The company also delivered a $271 million increase in digital earnings for the full year. Significantly, digital earnings growth for the year exceeded the traditional earnings decline for the first time in the company’s history.
On the basis of generally accepted accounting principles (GAAP), the company reported fourth-quarter earnings from continuing operations of $17 million, or $0.06 per share. Items of net expense that impacted comparability totaled $152 million, or $0.53 per share. The most significant items included a restructuring charge of $69 million after tax, or $0.24 per share, and $89 million after tax, or $0.31 per share, to record a valuation allowance against deferred tax assets in various international entities.
For the fourth quarter of 2006:
* Sales totaled $3.821 billion, a decrease of 9% from $4.197 billion in the fourth quarter of 2005. Digital revenue totaled $2.449 billion, a 5% decrease from $2.587 billion in the prior-year quarter, consistent with the company’s focus on improving digital profit margins. Traditional revenue totaled $1.357 billion, a 15% decline from $1.592 billion in the fourth quarter of 2005.
* The GAAP earnings from continuing operations were $17 million, or $0.06 per share, compared with a GAAP loss from continuing operations of $137 million, or $0.48 per share, in the year-ago period. The year-ago results included comparability items of expense totaling $1.02 per share.
* The company’s fourth-quarter earnings from continuing operations, before interest, other income (charges), net, and income taxes were $222 million, compared with a loss of $171 million in the year-ago quarter.
* Digital earnings for the fourth quarter were $271 million, an increase of $130 million compared with the year-ago quarter, and benefited from a number of items. The company generated significant earnings growth in its Graphic Communications business and achieved operational improvements in its Consumer Digital Group, including a year-over-year increase in income from licensing arrangements, which reflects the company’s continuing progress in generating returns from its intellectual property.
“I am extremely pleased with our performance in 2006 and our progress in implementing our digital business model,” said Antonio M. Perez, Chairman and Chief Executive Officer, Eastman Kodak Company. “Our digital earnings greatly exceeded traditional earnings in the fourth quarter. Profit margins expanded in the sizeable digital businesses that we have assembled, debt declined by more than $800 million in 2006, and the year ended with a strong cash position. We intend to conclude our restructuring this year, as part of the creation of a digital company with sustainable revenue and profit growth.”
