Kodak to Restate Results, Cut Jobs

Eastman Kodak Co. (EK) said Wednesday it would restate earnings for the first three quarters of 2004 and all of 2003 to fix accounting errors related to income taxes, pensions and retirement benefits and other issues.

Separately, the photography company said it would close a paper plant in its hometown of Rochester, N.Y., leading to about $50 million in restructuring charges and an unspecified number of job cuts.

Kodak is in the midst of a transition from its traditional film business to the digital era. It expects digital sales in 2005 will exceed traditional sales for the first time. It posted a loss in the fourth quarter but saw digital sales rise 40 percent in the period.

Kodak said the restatements would reduce 2004 net earnings by $21 million, or 7 cents per share. For 2003, net earnings will be reduced to a range of 75 cents to 85 cents per share, from 92 cents as reported.

While the restatements will have no material impact on revenue or cash flow, or on its ability to pay out retirement benefits.

Kodak said it would seek an extension for filing its annual report with securities regulators in order to have enough time to complete the restatements. That annual report will include an "adverse opinion" from auditors PricewaterhouseCoopers (search) on the company's internal controls over financial reporting.

On January 26, Kodak said it had discovered tax accounting errors that could delay the annual report and lead to a restatement. Executives said at the time there were no irregularities, but just errors, and they reiterated that stance Wednesday.

"Keep in mind that this situation arises from inadvertent accounting errors," Kodak Chief Financial Officer Robert Brust said in a statement.

The plant closure was reported separately in an unscheduled filing with the U.S. Securities and Exchange Commission. Of the $50 million in restructuring charges, Kodak said $3 million was for employee severance. After the plant closes Kodak said it would get its raw paper base from outside suppliers.

Shares in Kodak were not trading in after-hours dealing on Inet. The stock closed down 59 cents at $32.91 on the New York Stock Exchange (search).