Note 27 - Segment Information

12 Months Ended

Dec. 31, 2022

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

NOTE 27: SEGMENT INFORMATION

Kodak has four reportable segments: Traditional Printing, Digital Printing, Advanced Materials and Chemicals and Brand. A description of Kodak’s reportable segments follows.

Traditional Printing: The Traditional Printing segment is comprised of Prepress Solutions.

Digital Printing: The Digital Printing segment is comprised of four lines of business: the Electrophotographic Printing Solutions business, the Prosper business, the Versamark business and the Software business.

Advanced Materials and Chemicals: The Advanced Materials and Chemicals segment is comprised of four lines of business: Industrial Film and Chemicals, Motion Picture, Advanced Materials and Functional Printing and KSB. KSB was sold to Swiss Post Solutions in December 2020.

Brand: The Brand segment contains the brand licensing business.

All Other: All Other is comprised of the operations of the Eastman Business Park, a more than 1,200 acre technology center and industrial complex.

Segment financial information is shown below. Asset information by segment is not disclosed as this information is not separately identified and reported to the Chief Operating Decision Maker.

Net Revenues from Continuing Operations by Reportable Segment

	Year Ended December 31,
	2022		2021		2020
(in millions)
Traditional Printing	$	711	$	659	$	592
Digital Printing		227		249		241
Advanced Materials and Chemicals		234		212		172
Brand		17		15		13
Total of reportable segments		1,189		1,135		1,018
Other		16		15		11
Consolidated total	$	1,205	$	1,150	$	1,029

Segment Measure of Profit and Loss

Kodak’s segment measure of profit and loss is an adjusted earnings before interest, taxes, depreciation and amortization (“Operational EBITDA”). As demonstrated in the table below, Operational EBITDA represents the earnings (loss) from continuing operations before income taxes excluding non-service cost components of pension and other postemployment benefits income; depreciation and amortization expense; restructuring costs and other; stock-based compensation expense; consulting and other costs; idle costs; other operating income, net (unless otherwise indicated); interest expense; loss on early extinguishment of debt and other (charges) income, net.

Kodak’s segments are measured using Operational EBITDA both before and after allocation of corporate selling, general and administrative expenses (“SG&A”). The segment earnings measure reported is after allocation of corporate SG&A as this most closely aligns with U.S. GAAP. Research and development activities not directly related to the other segments are reported within the Advanced Materials and Chemicals segment.

2023 Segments

Change in Segments

Effective February 2023 Kodak changed its organizational structure.  The Traditional Printing segment and the Digital Printing segment were combined into one segment, named the Print segment.  No changes were made to Kodak's other segments.

Segment Operational EBITDA and Consolidated Income (Loss) from Continuing Operations Before Income Taxes

	Year Ended December 31,
(in millions)	2022			2021			2020
Traditional Printing	$	27		$	9		$	21
Digital Printing		(22	)		(5	)		(10	)
Advanced Materials and Chemicals		(1	)		(6	)		(23	)
Brand		14			13			11
Total of reportable segments		18			11			(1	)
Other		3			2			1
Depreciation and amortization		(29	)		(31	)		(37	)
Restructuring costs and other		(13	)		(6	)		(17	)
Stock-based compensation		(5	)		(7	)		(15	)
Consulting and other costs (1)		2			(19	)		(9	)
Idle costs (2)		(3	)		(2	)		(3	)
Other operating income, net, excluding income from transition services agreement (3)		1			6			7
Interest expense (4)		(40	)		(33	)		(12	)
Pension income excluding service cost component (4)		98			102			98
Loss on early extinguishment of debt (4)		—			—			(2	)
Other (charges) income, net (4)		(1	)		5			(386	)
Consolidated earnings (loss) from continuing operations before income taxes	$	31		$	28		$	(376	)

⁽¹⁾ Consulting and other costs are professional services and internal costs associated with corporate strategic initiatives, investigations and litigation.  Consulting and other costs include $10 million of income in the year ended December 31, 2022 representing insurance reimbursement of legal costs previously paid by the Company associated with investigations and litigation matters. Kodak received $5 million of insurance reimbursement in the fourth quarter of 2022 and the remaining $5 million in January 2023.

⁽²⁾ Consists of third-party costs such as security, maintenance, and utilities required to maintain land and buildings in certain locations not used in any Kodak operations and the costs, net of any rental income received, of underutilized portions of certain properties.

⁽³⁾   $6 million of income from the transition services agreement with the purchaser of the Company's flexographic packaging business in 2019 was recognized in the year ended December 31, 2020. No income was recognized in the years ended December 31, 2022 and 2021. The income was reported in Other operating income, net in the Consolidated Statement of Operations. Other operating income, net is typically excluded from the segment measure. However, the income from the transition services agreement was included in the segment measure.

₍₄₎ As reported in the Consolidated Statement of Operations.

In  2022, Kodak decreased employee benefit reserves by $15 million composed of a reduction in workers’ compensation reserves of approximately $13 million driven by changes in discount rates and a decrease in other employee benefit reserves of approximately $2 million, driven by both changes in discount rates and favorable experience.  The decrease in reserves in 2022 impacted gross profit by approximately $9 million, R&D by approximately $1 and SG&A by approximately $5 million. 

Kodak decreased workers’ compensation reserves by approximately $4 million in 2021 driven by changes in discount rates. The decrease in reserves in 2021 impacted gross profit by approximately $3 million and SG&A by approximately $1 million.

Kodak increased employee benefit reserves by approximately $4 million in 2020 reflecting an increase in workers’ compensation reserves ($7 million) partially offset by a decrease in postemployment benefit reserves ($3 million). The increase in reserves in 2020 impacted gross profit and SG&A each by approximately $2 million.

Amortization and depreciation expense by segment are not included in the segment measure of profit and loss but are regularly provided to the Chief Operating Decision Maker. 

(in millions)	Year Ended December 31,
Intangible asset amortization expense from continuing operations:	2022		2021		2020
Traditional Printing	$	—	$	—	$	1
Digital Printing		4		4		3
Brand		1		1		1
Consolidated total	$	5	$	5	$	5

(in millions)	Year Ended December 31,
Depreciation expense from continuing operations:	2022		2021		2020
Traditional Printing	$	11	$	14	$	19
Digital Printing		6		6		7
Advanced Materials and 3D Printing		6		5		5
Other		1		1		1
Consolidated total	$	24	$	26	$	32

(in millions)	Year Ended December 31,
Long-lived assets located in: (1)	2022		2021
The United States	$	95	$	81
Europe, Middle East and Africa		9		14
Asia Pacific		6		4
Canada and Latin America		44		41
Non-U.S. countries total (2)		59		59
Consolidated total	$	154	$	140

⁽¹⁾ Long-lived assets are comprised of property, plant and equipment, net.

⁽²⁾ Of the total non-U.S. property, plant and equipment in 2022, $41 million was located in Brazil. Of the total non-U.S. property, plant and equipment in 2021, $39 million was located in Brazil.

Major Customers

No single customer represented 10% or more of Kodak’s total net revenue in any year presented.