Note 18 - Segment Information

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

NOTE 18: SEGMENT INFORMATION

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. 

Kodak has three reportable segments: Print, Advanced Materials and Chemicals and Brand. A description of Kodak’s reportable segments follows.

Print: The Print segment is comprised of five lines of business: the Prepress Solutions business, the PROSPER business, the Software business, the Electrophotographic Printing Solutions business and the VERSAMARK business.

Advanced Materials and Chemicals: The Advanced Materials and Chemicals segment is comprised of four lines of business: the Industrial Film and Chemicals business, the Motion Picture business, the Advanced Materials and Functional Printing business and the IP Licensing and Analytical Services business.

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:

Segment Revenues

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in millions)	2023		2022		2023		2022
Print	$	196	$	224	$	620	$	704
Advanced Materials and Chemicals		64		58		197		173
Brand		4		3		12		11
All Other		5		4		13		12
Consolidated total	$	269	$	289	$	842	$	900

Segment Operational EBITDA and Consolidated Earnings from Operations Before Income Taxes

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(in millions)	2023			2022			2023			2022
Print	$	4		$	1		$	18		$	—
Advanced Materials and Chemicals		4			3			15			1
Brand		4			3			10			10
Total of reportable segments		12			7			43			11
All other		2			1			3			2
Depreciation and amortization		(7	)		(8	)		(23	)		(22	)
Restructuring costs and other (1)		(3	)		(3	)		(9	)		(3	)
Stock based compensation		(1	)		(1	)		(6	)		(4	)
Consulting and other costs (2)		(1	)		(2	)		10			(7	)
Idle costs (3)		—			(1	)		(1	)		(2	)
Interest expense (4)		(14	)		(10	)		(36	)		(29	)
Pension income excluding service cost component (4)		41			20			122			77
Loss on extinguishment of debt (4)		(27	)		—			(27	)		—
Other (charges) income, net (4)		(2	)		—			2			(2	)
Consolidated earnings from operations before income taxes	$	—		$	3		$	78		$	21

(1)	Restructuring costs and other for the three and nine months ended September 30, 2023 included $1 million and $7 million, respectively, which were reported as Restructuring costs and other in the Consolidated Statement of Operations. The remaining $2 million in each period represented inventory write-downs and were reported as Cost of revenues in the accompanying Consolidated Statement of Operations.
(2)	Consulting and other costs are primarily professional services and internal costs associated with certain corporate strategic initiatives, investigations and litigation.  Consulting and other costs includes $1 million and $12 million of income in the three and nine months ended September 30, 2023, representing insurance reimbursement of legal costs previously paid by the Company associated with investigations and litigation matters. Kodak received $17 million of insurance reimbursement proceeds in the first nine months of 2023, of which $5 million was recorded in Other current assets in the Consolidated Statement of Financial Position as of December 31, 2022.
(3)	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.
(4)	As reported in the Consolidated Statement of Operations.

Kodak decreased workers' compensation and other employee benefit reserves by approximately $3 million in the three and nine months ended September 30, 2023, driven by changes in discount rates.  The change in employee benefit reserves in the three months ended September 30, 2023 impacted gross profit by approximately $2 million and selling, general and administrative expenses (“SG&A”) by approximately $1 million. The decrease in reserves in the nine months ended September 30, 2023 impacted gross profit by approximately $1 million and SG&A expenses by approximately $2 million.

Kodak decreased workers’ compensation reserves by approximately $5 million and $13 million in the three and nine months ended September 30, 2022, respectively, driven by changes in discount rates. The decrease in reserves in the three months ended September 30, 2022 impacted gross profit by approximately $3 million and research and development ("R&D") expenses and SG&A expenses each by approximately $1 million. The decrease in reserves in the nine months ended September 30, 2022 impacted gross profit by approximately $8 million, R&D expenses by approximately $1 million and SG&A expenses by approximately $4 million. 

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 above table, Operational EBITDA represents the earnings from operations excluding the provision for income taxes; non-service cost components of pension and other postemployment benefits (“OPEB”) income; depreciation and amortization expense; restructuring costs and other; stock-based compensation expense; consulting and other costs; idle costs; interest expense, loss on extinguishment of debt and other (charges) income, net.

Kodak’s segments are measured using Operational EBITDA both before and after allocation of corporate 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.