# Eastman Kodak Co: Form 10-Q for the period ended Sep 30, 2023

- Company: [Eastman Kodak Co](/companies/kodk.md) (CIK 31235)
- Form: 10-Q
- Filed: 2023-11-08
- Accepted by EDGAR: Nov 8, 2023, 16:14 ET
- Period: 2023-09-30
- Accession: 0001437749-23-030954
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/31235/000143774923030954/ekc20230930_10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/31235/000143774923030954/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-07-01 to 2023-09-30 | $269.0m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2023-01-01 to 2023-09-30 | $842.0m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2023-07-01 to 2023-09-30 | $219.0m | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 9 months, 2023-01-01 to 2023-09-30 | $679.0m | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2023-07-01 to 2023-09-30 | $50.0m | us-gaap:GrossProfit |
| Gross profit | 9 months, 2023-01-01 to 2023-09-30 | $163.0m | us-gaap:GrossProfit |
| Research and development | 3 months, 2023-07-01 to 2023-09-30 | $7.0m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 9 months, 2023-01-01 to 2023-09-30 | $25.0m | us-gaap:ResearchAndDevelopmentExpense |
| Selling, general and administrative | 3 months, 2023-07-01 to 2023-09-30 | $40.0m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 9 months, 2023-01-01 to 2023-09-30 | $114.0m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2023-07-01 to 2023-09-30 | $2.0m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2023-01-01 to 2023-09-30 | $17.0m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2023-07-01 to 2023-09-30 | $14.0m | us-gaap:InterestExpense |
| Interest expense | 9 months, 2023-01-01 to 2023-09-30 | $36.0m | us-gaap:InterestExpense |
| Income tax | 3 months, 2023-07-01 to 2023-09-30 | −$2.0m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2023-01-01 to 2023-09-30 | $8.0m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-07-01 to 2023-09-30 | $2.0m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2023-01-01 to 2023-09-30 | $70.0m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-07-01 to 2023-09-30 | $0.00 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2023-01-01 to 2023-09-30 | $0.64 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-07-01 to 2023-09-30 | $0.00 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2023-01-01 to 2023-09-30 | $0.68 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-07-01 to 2023-09-30 | 79,500,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2023-01-01 to 2023-09-30 | 90,500,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2023-01-01 to 2023-09-30 | $21.0m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2023-01-01 to 2023-09-30 | $15.0m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Share repurchases | 9 months, 2023-01-01 to 2023-09-30 | $0 | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2023-09-30 | $246.0m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-09-30 | $712.0m | us-gaap:AssetsCurrent |
| Total assets | at 2023-09-30 | $2.36bn | us-gaap:Assets |
| Current liabilities | at 2023-09-30 | $271.0m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2023-09-30 | $1.19bn | us-gaap:Liabilities |
| Long-term debt | at 2023-09-30 | $451.0m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2023-09-30 | $1.0m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2023-09-30 | $959.0m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 58,767 characters.

### CAUTIONARY STATEMENT PURSUANT TO SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This report on Form 10-Q includes “forward–looking statements” as that term is defined under the Private Securities Litigation Reform Act of 1995.

Forward–looking statements include statements concerning Kodak’s plans, objectives, goals, strategies, future events, future revenue or performance, capital expenditures, liquidity, investments, financing needs and 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,” “strategy,” “continues,” “goals,” “targets” or future or conditional verbs, such as “will,” “should,” “could,” or “may,” and similar words and expressions, as well as statements that do not relate strictly to historical or current facts, are intended to identify forward–looking statements. All forward–looking statements, including management’s examination of historical operating trends and data, are based upon Kodak’s current expectations and assumptions. Forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from historical results or those expressed in or implied by such forward-looking statements. Important factors that could cause actual events or results to differ materially from the forward-looking statements include, among others, the risks and uncertainties described in more detail in the Company’s Annual Report on Form 10–K for the year ended December 31, 2022 under the headings “Business,” “Risk Factors,” “Legal Proceedings,” and/or “Management’s Discussion and Analysis of Financial Condition and Results of Operations–Liquidity and Capital Resources,” in the corresponding sections of this report on Form 10-Q and the Company’s quarterly reports on Form 10-Q for the quarters ended March 31, 2023 and June 30, 2023, and in other filings the Company makes with the SEC from time to time, as well as the following:

- Kodak’s ability to improve and sustain its operating structure, cash flow, profitability and other financial results;
- Kodak’s ability to achieve strategic objectives, cash forecasts, financial projections and projected growth;
- Kodak’s ability to achieve the financial and operational results contained in its business plans;
- Kodak’s ability to obtain additional or alternate financing if and as needed, Kodak's continued ability to manage world-wide cash through inter-company loans, distributions and other mechanisms, and Kodak's ability to provide or facilitate financing for its customers;
- Kodak’s ability to fund continued investments, capital needs, collateral requirements and restructuring payments and service its debt and Series B Preferred Stock and Series C Preferred Stock;
- Changes in foreign currency exchange rates, commodity prices, interest rates and tariff rates;
- The impact of the global economic environment, including inflationary pressures, medical epidemics such as COVID-19, geopolitical issues such as the war in Ukraine and conflict involving Israel, and Kodak’s ability to effectively mitigate the associated increased costs of aluminum and other raw materials, energy, labor, shipping, delays in shipment and production times, and fluctuations in demand;
- Kodak's ability to effectively compete with large, well-financed industry participants or with competitors whose cost structure is lower than Kodak's;
- The performance by third parties of their obligations to supply products, components or services to Kodak and Kodak’s ability to address supply chain disruptions and continue to obtain raw materials and components available from single or limited sources of supply, which may be adversely affected by COVID-19, the war in Ukraine and the conflict involving Israel;
- Kodak’s ability to comply with the covenants in its various credit facilities;
- Kodak’s ability to effectively anticipate technology and industry trends and develop and market new products, solutions and technologies, including products based on its technology and expertise that relate to industries in which it does not currently conduct material business;
- Kodak’s ability to effect strategic transactions, such as investments, acquisitions, strategic alliances, divestitures and similar transactions, or to achieve the benefits sought to be achieved from such strategic transactions;
- Kodak's ability to discontinue, sell or spin-off certain non-core businesses or operations, or otherwise monetize assets;
- The impact of the investigations, litigation and claims arising out of the circumstances surrounding the announcement on July 28, 2020, by the U.S. International Development Finance Corporation of the signing of a non‐binding letter of interest to provide a subsidiary of Kodak with a potential loan to support the launch of an initiative for the manufacture of pharmaceutical ingredients for essential generic drugs; and;
- The potential impact of force majeure events, cyber‐attacks or other data security incidents that could disrupt or otherwise harm Kodak’s operations.

