Driven by strong sales increases for key strategic technology products and intellectual property licensing payments, Eastman Kodak Company (NYSE: KODK) today reported net earnings of $19 million for the third quarter of 2014. Net earnings in the third quarter of 2013 were $1.99 billion as a result of a $2.21 billion reorganization item gain in that quarter. Operational EBITDA increased to $89 million in the third quarter from $42 million in the previous-year quarter.

Sales in the quarter were $564 million, up $1 million from the previous-year quarter, despite declines totaling $43 million in the Consumer Inkjet and Entertainment Imaging films mature businesses.

“Our first profitable quarter since our emergence is a milestone,” said Jeff Clarke, Chief Executive Officer. “Strategic technology product areas, especially in our graphics business, are showing momentum, and we continue to invest significantly in our technology and to build our installed base.

“However, Kodak continues to operate too closely to our breakeven point. While our costs are down, we will continue to reengineer processes, streamline our organization, and improve execution and accountability to accelerate and broaden our momentum.

“Our digital plates and CTP platesetter product lines delivered solid growth, with continuing robust growth in sales of KODAK SONORA Process Free Plates. Customers worldwide recognize the cost, workflow and environmental advantages offered by this product line, which eliminates use of water, chemistry and energy associated with processing of plates without sacrificing quality. We also showed strong growth for our unique packaging solution, the KODAK FLEXCEL NX System. Our KODAK PROSPER Systems had growth of more than 50% in pages printed.”

Chief Financial Officer John McMullen said, “Kodak is on track to meet guidance for 2014 revenue of $2.1 to $2.3 billion and Operational EBITDA of $145 to $165 million. Liquidity remains strong, with a cash balance of $744 million.”

Table 1: Kodak Earnings Summary

1Operational EBITDA is defined as Total Segment Earnings (Loss) plus depreciation and amortization expense, and excluding the reallocation of costs previously allocated to discontinued businesses, the impact of fresh start accounting, stock-based compensation expense and certain consulting costs. Total Segment Earnings (Loss) represents the company’s measure of segment earnings which excludes Restructuring costs, Reorganization items, net, the Corporate components of pension and OPEB expenses / income (as defined in the company’s public filings with regard to segment earnings information), other operating income (expense), net, and other income and expenses.

Graphics, Entertainment & Commercial Films (GECF): The GECF segment consists of the Graphics and Entertainment & Commercial Films groups, as well as Kodak’s intellectual property and brand licensing activities.

Table 2: GECF Segment Financial Overview

GECF segment sales were $400 million in the third quarter of 2014, an increase of 13% from the $353 million of the previous-year quarter.

A significant decline in motion picture film was more than offset by $51 million in non-recurring intellectual property licensing revenue. Unit volume in the digital plates business was up for the second quarter in a row, led by KODAK SONORA Process Free Plates. Combined with solid growth in computer-to-plate (CTP) platesetter sales, unit volume growth more than offset price erosion and resulted in a modest increase in revenue for the Pre-Press Solutions business.

Operational EBITDA for GECF improved in the quarter by $53 million to $89 million. The improvement in gross profit percent was driven by the gain in intellectual property and brand licensing, as well as manufacturing cost reductions in Graphics, primarily from positive comparisons as a result of fresh start accounting and lower material costs.

Digital Printing and Enterprise (DP&E): The DP&E Segment consists of Digital Printing, Packaging and Functional Printing, Enterprise Services & Solutions, and Consumer Inkjet Systems businesses.

Table 3: Digital Printing & Enterprise Segment Financial Overview

DP&E had sales of $164 million in the third quarter of 2014, a decline of 17% from the $198 million of the previous-year quarter, driven primarily by the decline in the Consumer Inkjet business.

Sales of KODAK FLEXCEL NX Products for package printing continued to enjoy strong growth in the quarter, on track with expectations, with revenue from FLEXCEL NX Plates up by 34%.

Operational EBITDA for the DP&E Segment declined from $6 million in the 2013 third quarter to zero in the 2014 quarter, largely as a result of the decrease in consumer inkjet ink sales. Gross profit percent remained essentially flat, with positive impacts from inventory revaluation as a result of fresh start accounting being offset by consumer inkjet ink sales constituting a lower percentage of the segment’s gross profit dollars, as well as lower sales of consumables in the digital printing business.

