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Kodak set to feel the shutter fall
January 20, 2012, Friday
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Eastman Kodak Co, inventor of the hand-held camera and the company that helped bring the world the first pictures from the moon, has filed for bankruptcy protection, capping a prolonged decline for one of America's best-known companies.
The photographic film pioneer, which had tried to restructure to become a seller of consumer products, said it had also obtained a US$950 million, 18-month credit facility from Citigroup to keep it going.
The loan and bankruptcy protection may give Kodak the time it needs to find buyers for some of its 1,100 digital patents, the key to its remaining value, and to reshape its business while continuing to pay its 17,000 workers.
"The board of directors and the entire senior management team unanimously believe this is a necessary step and the right thing to do for the future of Kodak," Antonio Perez, the company's chairman and chief executive, said.
"Now we must complete the transformation by further addressing our cost structure and effectively monetizing non-core intellectual-property assets. We look forward to working with our stakeholders to emerge a lean, world-class, digital imaging and materials science company," he added.
At the end of September, the group had total assets of US$5.1 billion and liabilities of US$6.75 billion.
Kodak said its non-US subsidiaries were not covered by the bankruptcy filing and would continue to honor all obligations to their suppliers.
Kodak once dominated its industry and its film was even the subject of a popular Paul Simon song, but it failed to embrace more modern technologies quickly enough, such as the digital camera - ironically, a product it invented.
Its downfall hit its hometown of Rochester, New York, with employment there falling to about 7,000 from more than 60,000 in Kodak's heyday.
Its market value has sunk to below US$150 million from US$31 billion 15 years ago.
In recent years, Perez has steered Kodak's focus more toward consumer and commercial printers. But that failed to restore annual profitability, something Kodak has not seen since 2007, or arrest a cash drain that has made it difficult for Kodak to meet its substantial pension and other benefits obligations to its workers and retirees.
Perez said bankruptcy protection would enable Kodak to continue to work to maximize the value of its technology assets, such as digital-imaging patents that it says are used in virtually every modern digital camera, smart phone and tablet. The company has also built up patented printing technology.
Kodak said it was being advised by investment bank Lazard Ltd, which has been helping Kodak look for a buyer for its digital patents.
Other advisers included business-turnaround specialist FTI Consulting Inc, whose Vice Chairman Dominic DiNapoli would serve as chief restructuring officer for Kodak, supporting existing management.
In the past few years, Kodak has used extensive litigation with rivals such as Apple, BlackBerry maker Research in Motion Ltd and Taiwan's HTC Corp over those patents as a means to try to generate revenue.
Those patents may now be sold through the bankruptcy process.
George Eastman, a high school dropout from upstate New York, founded Kodak in 1880, and began to make photographic plates. To get his business going, he splurged on a second-hand engine for US$125.
Within eight years, the Kodak name had been trademarked, and the company had introduced the hand-held camera as well as roll film, where it became the dominant producer.
Eastman also introduced the "Wage Dividend" in which the company would pay bonuses to employees based on results.
Nearly a century after Kodak's founding, astronaut Neil Armstrong used a Kodak camera the size of a shoebox to take pictures as, in 1969, he became the first man to walk on the moon.
Those pictures arguably had more viewers than the 80 films that have won Best Picture Oscars and were shot on Kodak film.
Six years after Armstrong's walk, and not long after Simon told his mama not to take his Kodachrome away, Kodak invented the digital camera.
The size of a toaster, it was too big for amateur photographers, whose pockets now are stuffed with digital offerings from the likes of Canon, Casio and Nikon.
But rather than develop the digital camera, Kodak put it on the back-burner and spent years watching rivals take market share it would never reclaim.
Kodak Snapshots
1879: George Eastman, founder of Kodak, invents an emulsion-coating machine, becoming one of the first people to mass-produce photographic dry plates.
1881: In January, Eastman and his friend Henry A. Strong form a partnership known as the Eastman Dry Plate Company, which is the predecessor of the Eastman Kodak Company.
1888: The name "Kodak" is born and the Kodak camera is introduced to the market, marking the birth of snapshot photography, as practiced by millions of amateurs today.
1975: Kodak invents the world's first digital camera.
1981: Kodak's annual sales exceed the US$10 billion milestone and cement its leading position among imaging and photographic equipment makers.
2005: From this year until 2010, Kodak's sales fall by half to US$7.2 billion.
2011: From July, Kodak tries to sell 1,100 digital-filming patents in a bid to inject some cash into the company whose losses since 2008 have surpassed US$1.76 billion.
