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Note 26 - Segment Information
 12 Months Ended
Dec. 31, 2023
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]

NOTE 26: SEGMENT INFORMATION

 

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. Asset information by segment is not disclosed as this information is not separately identified and reported to the Chief Operating Decision Maker.

 

Net Revenues from Continuing Operations by Reportable Segment

 

  

Year Ended December 31,

 
  

2023

  

2022

  

2021

 

(in millions)

            

Print

 $828  $938  $908 

Advanced Materials and Chemicals

  255   234   212 

Brand

  17   17   15 

Total of reportable segments

  1,100   1,189   1,135 

All Other

  17   16   15 

Total

 $1,117  $1,205  $1,150 

 

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 table below, Operational EBITDA represents the earnings (loss) from continuing operations before income taxes excluding non-service cost components of pension and other postemployment benefits income; depreciation and amortization expense; restructuring costs and other; stock-based compensation expense; consulting and other costs; idle costs; other operating income, net (unless otherwise indicated); interest expense; loss on early extinguishment of debt 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.

 

2023 Segments

 

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. Prior year segment information was revised to conform with the new organizational structure.

 

Segment Operational EBITDA and Consolidated Earnings from Continuing Operations Before Income Taxes

 

  

Year Ended December 31,

 

(in millions)

 

2023

  

2022

  

2021

 

Print

 $20  $5  $4 

Advanced Materials and Chemicals

  10   (1)  (6)

Brand

  15   14   13 

Total of reportable segments

  45   18   11 

All Other

  2   3   2 

Depreciation and amortization

  (30)  (29)  (31)

Restructuring costs and other

  (10)  (13)  (6)

Stock-based compensation

  (7)  (5)  (7)

Consulting and other costs (1)

  13   2   (19)

Idle costs (2)

  (3)  (3)  (2)

Other operating (expense) income, net (3)

  (6)  1   6 

Interest expense (3)

  (52)  (40)  (33)

Pension income excluding service cost component (3)

  161   98   102 

Loss on early extinguishment of debt (3)

  (27)  —   — 

Other income (charges), net (3)

  1   (1)  5 

Consolidated earnings from continuing operations before income taxes

 $87  $31  $28 

 

(1)

Consulting and other costs are professional services and internal costs associated with corporate strategic initiatives, investigations and litigation.  Consulting and other costs included $15 million and $10 million of income in the year ended December 31, 2023 and 2022, respectively, representing insurance reimbursement of legal costs previously paid by the Company associated with investigations and litigation matters. Kodak received $20 million of insurance reimbursement in 2023 of which $5 million was recorded in Other current assets in the Consolidated Statement of Financial Position as of December 31, 2022. Kodak received $5 million of insurance reimbursement proceeds in the year ended 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

 

In 2023, Kodak decreased employee benefit reserves by $1 million primarily reflecting a reduction in workers’ compensation reserves of approximately $1 million driven by changes in discount rates.  The decrease in reserves in 2023 impacted SG&A by approximately $1 million. 

 

In 2022, Kodak decreased employee benefit reserves by $15 million composed of a reduction in workers’ compensation reserves of approximately $13 million driven by changes in discount rates and a decrease in other employee benefit reserves of approximately $2 million, driven by both changes in discount rates and favorable experience.  The decrease in reserves in 2022 impacted gross profit by approximately $9 million, R&D by approximately $1 million and SG&A by approximately $5 million. 

 

Kodak decreased workers’ compensation reserves by approximately $4 million in 2021 driven by changes in discount rates. The decrease in reserves in 2021 impacted gross profit by approximately $3 million and SG&A by approximately $1 million.

 

Amortization and depreciation expense by segment are not included in the segment measure of profit and loss but are regularly provided to the Chief Operating Decision Maker. 

 

(in millions)

 

Year Ended December 31,

 

Intangible asset amortization expense from continuing operations:

 

2023

  

2022

  

2021

 

Print

 $4  $4  $4 

Brand

  —   1   1 

Total

 $4  $5  $5 

 

(in millions)

 

Year Ended December 31,

 

Depreciation expense from continuing operations:

 

2023

  

2022

  

2021

 

Print

 $17  $17  $20 

Advanced Materials and Chemicals

  7   6   5 

All Other

  1   1   1 

Total

 $25  $24  $26 

 

(in millions)

 

Year Ended December 31,

 

Long-lived assets located in: (1)

 

2023

  

2022

 

The United States

 $112  $95 

Europe, Middle East and Africa

  6   9 

Asia Pacific

  5   6 

Canada and Latin America

  46   44 

Non-U.S. countries total (2)

  57   59 

Total

 $169  $154 

 

(1)

Long-lived assets are comprised of property, plant and equipment, net.

(2)

Of the total non-U.S. property, plant and equipment in 2023, $45 million was located in Brazil. Of the total non-U.S. property, plant and equipment in 2022, $41 million was located in Brazil.

 

Major Customers

 

No single customer represented 10% or more of Kodak’s total net revenue in any year presented.