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Kodak Q4 Profits Rise

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ROCHESTER, N.Y., Jan. 30, 2008 -- Propelled by a 15 percent increase in digital sales, Eastman Kodak Co. today reported a fourth quarter of 2007 profit of $215 million, up from $16 million during the same quarter a year ago.

Digital revenue for the quarter was $2.2 billion, an increase of $288 million from a year ago. Revenue from traditional film-based products declined 15 percent, to $951 million from $1.1 billion in the fourth quarter of 2006. Total sales for the quarter rose 4 percent, to $3.2 billion from $3.1 billion a year ago.

The company has posted profits in four of the last five quarters as it continues to make the transition from film to digital photography (See Kodak Posts Q1 Loss of $151M).

Sales in its Consumer Digital Imaging Group for the fourth quarter were up 8 percent to $1.7 billion, with digital revenue up $196 million to $1.3 billion, helping offset a 15 percent decline in traditional film products. Kodak said the digital surge was primarily due to increased sales of photo-printing kiosks, digital cameras and digital picture frames and ink-jet printers, which exceeded Kodak's goal of 500,000 units sold in 2007.

The Film Products Group fourth quarter sales were $463 million, down 17 percent from $559 million a year ago. Earnings from its operations were less than half of last year's, $40 million compared to $83 million a year ago. The company largely attributed those results to seasonal production slowdowns in film manufacturing, some initial effects from the writers' strike, higher silver costs and new and renewed film agreements.

The Graphic Communications Group sales for the fourth quarter were $998 million, up 7 percent from a year ago. Revenues from digital products grew by 12 percent to $891 million, driven by increased sales of digital plates, Nexpress digital color printing presses and digital printing consumables. Earnings were down for the quarter -- $33 million compared to $47 million a year ago -- largely due to higher aluminum and other costs, an intellectual property licensing settlement and decreased income from film-based products.

Kodak said it earned $92 million, or 31 cents a share, from continuing operations for the quarter. This compares with a loss of $15 million, or 5 cents a share, a year ago.

The company wrapped up its four-year restructuring program in the fourth quarter of 2007. Since January 2004 it has spent close to $4 billion to cut approximately 28,000 jobs and reduce its worldwide facility square footage by one-third.

Between 2004 and 2007, the company eliminated about 27,650 jobs, including 6750 photofinishing, 13,125 manufacturing, 1575 research and development and 6200 administrative, Kodak said. Of the $68 million in restructuring-related charges incurred in the fourth quarter of 2007, $17 million was severance costs related to the elimination of approximately 625 positions, about 450 of which were in the US and Canada.

Also as part of the restructuring, in April 2007 Kodak sold is Health Group segment, which had 8100 employees, to Onex Corp. for $2.5 billion (See Kodak Selling Health Group for $2.5B).

“Our corporate restructuring is now over and Kodak is revitalized and ready to grow,” said Antonio M. Perez, Kodak chairman and CEO. “We have a strong market position in a significant number of very promising digital businesses, a competitive operating structure, a powerful brand, and extremely valuable intellectual property. We are a new company with a strong emphasis on sustaining profitable growth, and the talent and resources necessary to achieve that goal. This positions us well for strong performance in 2008 and beyond.”

Kodak said it expects the restructuring to save it approximately $1.6 billion a year in employee- and facility-related costs.

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Jan 2008
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