UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x☒

Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, ~~2016~~2017

o☐

Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File Number 1-87

EASTMAN KODAK COMPANY

(Exact name of registrant as specified in its charter)

NEW JERSEY		16-0417150
(State of incorporation)		(IRS Employer Identification No.)

343 STATE STREET, ROCHESTER, NEW YORK		14650
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: 585-724-4000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes x☒ No o☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months. Yes x☒ No o☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company.

See definition of “large accelerated filer,” “accelerated filer” ~~and~~ “smaller reporting company” and “emerging growth company in Rule 12b-2 of the Exchange Act.

Large accelerated filer	o	☐	Accelerated filer	x☒
Non-accelerated filer	o	☐ (Do not check if a smaller reporting company)	Smaller reporting company	o ☐
Emerging growth company		☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o☐ No x☒

~~Indicate~~As of August 1, 2017, the ~~number of~~registrant had 42,489,231 shares ~~outstanding of each of the issuer’s classes~~ of common stock, ~~as of the latest practicable date.~~$0.01 par value per share, outstanding.

~~Title of each Class~~

~~Number of Shares Outstanding at~~

~~August 8, 2016~~

~~Common Stock, $0.01 par value~~

~~42,247,470~~

[1]

EASTMAN KODAK COMPANY

Form 10-Q

June 30, ~~2016~~2017

Table of Contents

		Page
Part I.—Financial Information

Item 1.	Financial Statements	3
	Consolidated Statement of Operations (Unaudited)	3
	Consolidated Statement of Comprehensive (Loss) Income (Unaudited)	4
	Consolidated Statement of Financial Position (Unaudited)	5
	Consolidated Statement of Cash Flows (Unaudited)	6
	Notes to Financial Statements (Unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2122
	Liquidity and Capital Resources	3234
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3436
Item 4.	Controls and Procedures	3436

Part II. —Other Information

Item 1.	Legal Proceedings	3637
Item 2.	Unregistered Sales of Securities and Use of Proceeds	3637
Item 5.	Other Information	37
Item 6.	Exhibits	37

	Signature	38
	Index to Exhibits	39

[2]

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

EASTMAN KODAK COMPANY

CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)

(in millions, except per share data)

	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended						Six Months Ended
	2016			2015			2016			2015			June 30,						June 30,
(in millions)													2017			2016			2017			2016
Revenues
Sales	$	323		$	353		$	611		$	679		$	306		$	342		$	586		$	639
Services		74			81		148				166			75			81			152			161
Total revenues		397			434			759			845			381			423			738			800
Cost of revenues
Sales	248				292		476				560			240			261			462			497
Services	49				58		97				118			50			55			102			108
Total cost of revenues		297			350			573			678			290			316			564			605
Gross profit		100			84			186			167			91			107			174			195
Selling, general and administrative expenses	50				58		90				110			53			58			106			103
Research and development costs	10				12		19				25			15			16			30			31
Restructuring costs and other	7				5		11				22			11			7			18			11
Other operating (income) expense, net		(6	)		(1	)	8				2
Income from continuing operations before interest expense, other charges, net, reorganization items, net and income taxes		39			10			58			8
Other operating expense (income), net														2			(6	)		12			8
Earnings from continuing operations before interest expense, other (income) charges, net and income taxes														10			32			8			42
Interest expense	16				15		32				30			8			16			16			32
Other charges, net	1				2		2				12
Reorganization items, net		-			-			-			5
Income (loss) from continuing operations before income taxes		22			(7	)		24			(39	)
Other (income) charges, net														(9	)		1			(29	)		2
Earnings from continuing operations before income taxes														11			15			21			8
Provision for income taxes	6				8		12				13			4			6			7			13
Income (loss) from continuing operations		16			(15	)		12			(52	)
Earnings (loss) from continuing operations														7			9			14			(5	)
Loss from discontinued operations, net of income taxes		(8	)		(8	)		(19	)		(25	)		(3	)		(1	)		(3	)		(2	)
Net earnings (loss)		8			(23	)		(7	)		(77	)		4			8			11			(7	)
Less: Net income attributable to noncontrolling interests	1				1		4				5			—			1			—			4
NET EARNINGS (LOSS) ATTRIBUTABLE TO EASTMAN KODAK COMPANY	$	7		$	(24	)	$	(11	)	$	(82	)	$	4		$	7		$	11		$	(11	)
Basic net earnings (loss) per share attributable to Eastman Kodak Company common shareholders:
Basic net (loss) earnings per share attributable to Eastman Kodak Company common shareholders:
Continuing operations	$	0.36		$	(0.38	)	$	0.19		$	(1.36	)	$	0.05		$	0.19		$	0.09		$	(0.21	)
Discontinued operations		(0.19	)		(0.19	)		(0.45	)		(0.60	)		(0.07	)		(0.02	)		(0.07	)		(0.05	)
Total	$	0.17		$	(0.57	)	$	(0.26	)	$	(1.96	)	$	(0.02	)	$	0.17		$	0.02		$	(0.26	)
Diluted net earnings (loss) per share attributable to Eastman Kodak Company common shareholders:
Diluted net (loss) earnings per share attributable to Eastman Kodak Company common shareholders:
Continuing operations	$	0.35		$	(0.38	)	$	0.19		$	(1.36	)	$	0.05		$	0.18		$	0.09		$	(0.21	)
Discontinued operations		(0.19	)		(0.19	)		(0.45	)		(0.60	)		(0.07	)		(0.02	)		(0.07	)		(0.05	)
Total	$	0.16		$	(0.57	)	$	(0.26	)	$	(1.96	)	$	(0.02	)	$	0.16		$	0.02		$	(0.26	)
Number of common shares used in basic and diluted net earnings (loss) per share
Number of common shares used in basic and diluted net (loss) earnings per share
Basic		42.2			41.9			42.2			41.9			42.5			42.2			42.5			42.2
Diluted		42.6			41.9			42.4			41.9			42.7			42.6			42.7			42.2

The accompanying notes are an integral part of these consolidated financial statements.

[3]

EASTMAN KODAK COMPANY

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) (Unaudited)

(in millions)

	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended						Six Months Ended
	2016			2015			2016			2015			June 30,						June 30,
(in millions)													2017			2016			2017			2016
NET INCOME (LOSS)	$	8		$	(23	)	$	(7	)	$	(77	)	$	4		$	8		$	11		$	(7	)
Less: Net income attributable to noncontrolling interests		1			1			4			5			—			1			—			4
Net income (loss) attributable to Eastman Kodak Company		7			(24	)		(11	)		(82	)		4			7			11			(11	)
Other comprehensive loss, net of tax:
Currency translation adjustments		1			3			9			(4	)		—			1			14			9
Unrealized losses on available-for-sale securities, net of tax		-			(1	)		-			(1	)
Pension and other postretirement benefit plan obligation activity, net of tax		(2	)		(2	)		(148	)		5			(3	)		(2	)		(6	)		(148	)
Other comprehensive loss, net of tax attributable to Eastman Kodak Company		(1	)		-			(139	)		-
Other comprehensive (loss) income, net of tax attributable to Eastman Kodak Company														(3	)		(1	)		8			(139	)
COMPREHENSIVE INCOME (LOSS), NET OF TAX ATTRIBUTABLE TO EASTMAN KODAK COMPANY	$	6		$	(24	)	$	(150	)	$	(82	)	$	1		$	6		$	19		$	(150	)

The accompanying notes are an integral part of these consolidated financial statements.

[4]

EASTMAN KODAK COMPANY

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Unaudited)

							June 30,			December 31,
(in millions)	June 30, 2016			December 31, 2015			2017			2016
ASSETS
Cash and cash equivalents	$	513		$	546		$	370		$	434
Receivables, net		318			350			298			311
Inventories, net		286			263			313			271
Deferred income taxes		19			22
Other current assets		27			25			23			23
Current assets held for sale		140			72
Total current assets		1,303			1,278			1,004			1,039
Property, plant and equipment, net of accumulated depreciation of $347 and $314, respectively		368			394
Property, plant and equipment, net of accumulated depreciation of $376 and $343, respectively								320			342
Goodwill		88			88			88			88
Intangible assets		93			119
Intangible assets, net								108			121
Restricted cash		36			43			11			36
Deferred income taxes		24			23			42			35
Other long-term assets		130			122			120			115
Long-term assets held for sale		-			71
TOTAL ASSETS	$	2,042		$	2,138		$	1,693		$	1,776
LIABILITIES AND EQUITY

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND EQUITY (DEFICIT)
Accounts payable, trade	$	186		$	186		$	177		$	200
Current portion of long-term debt		4			4
Short-term borrowings and current portion of long-term debt								7			6
Other current liabilities		226			247			212			211
Current liabilities held for sale		28			22
Total current liabilities		444			459			396			417
Long-term debt, net of current portion		672			673			404			405
Pension and other postretirement liabilities		698			619			568			603
Other long-term liabilities	267				277			224			268
Long-term liabilities held for sale		-			7
Total Liabilities		2,081			2,035			1,592			1,693
Commitments and Contingencies (Note 6)

Commitments and Contingencies (Note 8)

Redeemable, convertible Series A preferred stock, no par value, $100 per share liquidation preference							160			156

Equity (Deficit)
Common stock, $0.01 par value		-			-			—			—
Additional paid in capital		639			633			636			641
Treasury stock, at cost		(6	)		(5	)		(8	)		(8	)
Accumulated deficit		(294	)		(283	)		(257	)		(268	)
Accumulated other comprehensive loss		(406	)		(267	)		(430	)		(438	)
Total Eastman Kodak Company shareholders’ (deficit) equity		(67	)		78
Noncontrolling interests		28			25
Total (deficit) equity		(39	)		103
TOTAL LIABILITIES AND EQUITY (DEFICIT)	$	2,042		$	2,138
Total shareholders’ deficit								(59	)		(73	)
TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND DEFICIT							$	1,693		$	1,776

The accompanying notes are an integral part of these consolidated financial statements.