Future events and other factors may cause Kodak’s actual results to differ materially from the forward–looking statements. All forward–looking statements attributable to Kodak or persons acting on its behalf apply only as of the date of this report on Form 10-Q and are expressly qualified in their entirety by the cautionary statements included or referenced in this document.

Kodak 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, except as required by law.

### EXECUTIVE OVERVIEW

Kodak is a global manufacturer focused on commercial print and advanced materials and chemicals. Kodak provides industry-leading hardware, software, consumables and services primarily to customers in commercial print, packaging, publishing, manufacturing and entertainment. With 79,000 patents earned over 130 years of research and development ("R&D"), Kodak believes in the power of technology and science to enhance what the world sees and creates. Kodak’s innovative, award-winning products, combined with its customer-first approach, allows Kodak to attract customers worldwide. Kodak is committed to environmental stewardship, including industry leadership in developing sustainable solutions for print.

Consolidated revenues in the three and nine months ended September 30, 2023 were $ 269 million and $ 842 million, respectively, a decrease of $ 20 million ( 7% ) and $ 58 million (6%) when compared to the three and nine months ended September 30, 2022 , respectively. Currency favorably impacted revenues in the three months ended September 30, 2023 compared to the three months ended September 30, 2022 ($6 million) and unfavorably impacted revenue in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 ($4 million).

Print revenues, which accounted for 73% and 74% of Kodak’s total revenues for the three and nine months ended September 30, 2023, respectively, declined by $28 million (13%) and $84 million (12%) compared to the prior year quarter and nine-month periods. Advanced Materials and Chemicals revenue improved $6 million (10%) and $24 million (14%), respectively, compared to the prior year periods.

### Economic Environment and Other Global Events:

Kodak's products are sold and serviced in numerous countries across the globe with more than half of sales generated outside the U.S. Current global economic conditions remain highly volatile due to the uncertain and unpredictable macroeconomic environment, heightened levels of inflation, changes in foreign exchange rates, the war in Ukraine, the conflict involving Israel, and other global events which impact Kodak’s operations. Kodak is experiencing supply chain disruptions, shortages in materials and labor, and increased labor, material and distribution costs as well as volume declines for certain businesses.

Kodak has implemented numerous measures to mitigate the challenges associated with supply chain disruptions and shortages in materials, including increasing safety stock on certain materials, increasing lead‐times, providing suppliers with longer forecasts of future demand and certifying additional sources or substitute materials where possible. These measures have enabled Kodak to largely meet current demand.

Kodak has also implemented various pricing actions in response to increased labor, material and distribution costs primarily within its Print and Advanced Materials and Chemicals segments. In order to mitigate the impact of higher aluminum, energy and packaging costs, the Print segment implemented surcharges on purchases of plates largely beginning in the latter part of the second quarter of 2021 that continue to be periodically reviewed and adjusted for accordingly.

The Advanced Materials and Chemicals segment has experienced labor shortages in certain manufacturing areas. Increased demand for consumer film products along with manufacturing equipment limitations and labor shortages have contributed to increased backorders. Kodak has increased headcount in this segment to better meet demand, but expects that supply will continue to be constrained by manufacturing equipment limitations without further capital improvements.

Due to current global economic conditions and pricing actions, the Print segment is experiencing a slowdown in customer demand for plates that negatively impacted volume. Kodak has implemented various actions in response, including supply chain and workforce optimization, productivity improvements and other cost savings that are projected to mitigate the impact of lower volumes. However, the potential worsening of economic conditions and the negative impact on customer demand due to further pricing actions could unfavorably impact this segment's operating results.

Following the cessation of U.S. plate manufacturing operations by Kodak’s key competitors, Kodak has faced increasing competition in the U.S. from low-priced plates imported from China and Japan. On September 28, 2023, Kodak filed petitions with U.S. Department of Commerce and the U.S. International Trade Commission requesting relief from unfairly traded imports of plates from China and Japan in the form of the imposition of anti-dumping and/or countervailing duties on such imported plates. There can be no assurance that Kodak will obtain the relief sought or, if relief is obtained, that the rates of duties that may be imposed on such imported plates will provide effective relief.

Kodak is monitoring the events surrounding the conflict involving Israel and the impact on the operations of its Israel subsidiary. A leased warehouse in Israel has been destroyed; however, none of Kodak’s employees were injured. Kodak is currently assessing the implications of this conflict, which are difficult to predict at this time, but it has been able to adapt its operations to avoid material disruption to its business. The direct operations of Kodak’s Israel subsidiary are less than 1% of total consolidated revenue and assets for 2023.

Kodak continues to monitor the rapidly evolving events surrounding the war in Ukraine and the various sanctions imposed in response to the war. Kodak is in compliance with all sanctions. Kodak is experiencing worldwide supply constraints for aluminum and increased energy costs due in part to the war in Ukraine. The extent to which the military conflict in Ukraine will continue to impact the global economy and Kodak's business and operations remains uncertain.

The war in Ukraine and the international response have disrupted Kodak’s ability to operate its Russian subsidiary in the ordinary course, affecting its ability to pay vendors and employees, receive amounts owed from customers in Russia and deliver product. Kodak is in the process of an orderly winding down of its Russian subsidiary and has ceased direct operations in Russia. The direct operations of Kodak’s Russian subsidiary did not have a material impact on the Company’s financial statements (less than 1% of total consolidated revenues and assets for 2022), and there were no material impacts on the consolidated results of operations as of and for the quarter ended September 30, 2023 from the wind-down activities.

