Kodak 2009 Annual Report Download - page 38

36
Graphic Communications Group
(dollars in millions) For the Year Ended
December 31,
2009
% of
Sales 2008
% of
Sales
Increase /
(Decrease)
%
Change
Total net sales $ 2,726 $ 3,334 $ (608) -18%
Cost of goods sold 2,073 2,445 (372) -15%
Gross profit 653 24.0% 889 26.7% (236) -27%
Selling, general and administrative expenses 524 19% 637 19% (113) -18%
Research and development costs 171 6% 221 7% (50) -23%
(Loss) earnings from continuing operations
before interest expense, other income
(charges), net and income taxes $ (42) -2% $ 31 1% $ (73) -235%
For the Year Ended
December 31, Change vs. 2008
2009
Amount
Change vs.
2008 Volume Price/Mix
Foreign
Exchange
Manufacturing
and Other Costs
Total net sales $ 2,726 -18.2% -14.5% -1.7% -2.0% n/a
Gross profit margin 24.0% -2.7pp n/a -1.1pp -0.8pp -0.8pp
Revenues
GCG’s 2009 revenue declines likely reflect the impact of ongoing global economic uncertainties, which depressed global print
demand and associated capital investments in the printing industry.
The decrease in GCG net sales for 2009 was driven by volume declines and unfavorable foreign exchange across all SPGs.
Unfavorable price/mix, primarily within Prepress Solutions and Digital Printing Solutions, reflects both a shift in demand toward
products requiring lower levels of customer investment and increased price pressures in commercial printing due to the economic
downturn in the industry, partially offset by favorable price/mix within Document Imaging.
Net sales of Prepress Solutions decreased 20%, primarily driven by volume declines, with unfavorable price/mix and foreign
exchange also contributing to the overall decrease in revenues. The volume decreases were largely attributable to the decline in
worldwide print demand, which reduced demand for plate consumables and prepress equipment.
Net sales of Digital Printing Solutions decreased 12%, as price/mix, volume, and foreign exchange were all unfavorable. For
equipment revenues within the SPG, unfavorable volumes were driven by color electrophotographic equipment, while unfavorable
price/mix was largely attributable to commercial inkjet equipment. For consumables revenues within the SPG, commercial inkjet and
black and white electrophotographic performance was driven by volume declines, partially offset by favorable price/mix. Favorable
color electrophotographic consumable volumes were offset by unfavorable price/mix. Equipment and consumable performance was
impacted by decreased capital investment levels in an uncertain economy and the worldwide decline in print demand, which drove a
shift in equipment placements toward lower-priced models and increased competitive pricing.
Net sales of Document Imaging decreased 10%, driven by lower volumes and unfavorable foreign exchange, partially offset by
favorable price/mix in the scanner product lines. The volume declines were largely attributable to decreased demand for scanning
and imaging products and services associated with delays in upgrades of scanning capacity, partially offset by sales stemming from
the acquisition of the scanner division of BÖWE BELL + HOWELL, which closed in the third quarter of 2009.
Net sales of Enterprise Solutions decreased 36%, primarily due to volume declines in sales of workflow software and print controllers
as a result of fewer prepress and digital printing equipment placements.