[5]

EASTMAN KODAK COMPANY

CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

~~(in millions)~~

	Six Months Ended June 30,						Six Months Ended
	2016			2015			June 30,
(in millions)							2017			2016
Cash flows from operating activities:
Net loss	$	(7	)	$	(77	)
Net earnings (loss)							$	11		$	(7	)
Adjustments to reconcile to net cash used in operating activities:
Depreciation and amortization		57			77			41			57
Pension and other postretirement income		(72	)		(54	)
Net gain on sales of businesses/assets		(7	)		(4	)
Non-cash restructuring costs, asset impairments and other charges		26			6
Pension income								(59	)		(72	)
Change in fair value of embedded conversion features derivative liability								(36	)		—
Prosper asset remeasurement								12			—
Non-cash restructuring costs, asset impairments and other charges, net								10			26
Net gain on sales of assets/businesses								(2	)		(7	)
Stock based compensation		3			11			5			3
Payment of claims		-			(10	)
Provision for deferred income taxes		5			5			1			5
Decrease in receivables		35			20			26			35
Increase in inventories		(22	)		(42	)		(40	)		(22	)
Decrease in liabilities excluding borrowings		(46	)		(49	)
Decrease in trade payables								(29	)		(9	)
Decrease in liabilities excluding borrowings and trade payables								(21	)		(37	)
Other items, net		(2	)		13			7			(2	)
Total adjustments		(23	)		(27	)		(85	)		(23	)
Net cash used in operating activities		(30	)		(104	)		(74	)		(30	)
Cash flows from investing activities:
Additions to properties		(12	)		(14	)		(17	)		(12	)
Proceeds from sales of businesses/assets, net		10			2
Use (funding) of restricted cash		6			(7	)
Net cash provided by (used in) investing activities		4			(19	)
Proceeds from sales of assets/businesses, net								2			10
Proceeds from sales of marketable securities								1			—
Net cash used in investing activities								(14	)		(2	)
Cash flows from financing activities:
Repayment of emergence credit facilities		(2	)		(2	)		—			(2	)
Repayment of capital leases								(2	)		—
Payment of contingent consideration related to the sale of a business		(4	)		-			—			(4	)
Net repayment of VIE credit facility		-			(1	)
Equity transactions of noncontrolling interests		(1	)		-			—			(1	)
Preferred stock dividend payments								(5	)		—
Treasury stock purchases		(1	)		(1	)		—			(1	)
Net cash used in financing activities		(8	)		(4	)		(7	)		(8	)
Effect of exchange rate changes on cash		2			(9	)		6			2
Net decrease in cash and cash equivalents		(32	)		(136	)
Cash and cash equivalents, beginning of period ⁽¹⁾		547			712
Cash and cash equivalents, end of period ⁽¹⁾	$	515		$	576
Net decrease in cash, cash equivalents and restricted cash								(89	)		(38	)
Cash, cash equivalents and restricted cash, beginning of period								478			600
Cash, cash equivalents and restricted cash, end of period							$	389		$	562

⁽¹⁾

Cash and cash equivalents, beginning of period for the six months ended June 30, 2016 includes $546 million of cash reported in the Statement of Financial Position and $1 million of cash reported in Current assets held for sale. Cash and cash equivalents, end of period for the six months ended June 30, 2016 includes $513 million of cash reported in the Statement of Financial Position and $2 million of cash reported in Current assets held for sale.

The accompanying notes are an integral part of these consolidated financial statements.

[6]

EASTMAN KODAK COMPANY

NOTES TO FINANCIAL STATEMENTS (Unaudited)

NOTE 1: BASIS OF PRESENTATION AND RECENT ACCOUNTING PRONOUNCEMENTS

BASIS OF PRESENTATION

The consolidated interim financial statements are unaudited, and certain information and footnote disclosures related thereto normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been omitted in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. In the opinion of management, the accompanying unaudited consolidated interim financial statements reflect all adjustments (consisting of normal recurring adjustments) necessary ~~to present fairly~~for a fair statement of the results of operations, financial position and cash flows of Eastman Kodak Company (“EKC” or the “Company”) and all companies directly or indirectly controlled, either through majority ownership or otherwise (collectively, “Kodak”). The results of operations for the interim periods are not necessarily indicative of the results for the entire fiscal year. These consolidated interim ~~financial~~ statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2015.~~2016.

Kodak is the primary beneficiary of a utilities variable interest entity, RED – Rochester, LLC (“RED”). Therefore, Kodak consolidates RED’s assets, liabilities and results of operations. Consolidated assets and liabilities of RED are $65 million and $14 million, respectively, as of June 30, 2016 and $69 million and $13 million, respectively, as of December 31, 2015. RED’s equity in those net assets as of June 30, 2016 and December 31, 2015 is $28 million and $25 million, respectively. RED’s results of operations are reflected in net income attributable to noncontrolling interests in the accompanying Consolidated Statement of Operations.

Reclassifications

Certain amounts for prior periods have been reclassified to conform to the current period classification due to changes to Kodak’s organization structure effective January 1, 2017 and April 1, 2017 and a change in the presentation of discontinued operations and assets held for ~~sale~~sale. In addition to the changes in segment reporting under the new organization structure, solvent recovery income for the Consumer and ~~for~~Film segment previously reported in Cost of Revenues is reported in Revenues and there is a change in the segment measure of profitability. Refer to Note ~~17,~~20, “Segment Information” and Note ~~18,~~21, “Discontinued Operations” for additional information.

RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

In ~~April 2015,~~May 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) ~~2015-03, Imputation~~No 2017-09, Compensation—Stock Compensation (Topic 718) — Scope of ~~Interest (Sub-Topic 835.30)~~Modification Accounting, to clarify when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new standard, modification is required only if the fair value, the vesting conditions, or the classification of an award as equity or liability changes as a result of the change in terms or conditions. The ASU is effective prospectively for annual and interim periods beginning after December 15, 2017 (January 1, 2018 for Kodak). Early adoption is permitted, including adoption in any interim period, for reporting periods for which financial statements have not yet been issued. Kodak early adopted ASU 2017-09 effective April 1, 2017. The adoption of this guidance had no impact on Kodak’s Consolidated Financial Statements.

In January 2017, the FASB issued ASU No: 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the ~~Presentation~~Accounting for Goodwill Impairment. The ASU simplifies the accounting for goodwill impairment by removing Step 2 of ~~Debt Issuance Costs.~~the goodwill impairment test, which required a hypothetical purchase price allocation. The ASU ~~2015-03~~ requires ~~debt issuance costs related~~entities to calculate a ~~recognized debt liability~~goodwill impairment as the amount by which a reporting unit’s carrying value exceeds its fair value, not to ~~be presented in the balance sheet as a direct deduction from~~exceed the carrying amount of ~~that debt liability, consistent~~goodwill. The same one-step impairment test applies to goodwill at all reporting units, even those with ~~debt discounts.~~ zero or negative carrying amounts. The ASU requires entities to disclose the amount of goodwill at reporting units with zero or negative carrying amounts. The ASU is effective prospectively for annual periods beginning after December 15, 2019, (January 1, 2020 for Kodak) with early adoption permitted for goodwill impairment tests performed after January 1, 2017. Kodak early adopted ASU 2017-04 effective January 1, 2017. The adoption of this guidance had no impact on Kodak’s Consolidated Financial Statements. As of the last goodwill assessment date, December 31, 2016, the Unified Workflow Solutions reporting unit had a negative carrying value. Total goodwill assigned to the Unified Workflow Solutions reporting unit is $6 million.

In ~~August 2015,~~November 2016, the FASB issued ASU ~~2015-15 clarifying~~2016-18 Statement of Cash Flows (Topic 230): Restricted Cash. ASU 2016-18 requires entities to show the ~~application of this guidance to line of credit arrangements. The amendments~~changes in the ~~ASUs are~~total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. As a result, entities will no longer present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement of cash flows. The ASU requires changes in the Company’s restricted cash to be classified as either operating activities, investing activities or financing activities in the Consolidated Statement of Cash Flows, depending on the nature of the activities that gave rise to the restriction. The new standard is effective ~~retrospectively~~for annual reporting periods beginning after December 15, 2017, (January 1, 2018 for Kodak) including interim reporting periods within those annual reporting periods. Early adoption in an interim period is permitted, but any adjustments must be reflected as of the beginning of the fiscal year that includes that interim period. Kodak early adopted ASU 2016-18 effective January 1, 2017 which resulted in a decrease of $6 million in net cash flows provided by investing activities from what was previously reported for the six-month period ended June 30, 2016.

[7]

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 provides clarification with respect to classification of several cash flow issues on the Statement of Cash Flows including debt prepayment or extinguishment costs, proceeds from the settlement of insurance claims, and distributions received from equity method investees. The new standard is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, ~~2015~~2017 (January 1, ~~2016~~2018 for Kodak). Kodak early adopted ASU 2016-15 retrospectively effective January 1, 2017. The adoption of this guidance ~~did~~had no impact on Kodak’s Consolidated Financial Statements.

