Kodak is warning that its future in business is looking very blurry.
The iconic 133-year-old business cautioned Monday that there’s “substantial doubt” about its ability to continue as a going concern because it might not have the financial resources to meet its future debt obligations, according to an Aug. 11 regulatory filing. A so-called going concern warning is an accounting term that signals a risk that a business might cease operations.
Shares of Kodak plunged $1.73, or 26%, to $5.05 in Tuesday morning trading. Reached for comment, a Kodak spokesperson pointed to the statement in its regulatory filing.
The warning is the latest development in the photography company’s storied history, which includes introducing one of the first consumer cameras in the 1880s and mass manufacturing film rolls for hobbyists and professionals alike. But Kodak struggled to adapt when digital cameras overtook film starting in the 1990s, leading to a bankruptcy filing in 2012.
Its current financial crunch is tied to almost $500 million in short-term debt obligations, as well as more than $200 million in pension liabilities. Last year, Kodak had said it would end its pension plan in order to reduce debt, according to the Wall Street Journal.
Kodak should have “a clear understanding by Aug.15 of how we will satisfy our obligations to all plan participants,” Chief Financial Officer David Bullwinkle said in a statement, referring to the pension plan.
A Kodak moment
Rochester, New York-based Eastman Kodak, founded by inventor George Eastman in 1892, mass produced the famed Brownie and Instamatic cameras, popularizing photography as a pastime for generations of Americans. Its yellow-and-red film boxes were ubiquitous in photo shops and other retailers.
Eastman said his goal was “to make the camera as convenient as the pencil,” according to the Kodak website.
But Kodak faced competition from Japanese companies, including Fujifilm in the 1990s, as well as the shift to digital technology, leading to its filing for bankruptcy protection in 2012.
The company wound up selling off many of its businesses and patents, while shutting down the camera manufacturing unit that first made it famous. It received approval for its plan to emerge from court oversight a year later.
At the time, Kodak was looking to recreate itself as a new, much smaller company focused on commercial and packaging printing.
Kodak is now nearing completion on a manufacturing plant to create regulated pharmaceutical products. The company already makes unregulated key starting materials for pharmaceuticals. Production at the retrofitted facility is expected to start later this year.
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