About Kodak

Kodak is a technology company focused on imaging for business. We provide innovative hardware, software, consumables and services to customers in graphic communications, packaging and functional printing. We also serve entertainment and commercial films markets. With our world-class R&D organization and extensive product portfolio, Kodak is helping customers around the globe to grow their own businesses in a sustainable way. For additional information on Kodak, visit us at kodak.com, follow us on Twitter @Kodak, or like us on Facebook at KodakNow.

CAUTIONARY STATEMENT PURSUANT TO SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This document includes “forward-looking statements” as that term is defined under the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning the Company’s plans, objectives, goals, strategies, future events, future revenue or performance, capital expenditures, liquidity, investments, financing needs, business trends, and other information that is not historical information. When used in this document, the words “estimates,” “expects,” “anticipates,” “projects,” “plans,” “intends,” “believes,” “predicts," “forecasts,” or future or conditional verbs, such as “will,” “should,” “could,” or “may,” and variations of such words or similar expressions are intended to identify forward-looking statements. All forward-looking statements, including, without limitation, management’s examination of historical operating trends and data are based upon the Company’s expectations and various assumptions. Future events or results may differ from those anticipated or expressed in these forward-looking statements. Important factors that could cause actual events or results to differ materially from these forward-looking statements include, among others, the risks and uncertainties described in more detail in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, under the headings “Business,” “Risk Factors,” and/or “Management’s Discussion and Analysis of Financial Condition and Results of Operations–Liquidity and Capital Resources,” the Risk Factors section of the Company's Report on Form 10-Q for the period ended September 30, 2014, and those described in other filings the Company makes with the SEC from time to time, as well as the following: the Company’s ability to improve and sustain its operating structure, financial results and profitability; the ability of the Company to achieve cash forecasts, financial projections, and projected growth; our ability to achieve the financial and operational results contained in our business plans; the ability of the Company to discontinue or sell certain non-core businesses or operations; the Company’s ability to comply with the covenants in its credit facilities; our ability to obtain additional financing if and as needed; any potential adverse effects of the Chapter 11 proceedings on the Company’s brand or business prospects; the Company’s ability to fund continued investments, capital needs, restructuring payments and service its debt; changes in foreign currency exchange rates, commodity prices and interest rates; the resolution of claims against the Company; our ability to attract and retain key executives, managers and employees; our ability to maintain product reliability and quality and growth in relevant markets; our ability to effectively anticipate technology trends and develop and market new products, solutions and technologies; and the impact of the global economic environment on the Company. There may be other factors that may cause the Company’s actual results to differ materially from the forward-looking statements. All forward-looking statements attributable to the Company or persons acting on its behalf apply only as of the date of this report on Form 10-Q and are expressly qualified in their entirety by the cautionary statements included in this document. The Company undertakes no obligation to update or revise forward-looking statements to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events.

APPENDICES

A. NON-GAAP MEASURES

In this third quarter financial results news release, reference is made to certain non-GAAP financial measures of Operational EBITDA.

The Company believes that these non-GAAP measures represent important internal measures of performance. Accordingly, where they are provided, it is to give investors the same financial data management uses with the belief that this information will assist the investment community in properly assessing the underlying performance of the company, its financial condition, results of operations and cash flow.

The following reconciliations are provided with respect to terms used in this third quarter financial results news release.

The following tables reconcile Operational EBITDA, Graphics, Entertainment and Commercial Films (“GECF”) Operational EBITDA, and Digital Printing and Enterprise (“DP&E”) Operational EBITDA to the most directly comparable GAAP measure of net loss (earnings) attributable to Eastman Kodak Company for the three months and nine months ended September 30, 2014 and 2013, respectively:

(1) Composed of interest cost, expected return on plan assets, amortization of actuarial gains and losses, amortization of prior service credits related to the U.S. Postretirement Benefit Plan and special termination benefits, curtailments and settlement components of pension and other postretirement benefit expenses, except for settlements in connection with the Chapter 11 bankruptcy proceedings that are recorded in Reorganization items, net and curtailments and settlements included in Earnings (loss) from discontinued operations, net of income taxes in the Consolidated Statement of Operations.

B. FINANCIAL STATEMENTS

The notes accompanying the Company’s third quarter 2014 Form 10-Q are an integral part of these consolidated financial statements.

The notes accompanying the Company’s third quarter 2014 Form 10-Q are an integral part of these consolidated financial statements.

The notes accompanying the Company’s third quarter 2014 Form 10-Q are an integral part of these consolidated financial statements.

The notes accompanying the Company’s third quarter 2014 Form 10-Q are an integral part of these consolidated financial statements.