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory. ASU 2016-16 requires the recognition of the income tax consequences of intra-entity transfers of assets other than inventory when the transfer occurs. The new standard is effective on a modified retrospective basis for annual reporting periods beginning after December 15, 2017, (January 1, 2018 for Kodak) including interim reporting periods within those annual reporting periods. Early adoption is permitted as of the beginning of an annual reporting period for which financial statements (interim or annual) have not ~~have~~been issued or made available for issuance (January 1, 2017 for Kodak). Kodak early adopted ASU 2016-16 on a ~~material~~modified retrospective basis during the first quarter of 2017. The adoption of this guidance had no impact on Kodak’s Consolidated Financial Statements.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In March 2017, the FASB issued ASU 2017-07, Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. ASU 2017-07 requires entities to report the service cost component in the same line item(s) as other compensation costs arising from services rendered during the period and to report all other components of net benefit costs outside a subtotal of income from operations. In addition, the ASU allows only the service cost component to be eligible for capitalization when applicable. ASU 2017-07 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017 (January 1, 2018 for Kodak); retrospective application is required for the presentation of the service cost and other cost components however the restrictions on the capitalization eligibility will be applied prospectively from the date of adoption. The components of net benefit cost are shown in Note 14, “Retirement Plans and Other Postretirement benefits”. The guidance will impact presentation in the Consolidated Financial Statements and the capitalization of costs to inventory. The current presentation of the service cost component is consistent with the requirements of the new standard. Upon adoption, the other components (which are currently being presented within Cost of revenues, Selling and general administrative expenses and Research and development costs) are expected to be presented within Other (income) charges, net. The segment profit measure currently includes only the service cost and amortization of prior service credits components of net periodic pension costs (refer to Note 20, “Segment Information”).

In February 2017, the FASB issued ASU 2017-05, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets. ASU 2017-05 defines in-substance nonfinancial assets, provides guidance with respect to accounting for partial sales of nonfinancial assets and conforms the derecognition guidance on nonfinancial assets with the model for transactions in the new revenue standard (Topic 606 as described below). ASU 2017-05 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017 (January 1, 2018 for Kodak) and allows either a full retrospective adoption to all periods presented or a modified retrospective adoption approach with the cumulative effect of initial application recognized at the date of initial application. Kodak expects to apply the modified retrospective adoption approach and expects that application of this standard will not have a significant impact on its consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial ~~Instruments-Credit~~Instruments—Credit Losses (Topic 326);: Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. In addition, the ASU requires credit losses relating to available-for-sale debt securities to be recorded through an allowance for credit losses. The amendments in this ASU broaden the information that an entity must consider in developing its expected credit loss estimate for assets measured either collectively or individually. The new standard is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, ~~2020~~2019 (January 1, ~~2021~~2020 for Kodak). Early adoption is permitted for fiscal years, and interim periods within those years, beginning after December 15, 2018 (January 1, 2019 for Kodak). Kodak is currently evaluating the impact of this ASU.

In March 2016, the FASB issued ASU 2016-09, Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 simplifies several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The new standard is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2016 (January 1, 2017 for Kodak). Early adoption is permitted. Kodak does not expect the adoption of this guidance to have a material impact on its Consolidated Financial Statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires lessees to recognize most leases on their balance sheets as lease liabilities with corresponding right-of-use assets and eliminates certain real estate-specific provisions. The new leasing standard is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2018 (January 1, 2019 for Kodak). Early adoption is permitted. Kodak is currently evaluating the impact of this ASU.

~~[7]~~

In January 2016, the FASB issued ASU 2016-01, Financial ~~Instruments–Overall:~~Instruments—Overall (Topic 825): Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01 primarily affects the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. Under the ASU all equity investments in unconsolidated entities (other than those accounted for using the equity method of accounting) will generally be measured at fair value through earnings. In addition, the FASB clarified guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The classification and measurement guidance will be effective for Kodak beginning January 1, 2018, including interim periods within those fiscal years. Kodak does not expect the adoption of this guidance to have a material impact on its Consolidated Financial Statements.

In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740) Balance Sheet Classification of Deferred Taxes. ASU 2015-17 amends the accounting for income taxes and requires all deferred tax assets and liabilities to be classified as non-current on the consolidated balance sheet. ASU 2015-17 is effective for fiscal years and interim reporting periods within those years beginning after December 15, 2016 (January 1, 2017 for Kodak), with early adoption permitted in any annual or interim period. ASU 2015-17 may be adopted either prospectively or retrospectively. Kodak is currently evaluating the method of adoption and expects ASU 2015-17 will have an impact on the consolidated balance sheet. The current deferred tax assets in excess of valuation allowance were $19 million as of June 30, 2016.

[8]

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).” ASU 2014-09 supersedes the revenue recognition requirements in Topic 605, “Revenue Recognition” and most industry-specific guidance. The core principle of ASU 2014-09 is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. In July 2015, the FASB deferred the effective date of ASU 2014-09. In 2016 the FASB issued ASU 2016-08, ~~and~~ ASUs 2016-10 through 12 and ASU 2016-20 clarifying guidance regarding principle vs agent considerations, identification of performance obligations, ~~and~~ analysis of licensing ~~transactions.~~transactions, impairment considerations and disclosures. The new revenue standards are collectively effective for fiscal years, and interim periods within those years, beginning after December 15, 2017 (January 1, 2018 for Kodak) and allow either a full retrospective adoption to all periods presented or a modified retrospective adoption approach with the cumulative effect of initial application recognized at the date of initial application. Kodak currently anticipates applying the modified retrospective adoption approach. To date, the Company has not yet identified any material changes in the timing of revenue recognition when considering the amended accounting guidance, however, the Company’s implementation efforts are ongoing and such assessments may change prior to the January 1, 2018 implementation date. Kodak is ~~currently evaluating~~in the ~~adoption alternatives~~process of implementing appropriate changes to the business processes, systems and ~~impact~~controls to support recognition and disclosure under the new standard. Training of ~~these ASUs.~~employees on the impacts of the standard and changes to processes, systems and controls will continue throughout 2017.

NOTE 2: CASH, CASH EQUIVALENTS AND RESTRICTED CASH

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Statement of Financial Position that sums to the total of such amounts shown in the Statement of Cash Flows:

	June 30,		December 31,
(in millions)	2017		2016
Cash and cash equivalents	$	370	$	434
Restricted cash included in Other current assets		8		8
Long-term restricted cash		11		36
Total cash, cash equivalents and restricted cash shown in the Statement of Cash Flows	$	389	$	478

Restricted cash included in Other current assets on the Statement of Financial Position primarily represents amounts which support hedging activities.

Long-term restricted cash as of June 30, 2017 and December 31, 2016 includes $6 million and $7 million, respectively, of security posted related to Brazilian legal contingencies. Long-term restricted cash as of December 31, 2016 also included $25 million supporting compliance with the Excess Availability threshold under the Amended and Restated Credit Agreement (“Amended Credit Agreement”). During the second quarter of 2017, the amount of outstanding letters of credit issued under the Amended Credit Agreement was reduced by $20 million, which had a corresponding reduction in the amount of long-term restricted cash necessary to support compliance with the Excess Availability threshold. See Note 8, “Commitments and Contingencies” and “Sources of Liquidity” in Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional information.

NOTE 2:3: RECEIVABLES, NET

					June 30,		December 31,
(in millions)	June 30, 2016		December 31, 2015		2017		2016
Trade receivables	$	268	$	300	$	259	$	277
Miscellaneous receivables		50		50		39		34
Total (net of allowances of $10 as of both June 30, 2016 and December 31, 2015)	$	318	$	350
Total (net of allowances of $9 as of June 30, 2017 and $8 as of December 31, 2016)					$	298	$	311

Approximately $23 million and ~~$28~~$26 million of the total trade receivable amounts as of June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively, will potentially be settled through customer deductions in lieu of cash payments. Such deductions represent rebates owed to customers and are included in Other current liabilities in the accompanying Consolidated Statement of Financial Position.

[9]

NOTE 3:4: INVENTORIES, NET

					June 30,		December 31,
(in millions)	June 30, 2016		December 31, 2015		2017		2016
Finished goods	$	157	$	141	$	177	$	149
Work in process		64		61		68		57
Raw materials		65		61		68		65
Total	$	286	$	263	$	313	$	271

~~[8]~~

NOTE 4:5: INTANGIBLE ASSETS

The gross carrying amount and accumulated amortization by major ~~intangible~~ asset category as of June 30, ~~2016~~2017 and December 31, ~~2015~~2016 were as follows:

June 30, 2016
(in millions)

Gross Carrying
Amount

Accumulated
Amortization

Net

Weighted-Average
Amortization Period
Technology-based

$
75

$
40

$
35

3 years
Kodak trade name

40

-

40

Indefinite life
Customer-related

26

10

16

6 years
Other

2

-

2

20 years
Total

$
143

$
50

$
93

	December 31, 2015							June 30, 2017
(in millions)	Gross Carrying Amount		Accumulated Amortization		Net		Weighted-Average Amortization Period	Gross Carrying Amount		Accumulated Amortization		Net		Weighted-Average Amortization Period
Technology-based	$	83	$	38	$	45	3 years	$	122	$	70	$	52	6 years
Kodak trade name		46		-		46	Indefinite life		40		-		40	Indefinite life
Customer-related		37		11		26	7 years		26		12		14	6 years
Other		2		-		2	21 years		2		-		2	21 years
Total	$	168	$	49	$	119		$	190	$	82	$	108

During the first quarter of 2016, Kodak updated its impairment analysis of the Kodak trade name due to the increased probability of selling its Prosper business. Based on the results of Kodak’s March 31, 2016 analysis, the carrying value of the Kodak trade name exceeded its fair value. The pre-tax trade name impairment charge of $5 million is included in Other operating (income) expense, net in the Consolidated Statement of Operations.

