PRESS RELEASE: Kodak Files for Bankruptcy

PRESS RELEASE

Eastman Kodak Company and Its U.S. Subsidiaries Commence Voluntary Chapter 11 Business Reorganization

ROCHESTER, N.Y., January 19 — Eastman Kodak Company (“Kodak” or the “Company”) announced today that it and its U.S. subsidiaries filed voluntary petitions for chapter 11 business reorganization in the U.S. Bankruptcy Court for the Southern District of New York.

The business reorganization is intended to bolster liquidity in the U.S. and abroad, monetize non-strategic intellectual property, fairly resolve legacy liabilities, and enable the Company to focus on its most valuable business lines. The Company has made pioneering investments in digital and materials deposition technologies in recent years, generating approximately 75% of its revenue from digital businesses in 2011.

Kodak has obtained a fully-committed, $950 million debtor-in-possession credit facility with an 18-month maturity from Citigroup to enhance liquidity and working capital. The credit facility is subject to Court approval and other conditions precedent. The Company believes that it has sufficient liquidity to operate its business during chapter 11, and to continue the flow of goods and services to its customers in the ordinary course.

Kodak expects to pay employee wages and benefits and continue customer programs. Subsidiaries outside of the U.S. are not subject to proceedings and will honor all obligations to suppliers, whenever incurred. Kodak and its U.S. subsidiaries will honor all post-petition obligations to suppliers in the ordinary course.

“Kodak is taking a significant step toward enabling our enterprise to complete its transformation,” said Antonio M. Perez, Chairman and Chief Executive Officer. “At the same time as we have created our digital business, we have also already effectively exited certain traditional operations, closing 13 manufacturing plants and 130 processing labs, and reducing our workforce by 47,000 since 2003. Now we must complete the transformation by further addressing our cost structure and effectively monetizing non-core IP assets. We look forward to working with our stakeholders to emerge a lean, world-class, digital imaging and materials science company.”

“After considering the advantages of chapter 11 at this time, the Board of Directors and the entire senior management team unanimously believe that this is a necessary step and the right thing to do for the future of Kodak,” Mr. Perez continued. “Our goal is to maximize value for stakeholders, including our employees, retirees, creditors, and pension trustees. We are also committed to working with our valued customers.

“Chapter 11 gives us the best opportunities to maximize the value in two critical parts of our technology portfolio: our digital capture patents, which are essential for a wide range of mobile and other consumer electronic devices that capture digital images and have generated over $3 billion of licensing revenues since 2003; and our breakthrough printing and deposition technologies, which give Kodak a competitive advantage in our growing digital businesses.”

Mr. Perez concluded, “The Board of Directors, the senior management team and I would like to underscore our appreciation for the hard work and loyalty of our employees. Kodak exemplifies a culture of collaboration and innovation. Our employees embody that culture and are essential to our future success.”

Kodak has taken this step after preliminary discussions with key constituencies and intends to work toward a consensual reorganization in the best interests of its stakeholders. Kodak expects to complete its U.S.-based restructuring during 2013.

The Company and its Board of Directors are being advised by Lazard, FTI Consulting Inc. and Sullivan & Cromwell LLP. In addition, Dominic DiNapoli, Vice Chairman of FTI Consulting, will serve as Chief Restructuring Officer to support the management team as to restructuring matters during the chapter 11 case.

More information about Kodak’s Chapter 11 filing is available on the Internet at www.kodaktransforms.com. Information for suppliers and vendors is available at (800) 544-7009 or (585) 724-6100.

Kodak will be filing monthly operating reports with the Bankruptcy Court and also plans to post these monthly operating reports on the Investor Relations section of Kodak.com. The Company will continue to file quarterly and annual reports with the Securities and Exchange Commission, which will also be available in the Investor Relations section of Kodak.com.

55 Comments

  1. Continuing on>

    2. build cameras that everyone wants. I would wager a full frame digital camera the size of a Kodak Retina III would sell if it had a schneider lens. Especially if the lenses were interchangeable I see all these little small sensor cameras. I want to see a small full frame camera. The M9 isn’t small enough. A Leica IIIf/g sized full frame digital camera is what I want.

