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In 3rd Quarter 2011 Report, Kodak Expects Digital Imaging Patent Portfolio Proceeds to ‘Materially Increase’ Cash Balance

November 3, 2011

A Nov. 3 press release on Eastman Kodak Co.’s third quarter 2011 report states that the company expects proceeds from the future sale of digital imaging patents to “materially increase” its cash balance.

Struggling for years in its traditional areas of film and digital cameras products, the company has shifted its focus new to “core digital growth businesses – Consumer and Commercial Inkjet, Workflow Software & Services, and Packaging Solutions.” These core areas, it reported “increased 13%, fueled by 44% revenue growth in Consumer Inkjet printers and ink, and 89% revenue growth in Packaging Solutions.”

“More than anything, the results of this quarter reflect our continued progress toward establishing digital growth businesses that will form the nucleus of a new Kodak,” said Kodak Chairman and CEO Antonio M. Perez in a press release.“We now expect to end the year with as much as $1.4 billion in cash, before any proceeds from the sale of our digital imaging patent portfolios, reflecting the company’s seasonal generation of cash in the fourth quarter,” Perez said. “Remember as well that the eventual sale of our digital patent portfolios will materially increase our cash balance and help to accelerate our efforts to complete the transformation.”

The company continued:

Update on Intellectual Property Activities

As the company has previously discussed, Kodak’s intellectual property strategy has three goals: To provide the company with design freedom to develop and introduce innovative new products, to provide access to new markets and new partnerships, and to generate income and cash.

In recent years, in keeping with that strategy, the company has actively monetized its intellectual property through a series of individual transactions as a way to fund its digital transformation. Throughout this period, as previously discussed, the company has also contemplated, at an appropriate point in time, shifting its monetization approach. Given the recent trends in the IP marketplace, and a heightened demand for premier intellectual property portfolios, now is the appropriate time to make this change. As a result, the company announced in July its intention to explore strategic alternatives for approximately 1,100 U.S. digital imaging patents, which represent about 10% of its patent portfolio and which are not core to its future. The company is pleased with the progress and level of interest in the portfolios. When the sale of these portfolios does occur, the company anticipates the proceeds will materially increase its cash balance.

The company’s updated outlook, detailed below, does not include any income or cash flow from the sale of its digital imaging patent portfolios, nor does it contemplate any resolution of the intellectual property litigation currently before the U.S. International Trade Commission. The company remains confident that it will ultimately prevail in its current litigation involving Apple and Research In Motion.


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