The ongoing changes in global economic conditions and the impact of other global events on Kodak’s operations and financial performance remains uncertain and will depend on several factors such as the duration of supply chain disruptions and slowdown in customer demand, the ability to secure raw materials and components and the ability to offset higher labor, material and distribution costs through pricing actions.

**Kodak’s strategy:**

The film industry and segments within the print industry face competition from digital substitution. Kodak’s strategy is to:

- Focus product investment in core competency areas of print and advanced materials, leveraging Kodak’s proprietary technologies to deliver technologically advanced products in the product goods packaging, graphic communications, and functional printing markets;
- Grow revenues through a focus on customers in Kodak’s print division, increasing overall share;
- Promote the use of film and expand the applications of Kodak’s film and chemicals to best utilize the existing infrastructure; and
- Continue to streamline processes to drive cost reductions and improve operating leverage.

A discussion of opportunities and challenges related to Kodak’s strategy follows:

- Print’s digital plate products include traditional digital plates and Kodak SONORA Process Free Plates. SONORA Process Free Plates allow Kodak customers to skip the plate processing step prior to mounting plates on a printing press. This improvement in the printing process saves time and costs for customers. Also, SONORA Process Free Plates reduce the environmental impact of the printing process because they eliminate the use of chemicals (including solvents), water and power that is otherwise required to process a traditional plate. The segment's digital plate products are experiencing challenges from higher prices and availability of raw materials, digital substitution and competitive pricing pressures. Kodak seeks to mitigate the impact of increases in manufacturing costs, including aluminum prices, through a combination of surcharges and price increases, improved production efficiency and cost reduction initiatives. In addition, Kodak seeks to offset the impact of short-term and long‐term market dynamics on pricing and volume pressures through innovations in Kodak product lines, including investing in digital print technologies.
- In Print's digital printing businesses, the PROSPER business is expected to grow as the legacy VERSAMARK business continues to decline as a percentage of the segment’s total revenue. The PROSPER Inkjet Systems business is expected to continue to build profitability. Kodak launched the PROSPER 7000 Turbo Press in June 2022. The PROSPER 7000 Turbo Press enables commercial, publishing and newspaper printers to compete more effectively with offset and to shift more long run jobs from conventional printing processes to inkjet. During the second quarter of 2023, Kodak placed its first PROSPER 7000 Turbo Press and it went into production during the third quarter of 2023. Investment in the next generation technology, ULTRASTREAM, is focused on the ability to place ULTRASTREAM writing systems in Kodak branded presses and in various original equipment manufacturers in applications ranging from commercial print to packaging. The first flexible packaging printing system utilizing Kodak’s ULTRASTREAM inkjet technology was placed during the second quarter of 2022. In addition, Kodak officially launched the KODAK PROSPER ULTRA 520 Digital Press utilizing Kodak’s ULTRASTREAM inkjet technology, which offers offset print quality in a smaller footprint. During the second quarter of 2023, Kodak placed its first KODAK PROSPER ULTRA 520 Digital Press and expects it to be in production during the fourth quarter of 2023. Kodak's Electrophotographic Printing Solutions business ceased manufacturing NEXFINITY and ASCEND printers effective December 2022. Kodak will continue to offer ink and other consumables as well as provide service to its installed base of printers.
- Advanced Materials and Chemicals is using Kodak’s deep expertise in chemistry and strengths in deposition and coating processes that come from decades of experience in film manufacturing to work on new initiatives:
- Electric Vehicle (“EV”)/Energy Storage Battery Material Manufacturing - Coating of substrates is a critical aspect of manufacturing materials for batteries and Kodak plans to capitalize on its expertise in coating technology to develop opportunities in this area. Kodak is currently in the process of expanding its pilot coating facility. On July 13, 2022, Kodak invested $25 million to acquire a minority preferred equity interest in Wildcat Discovery Technologies, Inc. (“Wildcat”), a private technology company that uses proprietary methods to research and develop new battery materials, including an EV battery. Kodak has also entered into an agreement to provide coating and engineering services in collaboration with Wildcat to develop and scale film coating technologies. Wildcat has granted Kodak certain rights to negotiate a production or licensing arrangement with Wildcat when and if Wildcat’s technology reaches commercial readiness.
- Light-Blocking Technology - Kodak plans to leverage a proprietary technology initially developed for electrophotographic toners to commercialize a carbon‐less fabric coating designed to offer superior light management, from complete blackout to selective light filtering, and coating compatibility with an unmatched range of fabrics. Kodak is installing a production-scale coating machine to coat fabrics in Eastman Business Park, located in Rochester, NY.
- Transparent Antennas - Kodak plans to leverage its proprietary copper micro‐wire technologies and high‐resolution printing expertise to contract‐manufacture custom transparent antennas for automotive, commercial construction, and other applications requiring excellent radio frequency (“RF”) and optical performance. The integration of antennas is growing worldwide due to the rapid expansion of 5G and an overall increase in RF communications, and the ubiquity of glass surfaces makes transparent antennas attractive for multiple end‐use markets.
- Reagent Manufacturing - Kodak plans to capitalize on its existing chemical manufacturing expertise, including current production of unregulated Key Starting Materials for pharmaceuticals, to implement an expansion into manufacturing Diagnostic Test Reagent solutions. Kodak has started construction of a lab and manufacturing facility to manufacture reagents for healthcare applications within an existing building located at Eastman Business Park.
- Film and related component manufacturing operations and Kodak Research Laboratories utilize capacity at Eastman Business Park, which helps cost absorption for both Kodak operations and tenants at Eastman Business Park.
- Kodak plans to capitalize on its intellectual property through new business or licensing opportunities in 3D printing materials, smart material applications, and printed electronics markets.