    3. Release better versions of their transparency film with very slow ISO’s I mean ISO 25 with better colour and saturation than Velvia suited for landscapes. Digital works great at high ISO but at low ISO with hyper detail and colour, there is just no one in the area. Surely that must be within technical reach for some mediums and there must be some demand. Love your images Steve but I wonder if they could be out of sight if you could should in daylight with high quality 25 ISO imaging material be it digital or film.

    4. Rationalise the labour force and improve service. If film is to be sold, Sell film and support private labs to give a 2 hour turnaround time for processing and scanning. Aim it at professional use. Consumer use of the film I think is gone.

    5. Kodak still leads with negative film over fuji but just only. Build on the strength and make it better. Set world prices not US prices and other prices for your products

    6. Sponsor sports and event photographers to shoot with film and highlight what it can do over digital. Encourage commercial use of the products you have on the basis that it is a better product and produces better results over the digital counterparts, but make them competative. But don’t forget its a digital world out there. Get the data and find out what people really want from their photography.

  2. Alas poor Kodak, we knew them Horatio.

    kodak has lost its way. It needs to catch up with the times. If I ran Kodak I would do the following:

    1.Buy out Nokia and learn how to put Kodak sensors in mobile phones.
    2.

  3. They are filing chapter 11, which means reorganization. Not chapter 7, which means they’re going under.
    Panicking about the future of Kodak now would basically start a bank run, resulting in people calling it prematurely, which results in less sales of Kodak film because, why buy from a company that is so clearly going to die?
    Film is the only profitable part of Kodak. Kodak would kill itself if it stopped selling film, simply because their attempts to branch out have fallen flat on their faces OR they sold them (Selling their sensor division so they could “Become a more digital company”… wtf?)

    If I recall correctly, Ilford filed the British version of Chapter 11 a few years ago, and they’ve bounced back very well.

    I have no attachment to the company emotionally so I am not verbalizing my wishes instead of the reality. It’d probably be cheaper for me to buy lots of the triple packs of HP5 instead of Tri-X, and it’d offer me more control to use DD-X (13 or so rolls per bottle since it’s 1+4) than it would for me to mix up a huge batch of XTOL and try keep it from oxidizing (33 rolls or so per 5 liters at 1+1), but I like the products that Kodak puts out and the results it gives me, and will carry on using those products until Kodak or I cease to exist, and I urge any fellow Kodak shooters please carry on buying them at a time where market input is probably at a time of utmost importance in regards to the future of the company.

    Worse comes to worse, Ilford will be there and they have literature to help ease the transition: http://www.ilfordphoto.com/products/page.asp?n=10

  4. It is hard for us old guys to get our head round the fact that Kodak is in such financial trouble. To us back in the days Kodak was photography.

    Very sad, and I hope some good comes from all of this financial re-structuring, but I doubt it with Fujifilm being the new visionary.

  5. It could turn out to be a good thing- it could possibly be equated with taking all the dead branches out of a huge and very old tree. Just hope some one doesn’t cut off the film branch.

    • Now that would be cool – however, not sure if labs would gear up for the processing…truthfully, E100G is better in my opinion as well as the film that knocked Kodachrome out, Velvia.

      Funny, Paul Simon lamented about “the greens of summer” and it was the actual “greens” in Velvia that so many landscape guys absolutely loved and almost switched overnight for.

      • I agree re. the Paul Simon comment – Fuji was always better in that department.

        Evidence suggests he is probably a better musician than he is a photographer!

        I think both current Kodak and Fuji slide film is equal to Kodachrome in terms of colour but comparing them I feel a good ‘chrome’ always takes it in terms of ultimate sharpness, acuity, etc.

        Kodachrome has a virtual 3D element, due to it’s unique construction, that few can match.

        As to the processing issue, I’d envisage any commercial rights buy-out would take both manufacturing and processing out to the Far East or India – or any Third World sector really – primarily because of high costs.

        I think it possible that Kodak canned USA Kodachrome facilities because it could not, or would not, envisage a move in it’s processing to China, Korea, Vietnam …. Nigeria ….?

    • Rob, I’d say the chances are very good we’ll see something like that. Kodak plans to sell off most of its patents and the film business doesn’t bring in much at all any longer.

    • Polaroid didn’t though, without kodak machines and processes will illford/fuji even be able to make kodak film to spec?

      • Yup…they will use the Kodak machines or make new ones…no biggie. Relax y’all, because MILLIONS of people STILL prefer and shoot film, the market will still be there, Kodak or not.

