Kodak to wind down consumer inkjet sales; eyes exclusivity extension

By Caroline Salls

Pittsburgh, Sept. 28 - Eastman Kodak Co. has requested an extension through Feb. 28 of its exclusive right to file a plan of reorganization as it progresses toward emergence in the first half of 2013, according to a news release.

According to a motion filed Friday with the U.S. Bankruptcy Court for the Southern District of New York, the company is also seeking court approval to extend its exclusive plan vote solicitation period through April 30, 2013.

The exclusive plan-filing period is currently scheduled to expire on Oct. 15 and the solicitation period is scheduled to expire on Dec. 14.

In its motion, Kodak said it described the substantial progress it has made toward reorganization goals since filing for Chapter 11, including the successful stabilization of its business, the development of its emergence plan, significant operating improvements, the expansion of customer and vendor relationships and substantial cost reductions.

Printer sales wind-down

Consistent with its emergence strategy, Kodak said it has continued to manage its consumer inkjet business for profitability.

Starting in 2013, the company said it will focus that business on the sale of ink to its installed base and wind down sales of consumer inkjet printers.

Kodak said it expects this decision to significantly improve cash flow in the United States beginning in the first half of 2013.

"Kodak is making good progress toward emergence from Chapter 11, taking significant actions to reorganize our core ongoing businesses, reduce costs, sell assets and streamline our organizational structure," chairman and chief executive officer Antonio M. Perez said in the release.

"Steps such as the sale of personalized imaging and document imaging and the consumer inkjet decision will substantially advance the transformation of our business to focus on commercial, packaging & functional printing solutions and enterprise services.

"As we complete the other key objectives of our restructuring in the weeks ahead, we will be well positioned to emerge successfully in 2013."

New savings, charges

The company said it expects to begin realizing savings from its new, more strategically focused business, workforce reductions and other cost-reduction initiatives in the near term.

According to an 8-K filed with the Securities and Exchange Commission, the company currently expects to incur $90 million of total charges in connection with its plan to wind down consumer inkjet sales. The charges include $20 million of charges related to separation benefits, $32 million of non-cash related charges for accelerated depreciation and asset write-offs and $38 million in other cash related charges associated with this action.

Kodak said it estimates that about $9 million of the total charges for separation benefits will require cash expenditures and that the remainder will be provided in the form of special termination benefits from the company's defined benefit pension plans.

Kodak said in the news release that it continues its analysis of further operational and workforce reductions in an effort to streamline operations and generate profits.

A hearing on the exclusivity extension is scheduled for Oct. 17.

Kodak is a Rochester, N.Y.-based imaging technology products and services provider to the photographic and graphic communications markets. The company filed for bankruptcy on Jan. 19, 2012. Its Chapter 11 case number is 12-10202.

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