### RESULTS OF OPERATIONS

### 2023 COMPARED TO 2022

### THIRD QUARTER RESULTS OF OPERATIONS

*(in millions)*

|  | Three Months Ended September 30, 2023 | % of Sales | 2022 | % of Sales | $ Change | Nine Months Ended September 30, 2023 | % of Sales | 2022 | % of Sales | $ Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Revenues | $269 |  | $289 |  | $(20) | $842 |  | $900 |  | $(58) |
| Cost of revenues | 219 |  | 246 |  | (27) | 679 |  | 773 |  | (94) |
| Gross profit | 50 | 19% | 43 | 15% | 7 | 163 | 19% | 127 | 14% | 36 |
| Selling, general and administrative expenses | 40 | 15% | 39 | 13% | 1 | 114 | 14% | 123 | 14% | (9) |
| Research and development costs | 7 | 3% | 8 | 3% | (1) | 25 | 3% | 26 | 3% | (1) |
| Restructuring costs and other | 1 | 0% | 3 | 1% | (2) | 7 | 1% | 3 | 0% | 4 |
| Income (loss) from operations before interest expense, pension income excluding service cost component, loss on extinguishment of debt, other charges (income), net and income taxes | 2 | 1% | (7) | (2)% | 9 | 17 | 2% | (25) | (3)% | 42 |
| Interest expense | 14 | 5% | 10 | 3% | 4 | 36 | 4% | 29 | 3% | 7 |
| Pension income excluding service cost component | (41) | (15)% | (20) | (7)% | (21) | (122) | (14)% | (77) | (9)% | (45) |
| Loss on extinguishment of debt | 27 | 10% | — | 0% | 27 | 27 | 3% | — | 0% | 27 |
| Other charges (income), net | 2 | 1% | — | 0% | 2 | (2) | (0)% | 2 | 0% | (4) |
| Income from operations before income taxes | — | 0% | 3 | 1% | (3) | 78 | 9% | 21 | 2% | 57 |
| (Benefit) provision for income taxes | (2) | (1)% | 1 | 0% | (3) | 8 | 1% | 2 | 0% | 6 |
| NET EARNINGS | $2 | 1% | $2 | 1% | $— | $70 | 8% | $19 | 2% | $51 |

### Revenue

### Current Quarter

For the three months ended September 30, 2023 revenues declined $20 million compared with the same period in 2022, driven by lower volume in Print ($37 million) partially offset by improved pricing and product mix within Print ($4 million), improved pricing and product mix as well as higher margins in Advanced Materials and Chemicals ($4 million and $1 million, respectively) and favorable foreign currency ($6 million). See segment discussions for additional details.

### Year-to-Date

For the nine months ended September 30, 2023 revenues declined $58 million compared with the same period in 2022, driven by lower volume in Print ($121 million) and an unfavorable foreign exchange impact ($4 million) partially offset by improved pricing and product mix within Print ($40 million) and Advanced Materials and Chemicals ($25 million). See segment discussions for additional details.

### Gross Profit

### Current Quarter

Gross profit for the three months ended September 30, 2023 improved $7 million compared with the same period in 2022, primarily due to improved pricing and product mix within Advanced Materials and Chemicals ($6 million) and Print ($3 million), lower costs for aluminum ($9 million) and favorable foreign exchange rates ($2 million). These favorable impacts were partially offset by higher manufacturing costs combined with lower Print volume ($11 million) and by the net change in employee benefit and workers' compensation reserves ($1 million). See segment discussions for additional details.

### Year-to-Date

Gross profit for the nine months ended September 30, 2023 improved $36 million compared with the same period in 2022, primarily due to improved pricing and product mix within Print ($39 million) and improved pricing and product mix as well as higher margins in Advanced Materials and Chemicals ($26 million and $3 million, respectively) and lower costs for aluminum ($22 million). These favorable impacts were partially offset by higher manufacturing costs combined with lower Print volume ($45 million), higher restructuring and other exit costs ($2 million) and the net change in employee benefit and workers' compensation reserves ($7 million). See segment discussions for additional details.

### Selling, General and Administrative Expenses

Consolidated selling and general administrative expenses ("SG&A") increased $1 million in the three months ended September 30, 2023 compared to the prior year period primarily due to higher selling and administrative costs ($3 million) partially offset by $1 million of income representing insurance reimbursement of legal costs previously paid by the Company associated with investigations and litigation. Consolidated SG&A decreased $9 million in the nine months ended September 30, 2023 compared to the prior year period primarily due to lower consulting and other costs primarily associated with investigations and litigation ($5 million) and $12 million of income representing insurance reimbursement of legal costs partially offset by an increase in selling and administrative costs ($7 million) and higher stock-based compensation costs ($2 million).

### Research and Development Costs

Consolidated research and development ("R&D") expenses decreased $1 million in both the three and nine months ended September 30, 2023 primarily due to a reduction in R&D activities in the Electrophotographic Printing Solutions business when manufacturing activities ceased.

### Pension Income Excluding Service Cost Component

Pension income excluding service cost component increased $21 million and $45 million in the three and nine months ended September 30, 2023, respectively. Refer to Note 13, "Retirement Plans and Other Postretirement Benefits".

### Loss on Extinguishment of Debt

For details, refer to Note 5, "Debt and Credit Facilities".

### Other charges (income), net

For details, refer to Note 11, "Other Charges (Income)".

### REPORTABLE 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.

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 Revenues

*(in millions)*

|  | Three Months Ended September 30, 2023 | 2022 | Nine Months Ended September 30, 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

*(in millions)*

|  | Three Months Ended September 30, 2023 | 2022 | Nine Months Ended September 30, 2023 | 2022 |
| --- | ---: | ---: | ---: | ---: |
| Print | $4 | $1 | $18 | $- |
| Advanced Materials and Chemicals | 4 | 3 | 15 | 1 |
| Brand | 4 | 3 | 10 | 10 |
| 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, respectively, 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 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 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”). Operational EBITDA represents the earnings from operations excluding the provision for income taxes; non-service cost components of pension and OPEB income; depreciation and amortization expense; restructuring costs and other; stock-based compensation expense; consulting and other costs; idle costs; interest expense, other operating income, net, loss on extinguishment of debt and other (charges) income, net.

Kodak’s segments are measured using Operational EBITDA both before and after the allocation of corporate SG&A expenses. 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.

