Kodak 2011 Annual Report Download - page 41

As announced on February 9, 2012, the Company plans to phase out its dedicated capture devices business, including digital cameras, pocket video
cameras, and digital picture frames in the first half of 2012.
Revenues
CDG’s 2011 revenue decline , as compared with the same period in 2010, was primarily attributable to unfavorable price/mix, driven by a decrease in
non-recurring intellectual property royalty revenues (-28%). Also contributing to the decline were lower volumes in Digital Capture and Devices (-
10%), largely reflective of the Company’s focus on improved profitability versus revenue growth. Partially offsetting these declines were higher
volumes within Consumer Inkjet Systems (+4%), due to continued positive customer response as noted above. Total revenues for Consumer Inkjet
Systems grew 39% from the prior year period. The volume increases experienced by the Company outpaced the consumer printing industry, which
management believes is reflective of how the Company’s value proposition continues to resonate with customers.
CDG’s 2010 revenue increase of 4% as compared with the same period in 2009 was primarily due to an increase in revenues from non-recurring
intellectual property licensing agreements (+15%), partially offset by unfavorable price/mix in the other components of Digital Capture and Devices due
to pricing pressures in the industry (-7%). Volume improvements in Consumer Inkjet Systems (+3%) also contributed to the revenue increase. Partially
offsetting these increases were volume declines in Retail Systems Solutions (-4%), primarily due to the expiration of a significant customer contract in
2009. Total revenues for Consumer Inkjet Systems grew 29% from the prior year.
Included in revenues were non-recurring intellectual property licensing agreements within Digital Capture and Devices . These licensing agreements
contributed $64 million, $838 million, and $435 million to revenues in 2011, 2010, and 2009, respectively.
Gross Profit
The decrease in gross profit margin from 2010 to 2011 was primarily attributable to unfavorable price/mix within Digital Capture and Devices , driven
by lower non-recurring intellectual property royalty revenues (-25pp). Unfavorable price/mix, due to competitive pricing pressures within Digital
Capture and Devices (-3pp) and Consumer Inkjet Systems (-2pp), also contributed to the decline. These declines were partially offset by ongoing cost
improvements within Consumer Inkjet Systems (+4pp), due to improved quality and component cost reductions.
The increase in gross profit margin from 2009 to 2010 for CDG was primarily attributable to the increase in non-recurring intellectual property licensing
revenues (+10pp) included in price/mix within Digital Capture and Devices.
This was partially offset by unfavorable price/mix in the other components of
Digital Capture and Devices
(-2pp), largely related to competitive pricing pressures, and by price/mix declines within Retail Systems Solutions (-1pp),
primarily due to the expiration of a significant customer contract in 2009. Cost improvements, primarily within Digital Capture and Devices (+4pp) and
Consumer Inkjet Systems (+2pp), positively impacted gross profit margin as a percent of sales and were largely the result of supplier cost reductions and
improved product life cycle management .
Included in gross profit were non-recurring intellectual property licensing agreements within Digital Capture and Devices . These licensing agreements
contributed $64 million, $838 million, and $435 million to gross profit in 2011, 2010, and 2009, respectively.
For the Year Ended
December 31,
Change vs. 2009
2010 Amount
Change vs.
2009
Volume
Price/Mix
Foreign
Exchange
Manufacturing
and Other
Costs
Total net sales
$
2,731
4
%
-
1
%
6
%
-
1
%
n/a
Gross profit margin
37
%
12pp
n/a
6pp
0pp
6pp
39