	December 31, 2016
(in millions)	Gross Carrying Amount		Accumulated Amortization		Net		Weighted-Average Amortization Period
Technology-based	$	122	$	57	$	65	6 years
Kodak trade name		40		-		40	Indefinite life
Customer-related		26		12		14	6 years
Other		2		-		2	21 years
Total	$	190	$	69	$	121

Due to the exit of its position in silver metal mesh touch screen development in the first quarter of 2016, Kodak concluded that the carrying value of intangible assets associated with those operations exceeded their fair value and recorded a pre-tax impairment charge of $8 million, which is included in Other operating (income) expense, net in the Consolidated Statement of Operations.

Amortization expense related to intangible assets was $5 million for both the three months ended June 30, 2017 and 2016 and ~~2015~~$9 million and $10 million for ~~both~~ the six months ended June 30, 2017 and 2016, respectively.

During the first quarter of 2017, Kodak recorded $4 million to adjust the Prosper intangible asset carrying value to the amount that would have been recorded had the Prosper intangible assets been continuously classified as held and ~~2015.~~used. Refer to Note 10, “Other Operating Expense (Income), net and Note 21, “Discontinued Operations”.

Estimated future amortization expense related to intangible assets that are currently being amortized as of June 30, ~~2016 was~~2017, is as follows:

(in millions)
Q3 - Q4 2016	$	9
2017		16
Q3-Q4 2017			$	10
2018		12		16
2019		5		9
2020		4		8
2021 and thereafter		7
2021				7
2022 and thereafter				18
Total	$	53	$	68

[10]

NOTE 6: OTHER CURRENT LIABILITIES

	June 30,		December 31,
(in millions)	2017		2016
Employee related liabilities	$	48	$	49
Deferred revenue		30		32
Customer rebates		23		27
Deferred consideration on disposed businesses		17		7
Restructuring liabilities		12		8
Workers compensation		9		8
Other		73		80
Total	$	212	$	211

NOTE ~~5: DEBT~~7: OTHER LONG-TERM LIABILITIES

On May 26, 2016, the Company and certain of its domestic subsidiaries (the “Subsidiary Guarantors”) entered into an Amended and Restated Credit Agreement (the “Amended Credit Agreement or ABL Credit Agreement”) with the lenders party thereto (the “Lenders”), Bank of America, N.A., as administrative and collateral agent, and Bank of America, N.A. and JPMorgan Chase Bank, N.A., as joint lead arrangers and joint bookrunners, which amended and restated the existing Asset Based Revolving Credit Agreement, dated as of September 3, 2013 (the “Prior Credit Agreement”). Each of the capitalized but undefined terms in this Form 10-Q has the meanings ascribed to such terms in the Amended Credit Agreement.

The Amended Credit Agreement decreased the aggregate amount of commitments from $200 million to $150 million and extended the maturity date to the earlier of May 26, 2021 or the date that is 90 days prior to the earliest scheduled maturity date of any of the Company’s outstanding term loans or refinancings thereof, of which the earliest maturity date is currently September 3, 2019. The Amended Credit Agreement, among other things, lowered reserve requirements by eliminating the Availability Block and removed the ability to use Qualified Cash to support Excess Availability.

~~[9]~~

The Amended Credit Agreement limits, among other things, the Company’s and the Subsidiary Guarantors’ ability to (i) incur indebtedness, (ii) incur or create liens, (iii) dispose of assets, (iv) make restricted payments and (v) make investments. In addition to other customary affirmative covenants, the Amended Credit Agreement provides for a periodic delivery by the Company of its various financial statements as set forth in the Amended Credit Agreement. Events of default under the Amended Credit Agreement include, among others, failure to pay any loan, interest or other amounts when due, the occurrence of breach of covenants and a change of control of the Company. Upon an event of default, the applicable lenders may declare the outstanding obligations under the Amended Credit Agreement to be immediately due and payable and exercise other rights and remedies provided for in the Amended Credit Agreement.

Each existing direct or indirect U.S. subsidiary of the Company (other than immaterial subsidiaries, unrestricted subsidiaries and certain other subsidiaries) has reaffirmed its unconditional guarantee (and any such future subsidiaries must provide an unconditional guarantee) of the obligations of the Company under the Amended Credit Agreement. Obligations under the Amended Credit Agreement are secured by: (i) a first priority lien on cash, accounts receivable, inventory, machinery and equipment (the “ABL Priority Collateral”) and (ii) a third priority lien on all assets of the Company and the Subsidiary Guarantors, other than the ABL Priority Collateral, including respectively, on 100% of the stock of material U.S. subsidiaries and 65% of the stock of material foreign subsidiaries.

The Lenders will make available asset-based revolving loans (the “ABL Loans”) and letters of credit in an aggregate amount of up to $150 million, subject to the Borrowing Base. The Company has issued approximately $117 million of letters of credit under the Amended Credit Agreement as of June 30, 2016. Under the Amended Credit Agreement’s borrowing base calculation, the Company had approximately $30 million of Excess Availability as of June 30, 2016. Availability is subject to the borrowing base calculation, reserves and other limitations.

~~The ABL Loans bear interest at the rate of LIBOR plus 2.25%-2.75% per annum or Base Rate plus 1.25%-1.75% per annum based on Excess Availability.~~

Excess Availability is equal to the sum of (i) 85% of the amount of the Eligible Receivables less a Dilution Reserve, (ii) the lesser of 85% of Net Orderly Liquidation Value or 75% of the Eligible Inventory (iii) the lesser of $20 million or 75% of Net Orderly Liquidation Value of Eligible Equipment (iv) Eligible Cash less (a) Rent and Charges Reserves, (b) Principal Outstanding and (c) Outstanding Letters of Credit (each item as defined in the Amended Credit Agreement).

Under the Amended Credit Agreement, Kodak is required to maintain a minimum Fixed Charge Coverage Ratio of 1.00 to 1.00 when Excess Availability is less than 12.5% of lender commitments (springing covenant). If Excess Availability falls below 12.5% of lender commitments ($18.75 million as of June 30, 2016), Kodak may, in addition to the requirement to be in compliance with the minimum Fixed Charge Coverage Ratio, become subject to cash dominion control.

As of June 30, 2016, Kodak had funded $23 million to the Eligible Cash account, held with the Amended Credit Agreement administrative agent, which is classified as Restricted Cash in the Consolidated Statement of Financial Position supporting the Excess Availability amount. Since Excess Availability was greater than 12.5% of lender commitments at June 30, 2016, Kodak is not required to have a minimum Fixed Charge Coverage Ratio of 1.0 to 1.0. As of June 30, 2016 Kodak was in compliance with all the covenants under the Amended Credit Agreement.

	June 30,		December 31,
(in millions)	2017		2016
Workers compensation	$	103	$	105
Asset retirement obligations		43		43
Deferred taxes		16		16
Environmental liabilities		12		12
Deferred consideration on disposed businesses		14		24
Embedded conversion features derivative liability		7		43
Other		29		25
Total	$	224	$	268

NOTE 6:8: COMMITMENTS AND CONTINGENCIES

As of June 30, ~~2016,~~2017, the Company had outstanding letters of credit of ~~$117~~$96 million issued under the Amended Credit Agreement, as well as bank guarantees and letters of credit of $5$4 million, surety bonds in the amount of ~~$18~~$53 million, and restricted cash and deposits of ~~$53~~$25 million, primarily ~~to support compliance with the Excess Availability threshold under the Amended Credit Agreement,~~ to ensure the payment of possible casualty and workers’ compensation claims, environmental liabilities, legal contingencies and rental payments and to support various customs, tax and trade activities. The restricted cash and deposits are reflected in Restricted cash, Other current assets and Other long-term assets in the Consolidated Statement of Financial Position.

Kodak’s Brazilian operations are involved in various litigation matters and have received or been the subject of numerous governmental assessments related to indirect and other taxes in various stages of litigation, as well as civil litigation and disputes associated with former employees and contract labor. The tax matters, which comprise the majority of the litigation matters, are primarily related to federal and state value-added taxes. Kodak is disputing these matters and intends to vigorously defend its position. Kodak routinely assesses all these matters as to the probability of ultimately incurring a liability in its Brazilian operations and records its best estimate of the ultimate loss in situations where it assesses the likelihood of loss as probable. As of June 30, ~~2016,~~2017, the unreserved portion of these contingencies, inclusive of any related interest and penalties, for which there was at least a reasonable possibility that a loss may be incurred, amounted to approximately ~~$57~~$52 million.

In connection with assessments in Brazil, local regulations may require Kodak to post security for a portion of the amounts in dispute. As of June 30, ~~2016,~~2017, Kodak has posted security composed of $6 million of pledged cash reported within Restricted cash in the Consolidated Statement of Financial Position and liens on certain Brazilian assets with a net book value of approximately $72 million. Generally, any encumbrances on the Brazilian assets would be removed to the extent the matter is resolved in Kodak's favor.

~~[10]~~

Kodak is involved in various lawsuits, claims, investigations, ~~remediation~~remediations and proceedings, including, from time to time, commercial, customs, employment, environmental, and health and safety matters, which are being handled and defended in the ordinary course of business. Kodak is also subject, from time to time, to various assertions, claims, proceedings and requests for indemnification concerning intellectual property, including patent infringement suits involving technologies that are incorporated in a broad spectrum of Kodak’s products. These matters are in various stages of investigation and litigation and are being vigorously defended. Based on information currently available, Kodak does not believe that it is probable that the outcomes in any of these matters, individually or collectively, will have a material adverse effect on its financial position or results of operations. Litigation is inherently unpredictable, and judgments could be rendered or settlements entered that could adversely affect Kodak’s operating results or cash flows in a particular period. Kodak routinely assesses all of its litigation and threatened litigation as to the probability of ultimately incurring a liability, and records its best estimate of the ultimate loss in situations where it assesses the likelihood of loss as probable.