        Fuji and Ilford make plenty of great emulsions as there will always be a market for them. As good as digital is, it will never replace the magical qualities of film.

        From what I hear, Hollywood isn’t completely sold on digital for the same reasons still photographers are not: yes while memory is essentially free, it still looks like a frickin’ digital image, post processing be damned.

        Anyone hear remember the opening scene to “Pale Rider”? Imagine that shot with a digital sensor…it would probably look like a documentary instead of a m-o-v-i-e.

        • Not to mention that the film division might be the only profitable part of Kodak right now. That’s right, read that first sentence again.

          Stockpiling is kind of stupid. If everyone does it, it creates a huge blip in sales, and then sales dry up, which is worse news if they do ramp up production to meet the perceived demand. Buy fresh, shoot and process regularly. Yes, it’s expensive, but you can’t kill off your passion with your practises and then complain that it got killed off.

  6. The movie industry is facing a dilemma and they will probably step in to ensure that there is no disruption. Yes, digital is advancing, but much is still done on film. For the consumer division, things will proceed normally for a while but who knows what the future will bring. In the meantime, I did buy 1000 rolls of Tri-X 120. At least I can still have a few more years of work left with my favorite film stock.

    • Some say the true death of film won’t be until the movie industry goes 100% digital. But, there are many companies who continue to produce fine B&W films like Adox, Effke, Fomopan, Ilford, and Fuji. I think the B&W market will live forever and somehow, some way, the Portras and Ektars we love will still be here.

      1,000 rolls – dang!

  7. I went to school in Rochester and took a field trip to Kodak a few years ago. It seemed to be in a bad condition then. I guess the problems intensified over this tough economic time.

  8. Sad, but inevitable, given recent management. George Eastman must be turning in his grave.

    He was the visionary who foresaw the commercial potential of mass photography. Kodak virtually invented the bare bones of (useable) digital technology … then watched as others took it and ran away with the market.

    Trying to apply a film based business model to a digital market was suicidal. No amount of ink, paper & printer sales can compete with the former consumable film sales profits.

    Eastman did not invent film photography – crucially, he figured out how to sell it to the masses.

    Shame Kodak forgot to do the same before it ‘launched’ digital products and effectively torpedoed their former market sector!

  9. They invented the digital camera (Steven Sasson, 1975). Then they invented the Bayer filter (Bryce Bayer, 1976). Ten years later, it was the first megapixel sensor (1986) and the multi-layer OLED (1987).

    With such a head start in digital imaging, they could have been today’s Fujifilm, kept innovating and pushing sensors’ science further. Something, somewhere, went wrong; probably decisions for the short term driven by shareholder pressure (the politically correct word is “lack of vision”).

  10. It only seems like yesterday that I was buying Kodachrome 64 in 35mm and 120 formats. I may even have some still in the bottom of the fridge some where.

    • I certainly have – perhaps a rights buy-out will see a resurrection of Kodachrome processing …. plus ‘new’ Kodachrome coming out of a factory somewhere ….

      Fingers crossed!

  11. Just a couple of points of information:

    1) Kodak no longer makes sensors. They sold that business to a private-equity firm late last year.

    2) There isn’t much left to Kodak’s film business. Not only have most consumers and professionals moved on to digital (with some notable exceptions), but Hollywood is now finally abandonng film for digital as well. Perhaps some of Kodak’s best remaining films will be sold off and we’ll still get them under an Asian or Eastern European label.

    So what’s left? Third-rate consumer cameras made by a third party in China? Kodak says printers and papers are its future – just in time for the paperless promise of digital photography to come to full fruition.

    Kodak may make it through Chapter 11, raise cash through the sale of its patents and hang around for a few more years. But, barring a surprise breakthrough by the company, I suspect it will ultimately end up sold or merged… with the Kodak name ending up on cheap products the way Polaroid is now.

    I hope I’m wrong and Kodak pulls off a magnificent reinvention of itself. But I wouldn’t put money on it. Yes, you can blame the company’s downfall on management arrogance and/or paralysis. But the market turnaround after the point at which digital finally gained traction (after having existed for some 25 years) did happen VERY quickly. For Kodak, it was the perfect storm – one that may have been impossible to survive. There are a lot of instant experts who think they can explain Kodak’s predicament in a single sentence. The truth is, it’s not that simple.

