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Note 19 - Segment Information
 9 Months Ended
Sep. 30, 2021
Segment Reporting [Abstract]  
Segment Information

NOTE 19: SEGMENT INFORMATION

 

Kodak has four reportable segments: Traditional Printing, Digital Printing, Advanced Materials and Chemicals and Brand.  A description of Kodak’s reportable segments follows.

 

Traditional Printing: The Traditional Printing segment is comprised of Prepress Solutions.

 

Digital Printing: The Digital Printing segment is comprised of four lines of business: the Electrophotographic Printing Solutions business, the Prosper business, the Versamark business and the Kodak Software business.

 

Advanced Materials and Chemicals: The Advanced Materials and Chemicals segment is comprised of four lines of business: Industrial Film and Chemicals, Motion Picture, Advanced Materials and Functional Printing and Kodak Services for Business (“KSB”). KSB was sold to Swiss Post Solutions in December 2020.

 

Brand: The Brand segment contains the brand licensing business.

 

All Other: All Other is comprised of the operations of the Eastman Business Park, a more than 1,200-acre technology center and industrial complex.

Segment financial information is shown below:

 

Segment Revenues

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(in millions)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Traditional Printing

 

$

166

 

 

$

146

 

 

$

483

 

 

$

419

 

Digital Printing

 

 

58

 

 

 

56

 

 

 

184

 

 

 

173

 

Advanced Materials and Chemicals

 

 

55

 

 

 

44

 

 

 

155

 

 

 

124

 

Brand

 

 

4

 

 

 

3

 

 

 

10

 

 

 

8

 

All Other

 

 

4

 

 

 

3

 

 

 

11

 

 

 

8

 

Consolidated total

 

$

287

 

 

$

252

 

 

$

843

 

 

$

732

 

 

Segment Operational EBITDA and Consolidated Income (Loss) from Operations Before Income Taxes

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(in millions)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Traditional Printing

 

$

5

 

 

$

5

 

 

$

16

 

 

$

7

 

Digital Printing

 

 

(2

)

 

 

(3

)

 

 

(2

)

 

 

(8

)

Advanced Materials and Chemicals

 

 

—

 

 

 

(6

)

 

 

(3

)

 

 

(22

)

Brand

 

 

3

 

 

 

3

 

 

 

8

 

 

 

7

 

Total of reportable segments

 

 

6

 

 

 

(1

)

 

 

19

 

 

 

(16

)

All Other

 

 

—

 

 

 

—

 

 

 

1

 

 

 

—

 

Depreciation and amortization

 

 

(7

)

 

 

(9

)

 

 

(23

)

 

 

(29

)

Restructuring costs and other

 

 

—

 

 

 

(1

)

 

 

(1

)

 

 

(9

)

Stock based compensation

 

 

(2

)

 

 

(17

)

 

 

(6

)

 

 

(18

)

Consulting and other costs (1)

 

 

(4

)

 

 

(4

)

 

 

(13

)

 

 

(5

)

Idle costs (2)

 

 

(1

)

 

 

(1

)

 

 

(2

)

 

 

(2

)

Other operating (expense) income, net, excluding

    income from transition services agreement (3)

 

 

(1

)

 

 

—

 

 

 

6

 

 

 

6

 

Interest expense (4)

 

 

(9

)

 

 

(3

)

 

 

(23

)

 

 

(11

)

Pension income excluding service cost component (4)

 

 

25

 

 

 

26

 

 

 

76

 

 

 

79

 

Loss on early extinguishment of debt (4)

 

 

—

 

 

 

(2

)

 

 

-

 

 

 

(2

)

Other income (charges) net (4)

 

 

2

 

 

 

(432

)

 

 

1

 

 

 

(387

)

Consolidated income (loss) from operations before

   income taxes

 

$

9

 

 

$

(444

)

 

$

35

 

 

$

(394

)

 

 

(1)

Consulting and other costs are primarily professional services and internal costs associated with certain corporate strategic initiatives, investigations and litigation.

 

(2)

Consists of costs such as security, maintenance and utilities required to maintain land and buildings in certain locations not used in any Kodak operations and the costs, net of any rental income received, of underutilized portions of certain properties.

 

(3)

$1 million and $5 million of income from the transition services agreement with the purchaser of Kodak’s Flexographic Packaging Business was recognized in the three and nine months ended September 30, 2020, respectively.  No income has been recognized in 2021.  The income was reported in Other operating expense (income), net in the Consolidated Statement of Operations. Other operating expense (income), net is typically excluded from the segment measure. However, the income from the transition services agreement was included in the segment measure.

 

(4)

As reported in the Consolidated Statement of Operations.

 

Kodak decreased workers’ compensation reserves by approximately $1 million and $4 million in the three and nine months ended September 30, 2021, respectively, driven by changes in discount rates. The decrease in reserves in the three and nine months ended September 30, 2021 impacted gross profit by approximately $1 million and $3 million, respectively. Selling, general and administrative expenses (“SG&A”) were not impacted in the three months ended September 30, 2021 and were impacted by approximately $1 million in the nine months ended September 30, 2021.

 

Kodak increased workers’ compensation reserves by approximately $9 million in the third quarter of 2020 driven by changes in discount rates.  The increase in reserves in the third quarter of 2020 impacted gross profit by approximately $6 million, SG&A by approximately $2 million and R&D by approximately $1 million.

 

Segment Measure of Profit and Loss

Kodak’s segment measure of profit and loss is an adjusted earnings before interest, taxes, depreciation and amortization (“Operational EBITDA”).  

 

As demonstrated in the above table, Operational EBITDA represents the earnings (loss) from operations excluding the provision for income taxes; non-service cost components of pension and other postemployment benefits (“OPEB”) income; loss on early extinguishment of debt, depreciation and amortization expense; restructuring costs; stock-based compensation expense; consulting and other costs; idle costs; other operating (expense) income, net (unless otherwise indicated); interest expense and other income (charges), net.

 

Kodak’s segments are measured using Operational EBITDA both before and after allocation of corporate SG&A.  The segment earnings measure reported is after allocation of corporate SG&A as this most closely aligns with U.S. GAAP.  Research and Development activities not directly related to the other segments are reported within the Advanced Materials and Chemicals segment.