Financial

Eastman Kodak released its second quarter results with a loss of US$191 million, as well as a 29 percent sales decline, when compared with the year-ago quarter. Sales in Kodak’s second quarter 2009 were US$1.8 billion (all figures in U.S. currency), compared with $2.485 billion in Q2 of 2008.

“We have every expectation that our cash flow pattern this year will mirror the pattern of previous years, with a sizable increase in cash generation in the second half of 2009,” said Antonio Perez, Chairman and Chief Executive Officer, Eastman Kodak. “During the second quarter we continued to execute on our strategy, with our consumer inkjet hardware and ink revenue growth significantly outpacing the market.” To that end, Perez pointed to the first sale of its Prosper S10 Imprinting System in July of this year, as well as a letter of intent from an unidentified customer to purchase a Prosper press.

Revenue from Kodak’s digital businesses totaled $1.173 billion, a 28 percent decline from $1.636 billion in the prior-year quarter, while revenue from its traditional business decreased 30 percent to $593 million. The company blamed these results on “industry-related declines” and “the negative impact on volumes related to the uncertainty of labour contract negotiations in the entertainment industry.”

During its second quarter, the Rochester-based company decreased “selling, general and administrative” expenses by 26 percent, as well as a 38 percent decrease in R&D expenses, which amounted to $84 million. Kodak held $1.132 billion in cash and cash equivalents as of June 30, 2009, while its debt level stood at $1.311 billion.

For its second quarter of 2008, Electronics For Imaging reported revenues of US$90.1 million, compared to US$143.8 million in the year ago quarter. In relating this significant quarter loss, the California-based company pointed to a delay in the commercial release of previously announced inkjet technologies.

“Our results reflect the continued challenges in our industry compounded by the delay in broad availability of our new line-up of inkjet printers. While our overall results are disappointing, we are pleased with the approximately 14 percent sequential growth in our inkjet business and the execution on our commitment to align spending with revenue, with operating expenses reduced by 22 percent year-over-year,” said Guy Gecht, CEO of EFI. “Despite the product delay, we remain very excited with the opportunities for our inkjet segment and the record number of industry-leading new products we plan to bring to market over the next several months.”

A Michigan circuit court has awarded Valassis US$300 million for compensatory damages in its lawsuit against News America Marketing (NAM), a subsidiary of News Corp. A jury verdict agreed with Valassis’ claim of unfair competition and tortious interference by NAM.

Valassis is a media buyer delivering over 10-billion impressions annually, as well as a large direct-mail printer and a provider of newspaper polybags. "We are pleased with the jury's verdict, and we look forward to moving ahead with our two other cases, including the antitrust case in the Eastern District of Michigan where any compensatory damages will be trebled," said Alan Schultz, Valassis Chairman, President and CEO. “Furthermore, I am very proud of the efforts of our employees who have been competing on this uneven playing field for nearly a decade."

Valassis has additional lawsuits pending against NAM in the United States District Court, Eastern District of Michigan, asserting violations of the Sherman Act, and in the Supreme Court of the State of California for the County of Los Angeles raising claims under California's Cartwright, Unfair Competition and Unfair Practices Acts.

The Eastern District of Michigan case and the California case have not reached a trail stage.


Xerox Corp. today announced revenues of US$3.7 billion for its second quarter of 2009, which represents an 18 percent drop from second-quarter 2008. The company states this includes a 5-point negative impact from currency.

"We have seen sequential improvement with revenue up 5 percent from the first quarter,” said Ursula Burns, Xerox Chief Executive Officer. “However, assuming current economic conditions persist, we expect revenue will remain under pressure during the balance of this year.”

Equipment sale revenue declined 29 percent during the company’s second quarter, while operating cash flow reached US$609 million. Xerox ended the second quarter with a cash balance of $1.2 billion, and total debt was down US$347 million through the first half of the year. Xerox plans to reduce overall debt by US$1 billion this year.

After its June 13 filing under Companies’ Creditors Arrangement Act for bankruptcy protection, Fraser Papers of Toronto receives a reorganization extension from the Ontario Superior Court of Justice.

The extension is for 90 days through October 16, 2009, and was supported by PricewaterhouseCoopers, the court appointed monitor of Fraser Papers’ CCAA process. The company also announced that on July 13, 2009, the U.S. Bankruptcy Court for the District of Delaware, recognizing the CCAA proceeding as a foreign main proceeding, granted a stay of proceedings for Fraser Papers.

