily because of charges for Eastman Chemical Company's planned exit from the Kodel polyester staple fiber business.  The benefits from increased unit volumes and higher effective selling prices were offset by higher operating costs.
    Sales to customers in the U.S. for the quarter increased 7 percent to $689 million from last year's $642 million, while sales outside the U.S. were up 3 percent to $341 million from $331 million a year ago. For the first half, sales to customers in the U.S. increased 6 percent to $1.35 billion from last year's $1.27 billion, while sales outside the U.S. were down 2 percent to $651 million from $661 million a year ago.
    Sales to customers in the U.S. recorded moderate increases for the quarter and year-to-date primarily because of increased unit volumes. Outside the U.S., sales increased slightly in the quarter, as increases in unit volumes were partially offset by the effects of unfavorable foreign currency rate changes and lower effective selling prices.  Year- to-date sales recorded a slight decrease primarily due to unfavorable foreign currency rate changes.
    Eastman Kodak Company and Subsidiary Companies
    CONSOLIDATED STATEMENT OF EARNINGS
      (in millions, except per share amounts)
                                             Second Quarter
                                              1993    1992
    REVENUES
    Sales                                   $4,265 $  4,287
    Earnings from equity interests
      and other revenues                        66       86
          TOTAL REVENUES                     4,331    4,373
    COSTS
    Cost of goods sold                       1,983    2,056
    Marketing and administrative expenses    1,279    1,292
    Research and development costs             337      336
    Interest expense                           169      182
    Other charges                               47       20
          TOTAL COSTS                        3,815    3,886
    Earnings from continuing operations
      before income taxes                      516      487
    Provision for income taxes from
      continuing operations                    212      208
    Earnings from continuing operations
      before extraordinary item and
      cumulative effect of changes in
      accounting principle                     304      279
    Earnings from discontinued operations
      before cumulative effect of changes
      in accounting principle                   79       82
    Earnings before extraordinary item and
      cumulative effect of changes in
      accounting principle                     383      361
    Extraordinary item                         (12)      -
    Earnings before cumulative effect of
      changes in accounting principle          371      361
    Cumulative effect of changes in
      accounting principle from continuing
      operations                                -        -
    Cumulative effect of changes in
      accounting principle from discontinued
      operations                                -        -
    Total cumulative effect of changes in
      accounting principle                      -        -
          NET EARNINGS                      $  371   $  361
    Eastman Kodak Company and Subsidiary Companies
    CONSOLIDATED STATEMENT OF EARNINGS
         (in millions, except per share amounts)
                                             Second Quarter
                                              1993    1992
    Primary earnings per share from
      continuing operations before
      extraordinary item and cumulative
      effect of changes in accounting
      principle                             $  .93   $  .86
    Primary earnings per share from
      discontinued operations before
      cumulative effect of changes in
      accounting principle                     .24      .25
    Primary earnings per share before
      extraordinary item and cumulative
      effect of changes in accounting
      principle                               1.17     1.11
    Extraordinary item                        (.04)      -
    Primary earnings per share before
      cumulative effect of changes in
      accounting principle                    1.13     1.11
    Cumulative effect of changes in
      accounting principle from
      continuing operations                     -        -
    Cumulative effect of changes in
      accounting principle from
      discontinued operations                   -        -
    Total cumulative effect of changes
      in accounting principle                   -        -
    Primary earnings per share              $ 1.13   $ 1.11
    Fully diluted earnings per share from
      continuing operations before
      extraordinary item and cumulative
      effect of changes in accounting
      principle                             $  .89   $  .83
    Fully diluted earnings per share from
      discontinued operations before
      cumulative effect of changes in
      accounting principle                     .22      .23
    Fully diluted earnings per share
      before extraordinary item and
      cumulative effect of changes in
      accounting principle                    1.11     1.06
    Extraordinary item                        (.03)      -
    Fully diluted earnings per share
      before cumulative effect of changes
      in accounting principle                 1.08     1.06
    Cumulative effect of changes in
      accounting principle from
      continuing operations                     -        -
    Cumulative effect of changes in
      accounting principle from
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Date:Jul 28, 1993
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