[11]

NOTE 7:9: GUARANTEES

EKC guarantees obligations to third parties for some of its consolidated subsidiaries. The maximum amount guaranteed is ~~$17~~$11 million and the outstanding amount for those guarantees is $6$4 million.

In connection with the settlement of certain of the Company’s historical environmental liabilities at Eastman Business Park, in the event the historical liabilities exceed $99 million, the Company will become liable for 50% of the portion above $99 million with no limitation to the maximum potential future payments. There is no liability recorded for this guarantee.

Extended Warranty ~~Costs~~Arrangements

Kodak offers its customers extended warranty arrangements that are generally one year, but may range from three months to ~~five~~six years after the original warranty period. Kodak provides repair services and routine maintenance under these arrangements. Kodak has not separated the extended warranty revenues and costs from the routine maintenance service revenues and costs, as it is not practicable to do so. Therefore, these revenues and costs have been aggregated in the discussion that follows. The change in Kodak’s deferred revenue balance in relation to these extended warranty and maintenance arrangements from December 31, ~~2015~~2016 to June 30, ~~2016,~~2017, which is reflected in Other current liabilities in the accompanying Consolidated Statement of Financial Position, was as follows:

(in millions)

Deferred revenue on extended warranties as of December 31, 2015

$
26

New extended warranty and maintenance arrangements in 2016

84

Recognition of extended warranty and maintenance arrangement revenue in 2016

(86
)
Deferred revenue on extended warranties as of June 30, 2016

$
24

(in millions)
Deferred revenue on extended warranties as of December 31, 2016	$	24
New extended warranty and maintenance arrangements in 2017		67
Recognition of extended warranty and maintenance arrangement revenue in 2017		(68	)
Deferred revenue on extended warranties as of June 30, 2017	$	23

NOTE 8:10: OTHER OPERATING EXPENSE (INCOME) ~~EXPENSE,~~, NET

													Three Months Ended					Six Months Ended
													June 30,					June 30,
(in millions)	Three Months Ended June 30,						Six Months Ended June 30,						2017		2016			2017			2016
	2016			2015			2016			2015
(Income) expense:
Asset impairments ^{(1) (2) (3) (4)}	$	1		$	-		$	25		$	6
Litigation proceeds ⁽⁵⁾		-			-			(10	)		-
Gain on sale of assets ⁽⁶⁾		(7	)		(1	)		(7	)		(4	)
Prosper asset remeasurement ⁽¹⁾													$	—	$	—		$	12		$	—
Asset impairments ^{(2) (3)}														2		1			2			25
Legal settlements ⁽⁴⁾														—		—			—			(10	)
Gain on sale of assets ⁽⁵⁾														—		(7	)		(2	)		(7	)
Total	$	(6	)	$	(1	)	$	8		$	2		$	2	$	(6	)	$	12		$	8

⁽¹⁾	In the first quarter of 2017, Kodak reduced the carrying value of Prosper fixed assets ($8 million) and intangible assets ($4 million) to the amount that would have been recorded had the Prosper assets been continuously classified as held and used. Refer to Note 21, “Discontinued Operations”.

⁽²⁾

In the first quarter of 2016, due to the exit of its position in silver metal mesh touch screen development, Kodak concluded that the carrying value of property, plant and equipment associated with those operations exceeded their fair value. Kodak recorded pre-tax impairment charges in the quarter and six months ended June 30, 2016 of $1 million and $12 million, respectively.

⁽²⁾

~~In the first quarter~~ Kodak also wrote off related intangible assets with a gross carrying amount of ~~2016, Kodak~~$14 million and accumulated amortization of $6 million and recorded an impairment charge of $8 ~~million related to silver metal mesh touch screen intangible assets. Refer to Note 4, “Intangible Assets.”~~million.

⁽³⁾	In the first quarter of 2016, Kodak concluded the carrying value of the Kodak trade name exceeded its fair value and recorded an impairment charge of $5 million related to the Kodak trade name. ~~Refer to Note 4, “Intangible Assets.”~~

~~[11]~~

⁽⁴⁾

In the first quarter of 2015, due to the change in Kodak’s reporting units and the delay in commercializing new technologies in the Micro 3D Printing reporting unit, Kodak concluded the carrying value of the Micro 3D Printing reporting unit exceeded its implied fair value and recorded a goodwill impairment charge of $6 million representing the entire amount of goodwill for this reporting unit.

⁽⁵⁾⁽⁴⁾

In the first quarter of 2016, Kodak received $10 million representing net litigation proceeds from DuPont.

⁽⁶⁾⁽⁵⁾

On June 30, 2016, Kodak sold certain assets of its brand protection business to eApeiron Solutions Inc. in exchange for cash consideration of approximately $6 million and an equity investment of 19.9%. Kodak ~~will account~~is accounting for this investment under the equity method of accounting. Kodak recognized a gain of approximately $7 million on this transaction.

[12]

NOTE 9:11: OTHER (INCOME) CHARGES, NET

									Three Months Ended					Six Months Ended
									June 30,					June 30,
(in millions)	Three Months Ended June 30,				Six Months Ended June 30,				2017			2016		2017			2016
	2016		2015		2016		2015
Change in fair value of embedded conversion features derivative liability ⁽¹⁾									$	(14	)	$	—	$	(36	)	$	—
Loss on foreign exchange transactions	$	1	$	2	$	2	$	11		3			1		4			2
Other		-		-		-		1		2			—		3			—
Total	$	1	$	2	$	2	$	12	$	(9	)	$	1	$	(29	)	$	2

⁽¹⁾	Refer to Note 22, “Financial Instruments”.

NOTE ~~10:~~12: INCOME TAXES

Kodak’s income tax provision and effective tax rate were as follows:

													Three Months Ended						Six Months Ended
													June 30,						June 30,
(in millions)	Three Months Ended June 30,						Six Months Ended June 30,						2017			2016			2017			2016
	2016			2015			2016			2015
Earnings (loss) from continuing operations before income taxes	$	22		$	(7	)	$	24		$	(39	)
Earnings from continuing operations before income taxes													$	11		$	15		$	21		$	8
Effective tax rate		27.3	%		(114.3	)%		50.0	%		(33.3	)%		36.4	%		40.0	%		33.3	%		162.5	%
Provision for income taxes		6			8			12			13			4			6			7			13
Provision (benefit) for income taxes @ 35%		8			(2	)		8			(14	)
Provision for income taxes @ 35%														4			5			7			3
Difference between tax at effective vs. statutory rate	$	(2	)	$	10		$	4		$	27		$	-		$	1		$	-		$	10

For the three ~~and six~~ months ended June 30, ~~2016,~~2017, the difference between ~~the Company’s~~Kodak’s recorded provision and the provision that would result from applying the U.S. statutory rate of 35.0% is primarily attributable to: (1) the impact related to existing valuation allowances associated with changes in net deferred tax assets from current earnings and losses, ~~generated within~~(2) the results from operations in jurisdictions outside the U.S, (3) a benefit associated with foreign withholding taxes on undistributed earnings and (4) changes in audit reserves, including a settlement with a taxing authority in a location outside the U.S.

For the six months ended June 30, 2017, the difference between Kodak’s recorded provision and the provision that would result from applying the U.S. statutory rate of 35.0% is primarily attributable to: (1) the impact related to existing valuation allowances associated with changes in net deferred tax assets from current earnings and ~~certain~~losses, (2) the results from operations in jurisdictions outside the U.S., ~~for which no benefit was recognized due~~(3) a provision associated with foreign withholding taxes on undistributed earnings and (4) changes in audit reserves, including a settlement with a taxing authority in a location outside the U.S.

For the three and six months ended June 30, 2016, the difference between Kodak’s recorded provision and the provision that would result from applying the U.S. statutory rate of 35.0% is primarily attributable to: (1) the impact related to ~~management’s conclusion that it was more likely than not that the~~existing valuation allowances associated with changes in net deferred tax ~~benefits would not be realized,~~assets from current earnings and losses, (2) the results from operations in jurisdictions outside the U.S., and (3) changes in audit reserves.

The difference between the Company’s recorded provision and the benefit that would result from applying the U.S. statutory rate of 35.0% for the three and six month periods ended June 30, 2015 is primarily attributable to: (1) losses generated within the U.S. and certain jurisdictions outside the U.S. for which no benefit was recognized due to management’s conclusion that it was more likely than not that the tax benefits would not be realized (2) the results from operations in jurisdictions outside the U.S., and (3) a provision associated with foreign withholding taxes on undistributed earnings.

NOTE ~~11:~~13: RESTRUCTURING LIABILITIES

Charges for restructuring activities are recorded in the period in which Kodak commits to a formalized restructuring plan, or executes the specific actions contemplated by the plan, and all criteria for liability recognition under the applicable accounting guidance have been met. Restructuring actions taken in the first half of ~~2016~~2017 were initiated to reduce Kodak’s cost structure as part of its commitment to drive sustainable profitability and included actions associated with the ~~exit of Kodak’s silver metal mesh touch screen development, continued progress toward~~Prosper business cost reduction, voluntary workforce transition plans in the ~~Leeds plate manufacturing facility exit,~~U.S., an office closure in Switzerland, as well as various targeted reductions in manufacturing, service, sales, research and development and other administrative functions.

~~Leeds Plate Manufacturing Facility Exit~~[13]

On March 3, 2014, Kodak announced a plan to exit its prepress plate manufacturing facility located in Leeds, England. This decision was pursuant to Kodak’s initiative to consolidate manufacturing operations globally, and is expected to result in a more efficient delivery of its products and

~~[12]~~

solutions. Kodak began the exit of the facility in the second quarter of 2014, phased out production at the site in the third quarter of 2015 and has substantially completed the exit of the facility.

Under this program, on a life-to-date basis as of June 30, 2016, Kodak has recorded severance charges of $10 million, long-lived asset impairment charges of $3 million, accelerated depreciation charges of $10 million, and other exit costs of $2 million.