2012: Kodak files for bankruptcy protection on January 19.
The photographic film pioneer, which had tried to restructure to become a seller of consumer products, said it had also obtained a US$950 million, 18-month credit facility from Citigroup to keep it going.
The loan and bankruptcy protection may give Kodak the time it needs to find buyers for some of its 1,100 digital patents, the key to its remaining value, and to reshape its business while continuing to pay its 17,000 workers.
"The board of directors and the entire senior management team unanimously believe this is a necessary step and the right thing to do for the future of Kodak," Antonio Perez, the company's chairman and chief executive, said.
"Now we must complete the transformation by further addressing our cost structure and effectively monetizing non-core intellectual-property assets. We look forward to working with our stakeholders to emerge a lean, world-class, digital imaging and materials science company," he added.
At the end of September, the group had total assets of US$5.1 billion and liabilities of US$6.75 billion.
Kodak said its non-US subsidiaries were not covered by the bankruptcy filing and would continue to honor all obligations to their suppliers.
Kodak once dominated its industry and its film was even the subject of a popular Paul Simon song, but it failed to embrace more modern technologies quickly enough, such as the digital camera - ironically, a product it invented.
Its downfall hit its hometown of Rochester, New York, with employment there falling to about 7,000 from more than 60,000 in Kodak's heyday.
Its market value has sunk to below US$150 million from US$31 billion 15 years ago.
In recent years, Perez has steered Kodak's focus more toward consumer and commercial printers. But that failed to restore annual profitability, something Kodak has not seen since 2007, or arrest a cash drain that has made it difficult for Kodak to meet its substantial pension and other benefits obligations to its workers and retirees.
Perez said bankruptcy protection would enable Kodak to continue to work to maximize the value of its technology assets, such as digital-imaging patents that it says are used in virtually every modern digital camera, smart phone and tablet. The company has also built up patented printing technology.
Kodak said it was being advised by investment bank Lazard Ltd, which has been helping Kodak look for a buyer for its digital patents.
Other advisers included business-turnaround specialist FTI Consulting Inc, whose Vice Chairman Dominic DiNapoli would serve as chief restructuring officer for Kodak, supporting existing management.
In the past few years, Kodak has used extensive litigation with rivals such as Apple, BlackBerry maker Research in Motion Ltd and Taiwan's HTC Corp over those patents as a means to try to generate revenue.
Those patents may now be sold through the bankruptcy process.
George Eastman, a high school dropout from upstate New York, founded Kodak in 1880, and began to make photographic plates. To get his business going, he splurged on a second-hand engine for US$125.
Within eight years, the Kodak name had been trademarked, and the company had introduced the hand-held camera as well as roll film, where it became the dominant producer.
Eastman also introduced the "Wage Dividend" in which the company would pay bonuses to employees based on results.
Nearly a century after Kodak's founding, astronaut Neil Armstrong used a Kodak camera the size of a shoebox to take pictures as, in 1969, he became the first man to walk on the moon.
Those pictures arguably had more viewers than the 80 films that have won Best Picture Oscars and were shot on Kodak film.
Six years after Armstrong's walk, and not long after Simon told his mama not to take his Kodachrome away, Kodak invented the digital camera.
The size of a toaster, it was too big for amateur photographers, whose pockets now are stuffed with digital offerings from the likes of Canon, Casio and Nikon.
But rather than develop the digital camera, Kodak put it on the back-burner and spent years watching rivals take market share it would never reclaim.
Kodak Snapshots
1879: George Eastman, founder of Kodak, invents an emulsion-coating machine, becoming one of the first people to mass-produce photographic dry plates.
1881: In January, Eastman and his friend Henry A. Strong form a partnership known as the Eastman Dry Plate Company, which is the predecessor of the Eastman Kodak Company.
1888: The name "Kodak" is born and the Kodak camera is introduced to the market, marking the birth of snapshot photography, as practiced by millions of amateurs today.
1975: Kodak invents the world's first digital camera.
1981: Kodak's annual sales exceed the US$10 billion milestone and cement its leading position among imaging and photographic equipment makers.
2005: From this year until 2010, Kodak's sales fall by half to US$7.2 billion.
2011: From July, Kodak tries to sell 1,100 digital-filming patents in a bid to inject some cash into the company whose losses since 2008 have surpassed US$1.76 billion.
2012: Kodak files for bankruptcy protection on January 19.
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