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Kodak’s Q1 Consumer Digital, Film Sales Down

5/04/2006 09:04:00 AM Eastern

Rochester, N.Y. — Eastman Kodak reported lower sales in its consumer digital unit along with its film and photofinishing system business, with a $94 million loss for the former and lower profits for the latter during the first quarter, ended March 31.

Consumer digital sales totaled $498 million, down 10 percent. Loses from operations for the segment was $94 million, compared with a year-ago loss of $58 million. This primarily reflects higher retailer inventory on an industry-wide basis, previously announced price reductions for thermal media, and increased depreciation charges due to the asset useful life changes made in the third quarter of 2005, partially offset by a year-over-year improvement in digital capture earnings, the company said.

Still, Antonio Perez, chairman/CEO, commented, “On the consumer side, our Easyshare system just marked its fifth anniversary and continues to set the standard for ease of use and imaging innovation. In January, we brought to market the world’s first dual-lens digital camera, which has been very positively received by technology experts and consumers worldwide.”

Kodak’s film and photofinishing system sales were $916 million, down from $1.268 billion in the year-ago quarter. Earnings from operations were $29 million, compared with $71 million in the year-ago quarter. The increased non-cash charges for depreciation, due to the asset useful life changes made in the third quarter of 2005, account for more than half of this decline, the company said.

Overall sales for Kodak were $2.89 billion during the first quarter, an increase of 2 percent over the same period last year and recorded a loss of $298 million, which the company blamed on restructuring charges of ($197 million after taxes) and rising silver and oil costs.

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