Restructuring Reserve Activity

The activity in the accrued balances and the non-cash charges and credits incurred in relation to restructuring activities for the ~~three and~~ six months ended June 30, ~~2016~~2017 were as follows:

(in millions)

Severance
Reserve ⁽¹⁾

Exit
Costs
Reserve ⁽¹⁾

Long-lived Asset
Impairments and
Inventory
Write-downs ⁽¹⁾

Accelerated Depreciation ⁽¹⁾

Total

Balance as of December 31, 2015

$
7

$
4

$
-

$
-

$
11

Q1 2016 charges

4

-

1

-

5

Q1 utilization/cash payments

(5
)

(1
)

(1
)

-

(7
)
Q1 2016 other adjustments & reclasses ⁽²⁾

(1
)

-

-

-

(1
)
Balance as of March 31, 2016

$
5

$
3

$
—

$
—

$
8

Q2 2016 charges - continuing operations

$
6

$
1

$
-

$
-

$
7

Q2 2016 charges - discontinued operations

1

-

-

-

1

Q2 utilization/cash payments

(3
)

(1
)

-

-

(4
)
Q2 2016 other adjustments & reclasses ⁽³⁾

(1
)

-

-

-

(1
)
Balance as of June 30, 2016

$
8

$
3

$
—

$
—

$
11

(in millions)	Severance Reserve ⁽¹⁾			Exit Costs Reserve ⁽¹⁾			Long-lived Asset Impairments and Inventory Write-downs ⁽¹⁾			Total
Balance as of December 31, 2016	$	5		$	3		$	—		$	8
Q1 charges		5			—			8			13
Q1 utilization/cash payments		(3	)		—			(8	)		(11	)
Q1 other adjustments and reclasses ⁽²⁾		(1	)		—			—			(1	)
Balance as of March 31, 2017	$	6		$	3		$	—		$	9
Q2 charges	$	8		$	3		$	—		$	11
Q2 utilization/cash payments		(3	)		(1	)		—			(4	)
Q2 other adjustments and reclasses ⁽³⁾		(4	)		—			—			(4	)
Balance as of June 30, 2017	$	7		$	5		$	—		$	12

⁽¹⁾	The severance and exit costs reserves require the outlay of cash, while long-lived asset impairments ~~accelerated depreciation~~ and inventory write-downs represent non-cash items.

⁽²⁾	The $(1) million represents severance related charges for pension plan special termination benefits, which are reflected in Pension and other postretirement liabilities in the Consolidated Statement of Financial Position.

⁽³⁾

The ~~$(1)~~$(4) million ~~represents~~includes $(5) million of severance related charges for pension plan ~~curtailments and~~ special termination benefits, which ~~are reflected in~~were reclassified to Pension and other ~~retirement~~postretirement liabilities, ~~in the Consolidated Statement~~and $1 million of ~~Financial Position.~~foreign currency translation adjustments.

For the three months ended June 30, ~~2016,~~2017 the $8$11 million of charges ~~includes $1 million of charges which were reported in discontinued operations in the accompanying Consolidated Statement of Operations. The remaining $7 million~~ were reported as Restructuring costs and ~~other.~~other in the Consolidated Statement of Operations.

The severance costs for the three months ended June 30, ~~2016~~2017 related to the elimination of approximately 100 positions including approximately 2550 manufacturing/service ~~positions, 25 research and development~~ positions, and 50 administrative positions. The geographic composition of these positions includes approximately 5075 in the United States and Canada and 5025 throughout the rest of the world.

For the six months ended June 30, ~~2016,~~2017 the ~~$13~~$24 million of charges includes $1$6 million of charges for inventory write-downs which were reported in Cost of revenues in the ~~accompanying~~ Consolidated Statement of ~~Operations and $1 million which was reported in discontinued operations.~~Operations. The remaining ~~$11~~$18 million was reported as Restructuring costs and other.

The severance costs for the six months ended June 30, ~~2016~~2017 related to the elimination of approximately ~~150~~200 positions including approximately 5075 manufacturing/service positions, 25 research and development positions and 75100 administrative positions. The geographic composition of these positions includes approximately 75125 in the United States and Canada and 75 throughout the rest of the world.

As a result of these initiatives, the majority of the severance will be paid during periods through the ~~end~~first quarter of ~~2016.~~2018. However, in some instances, the employees whose positions were eliminated can elect or are required to receive their payments over an extended period of time. In addition, certain exit costs, such as long-term lease payments, will be paid over periods throughout the remainder of ~~2016~~2017 and beyond.

[~~13]~~14]

NOTE ~~12:~~14: RETIREMENT PLANS AND OTHER POSTRETIREMENT BENEFITS

Components of the net periodic benefit cost for all major U.S. and Non-U.S. defined benefit plans are as follows:

																									Three Months Ended												Six Months Ended
																									June 30,												June 30,
	Three Months Ended June 30,												Six Months Ended June 30,												2017						2016						2017						2016
(in millions)	2016						2015						2016						2015						U.S.			Non-U.S.			U.S.			Non-U.S.			U.S.			Non-U.S.			U.S.			Non-U.S.
	U.S.			Non-U.S.			U.S.			Non-U.S.			U.S.			Non-U.S.			U.S.			Non-U.S.
Major defined benefit plans:
Service cost	$	3		$	-		$	4		$	1		$	6		$	1		$	8		$	2		$	3		$	1		$	3		$	—		$	6		$	2		$	6		$	1
Interest cost		28			4			37			5			58			7			74			9			28			3			28			4			57			6			58			7
Expected return on plan assets		(66	)		(7	)		(68	)		(8	)		(131	)		(14	)		(136	)		(16	)		(61	)		(6	)		(66	)		(7	)		(122	)		(13	)		(131	)		(14	)
Amortization of:
Prior service credit		(1	)		-			(2	)		-			(3	)		-			(4	)		-			(1	)		—			(1	)		—			(3	)		—			(3	)		—
Actuarial gain		2			-			-			-			2			-			-			(1	)
Actuarial loss																										—			—			2			—			—			1			2			—
Net pension income before special termination benefits		(34	)		(3	)		(29	)		(2	)		(68	)		(6	)		(58	)		(6	)		(31	)		(2	)		(34	)		(3	)		(62	)		(4	)		(68	)		(6	)
Special termination benefits		2			-			1			-			3			-			5			-			5			—			2			—			6			—			3			—
Net pension income		(32	)		(3	)		(28	)		(2	)		(65	)		(6	)		(53	)		(6	)		(26	)		(2	)		(32	)		(3	)		(56	)		(4	)		(65	)		(6	)
Other plans including unfunded plans		-			-			-			2			-			(1	)		-			4
Other plans																										—			1			—			—			—			1			—			(1	)
Total net pension income	$	(32	)	$	(3	)	$	(28	)	$	-		$	(65	)	$	(7	)	$	(53	)	$	(2	)	$	(26	)	$	(1	)	$	(32	)	$	(3	)	$	(56	)	$	(3	)	$	(65	)	$	(7	)

~~The total net pension income reported for~~For both the ~~three and~~three-and six ~~month periods~~months ended June 30, ~~2016~~2017 and ~~2015 includes less than $1 million of costs reported as discontinued operations in each respective period.~~

~~For the three and six month periods ended June 30,~~ 2016 ~~and 2015,~~ the special termination benefits charges were incurred as a result of Kodak’s restructuring actions.

NOTE 15: REDEEMABLE, CONVERTIBLE SERIES A PREFERRED STOCK

On November 15, 2016, the Company issued 2,000,000 shares of 5.50% Series A Convertible Preferred Stock, no par value per share (the “Series A Preferred Stock”), for an aggregate purchase price of $200 million, or $100 per share. The Company has classified the Series A Preferred Stock as temporary equity in the Consolidated Statement of Financial Position. Kodak ~~made contributions (funded plans) or~~allocated $43 million of the net proceeds received to a derivative liability based on the aggregate fair value of the embedded conversion features on the date of issuance which reduced the net carrying value of the Series A Preferred Stock (see Note 22, “Financial Instruments”). The carrying value of the Series A Preferred Stock at the time of issuance, $155 million ($200 million aggregate gross proceeds less $43 million allocated to the derivative liability and $2 million in transaction costs), is being accreted to the mandatory redemption amount using the effective interest method to Additional paid ~~benefits (unfunded plans) totaling~~in capital in the Consolidated Statement of Financial Position as a deemed dividend from the date of issuance through the mandatory redemption date, November 15, 2021. The holders of Series A Preferred Stock are entitled to cumulative dividends payable quarterly in cash at a rate of 5.50% per annum. The Company declared a cash dividend of approximately $7$3 million ~~relating to its defined benefit pension and other postretirement benefit plans~~in June 2017, which was paid on July 17, 2017. The accrual for the ~~six months ended~~cash dividend declared is included in Other current liabilities in the accompanying Consolidated Statement of Financial Position as of June 30, ~~2016.~~

~~Certain~~2017. As of ~~Kodak’s retirement plans were remeasured during~~June 30, 2017, the ~~first quarter of 2016. The remeasurement~~Series A Preferred Stock has not been converted and none of the ~~funded status~~antidilution provisions have been triggered. Any shares of ~~those plans during~~Series A Preferred Stock not converted prior to the ~~first quarter increased Kodak’s recognized defined benefit plan obligation by $142 million.~~fifth anniversary of the initial issuance of the Series A Preferred Stock are required to be redeemed at $100 per share plus the amount of accrued and unpaid dividends.