    Nonethless, we should all thank Kodak – the Microsoft, Apple, Intel, and IBM of its day – for all it has given the world since 1889.

    • Steve

      It is fairly simple. Kodak, like ATT before them (that would be the original ATT and not the former Baby Bel that is now named ATT), their management was their own worst enemy. Without having a near monopoly their size worked against them, and they believed their own press, but could not or would not react fast enough.

      Kodak was known as the great yellow father, as much for their attitude of they know what is best for the customer, as well as for their product innovations.

  12. Kodak was instrumental in developing digital photography, however, due to management’s insistence on quarterly results they were incredibly short sighted and ran their business into the ground 3 months at a time.

    It is the way a lot of large companies are set up. If you don’t innovate for fear cannibalizing your own products, someone else will. Proof that organizational inertia is a powerful and destructive force.

    Kodak had all the tools to remain relevant for the next century. They squandered it.

    I hope they can salvage their business.

  13. kodak lost their vision once digital became a reality , instead of embracing it they ignored it ! and now no more kodak …..oh well no more kodak film !

    • They didn’t ignore it, they feared it. They thought they would unleash their own enemy that would eat their film business. That kind of thinking only works in a vacuum.

  14. If I’m not mistaken, doesn’t the M8, M8.2, M9 and other Leica camera use Kodak imaging devices for creation of their digital images? Poor management will alway bankrupt good companies.

      • Kodak sold their digital sensor making division a couple of months ago. As long as the buyer gives their management team clear direction, gives them the tools they need and does some necessary house cleaning, Leica’s sensor supply chain should be in good shape. Time will tell.

        PaulB

  15. Just yesterday, out of the blue, I decided to throw out a couple of boxes of old Kodak slide films and paper I’ve had hanging around for years – figured I probably wouldn’t need it any more. This morning I woke up to find Kodak had filed for bankruptcy – interesting bit of syncronicity!

  16. Hey hey slow down folks, no one said the Kodak will close down completely as a company remember that is less than 3 years ago:

    Sep 9, 2009 – The KODAK KAF-18500 Image Sensor was developed specifically for the newly announced LEICA M9 p lus Kodak makes medium format sensors too.

    Basically what this all means they will have a huge reorganization, very likely Kodak will soon eventually stop producing film, yeap that sucks, but we might have a lead company in the world in sensor manufacturing in a couple of years…

      • Or how about a Fuji sensor…..
        I have a theory that the X-Pro1 was APS-C because of some sort of arrangement with Leica to supply them a full frame sensor for the M10…

        Of course I’m wrong about most things…but you never know!

        • Hmm, there is supposed to be coming a ‘larger than FF’ sensor mirrorless option as well, and that one should put any M-system to shame. Don’t think Leica would have much problem with a Full-Frame X-pro when there’s word on that.

      • Indeed the new sony sensor sound look very promising! I truly hope they use it. I’m sure that anything that greatly improves ISO noise and reduces battery consumption will be very welcome to new Leica M users 🙂

  17. Bankruptcy does not equal dead! This could be a good thing for Kodak the company! They can shed costs and restructure themselves into a profitable company. They have a brighter potential now than they did yesterday. My heart goes out to the employees and the jobs that will not survive this process.

  18. A great company that has been poorly run for at least the last decade and a half.

    My hope is that they are able to offload their non performing assets and restructure effectively using the Chapter 11 provisions.

    AK

    • I don’t really care about a lot of their patents, etc. Likely funds set up by lawyers will purchase them.

      I hope they can sell their film division to someone who knows how to manage it.

  19. Due to a lack of leadership and no vision a wonderful iconic company is heading to the grave. If my memory serves me correctly I believe they were a leader in introducing a digital back on a top end Nikon body. Secondly they should have owned the digital printing industry with their excellent experience with paper know how. They should be the Epson of today.

    I’m sure there are many top notch Kodak employees that had the ideas and where with all to have been able to make this happen. But like many past failed American companies, if it wasn’t a senior manager’s idea it didn’t happen. They did all they could to protect their own turf or said it couldn’t be done. Now they are all done.

    • I think you are right!

      As far back as 1976 one of their employees wrote a memo stating digital photography would take over.

      The only thing he got “wrong” was that it would happen in 2010 🙂

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