Kodak Loss Holds Steady

It sees more red ink in 2006.
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Eastman Kodak's

(EK)

fourth-quarter loss narrowed slightly from a year ago and the company said its ongoing restructuring program will result in about $1 billion of red ink in 2006.

The company also said Robert Brust, its 62-year-old chief financial officer, will retire next January. It's searching for a successor.

Kodak lost $52 million, or 18 cents a share, in the quarter, compared with a loss of $59 billion, or 20 cents a share, last year. The latest quarter included a loss from continuing operations of $143 million, or 50 cents a share, offset by $148 million of discontinued earnings and a $57 million charge for an accounting change.

Numerous restructuring items affected the most recent quarter, including a $146 million charge related to accelerated depreciation; a $159 million charge for cost reductions; and a $7 million legal expense. Kodak's fourth-quarter sales rose 12% from last year to $4.20 billion. Analysts expected $4.19 billion.

Kodak's restructuring involves the reorientation of its business around digital products and away from traditional film. In the fourth quarter, Kodak said digital revenue rose 45% from a year ago to $2.67 billion, while traditional revenue fell 21% to $1.905 billion.

The company said 2006 revenue will fall somewhere in a range of 2% below to 4% above 2005's $14.27 billion; analysts surveyed by Thomson First Call were expecting $14.57 billion. Of that, digital revenue growth will be 16% to 22%, while digital earnings will be $350 million to $450 million.

On an earnings-from-operations basis, Kodak expects to lose $900 million to $1.1 billion in 2006, reflecting its restructuring. Kodak expects investable cash flow to be between $400 million and $600 million, with net cash provided by operating activities from continued operations of $800 million to $1.0 billion.

"We are now more than halfway through our transformation, and we have proven our ability to drive sales in digital markets and to generate the cash necessary to fund our growth," Kodak said. "We enter 2006 with solid momentum and a stronger emphasis on profitable growth. Our focus this year -- beyond digital revenue growth and cash generation -- will be expanding the margins of our digital businesses, now that we've amassed the scale necessary to be a market force. We are confident that we have the management and the strategies in place to achieve this goal and to generate value for our shareholders."