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Note 16 - Segment Information
 3 Months Ended
Mar. 31, 2023
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]

NOTE 16: SEGMENT INFORMATION

 

Change in Segments 
Effective February 2023 Kodak changed its organizational structure. The Traditional Printing segment and the Digital Printing segment were combined into one segment, named the Print segment. No changes were made to Kodak's other segments. 

 

Kodak has three reportable segments: Print, Advanced Materials and Chemicals and Brand. A description of Kodak’s reportable segments follows.

 

Print: The Print segment is comprised of five lines of business: the Prepress Solutions business, the PROSPER business, the Software business, the Electrophotographic Printing Solutions business and the VERSAMARK business.

 

Advanced Materials and Chemicals: The Advanced Materials and Chemicals segment is comprised of three lines of business: Industrial Film and Chemicals, Motion Picture and Advanced Materials and Functional Printing.

 

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

 
  

March 31,

 

(in millions)

 

2023

  

2022

 

Print

 $209  $228 

Advanced Materials and Chemicals

  61   54 

Brand

  4   4 

All Other

  4   4 

Consolidated total

 $278  $290 

 

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

 

  

Three Months Ended

 
  

March 31,

 

(in millions)

 

2023

  

2022

 

Print

 $6  $(7)

Advanced Materials and Chemicals

  —   (3)

Brand

  3   3 

Total of reportable segments

  9   (7)

Depreciation and amortization

  (8)  (7)

Restructuring costs and other

  (1)  — 

Stock based compensation

  (4)  (2)

Consulting and other costs (1)

  10   (2)

Idle costs (2)

  —   (1)

Other operating expense (3)

  (1)  — 

Interest expense (3)

  (11)  (9)

Pension income excluding service cost component (3)

  40   30 

Other income (charges), net (3)

  7   (3)

Consolidated earnings (loss) from operations before income taxes

 $41  $(1)

 

(1)

Consulting and other costs are primarily professional services and internal costs associated with certain corporate strategic initiatives, investigations and litigation.  Consulting and other costs include $10 million of income in the three months ended March 31, 2023 representing insurance reimbursement of legal costs previously paid by the Company associated with investigations and litigation matters. Kodak received $15 million of insurance reimbursement proceeds in the first quarter of 2023, of which $5 million was recorded in Other current assets in the Consolidated Statement of Financial Position as of December 31, 2022.

 

(2)

Consists of third-party 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)

As reported in the Consolidated Statement of Operations.

 

Kodak increased employee benefit reserves by approximately $1 million in the three months ended March 31, 2023 composed of an increase in workers' compensation reserves ($2 million) driven by changes in discount rates and a decrease in other employee benefit reserves ($1 million), primarily driven by a reduction in bonus accruals. The increase in reserves in the three months ended March 31, 2023 impacted gross profit by approximately $1 million. 

 

Kodak decreased workers’ compensation reserves by approximately $4 million in the three months ended March 31, 2022, driven by changes in discount rates. The decrease in reserves in the three months ended March 31, 2022 impacted gross profit by approximately $3 million and Selling, general and administrative expenses 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; depreciation and amortization expense; restructuring costs and other; stock-based compensation expense; consulting and other costs; idle costs; interest expense, other operating expense, net and other income (charges), net.

 

Kodak’s segments are measured using Operational EBITDA both before and after allocation of corporate selling, general and administrative expenses ("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.