### PRINT SEGMENT

*(in millions)*

|  | Three Months Ended September 30, 2023 | 2022 | $ Change | Nine Months Ended September 30, 2023 | 2022 | $ Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Revenues | $196 | $224 | $(28) | $620 | $704 | $(84) |
| Operational EBITDA | $4 | $1 | $3 | $18 | $— | $18 |
| Operational EBITDA as a % of revenues | 2% | 0% |  | 3% | 0% |  |

### Revenues

### Current Quarter

The decrease in Print revenues for the three months ended September 30, 2023 of approximately $28 million reflected lower volumes in Prepress consumables, equipment and service ($21 million, $5 million and $2 million, respectively), Electrophotographic Printing Solutions consumables and service and Electrophotographic Printing Solutions equipment (each $3 million) and PROSPER annuities ($2 million) partially offset by favorable pricing in Prepress equipment ($1 million) and favorable foreign currency rates ($5 million).

### Year-to-Date

The decrease in Print revenues for the nine months ended September 30, 2023 of approximately $84 million reflected lower volumes in Prepress consumables, equipment and service ($91 million, $6 million and $3 million, respectively), Electrophotographic Printing Solutions consumables and service as well as equipment ($7 million and $3 million, respectively), PROSPER annuities ($5 million), Versamark consumables and service ($4 million) and PROSPER components ($2 million) as well as an unfavorable foreign exchange impact ($4 million). These unfavorable impacts were partially offset by improved pricing in Prepress Solutions consumables ($30 million), PROSPER annuities ($2 million) and Electrophotographic Printing Solutions consumables and service ($1 million) and Versamark consumables and service ($1 million) as well as improved pricing and product mix in Prepress equipment ($3 million) and Prepress service ($1 million).

### Operational EBITDA

### Current Quarter

Print Operational EBITDA for the three months ended September 30, 2023 improved $3 million reflecting lower costs for aluminum ($9 million) and improved volume in Electrophotographic Printing Solutions equipment ($1 million), partially offset by increased manufacturing costs ($7 million) driven by lower volumes and increases in other costs such as utilities, transportation and supplies and the net impact of changes in employee benefit and workers' compensation reserves ($1 million).

### Year-to-Date

Print Operational EBITDA for the nine months ended September 30, 2023 improved $18 million reflecting price improvements in Prepress Solutions consumables ($30 million), Prepress Solutions Service ($1 million) and Electrophotographic Printing Solutions consumables and service ($1 million), improved product mix on PROSPER and Prepress Solutions equipment annuities (each $2 million), Versamark annuities ($1 million), lower R&D costs ($2 million) and lower costs for aluminum ($22 million). These favorable impacts were partially offset by increased manufacturing costs ($39 million) driven by lower volumes and increases in other costs such as utilities, transportation and supplies, and the net impact of changes in employee benefit and workers' compensation reserves ($5 million).

### ADVANCED MATERIALS AND CHEMICALS SEGMENT

*(in millions)*

|  | Three Months Ended September 30, 2023 | 2022 | $ Change | Nine Months Ended September 30, 2023 | 2022 | $ Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Revenues | $64 | $58 | $6 | $197 | $173 | $24 |
| Operational EBITDA | $4 | $3 | $1 | $15 | $1 | $14 |
| Operational EBITDA as a % of revenues | 6% | 5% |  | 8% | 1% |  |

### Revenues

### Current Quarter

Advanced Materials and Chemicals revenues for the three months ended September 30, 2023 improved $6 million primarily from price and product mix improvements as well as higher margins in Industrial Film and Chemicals (each $3 million) and price improvements in Motion Picture ($1 million) partially offset by lower volumes in Motion Picture ($1 million).

### Year-to-Date

Advanced Materials and Chemicals revenues for the nine months ended September 30, 2023 improved $24 million primarily from price and product mix improvements in Industrial Film and Chemicals ($22 million) and price improvements in Motion Picture ($3 million).

### Operational EBITDA

### Current Quarter

Advanced Materials and Chemicals Operational EBITDA improved $1 million for the three months ended September 30, 2023 reflecting price and product mix improvements Industrial Film and Chemicals ($5 million), pricing improvements in Motion Picture ($1 million) and favorable foreign currency rates ($1 million) partially offset by higher SG&A costs ($2 million) and higher manufacturing costs ($4 million).

### Year-to-Date

Advanced Materials and Chemicals Operational EBITDA improved $14 million for the nine months ended September 30, 2023 reflecting price and product mix improvements as well as higher margins in Industrial Film and Chemicals ($23 million and $3 million, respectively) and pricing improvements in Motion Picture ($3 million) partially offset by increased manufacturing costs ($6 million), higher SG&A costs ($4 million) and the net impact of changes in employee benefit and workers' compensation reserves ($4 million).

### BRAND SEGMENT

*(in millions)*

|  | Three Months Ended September 30, 2023 | 2022 | $ Change | Nine Months Ended September 30, 2023 | 2022 | $ Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Revenues | $4 | $3 | $1 | $12 | $11 | $1 |
| Operational EBITDA | $4 | $3 | $1 | $10 | $10 | $— |
| Operational EBITDA as a % of revenues | 100% | 100% |  | 83% | 91% |  |

There were no material changes in Brand revenues or Operational EBITDA for the three and nine months ended September 30, 2023 compared to the prior year periods.

### RESTRUCTURING COSTS AND OTHER

Kodak recorded charges of $3 million and $9 million related to restructuring activities for the three and nine months ended September 30, 2023, respectively, of which $1 million and $7 million 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. The charges recorded for the nine months ended September 30, 2023 consisted of $8 million of severance charges, $2 million of inventory write-downs, and a net credit of $1 million in exit costs, as Kodak settled certain supplier obligations related to the cessation of manufacturing of the Electrophotographic Printing Solutions equipment products for less than the contractual amounts recorded in the fourth quarter of 2022.

Kodak made cash payments related to restructuring of approximately $2 million and $7 million during the three and nine months ended September 30, 2023, respectively.

The restructuring actions implemented in the first nine months of 2023 are expected to generate future annual cash savings of approximately $7 million, which are expected to reduce future annual SG&A and Cost of revenues expenses by $3 million and $4 million, respectively. The majority of the annual savings are expected to be in effect by the end of the second quarter of 2024 as actions are completed.

