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Kodak 4Q out of focus
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January 14, 1999: 8:42 a.m. ET
Earnings up over last year, but not enough to beat Street forecasts
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NEW YORK (CNNfn) - Eastman Kodak Co. reported higher fourth-quarter earnings Thursday, but the figure Wall Street was looking for didn't develop.
Rochester, N.Y.-based Eastman Kodak Co. (EK), a component of the Dow Jones industrial average, reported net earnings of $272 million, or a diluted 83 cents per share, compared with a loss of $744 million, or $2.29 per share, a year earlier.
However, Wall Street was looking for this year's fourth quarter earnings to reach $1.15 per share, according to First Call.
The photo products maker said both quarters were hit by one-time charges, including a $1.5 billion pre-tax charge for restructuring, asset write downs and other charges in 1997.
Kodak said sales and earnings during the latest quarter were hit hard by dramatic slowdowns in the company's Office Imaging business and the economic turmoil in Russia.
"1998 was a year of excellent progress for Kodak, despite continuing intense competition, the issues with the Office Imaging business, and on-going challenges in emerging markets," said George Fisher, Kodak's chief executive officer. "On the competitive front, we arrested our share loss in the U.S., closing out the year with a share increase for the consumer film in that market."
Sales slipped 6 percent to $3.563 billion for the 1998 fourth quarter from $3.779 billion a year ago. Excluding the effects of forming Kodak Polychrome Graphics and the reclassification of certain promotional expenses, sales declined 2 percent.
The company said sales would have been essentially level without the impact of emerging markets during the quarter.
Net earnings during the quarter were reduced $71 million after tax, or 22 cents per share, by several factors, including an after-tax charge of $87 million connected with Office Imaging, $30 million in charges associated with the November acquisition of Imation, primarily for in-process research and development, and $11 million for litigation.
These charges were partially offset by an after-tax gain of $57 million from the sale of NanoSystems. Adjusting for these factors, net earnings would have been $1.05 per share for the fourth quarter of 1998. This compares with net earnings of 75 cents per share during the fourth quarter of 1997, when adjusting for restructuring.
For all 1998, net earnings were $1.390 billion, or $4.24 a share, compared with $5 million, or 1 cent a share, for 1997. Adjusting for charges and other factors, 1998 net earnings would have been $1.429 billion, compared with $1.148 billion for 1997. Diluted earnings per share would have been $4.37 for 1998, compared with $3.46 for 1997, a 26 percent improvement.
Full year sales were $13.406 billion in 1998, down 8 percent from $14.538 billion in 1997. Adjusting for the formation of Kodak Polychrome Graphics and the reclassification of certain promotional expenses, sales declined 5 percent. One-third of the decline resulted from emerging markets, the company said.
Kodak shares closed down 15/16 Wednesday at 78-11/16. 
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