Kodak 2005 Annual Report Download - page 44

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Earnings From Continuing Operations
Net earnings from continuing operations for 2004 were $81 million, or $.28 per basic and diluted share, as compared with net earnings from
continuing operations for 2003 of $189 million, or $.66 per basic and diluted share, representing a decrease of $108 million, or 57%. The decrease in
net earnings from continuing operations is primarily attributable to the reasons outlined above.
Digital & Film Imaging Systems
Worldwide Revenues
Net worldwide sales for the D&FIS segment were $9,366 million for 2004 as compared with $9,415 million for 2003, representing a decrease of
$49 million, or 1%, which includes a favorable impact from exchange of 3%. Approximately 3.8 percentage points of the decrease in net sales was
attributable to price/mix declines driven primarily by declines in traditional fi lm products as well as consumer digital cameras and inkjet media. This
decrease was partially offset by favorable exchange, which increased revenues by approximately 3.1 percentage points.
D&FIS segment net sales in the U.S. were $3,900 million for the current and prior year. D&FIS segment net sales outside the U.S. were
$5,466 million for the current year as compared with $5,515 million for the prior year, representing a decrease of $49 million, or 1%, which includes a
favorable impact from exchange of 5%.
Digital Strategic Product Groups’ Revenues
D&FIS segment digital product sales were $2,641 million for the current year as compared with $1,802 million for the prior year, representing an
increase of $839 million, or 47%, primarily driven by the consumer digital capture SPG. Net worldwide sales of consumer digital capture products,
which include consumer digital cameras, accessories, memory products, and royalties, increased 58% in 2004 as compared with 2003, primarily
refl ecting strong volume increases and favorable exchange, partially offset by negative price/mix. Sales continue to be driven by strong consumer
acceptance of the EasyShare digital camera system and the success of new digital camera product introductions during the current year.
The Company gained worldwide digital camera unit market share when compared with the prior year. According to market research fi rm IDC’s
full year 2004 digital camera study, Kodak leads the industry in the U.S. with a 21.9 percent market share. Digital camera market share has also
improved internationally, giving Kodak the number one market share in Australia, Argentina, Peru and Chile as well as putting it among the top three
positions in Germany, United Kingdom, Mexico and Brazil.
Net worldwide sales of picture maker kiosks and related media increased 43% in 2004 as compared with 2003, primarily due to strong volume
increases and favorable exchange. Sales continue to be driven by strong market acceptance of Kodak’s new generation of kiosks as well as an
increase in consumer demand for digital printing at retail.
Net worldwide sales from the home printing solutions SPG, which includes inkjet photo paper and printer docks/media, increased 57% in the current
year as compared with the prior year. For inkjet paper, 2004 was marked by increased competition from store brands and the mix shift associated
with consumer’s preference for smaller format papers. Kodak’s printer dock products continued to experience strong sales growth during 2004.
Traditional Strategic Product Groups’ Revenues
D&FIS segment traditional product sales were $6,725 million for the current year as compared with $7,613 million for the prior year, representing a
decrease of $888 million, or 12%, primarily driven by declines in the fi lm capture SPG and the consumer output SPG. Net worldwide sales of the fi lm
capture SPG, including consumer roll fi lm (35mm fi lm and Advantix fi lm), one-time-use cameras (OTUC), professional fi lms, reloadable traditional
fi lm cameras and batteries/videotape, decreased 17% in 2004 as compared with 2003, primarily refl ecting volume declines and negative price/mix
experienced for all signifi cant fi lm capture product categories. These declines were partially offset by favorable exchange.
U.S. consumer fi lm industry sell-through volumes decreased approximately 18% in 2004 as compared with 2003. Kodak’s sell-in consumer fi lm
volumes declined 21% as compared with the prior year, refl ecting a decrease in U.S. retailers’ inventories.
Net worldwide sales for the retail photofi nishing SPG, which includes color negative paper, equipment and services, chemistry, and photofi nishing
services at retail, decreased 10% in 2004 as compared with 2003, primarily refl ecting lower volumes of Qualex retail photofi nishing services, partially
offset by favorable exchange.
Net worldwide sales for the wholesale photofi nishing SPG, which includes color negative paper, equipment, chemistry, and photofi nishing services at
Qualex in the U.S. and Consumer Imaging Services (CIS) outside the U.S., decreased 32% in 2004 as compared with 2003, primarily refl ecting lower
volumes, partially offset by favorable exchange. The lower volumes refl ect the effects of digital replacement.
Net worldwide sales for the entertainment fi lms SPG, including origination and print fi lms to the entertainment industry increased 10% in 2004 as
compared with 2003, refl ecting volume increases and favorable exchange that was partially offset by negative price/mix.