NOTE ~~13:~~16: EARNINGS PER SHARE

Basic earnings per share computations are based on the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share include any dilutive effect of potential common shares. In periods with a net loss from continuing operations, diluted earnings per share are calculated using weighted-average basic shares for that period, as utilizing diluted shares would be anti-dilutive to loss per share.

[15]

A reconciliation of the amounts used to calculate basic and diluted earnings per share for the three and six months ended June 30, 2017 follows: (in millions):

	Three Months Ended			Six Months Ended
	June 30, 2017			June 30, 2017
Earnings from continuing operations attributable to Eastman Kodak Company	$	7		$	14
Less: Series A convertible preferred stock cash dividend		(3	)		(6	)
Less: Series A convertible preferred stock deemed dividend		(2	)		(4	)
Earnings from continuing operations available to common shareholders - basic and diluted	$	2		$	4

Earnings from net earnings attributable to Eastman Kodak Company	$	4		$	11
Less: Series A convertible preferred stock cash dividend		(3	)		(6	)
Less: Series A convertible preferred stock deemed dividend		(2	)		(4	)
(Loss) earnings from net earnings available to common shareholders - basic and diluted	$	(1	)	$	1

Weighted-average common shares outstanding - basic	42.5	42.5
Effect of dilutive securities:
Unvested restricted stock units	0.2	0.2
Weighted-average common shares outstanding - diluted	42.7	42.7

The computation of diluted earnings per share for the three and six months ended June 30, 2017 excluded the impact of (1) the assumed conversion of 2.0 million shares of Series A convertible preferred shares, (2) the assumed conversion of net share settled warrants to purchase 1.8 million shares of common stock at an exercise price of $14.93, (3) the assumed conversion of net share settled warrants to purchase 1.8 million shares of common stock at an exercise price of $16.12 and (4) the assumed conversion of 2.6 million outstanding employee stock options because they would have been anti-dilutive.

Weighted-average basic shares outstanding were 42.2 million for the three and six month periods ended June 30, 2016. ~~Weighted average basic and diluted shares were 41.9 million for the three and six month periods ended June 30, 2015.~~

Weighted average diluted shares were 42.6 million ~~and 42.4 million~~ for the ~~three and six month periods~~three-month period ended June 30, 2016 ~~respectively~~ and included the dilutive effect of 0.4 million ~~and~~unvested restricted stock units.

As a result of the net loss from continuing operations for the six months ended June 30, 2016, Kodak calculated earnings per share using weighted-average basic shares outstanding for the period. If Kodak had reported earnings from continuing operations for the six months ended June 30, 2016, Kodak would have included the dilutive effect of 0.2 million unvested restricted stock ~~units, respectively.~~units.

The computation of diluted earnings per share for the three and six months ended June 30, 2016 excluded the impact of the assumed conversion of net share settled warrants to purchase (a) 1.8 million shares of common shares at an exercise price of $14.93 and (b) 1.8 million shares of common shares at an exercise price of $16.12 because they would have been anti-dilutive.

~~As a result~~ Outstanding stock options of ~~the net loss from continuing operations presented~~1.7 million for the three and six months ended June 30, 2015, Kodak calculated diluted earnings per share using weighted-average basic shares outstanding for that period, as utilizing diluted shares would be anti-dilutive to loss per share. If Kodak had reported earnings from continuing operations for the three and six months ended June 30, 2015, unvested restricted stock units of 0.2 million and warrants to purchase 0.7 million of common shares would have been dilutive in the computation of diluted earnings per share:

~~Outstanding stock options of 1.7 million and 1.1 million for the three and six months ended June~~ 2016 ~~and 2015, respectively,~~ were not included in the computation of diluted earnings per share as they would also have been anti-dilutive.

~~[14]~~

NOTE ~~14:~~17: SHAREHOLDERS’ EQUITY

Kodak has 560 million shares of authorized stock, consisting of: (i) 500 million shares of common stock, par value $0.01 per share and (ii) 60 million shares of preferred stock, no par value, issuable in one or more series. As of ~~both~~ June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, there were ~~42.2~~42.5 million and ~~42.0~~42.4 million shares of common stock outstanding and no2.0 million shares of Series A preferred stock ~~outstanding.~~issued and outstanding, respectively. Treasury stock consisted of approximately ~~0.4~~0.5 million shares at both June 30, ~~2016~~2017 and ~~0.3 million shares at~~ December 31, ~~2015.~~2016.

[16]

NOTE ~~15:~~18: OTHER COMPREHENSIVE ~~LOSS~~(LOSS) INCOME

The changes in Other comprehensive ~~loss,~~(loss) income, by component, were as follows:

																Three Months Ended						Six Months Ended
																June 30,						June 30,
(in millions)		Three Months Ended June 30,							Six Months Ended June 30,							2017			2016			2017			2016
		2016			2015				2016			2015
Currency translation adjustments		$	1		$	3			$	9		$	(4	)		$	—		$	1		$	14		$	9
Unrealized losses on available-for-sale securities, before tax			-			(1	)			-			(1	)
Tax provision			-			-				-			-
Unrealized losses on available-for-sale securities, net of tax			-			(1	)			-			(1	)
Pension and other postretirement benefit plan changes
Newly established prior service credit			-			-				-			4
Newly established net actuarial (loss) gain			(2	)		-				(144	)		5
Newly established net actuarial loss																	(1	)		(2	)		(1	)		(144	)
Tax benefit			1			-				1			-				—			1			—			1
Newly established prior service credit and net actuarial (loss) gain, net of tax			(1	)		-				(143	)		9
Newly established net actuarial loss, net of tax																	(1	)		(1	)		(1	)		(143	)
Reclassification adjustments:
Amortization of prior service credit	^(a)		(2	)		(2	)	^(a)		(4	)		(4	)	^(a)		(2	)		(2	)		(4	)		(4	)
Amortization of actuarial gains	^(a)		-			(1	)	^(a)		(1	)		(1	)	^(a)		—			—			(1	)		(1	)
Recognition of gains due to settlements			-			-				(1	)		-				—			—			—			(1	)
Total reclassification adjustments			(2	)		(3	)			(6	)		(5	)			(2	)		(2	)		(5	)		(6	)
Tax provision			1			1				1			1				—			1			—			1
Reclassification adjustments, net of tax			(1	)		(2	)			(5	)		(4	)			(2	)		(1	)		(5	)		(5	)
Pension and other postretirement benefit plan changes, net of tax			(2	)		(2	)			(148	)		5				(3	)		(2	)		(6	)		(148	)
Other comprehensive loss		$	(1	)	$	-			$	(139	)	$	-
Other comprehensive (loss) income																$	(3	)	$	(1	)	$	8		$	(139	)

^(a)	Reclassified to Total Net Periodic Benefit Cost - refer to Note ~~11,~~14, "Retirement Plans and Other Postretirement Benefits".

NOTE ~~16:~~19: ACCUMULATED OTHER COMPREHENSIVE LOSS

Accumulated other comprehensive loss is composed of the following:

							June 30,			December 31,
(in millions)	June 30, 2016			December 31, 2015			2017			2016
Currency translation adjustments	$	(58	)	$	(67	)	$	(82	)	$	(96	)
Unrealized loss on investments		2			2
Pension and other postretirement benefit plan changes		(350	)		(202	)		(348	)		(342	)
Ending balance	$	(406	)	$	(267	)	$	(430	)	$	(438	)

[17]

NOTE ~~17:~~20: SEGMENT INFORMATION

Effective January 1, 2017, Kodak changed its organizational structure. Micro 3D Printing, within the Micro 3D Printing and Packaging segment, was moved into the Intellectual Property Solutions segment, which has been renamed the Advanced Materials and 3D Printing Technology segment. The Flexographic Packaging business, formerly part of the Micro 3D Printing and Packaging segment, is now being reported as a dedicated segment.

Effective April 1, 2017, Kodak made another change to its organizational structure. Digital front-end controllers within the Prosper business in the Enterprise Inkjet Systems segment was moved to the Unified Workflow Solutions business within the Software and Solutions segment.

Prior period segment results have been revised to conform to the current period segment reporting structure.

Financial information is reported for seven reportable segments: Print Systems, ~~Micro 3D Printing and~~Enterprise Inkjet Systems, Flexographic Packaging, Software and Solutions, Consumer and Film, ~~Enterprise Inkjet Systems, Intellectual Property Solutions~~Advanced Materials and 3D Printing Technology and Eastman Business Park. ~~The balance of Kodak’s continuing operations, which do not meet the criteria of a reportable segment, are reported in All Other.~~ A description of the reportable segments follows.

Print Systems: The Print Systems segment is comprised of two lines of business: Prepress Solutions and Electrophotographic Printing Solutions.

~~[15]~~

~~Micro 3D Printing and Packaging~~Enterprise Inkjet Systems: The ~~Micro 3D Printing and Packaging~~Enterprise Inkjet Systems segment is comprised of two lines of business: the Prosper business and the Versamark business.

Flexographic Packaging: The Flexographic Packaging ~~and Micro 3D Printing.~~segment is comprised of the Packaging line of business.

Software and Solutions: The Software and Solutions segment is comprised of two lines of business: Unified Workflow Solutions and Kodak Technology ~~Solutions and Unified Workflow~~ Solutions.

Consumer and Film: The Consumer and Film segment is comprised of three lines of business: Industrial Film and Chemicals, Motion Picture and Consumer Products (which includes Consumer Inkjet ~~Solutions; Motion Picture, Industrial Chemicals~~Solutions).

Advanced Materials and ~~Films; and Consumer Products.~~

~~Enterprise Inkjet Systems~~3D Printing Technology: The ~~Enterprise Inkjet Systems segment is comprised of the KODAK VERSAMARK business.~~

~~Intellectual Property Solutions: The Intellectual Property Solutions~~Advanced Materials and 3D Printing Technology segment includes ~~licensing~~the Kodak Research Laboratories and ~~research and development activities~~associated new business opportunities, intellectual property licensing not directly related to ~~the~~ other ~~segments.~~business segments, and Micro 3D Printing.

