Kodak CEO Antonio Perez sent the following email to employees:
March 7, 2012
Over the past several weeks, the people of Kodak working together have accomplished a tremendous amount and shown incredible spirit and determination. We have refocused our business and engaged with our external stakeholders to demonstrate our commitment to keep Kodak on the right path for the future.
All of us on the senior executive team are looking forward to Thursday's Global Employee Town Meeting. We will discuss some of our achievements and milestones, as well as update you on progress with our reorganization. In advance of our meeting, I wanted to share with you that we are making progress from an operational and financial standpoint as well as our goals for 2012.
I am pleased to report that we have made significant progress against the four primary objectives we described for pursuing our Chapter 11 restructuring:
Bolster our liquidity. We now have access to $950 million in financing to continue running our operations, which requires compliance with the covenants that form the basis of the first two goals for the year described below. And due to our prudent management of our business, our cash position as of mid-February is ahead of where we projected.
Monetize non-strategic intellectual property. We are moving toward an auction of our digital imaging patent portfolio.
Fairly resolve legacy liabilities. We have exited some contracts and sponsorships that are not in our best interest – steps we could not have taken without the tools that Chapter 11 provides. We have also filed a court motion to address other legacy costs, such as U.S. retiree benefits. This motion contains our request to discontinue certain retiree medical benefits in alignment with our intent to preserve core benefits for the retirees affected. These benefits decisions are difficult, but they are essential to creating the Kodak of the future.
Focus on our most valuable business lines. We have already made some adjustments to our portfolio. As you know, we announced our decision to exit our digital cameras and accessories business, and we proposed to the court a process to sell KODAK Gallery through an auction. With respect to our digital growth strategy, you will hear from the management team at the Town Meeting about key customer wins and plans for the Drupa show in May.
I also wanted to discuss with you our four goals for 2012. Two goals deal with maintaining our DIP funding during the Chapter 11 process, and two relate to the structure and resources we need to ensure we are viable through and after Chapter 11.
The first goal is to maintain a specific level of liquidity in the U.S. – as measured by our cash on hand plus the amount we have available to borrow from our DIP line of credit. The targets vary by month, and we will track the measure monthly.
The second goal is a global measurement of earnings: cumulative 12-month adjusted EBITDA. EBITDA stands for earnings before interest, taxes, depreciation, and amortization; "adjusted" refers to the specific items that are excluded, as defined in the loan agreement. This measure varies from generally accepted accounting principles. It is a cumulative measure, which we will begin reporting in May.
Our third goal is to define our plan of reorganization. This means focusing on the right mix of businesses including traditional businesses, profitable digital businesses, and digital businesses that have potential for future growth and profitability. We must also appropriately size our cost structure to reflect the company that will emerge from Chapter 11. The target date for finalization of the plan of reorganization is January 2013.
Our fourth goal is to intensify our efforts around employee engagement and to instill confidence in the future of the company among Kodak people as well as customers, suppliers, and other partners. To this end, we are committed to continue to keep our employees, customers, and business partners informed of our progress towards these goals.
While there is still much hard work ahead to restructure the company, we are on the right path. The expressions of support we hear from our customers, our lenders, our suppliers, and from the public – and their commitment to doing business with us – gives us confidence about the strengths of Kodak and our ability to achieve a successful transformation.
Most of all, I want to thank you for all that you have done. I am looking forward to our meeting on Thursday.