Kodak 2008 Annual Report Download - page 36

34
Worldwide Revenues
Net sales for FPEG decreased 18% primarily due to Film Capture and Traditional Photofinishing, reflecting continuing volume
declines in the consumer film industry and reduced demand due to the global economic slowdown that began in the latter part of
2008, partially offset by favorable foreign exchange.Net worldwide sales of Film Capture and Traditional Photofinishing decreased
40% and 19%, respectively, in 2008 as compared with 2007.
Net worldwide sales for Entertainment Imaging decreased 5% compared with the prior year, driven by volume declines primarily
reflecting the effects of the writers’ strike in the first quarter of 2008, and reduced demand in the second half of 2008 from the delay
in creation of feature films resulting from uncertainty surrounding industry labor contract issues, as well as the weak economy. This
decrease was partially offset by favorable foreign exchange.
Gross Profit
The decrease in FPEG gross profit dollars is primarily a result of declines in sales volume within Film Capture as described above,
unfavorable price/mix across all SPGs, partially offset by favorable foreign exchange.
The decrease in FPEG gross profit margin was primarily driven by unfavorable price/mix across all SPGs. In addition, increased
manufacturing and other costs in Film Capture were driven by higher costs of silver, paper, and petroleum-based raw material and
other costs. These cost increases were largely offset by lower benefit costs (including other postemployment benefits) and the
benefit of lower depreciation expense as a result of the change in useful lives executed during the first quarter of this year.
Selling, General and Administrative Expenses
The decline in SG&A expenses for FPEG was attributable to lower benefit costs (including other postemployment benefits) and
ongoing efforts to achieve target cost models, partially offset by unfavorable foreign exchange.
Graphic Communications Group
(dollars in millions) For the Year Ended
December 31,
2008
%of
Sales 2007
%of
Sales
Increase /
(Decrease)
%
Change
Total net sales $ 3,334 $ 3,413 $ (79) -2%
Cost of goods sold 2,445 2,438 70%
Gross profit 889 26.7% 975 28.6% (86) -9%
Selling, general and administrative expenses 627 19% 657 19% (30) -5%
Research and development costs 231 7% 214 6% 17 8%
Earnings from continuing operations before
interest expense, other income (charges),
net and income taxes $31 1% $ 104 3% $ (73)-70%
For the Year Ended
December 31, Change vs. 2007
2008
Amount
Change vs.
2007 Volume Price/Mix
Foreign
Exchange
Manufacturing
and Other Costs
Total net sales $ 3,334 -2.3% -1.6% -4.1% 3.4% n/a
Gross profit margin 26.7% -1.9pp n/a -1.1pp -0.6pp -0.2pp