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Note 17 - Segment Information
 6 Months Ended
Jun. 30, 2023
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]

NOTE 17: 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 four lines of business: the Industrial Film and Chemicals business, the Motion Picture business, the Advanced Materials and Functional Printing business and the IP Licensing and Analytical Services business.

 

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

  

Six Months Ended

 
  

June 30,

  

June 30,

 

(in millions)

 

2023

  

2022

  

2023

  

2022

 

Print

 $215  $252  $424  $480 

Advanced Materials and Chemicals

  72   61   133   115 

Brand

  4   4   8   8 

All Other

  4   4   8   8 

Consolidated total

 $295  $321  $573  $611 

 

Segment Operational EBITDA and Consolidated Earnings from Operations Before Income Taxes

 

  

Three Months Ended

  

Six Months Ended

 
  

June 30,

  

June 30,

 

(in millions)

 

2023

  

2022

  

2023

  

2022

 

Print

 $8  $6  $14  $(1)

Advanced Materials and Chemicals

  11   1   11   (2)

Brand

  3   4   6   7 

Total of reportable segments

  22   11   31   4 

All other

  1   1   1   1 

Depreciation and amortization

  (8)  (7)  (16)  (14)

Restructuring costs and other

  (5)  —   (6)  — 

Stock based compensation

  (1)  (1)  (5)  (3)

Consulting and other costs (1)

  1   (3)  11   (5)

Idle costs (2)

  (1)  —   (1)  (1)

Other operating income (3)

  1   —   —   — 

Interest expense (3)

  (11)  (10)  (22)  (19)

Pension income excluding service cost component (3)

  41   27   81   57 

Other (charges) income, net (3)

  (3)  1   4   (2)

Consolidated earnings from operations before income taxes

 $37  $19  $78  $18 

 

(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 includes $1 million and $11 million of income in the three and six months ended June 30, 2023, respectively, representing insurance reimbursement of legal costs previously paid by the Company associated with investigations and litigation matters. Kodak received $16 million of insurance reimbursement proceeds in the first six months 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 decreased employee benefit reserves by approximately $1 million in the three months ended June 30, 2023, driven by changes in discount rates.  The change in employee benefit reserves in the six months ended June 30, 2023 was less than $1 million.

 

Kodak decreased workers’ compensation reserves by approximately $4 million and $8 million in the three and six months ended June 30, 2022, driven by changes in discount rates. The decrease in reserves in the three months ended June 30, 2022 impacted gross profit by approximately $2 million and Selling, general and administrative expenses (“SG&A”) by approximately $2 million. The decrease in reserves in the six months ended June 30, 2022 impacted gross profit by approximately $5 million and SG&A expenses by approximately $3 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 income, net and other (charges) income, 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.