Kodak 133 Years - Possible Bankruptcy

After 133 years, a bankruptcy and multiple reinventions - Kodak's latest snapshot is grim: The company says there’s “substantial doubt” it can stay in business. Kodak’s management raised serious concerns about its ability to continue operating over the next year. The warning stems from roughly $500 million in debt maturing within 12 months and the lack of committed financing to cover those obligations. Without new funding or successful refinancing, the company could default.

Deep strains in earnings - For the second quarter ended June 30, Kodak booked $263 million in revenue, which was down 1% from a year earlier. However, the real blow came from the bottom line: Profitability took a sharp hit compared to last quarter, with gross profit sinking 12% to $51 million, squeezing Kodak’s margins from 22% to 19%. What had been a $26 million profit in the same period last year flipped 180 degrees to a $26 million loss. Operational EBITDA slipped to $9 million from $12 million, as significantly lower sales volumes and surging manufacturing costs overwhelmed relatively modest price increases.

Cash reserves also slimmed down. Kodak ended the quarter with $155 million on hand, just $70 million of it in the U.S. That’s $46 million less than it had in December, drained by rising costs, and weaker operating results.

Kodak is counting on a somewhat random source of liquidity: terminating its U.S. Kodak Retirement Income Plan and using excess assets to pay down debt. It expects clarity by mid-August on how it will settle obligations to plan participants, and aims to complete the process by December.

Kodak’s long fall - Founded by George Eastman in the late 19th century, Kodak revolutionized photography by democratizing film, making cameras affordable for the masses. Its slogan—“You push the button, we do the rest”—became synonymous with convenient sentimentality. At its peak in the 1970s, Kodak controlled nearly 90% of U.S. film sales and 85% of the camera market.

Then the digital revolution upended the industry, and Kodak stumbled. In a twist of irony, it was a Kodak engineer who created the first digital camera—but, fearing the innovation would cannibalize their current product, the company sat on the invention. They bet on film being a source of nostalgia, even as digital cameras took over the market with a promise of even more convenience.