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Kodak Reports Continued Progress in Segment Profitability in Third Quarter



  Kodak Reports Continued Progress in Segment Profitability in Third Quarter

Company demonstrates success in reducing costs and focusing on most profitable
businesses

Business Wire

ROCHESTER, N.Y. -- October 30, 2012

Eastman Kodak Company reported today that it made continued performance
improvement in segment profitability for the third quarter of 2012 as a result
of tightened focus on the company’s most profitable customer accounts and
businesses and a substantial reduction in costs. The company’s focus on cost
reductions and profitability resulted in a decrease in selling, general and
administrative expenses of $63 million, a 24% reduction from the same period
in the prior year.

The segment operating loss for the third quarter was $37 million, an $87
million improvement from the prior year. The company’s gross profit margin
increased by 2 percentage points. On a GAAP basis, the third quarter loss from
continuing operations before interest expense, other income (charges), net,
reorganization items, net and income taxes was $193 million, compared to the
prior year quarter loss of $167 million. Excluding restructuring costs, the
operating loss was $76 million.

The company’s worldwide cash balance was $1.13 billion at the end of the third
quarter.  The company has submitted to the U.S. Bankruptcy Court for approval
an agreement with the Official Committee of Retired Employees that will
substantially reduce the company’s payments for non-pension benefits for U.S.
retirees, beginning in 2013, an action that would save the company about $100
million in cash expenditures next year (prior to reduction for appropriate
expenses related to the agreement).

Kodak’s revenue of $1.018 billion in the third quarter represented a decline
of 19% from the year-ago quarter. This reduction reflects strategic decisions
to focus on profitable businesses and accounts, lower sales of traditional
products, unfavorable foreign exchange impact, and soft industry demand as a
result of the broader economic downturn in some businesses and regions. The
net loss for the quarter was $312 million. Excluding restructuring and
reorganization costs, the loss would have narrowed to $139 million, an
improvement of $66 million over the prior-year quarter.

“Since our Chapter 11 filing in January, we have focused on the businesses
that are core to our future strategic direction and exited businesses that
were unprofitable,” said Antonio M. Perez, Chairman and Chief Executive
Officer. “The actions we are taking in response to economic and market
conditions are working and will position us to emerge in 2013 as a growing,
profitable, sustainable company.”

A full disclosure of Kodak’s quarterly performance is contained in a 10-Q
report filed today with the U.S. Securities and Exchange Commission.

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, 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 most recent Annual Report on Form 10-K for the year ended December
31, 2011, Quarterly Reports on Form 10-Q for the quarters ended March 31,
2012, June 30, 2012 and September 30, 2012, under the headings "Business",
"Risk Factors", "Management's Discussion and Analysis of Financial Condition
and Results of Operations-Liquidity and Capital Resources" and those described
in filings made by the Company with the U.S. Bankruptcy Court for the Southern
District of New York and in other filings the Company makes with the SEC from
time to time, as well as the following: the Company’s ability to successfully
emerge from Chapter 11 as a profitable sustainable company; the ability of the
Company and its subsidiaries to develop, secure approval of and consummate one
or more plans of reorganization with respect to the Chapter 11 cases; the
Company’s ability to improve its operating structure, financial results and
profitability; the ability of the Company to achieve cash forecasts, financial
projections, and projected growth; our ability to raise sufficient proceeds
from the sale of businesses and non-core assets; the businesses the Company
expects to emerge from Chapter 11; the ability of the company to discontinue
certain businesses or operations; the ability of the Company to continue as a
going concern; the Company’s ability to comply with the Earnings Before
Interest, Taxes, Depreciation and Amortization (EBITDA) covenants in its
Debtor-in-Possession Credit Agreement; our ability to obtain additional
financing; the potential adverse effects of the Chapter 11 proceedings on the
Company's liquidity, results of operations, brand or business prospects; the
monetization of our digital imaging patent portfolio; the outcome of our
intellectual property patent litigation matters; the Company's ability to
generate or raise cash and maintain a cash balance sufficient to comply with
the minimum liquidity covenants in its Debtor-in-Possession Credit Agreement
and to fund continued investments, capital needs, restructuring payments and
service its debt; our ability to fairly resolve legacy liabilities; the
resolution of claims against the company; our ability to retain key
executives, managers and employees; our ability to maintain product
reliability, innovation 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. 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 document, 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.

Eastman Kodak Company

Third Quarter 2012 Financial Results

Non-GAAP Reconciliation

Within the Company's third quarter 2012 earnings release, reference is made to
the non-GAAP financial measures of segment operating loss, operating loss
excluding restructuring costs, and net loss excluding restructuring and
reorganization items, net.

The Company believes that these non-GAAP measures represent important internal
measures of performance. Accordingly, they are provided to give the same
financial data management uses with the belief that this information will
assist the users of it in properly assessing the underlying performance of the
Company.

The following reconciliations are provided with respect to terms used in the
October 30, 2012, earnings release.

The following table reconciles segment operating loss to the most directly
comparable GAAP measure of loss from continuing operations before interest
expense, other income (charges), net, reorganization items, net and income
taxes (amounts in millions):

                                                Q3         Q3        
                                                2012       2011       Change
                                                                       
Segment loss, as presented                      $ (37  )   $ (124 )   $ 87
Restructuring costs and other (including
restructuring related expenses reported in        (126 )     (18  )     (108 )
cost of sales)
Corporate components of pension and OPEB          (34  )     (13  )     (21  )
expense
Other operating (expenses) income, net            4          (12  )     16    
Loss from continuing operations before
interest expense, other income (charges),       $ (193 )   $ (167 )   $ (26  )
net, reorganization items, net and income
taxes (GAAP basis), as presented

The following table reconciles operating loss excluding restructuring costs to
the most directly comparable GAAP measure of loss from continuing operations
before interest expense, other income (charges), net, reorganization items,
net and income taxes (amounts in millions):

                                                                       Q3
                                                                       2012
                                                                        
Operating loss, as presented                                           $ (76)
Restructuring costs and other                                            (117)
Loss from continuing operations before interest expense, other
income (charges), net, reorganization items, net and income taxes      $ (193)
(GAAP basis), as presented

The following table reconciles net loss excluding restructuring costs and
reorganization items, net to the most directly comparable GAAP measure of net
loss (amounts in millions):

                                                Q3         Q3        
                                                2012       2011       Change
                                                                       
Net loss before restructuring and               $ (139 )   $ (205 )   $ 66
reorganization items, net as presented
Restructuring costs and other                     (117 )     (17  )   $ (100 )
Reorganization items, net                         (56  )     -          (56  )
Net loss (GAAP basis), as presented             $ (312 )   $ (222 )   $ (90  )

Contact:

Eastman Kodak Company
Christopher Veronda, +1-585-724-2622
christopher.veronda@kodak.com
Krista Gleason, +1-585-724-5952
krista.gleason@kodak.com
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