In a statement about the protection extension, Fraser Papers also noted the approval of additional financing from the Government of New Brunswick, which is to be targeted toward the completion of the company's lumber mill in Plaster Rock, New Brunswick. Fraser Papers expects construction on the modernization project to commence in the coming weeks, with completion targeted for the end of the third quarter.

The Supreme Court of British Columbia has been petitioned by Catalyst Paper over recently set property tax rates in North Cowichan, Port Alberni and Campbell River; and potentially Powell River in another filing. These are the four municipalities holding Catalyst Paper’s four British Columbia-based paper mills.

In a press release about the action, Catalyst argues, under Section 262 of the Local Government Act, “that the tax rates are unreasonable and therefore beyond the municipalities' jurisdiction. Catalyst has held long-standing discussions with each of these municipalities in an effort to address the issue of unreasonable tax rates imposed on major industry. The bylaws being challenged would perpetuate disparities that are unsustainable in light of extremely challenging economic conditions.”

The company continues to state that major industry tax rates have been set at a rate 20 times above the residential rate in North Cowichan, while the other three municipalities have seen a smaller increase that is still 10 times the residential rate. Referencing British Columbia’s provincial neighbour, Catalyst points out that Alberta typically caps such rates at four times the residential rate.

Catalyst estimates that the new bylaws would result in a 2009 property tax cost of $19.3 million. That estimate excludes school, district and other provincial levies – “This is a modest reduction of about 10 per cent from the previous year's payments of $21.7 million, and remains far higher than the cost of municipal services consumed - estimated at between $4 and $6 million in 2008.”

Commenting on the action, Richard Garneau, CEO of Catalyst, stated, “We've done all we can to impress on municipal governments that this is a shared problem and that the viability of the industrial economy in coastal BC is at stake. Excessive property taxes are diverting scarce capital that's needed to support the long-term viability of our operations as we face one of the most difficult markets in decades.

“Legal action was not our first choice. But the current bylaws suggest that our appeals for tax equity have not been heard, and continuing to pay excessive tax bills with borrowed money is just not sustainable or prudent, especially in current credit markets."

Based in Richmond, BC, Catalyst is the largest producer of specialty printing papers and newsprint in Western North America and also produces market kraft pulp. It claims to own Western Canada's largest paper recycling facility. The company's six mills have a combined annual production capacity of 2.5 million tonnes.

After two days of competition in North Carolina at the Phoenix Challenge international flexography competition, the teams representing Gordon Graydon Memorial Secondary School placed first and third places. This marks the second year in a row teams from Gordon Graydon has topped the competition.

Hannah Plavnick and Stephanie Hammond won the first place gold medal with a score of 605 out of a possible 625. They each received a US$1000 bursary. This was the second 1st place standing for Plavnick as she placed 1st last year as well with another partner. Plavnick has been accepted into Ryerson University’s Graphic Communications Management program for the Fall of 2009.

Grant Izukawa and Abdul Murad placed third and brought home the bronze medals. They missed out of a second place finish by only six points. Second place went to a team from North Carolina.

Grade 10 student Frances Lee was recognized for the best T-shirt design, while instructor Peter Belanger won the Diann Teague award for leading the winning team. Twenty teams were part of the competition, including three from Canada.

After two days of competition in North Carolina at the Phoenix Challenge international flexography competition, the teams representing Gordon Graydon Memorial Secondary School placed first and third places. This marks the second year in a row teams from Gordon Graydon has topped the competition.

Hannah Plavnick and Stephanie Hammond won the first place gold medal with a score of 605 out of a possible 625. They each received a US$1000 bursary. This was the second 1st place standing for Plavnick as she placed 1st last year as well with another partner. Plavnick has been accepted into Ryerson University’s Graphic Communications Management program for the Fall of 2009.

Grant Izukawa and Abdul Murad placed third and brought home the bronze medals. They missed out of a second place finish by only six points. Second place went to a team from North Carolina.

Grade 10 student Frances Lee was recognized for the best T-shirt design, while instructor Peter Belanger won the Diann Teague award for leading the winning team. Twenty teams were part of the competition, including three from Canada.

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