### LIQUIDITY AND CAPITAL RESOURCES

**Management’s Assessment of Liquidity**

Kodak ended the quarter with a cash balance of $246 million, an increase of $29 million from December 31, 2022.

The financing transactions entered into during the third quarter of 2023 (see “July 21, 2023 Financing Transactions” below for further information) and prior financing transactions provided additional liquidity to the Company to fund on‐going operations and obligations, invest in growth opportunities in Kodak’s businesses of print and advanced materials and chemicals and for corporate infrastructure investments expected to contribute to improvements in cash flow.

Available liquidity includes existing cash balances and cash flows from operating activities. The amount of available liquidity is subject to fluctuations and includes cash balances held by various entities worldwide. At September 30, 2023 and December 31, 2022 approximately $171 million and $152 million, respectively, of cash and cash equivalents were held within the U.S. and approximately $75 million and $65 million, respectively, of cash and cash equivalents were held outside the U.S. Cash balances held outside the U.S. are generally required to support local country operations and may have high tax costs or other limitations that delay the ability to repatriate, and therefore may not be readily available for transfer to other jurisdictions. Kodak utilizes cash balances outside the U.S. to fund needs in the U.S. through the use of inter-company loans.

As of September 30, 2023 and December 31, 2022, outstanding inter-company loans to the U.S. were $426 million and $399 million, respectively, which include short-term inter-company loans from Kodak’s international finance center of $139 million and $109 million, respectively. In China, where approximately $25 million and $24 million of cash and cash equivalents was held as of September 30, 2023 and December 31, 2022, respectively, there are limitations related to net asset balances that may impact the ability to make cash available to other jurisdictions in the world. Under the terms of the Amended and Restated Term Loan Credit Agreement, the Company is permitted to invest up to $60 million (or $75 million after the Deleveraging Milestone Date) in Restricted Subsidiaries that are not Loan Parties and in joint ventures or Unrestricted Subsidiaries that are not party to the Amended and Restated Term Loan Credit Agreement.

The Company’s Hong Kong subsidiary has an $80 million inter‐company loan from one of the Company’s Chinese subsidiaries with a maturity date of November 16, 2024, the proceeds of which were in turn loaned to the U.S. The inter‐company loan is required to be repaid in the next two years in four equal installments. The first $20 million installment is due by November 16, 2023 and the remaining installments are due in 2024. The amounts repaid to the Chinese subsidiary may not be able to be loaned, repatriated or otherwise moved back to the U.S., in which case the Company’s U.S. liquidity would be reduced. If the inter‐company loan is not extended, refinanced or amended and the Hong Kong subsidiary does not pay the remaining installments by the end of the 30‐day grace period following notice by the Chinese subsidiary after a failure to pay on the due date of such installment, the Hong Kong subsidiary would default on the inter‐company loan. The Company intends to pursue alternatives that will allow it and its subsidiaries to perform their obligations to each other while minimizing the impact on U.S. liquidity.

Kodak's cash flows continue to be negatively impacted by supply chain disruptions, shortages in materials and labor, increased labor, commodity and distribution costs and slowdown in customer demand related to global economic conditions. The impacts from price increases, continued cost reduction actions and supply chain-related cost improvements that were largely implemented during 2022 have positively impacted Kodak’s operations during the first nine months of 2023. The economic uncertainty surrounding the current inflationary environment and other global events represents additional elements of complexity in Kodak’s plans to return to sustainable positive cash flow. The Company cannot predict the duration and scope of such events, including the war in Ukraine and the conflict involving Israel, and other factors such as the ability to continue to secure raw materials and components, the impact of rising costs of labor, commodity and distribution costs, or how quickly and to what extent normal economic and operating conditions can resume.

During the third quarter of 2023, Kodak entered into multiple long-term brand licensing arrangements and recorded total deferred revenue of approximately $57 million. Kodak received approximately $8 million of cash proceeds related to these licensing arrangements in the current year quarter and expects to receive approximately $4 million in the fourth quarter of 2023, $40 million in the first quarter of 2024 and $5 million in 2025.

Kodak's plans to return to sustainable positive cash flow include growing revenues profitably through pricing actions, implementing effective working capital utilization, reducing operating expenses, continuing to simplify the organizational structure, investing in information technology systems to drive operational efficiencies, generating cash from selling and leasing underutilized assets or through new licensing opportunities and implementing ways to reduce cash collateral needs.

Kodak believes its liquidity position is adequate to fund its operating and investing needs and to provide the flexibility to respond as necessary to ordinary changes in the business and economic environment. Kodak’s ability to adequately fund its long‐term liquidity, debt servicing and capital requirements will be dependent on generating positive cash flows from operations, managing world‐wide cash through intercompany loans, distributions or other mechanisms, and the ability to convert, redeem or extend the existing Series B and Series C Preferred Stock past their current maturities of May 26, 2026.

### July 21, 2023 Financing Transactions:

On June 30, 2023, the Company entered into an amendment (the “Term Loan Amendment”) to the Original Term Loan Credit Agreement (the Original Term Loan Credit Agreement and, as amended and restated by the Term Loan Amendment, the “Amended and Restated Term Loan Credit Agreement”), with certain funds affiliated with Kennedy Lewis Investment Management LLC (“KLIM”) as lenders (the “Term Loan Lenders”) and the and Alter Domus (US) LLC, as administrative agent (the “Agent”). Subject to the terms and conditions of the Term Loan Amendment, the Term Loan Lenders provided the Company with a commitment to provide term loans in an aggregate principal amount of $450 million (the “Term Loans”).

On July 21, 2023, the Amended and Restated Term Loan Credit Agreement became effective and the Company completed its borrowing of the Term Loans. The Company received net proceeds from the Term Loans of approximately $435 million, of which $318 million, representing the aggregate principal amount of the Original Term Loans plus the accrued paid-in-kind interest and $2 million of cash interest, was paid by the Company to refinance the obligations under the Original Term Loan Credit Agreement.

Approximately $28 million of the net proceeds from the Term Loans were used to repay in full the Company’s outstanding Convertible Notes, representing the aggregate principal amount of the Convertible Notes plus accrued paid-in-kind interest.

