Eastman Kodak Company reported Wednesday that second-quarter net income, in accordance with Generally Accepted Accounting Principles (GAAP) in the U.S., totaled U.S. $0.39 per share and that sales were unchanged compared with the year-ago period.
Excluding the impact of previously announced focused cost reductions and other non-operational items, earnings from continuing operations were $0.60 per share, higher than the forecast of $0.25 to $0.35 per share that the company issued on June 18, Eastman said in a release. Relative to the June 18 forecast, the company said the actual results primarily reflect a more favorable sales mix of health imaging and traditional consumer products and services. Better-than-expected performance from joint ventures and a lower-than-expected tax rate also contributed to the difference between actual and forecasted results, it said.
For the second quarter of 2003, sales totaled $3.35 billion, unchanged from the second quarter of 2002. Excluding foreign exchange, sales declined 6 percent. The also company reported net income of $112 million, or $0.39 per share, compared with net income of $284 million, or $0.97 per share, in the second quarter of 2002.
"We are pleased to report quarterly earnings that are stronger than we had previously expected," said Daniel A. Carp, Kodak chairman and CEO. "Most of our businesses continue to perform well in a difficult economic environment."
He continued: "Our traditional consumer film and processing operations continue to face challenges associated with the increasing popularity of digital photography as well as persistent economic weakness, continuing price pressure and an associated decline in travel and tourism. Consumer adoption of digital photography is growing at a more rapid pace than a year ago, and this is trimming demand for consumer film. At the same time, we are seeing evidence that more consumers want to print their digital photos at retail and at home. This trend presents a huge opportunity for Kodak to generate profitable sales of our market-leading Picture Maker kiosks and inkjet paper, which will help offset declining sales from traditional film.
Given these developments, Mr. Carp said the company remains cautious about an upturn in the traditional consumer products and services for the balance of 2003.
Eastman’s segment results from continuing operations for the second quarter of 2003 are as follows:
Photography segment sales totaled $2.341 billion, down 2 percent. The segment had earnings from operations of $119 million on an operational and GAAP basis, compared with earnings from operations of $257 million a year ago. Highlights for the quarter included a 65-percent increase in consumer digital camera sales, and an 18 percent increase in sales of motion-picture origination and print film.
Health Imaging segment sales were $607 million, up 7 percent. Earnings from operations on an operational and GAAP basis for the segment were $131 million, up from $112 million in the year-ago period. Highlights included higher-than-expected sales of digital radiography, computed radiography and Picture Archiving and Communications Systems (PACS).
Commercial Imaging segment sales were $382 million, up 6 percent. Earnings from operations on an operational and GAAP basis were $40 million, compared with $53 million in the year-ago period.
All Other sales were $22 million, down from $28 million. Losses from operations on an operational and GAAP basis totaled $22 million, compared with losses of $6 million in the year-ago period. The All Other category includes the Kodak Display business, as well as Sensors, Optics and miscellaneous businesses.
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