Eastman Kodak Develops Digital Film: Fool by Numbers

By Motley Fool Contributors February 1, 2007

6 Recommendations

On Jan. 31, Eastman Kodak (NYSE: EK) released fourth-quarter earnings for the period ended Dec. 31.

Although net sales decreased by 9%, the company was able to turn a profit, albeit a small profit, for the first time since December of 2004.
The company is nearing the end of a large cost-reduction program, in effect since 2004, to transition it from traditional products and services to digital products and services. This restructuring program is estimated to bring savings of between $1.6 billion and $1.8 billion, and the company should fully benefit from these savings by the end of 2007.
Since the company has shifted its strategic outlook from traditional film products to a digital business model, digital earnings grew to $271 million, a 92.2% increase year over year.
Eastman Kodak is not picture-perfect to our Motley Fool CAPS community, with the company only receiving a one-star rating.

(Figures in millions, except per-share data)

Income Statement Highlights

	Q4 2006	Q4 2005	Change
Sales	$3,821	$4,197	(9.0%)
Earnings from Continued Operations	$17	($137)	N/A
EPS from Continued Operations	$0.06	($0.48)	N/A
Diluted Shares	287.5	287.2	0.1%

Get back to basics with a look at the income statement.

Margin Checkup

	Q4 2006	Q4 2005	Change*
Gross Margin	26.4%	23.0%	3.3
Operating Margin	5.8%	(4.1%)	9.9
Net Margin	0.4%	(3.3%)	3.7

*Expressed in percentage points.

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets	Q4 2006	Q4 2005	Change
Cash + ST Invest.	$1,469	$1,665	(11.8%)
Accounts Rec.	$2,669	$2,760	(3.3%)
Inventory	$1,202	$1,455	(17.4%)

Liabilities	Q4 2006	Q4 2005	Change
Accounts Payable*	$4,144	$4,187	(1.0%)
Long-Term Debt	$2,714	$2,764	(1.8%)

*Includes other current liabilities.

Learn the ways of the balance sheet.

Cash Flow Highlights

	FY 2006	FY 2005	Change
Cash From Ops.	$956	$1,208	(20.9%)
Capital Expenditures	$379	$472	(19.7%)
Free Cash Flow	$577	$736	(21.6%)

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Related Companies:

Canon (NYSE: CAJ)
Fujifilm (Nasdaq: FUJI)
Sony (NYSE: SNE)

Related Foolishness:

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