In addition, the Company repaid in full the amounts outstanding under its 2023 Amended ABL Credit Agreement, used $59 million of the net proceeds from the Term Loans to fund the L/C Cash Collateral account and paid approximately $1 million in fees in connection with the Amended and Restated L/C Facility Agreement (defined below).

The remaining net proceeds from the Term Loans of approximately $29 million are being used by the Company for general corporate purposes and working capital needs.

The Term Loan Amendment also amended and restated the Original Term Loan Credit Agreement to, among other things, (i) extend the maturity date to the earlier of August 15, 2028 or the date that is 91 days prior to the maturity date or mandatory redemption date of any of the Company’s then-outstanding Series B Preferred Stock or Series C Preferred Stock or any extensions or refinancings of any of the foregoing, (ii) make certain other changes to the terms of the Original Term Loan Credit Agreement and (iii) make certain other changes to the terms of the Guarantee and Collateral Agreement, dated as of February 26, 2021, among the Company, the Subsidiary Guarantors and the Agent.

The Term Loans bear interest at a rate of 7.5% per annum payable in cash and 5.0% per annum payable “in-kind” or in cash at the Company’s option, for an aggregate interest rate of 12.5% per annum.

The Amended and Restated Term Loan Credit Agreement continues to limit, among other things, the ability of the Company and its Restricted Subsidiaries (as defined in the Amended and Restated Term Loan Credit Agreement) to (i) incur indebtedness, (ii) incur or create liens, (iii) dispose of assets, (iv) make restricted payments and (v) make investments. The Amended and Restated Term Loan Credit Agreement contains customary affirmative covenants, including delivery of certain of the Company’s financial statements, and customary event of default provisions, including a cross-default provision that would give rise to an event of default if there is a default under or acceleration of “Material Indebtedness” other than inter-company indebtedness. Material Indebtedness includes obligations having a principal amount of at least $20 million (increasing to $25 million after the Deleveraging Milestone Date). The Amended and Restated Term Loan Credit Agreement does not include a financial maintenance covenant or any subjective acceleration clauses.

### ABL Credit Agreement

Approximately $58 million letters of credit were issued under the 2023 Amended ABL Credit Agreement and Amended ABL Credit Agreement as of both July 21, 2023 and December 31, 2022. As noted above, upon the termination of the 2023 Amended ABL Credit Agreement, the letters of credit totaling $58 million were transferred to the Amended and Restated L/C Facility, increasing letters of credit under the Amended and Restated L/C Facility Agreement to $99 million. The lenders’ security interest in any of the Company’s or its subsidiaries assets or property securing the 2023 Amended ABL Credit Agreement was released.

### Letter of Credit Facility Agreement

Approximately $31 million and $43 million letters of credit were issued under the Amended and Restated L/C Facility Agreement and L/C Facility Agreement as of September 30, 2023 and December 31, 2022, respectively. The letters of credit under the Amended and Restated L/C Facility Agreement are collateralized by cash collateral (the “L/C Cash Collateral”). The L/C Cash Collateral was $32 million and $44 million at September 30, 2023 and December 31, 2022, respectively, which was classified as Restricted Cash.

On June 30, 2023, the Company and the Subsidiary Guarantors entered into an amendment (the “June 2023 L/C Facility Amendment”) to the 2023 Amended L/C Facility Agreement, (as amended and restated by the June 2023 L/C Facility Amendment, the “Amended and Restated L/C Facility Agreement”), with Bank of America, N.A., as L/C Lender, L/C Agent and Issuing Bank. The June 2023 L/C Facility Amendment became effective on July 21, 2023.

Under the terms and conditions of the June 2023 L/C Facility Amendment, the L/C Lender committed to issue additional letters of credit on the Company’s behalf in an aggregate amount of up to $50 million, to an aggregate principal amount of commitments of up to $100 million (the “L/C Facility Commitments”), until August 30, 2023, provided that, at all times, the Company posted L/C Cash Collateral in an amount greater than or equal to 104% of the aggregate amount of letters of credit issued and outstanding at any given time.

The Company used $59 million of the net proceeds from the Term Loans to cash collateralize the letters of credit transferred to the L/C Facility from the 2023 Amended ABL Credit agreement, increasing the balance on deposit in the L/C Cash Collateral account to $102 million. In August 2023 the Company used $68 million of the funds in the L/C Cash Collateral account to cash collateralize its undiscounted actuarial workers’ compensation obligations directly with the New York State Workers’ Compensation Board (“NYS WCB”), reducing the issued letters of credit to $31 million and the balance on deposit in the L/C Cash Collateral account to $32 million (see discussion below). The Amended and Restated L/C Facility Agreement does not include a minimum liquidity or financial maintenance covenant.

*(in millions)*

|  | September 30, 2023 | December 31, 2022 |
| --- | ---: | ---: |
| Cash, cash equivalents and restricted cash | $374 | $286 |

### Cash Flow Activity

*(in millions)*

| Cash flows from operating activities: | Nine Months Ended September 30, 2023 | 2022 | Year-Over-Year Change |
| --- | ---: | ---: | ---: |
| Net cash provided by (used in) operating activities | $21 | $(130) | $151 |
| Cash flows from investing activities: |  |  |  |
| Net cash used in investing activities: | (15) | (44) | 29 |
| Cash flows from financing activities: |  |  |  |
| Net cash provided by financing activities | 87 | 45 | 42 |
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | (5) | (14) | 9 |
| Net increase (decrease) in cash, cash equivalents and restricted cash | $88 | $(143) | $231 |

\[50\]

### Operating Activities

Net cash from operating activities improved $151 million for the nine months ended September 30, 2023 as compared with the corresponding period in 2022 primarily due to improved earnings, proceeds from insurance reimbursements, a refund from a governmental authority, decreased investment in inventory and an increase in liabilities excluding borrowings and trade payables driven by increase in deferred revenue associated with brand licensing arrangements. This improvement was partially offset by an increase in trade receivables driven by $44 million in receivables recorded for brand licensing arrangements and a reduction in trade payables. During the nine months ended September 30, 2023, Kodak received $17 million of insurance reimbursement proceeds of legal costs previously paid by the Company associated with investigations and litigation matters and a $9 million refund from a governmental authority.

