Kodak asks for Chapter 11 extension as it ditches desktop printers
By Simon Nias Friday, 28 September 2012
Eastman Kodak has asked for more time to file its Chapter 11 bankruptcy reorganisation plan as it announced the decision to wind down consumer inkjet printer sales from 2013.
Kodak said that focusing its consumer inkjet business on the sale of ink to its install base while winding down printer sales would "significantly improve cash flow in the US beginning in the first half of 2013".
However, in the short term Kodak will take a $90m (£56m) hit on the cessation of desktop printer sales, including $20m in charges related to separation benefits, of which $9m will require cash expenditure.
The remainder consists of $32m of non-cash related charges for accelerated depreciation and asset write-offs and $38m in other cash-related charges associated with this action.
Kodak chief executive Antonio Perez said in a statement: "The actions we are taking are significant steps toward our successful emergence. We are committed to take the remaining steps required for our emergence in 2013 as a profitable, sustainable company."
The decision is a reversal of Kodak's prior assertion that desktop inkjet printers would - alongside commercial printing, packaging printing and workflow software - form one of the pillars of its business post-Chapter 11.
The decision marks Kodak's second major u-turn in its Chapter 11 restructuring plan since January 2012, following the announcement in August that it would sell its personalised and document imaging businesses, despite having previous described both to lenders as "core businesses".
Meanwhile, the company has also announced a further 200 job cuts, increasing to 1,200 the number of redundancies still to come in 2012 (on top of 2,700 that have already been cut).
In total this will constitute a 23% headcount reduction, resulting in annual savings of more than $340m and leaving Kodak with a global workforce of around 13,100 employees.
A hearing to consider Kodak's motion to extend the deadline to file its Chapter 11 reorganisation plan to 28 February 2013 is scheduled to be heard on 17 October this year.
Meanwhile, Kodak is still in negotiations with respect to a "fair, equitable and permanent resolution" to its $1.2bn US pension liability.Tweet
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