Kodak 2011 Annual Report Download - page 43

The decrease in GCG net sales from 2009 to 2010 was primarily due to unfavorable price/mix in Prepress Solutions (-4%), partially offset by
volume improvements across all SPGs (+3%). The unfavorable price/mix primarily reflects competitive pricing and overcapacity within the
printing industry. The volume improvements were largely driven by growth in digital plates and computer-to-plate equipment within Prepress
Solutions ; commercial inkjet equipment, including PROSPER S10 imprinting systems within Digital Printing Solutions ; and document imaging
scanners, including the introduction of the Kodak i4000 Series Scanners within Business Services and Solutions .
Three of the Company’s four digital growth initiatives are reported in GCG: Packaging, within Prepress Solutions ; Inkjet, within Digital Printing
Solutions ; and Workflow and Services, within Business Services and Solutions. Revenue grew a combined 4% for these businesses from 2010 to
2011, contributing approximately 1% to GCG’s overall sales growth year over year.
Gross Profit
The decrease in gross profit margin from 2010 to 2011 for GCG was driven by increased manufacturing and other costs, primarily due to increased
costs in Digital Printing Solutions (-3pp), attributable to continuing start-up costs associated with the stabilization of the PROSPER printing
systems. In addition, unfavorable price/mix in Prepress Solutions (-2pp), largely due to pricing pressures within the industry, contributed to the
decline.
The increase in gross profit margin from 2009 to 2010 for GCG was primarily due to reduced manufacturing costs, including aluminum costs (+4
pp). Partially offsetting this reduction in cost was unfavorable price/mix within Prepress Solutions (-3 pp), due to the reasons outlined in the Revenues
discussion above.
Selling, General and Administrative Expenses
The decrease in SG&A expenses from 2010 to 2011 and the increase in SG&A expenses from 2009 to 2010 were primarily attributable to advertising
campaigns run in 2010.
Research and Development Costs
The decreases in R&D costs were primarily due to the rationalization of investments.
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