### Investing Activities

Net cash used in investing activities for the nine months ended September 30, 2023 decreased $29 million compared to the corresponding period in 2022 due to the purchase of an equity interest in Wildcat in the third quarter of 2022 partially offset by an increase in additions to properties.

### Financing Activities

Net cash provided by financing activities for the nine months ended September 30, 2023 increased $42 million compared to the corresponding period in 2022 driven by the net proceeds of $90 million received in the third quarter of 2023 from the July 21, 2023 financing transactions.

### Other Uses of Cash Related to Financing Transactions

The holders of the Term Loans are entitled to quarterly cash interest payments at a rate of 7.5% per annum and holders of the Series B Preferred Stock are entitled to cumulative dividends payable quarterly in cash at a rate of 4.0% per annum. The holders of the Series C Preferred Stock are entitled to cumulative dividends payable quarterly “in-kind” in the form of additional shares of Series C Preferred Stock at a rate of 5.0% per annum. All interest and dividends have been paid when due.

### Other Collateral Requirements

The NYS WCB requires security deposits related to self‐insured workers’ compensation obligations, which security deposits are recalculated annually. Due to changes in 2019 to the manner in which the required security deposits are determined, the Company has been required to post additional collateral over the last several years. As of September 30, 2023, the Company had posted $75 million of collateral, representing 107% of the Company’s undiscounted actuarial workers’ compensation obligations. Effective May 1, 2023, the Company added New York to its existing workers compensation liability insurance policy and is no longer self-insured for future claims. As a result, the NYS WCB confirmed the Company will no longer be obligated to post any additional collateral, including the previously disclosed 50% credit rating-based assessment. Further, the NYS WCB confirmed the Company can request a review of the security deposits supporting the historical liability beginning on July 1, 2025 with the submission of a current actuarial report. Based on the results of the actuarial valuation report, the required security deposits may be eligible for reduction.

Based on the legacy nature of the Company’s workers’ compensation obligations, the undiscounted actuarial obligation has been declining and the Company expects it to continue to decline. While it may not be indicative of the rate of future declines, the undiscounted actuarial liability declined by an average of $5.5 million per year between 2014 and 2022. Accordingly, subject to the possibility of other changes to the calculation of required security deposits by the NYS WCB, the Company expects the amount of the required security deposits to decline over time and anticipates the gradual return of the capital used to support the security deposits that have been made.

As a result of the Company’s credit ratings, during the second quarter of 2020 two surety bond holders notified the Company they required approximately $9 million of incremental collateral. The Company reduced the surety bond value by approximately $9 million in July 2020 with an equivalent increase to an existing letter of credit with the NYS WCB. In the third quarter of 2023 the Company deposited $68 million directly with the NYS WCB and cancelled the corresponding letter of credit supporting the associated liability. The Company could be required to provide up to $4 million of letters of credit to the issuers of certain surety bonds in the future to fully collateralize the bonds.

### Defined Benefit Pension and Postretirement Plans

Kodak made net contributions (funded plans) or paid benefits (unfunded plans) totaling approximately $9 million to its defined benefit pension and postretirement benefit plans in the first nine months of 2023. For the balance of 2023, the forecasted contribution (funded plans) and benefit payment (unfunded plans) requirements for its pension and postretirement plans are approximately $4 million.

### Capital Expenditures

Cash flow from investing activities included $15 million of capital expenditures for the nine months ended September 30, 2023. Kodak expects approximately $20 million to $30 million of total capital expenditures for 2023.

### Critical Accounting Policies and Estimates

Preparation of the Company’s Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. The accounting policies most critical to the preparation of the consolidated financial statements and that require the most difficult, subjective or complex judgments are described in Management's Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. There have been no material changes in the Company's critical accounting policies or estimates since December 31, 2022.

## Market risk

As filed, 591 characters.

As noted in the 2022 Form 10-K, Kodak operates and conducts business in many foreign countries and as a result is exposed to fluctuations between the U.S. dollar and other currencies. Volatility in the global financial markets could increase the volatility of foreign currency exchange rates which would, in turn, impact sales and net income. For a discussion of the Company's exposure to market risk and how market risk is mitigated, refer to Part I, Item 1A "Risk Factors" and Part II, Item 7A, "Quantitative and Qualitative Disclosures About Market Risk", contained in the 2022 Form 10-K.

## Controls and procedures

As filed, 2,428 characters.

### Evaluation of Disclosure Controls and Procedures

Kodak maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in Kodak’s reports filed or submitted under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including Kodak’s Executive Chairman and Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Kodak’s management, with the participation of Kodak’s Executive Chairman and Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of Kodak’s disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q and have concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, Kodak’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective.

### Changes in Internal Control Over Financial Reporting

Kodak is in the process of a multi-year project to modernize and enhance the Company’s global information technology systems, to improve and standardize business and financial processes and to increase the efficiency and effectiveness of financial planning and reporting. As the phased implementation occurs, it may result in changes to processes and procedures which may result in changes to internal controls over financial reporting. As such changes occur, Kodak evaluates whether they materially affect the Company’s internal controls over financial reporting.

On May 16, 2023, Kodak acquired 100% of the outstanding shares of Graphic Systems Services, Inc. (“GSS”). GSS represented less than 1% of consolidated revenues for the three months ended September 30, 2023 and less than 1% of consolidated total assets as of September 30, 2023. As permitted by the SEC, Kodak elected to exclude GSS from its assessment of changes in internal controls over financial reporting.

There have been no changes in Kodak’s internal control over financial reporting during the most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, Kodak’s internal control over financial reporting.

## Risk factors

As filed, 208 characters.

See the Risk Factors set forth in Part I, Item 1A. of the 2022 Form 10-K for a detailed discussion of risk factors that could materially affect Kodak’s business, financial condition and results of operations.

Filed Nov 8, 2023.
Source: SEC EDGAR, the filing index for accession 0001437749-23-030954. Last ingested by Listed: Nov 3, 2026, 19:39 ET. No prices; not investment advice.