Eastman Business Park: The Eastman Business Park segment includes the operations of the Eastman Business Park, a more than ~~1,200 acre~~1,200-acre technology center and industrial complex.

~~All Other: All Other is composed of the RED utilities variable interest entity.~~

Segment financial information is shown ~~below.~~below:

~~Net~~

Segment Revenues ~~from Continuing Operations by Reportable Segment.~~

									Three Months Ended				Six Months Ended
									June 30,				June 30,
(in millions)	Three Months Ended June 30,				Six Months Ended June 30,				2017		2016		2017		2016
	2016		2015		2016		2015
Print Systems	$	258	$	283	$	489	$	537	$	236	$	258	$	449	$	489
Micro 3D Printing and Packaging		35		33		64		64
Enterprise Inkjet Systems										35		44		72		76
Flexographic Packaging										37		35		70		64
Software and Solutions		21		27		43		55		22		21		43		45
Consumer and Film		61		66		117		138		47		62		96		119
Enterprise Inkjet Systems		19		21		39		44
Intellectual Property Solutions		-		-		-		-
Advanced Materials and 3D Printing Technology										—		—		—		—
Eastman Business Park		3		4		7		7		4		3		8		7
Consolidated total	$	397	$	434	$	759	$	845	$	381	$	423	$	738	$	800

[~~16]~~18]

Segment Operational EBITDA and Consolidated Earnings (Loss) from Continuing Operations Before Income Taxes

													Three Months Ended						Six Months Ended
													June 30,						June 30,
(in millions)	Three Months Ended June 30,						Six Months Ended June 30,						2017			2016			2017			2016
	2016			2015			2016			2015
Print Systems	$	22		$	20		$	40		$	33		$	16		$	22		$	29		$	40
Micro 3D Printing and Packaging		2			4			3			4
Enterprise Inkjet Systems														1			(6	)		1			(10	)
Flexographic Packaging														8			6			14			10
Software and Solutions		(2	)		1			-			3			(1	)		(2	)		(1	)		(1	)
Consumer and Film		10			8			17			26			(5	)		10			(8	)		17
Enterprise Inkjet Systems	5				5		10				12
Intellectual Property Solutions		(4	)		(6	)		(8	)		(14	)
Advanced Materials and 3D Printing Technology														(7	)		(8	)		(15	)		(15	)
Eastman Business Park		1			2			1			1			2			1			2			1
Total of reportable segments		34			34			63			65			14			23			22			42
All Other ⁽¹⁾		2			-			5			4			—			2			—			5
Corporate components of pension and OPEB income ⁽²⁾		40			33			81			66			35			40			71			81
Depreciation and amortization		(27	)		(36	)		(54	)		(72	)		(22	)		(27	)		(41	)		(57	)
Restructuring costs and other		(7	)		(5	)		(12	)		(22	)		(11	)		(7	)		(24	)		(12	)
Overhead supporting, but not directly absorbed by discontinued operations ⁽³⁾		(4	)		(6	)		(8	)		(11	)
Stock based compensation		(1	)		(5	)		(3	)		(11	)		(3	)		(1	)		(5	)		(3	)
Consulting and other costs ⁽⁴⁾⁽³⁾		(2	)		(5	)		(3	)		(7	)		—			(2	)		(1	)		(3	)
Idle costs ⁽⁵⁾⁽⁴⁾		(1	)		(1	)		(2	)		(2	)		(1	)		(1	)		(2	)		(2	)
Manufacturing costs originally planned to be absorbed by silver metal mesh touch screen production ⁽⁶⁾		(1	)		-			(1	)		-
Other operating income (expense), net ⁽⁷⁾		6			1			(8	)		(2	)
Manufacturing costs originally planned to be absorbed by silver metal mesh touch screen production ⁽⁵⁾														—			(1	)		—			(1	)
Other operating (expense) income, net ⁽⁶⁾														(2	)		6			(12	)		(8	)
Interest expense ⁽⁷⁾⁽⁶⁾		(16	)		(15	)		(32	)		(30	)		(8	)		(16	)		(16	)		(32	)
Other charges, net ⁽⁷⁾		(1	)		(2	)		(2	)		(12	)
Reorganization items, net ⁽⁷⁾		-			-			-			(5	)
Consolidated income (loss) from continuing operations before income taxes	$	22		$	(7	)	$	24		$	(39	)
Other income (charges), net ⁽⁶⁾														9			(1	)		29			(2	)
Consolidated earnings from continuing operations before income taxes													$	11		$	15		$	21		$	8

⁽¹⁾	~~Earnings of the~~ RED utilities variable interest ~~entity.~~entity, which was deconsolidated as of December 31, 2016 (interest and depreciation of RED are included in the respective lines below).

⁽²⁾	Composed of interest cost, expected return on plan assets, amortization of actuarial gains and losses and ~~curtailments~~curtailment and settlement components of pension and other postretirement benefit expenses.

⁽³⁾

Primarily consists of costs for shared resources allocated to the Prosper Enterprise Inkjet business discontinued operation in the prior year periods which are now included in the results of continuing operations and an estimate of costs for shared resources which would have been allocated to the Prosper Enterprise Inkjet business discontinued operation in the current year period had the business remained in continuing operations.

⁽⁴⁾	Consulting and other costs are professional services and ~~other~~internal costs associated with certain corporate strategic initiatives.

⁽⁵⁾⁽⁴⁾

Consists of third party costs such as security, maintenance and utilities required to maintain land and buildings in certain locations not used in any Kodak operations.

⁽⁶⁾⁽⁵⁾

Consists of manufacturing costs originally planned to be absorbed by silver metal mesh touch screen production that are ~~now~~ excluded from the segment measure of ~~segment~~ profit and loss.

⁽⁷⁾⁽⁶⁾

As reported in the Consolidated Statement of Operations.

Segment Measure of Profit and Loss

Kodak’s segment measure of profit and loss is an adjusted earnings before interest, taxes, depreciation and amortization (“Operational EBITDA”). As demonstrated in the above table, Operational EBITDA represents the ~~income~~earnings (loss) from continuing operations excluding the provision ~~(benefit)~~ for income taxes; corporate components of pension and OPEB income; depreciation and amortization expense; restructuring costs; ~~overhead costs no longer absorbed by discontinued operations;~~ stock-based compensation expense; consulting and other costs; idle costs; manufacturing costs originally planned to be absorbed by silver metal mesh touch screen production; other operating ~~(income)~~ expense, net (unless otherwise indicated); interest expense; and other (income) charges, ~~net~~net. Overhead costs no longer absorbed by the Prosper discontinued operations of $4 million and ~~reorganization items, net.~~$8 million in the three and six months ended June 30, 2016, respectively, were also excluded from segment earnings while the business was reported in discontinued operations. As the Prosper business is no longer reported in discontinued operations, overhead allocations are included in the Enterprise Inkjet Solutions segment measure for all periods presented.

~~[17]~~

Kodak’s segments are measured using Operational EBITDA both before and after allocation of corporate selling, general and administrative expenses (“SG&A”). The segment earnings measure reported is after allocation of corporate SG&A as this most closely aligns with U.S. GAAP. Research and ~~development~~Development activities not directly related to the other segments are reported within the ~~Intellectual Property Solutions~~Advanced Materials and 3D Printing Technology segment.

[19]

Change in Segment Measure of ~~Profit and Loss~~Profitability

During the first quarter of ~~2016, Kodak changed its~~2017 the segment measure ~~of profit and loss.~~was changed to exclude internal costs associated with corporate strategic initiatives. The segment measure ~~excludes overhead~~already excluded external costs ~~no longer absorbed by discontinued operations (see description above). In addition, manufacturing~~associated with those initiatives. Additionally, third party costs ~~originally planned~~associated with incremental idle building space has been added to ~~be absorbed by silver metal mesh touch screen production are now excluded from the segment measure of profit and loss.~~ idle costs.

NOTE ~~18:~~21: DISCONTINUED OPERATIONS

KODAK PROSPER Enterprise Inkjet Business

~~In March 2016 Kodak announced that it is in talks with prospective buyers about offers to purchase its KODAK PROSPER Enterprise Inkjet business (the “Prosper Business”).~~

The results of ~~operations~~the Prosper business were previously presented as discontinued operations. However, the held for sale criteria were no longer met as of March 31, 2017. In April 2017, Kodak decided to retain the Prosper business. The assets and liabilities of the Prosper Business are classified as discontinued operations in the Consolidated Statement of Operations for all periods presented. Additionally, the related assets and liabilities associated with the Prosper Business are classifiedbusiness, previously presented as held for sale, have been reclassified to held and used in the Consolidated Statement of Financial Position as of ~~June 30,~~December 31, 2016, and ~~December~~the results of the Prosper business have been reclassified from discontinued operations to continuing operations for all periods presented. The Prosper business’ assets and liabilities as of March 31, ~~2015. Kodak anticipates~~2017 were measured at the carrying amount before the assets were classified as held for sale, ~~may take up~~reduced by $12 million representing the depreciation and amortization expense that would have been recognized had the assets been continuously classified as held for use. The $12 million reduction to ~~a year to complete.~~the carrying value of the Prosper assets was reported in Other operating expense, net in the first quarter of 2017.

The ~~results~~reclassification of ~~operations~~the results of the Prosper Business ~~are presented in~~to continuing operations had the following ~~table:~~

(in millions)

Three Months Ended
June 30,

Six Months Ended
June 30,

2016

2015

2016

2015

Revenues

$
25

$
24

$
39

$
40

Cost of sales

18

22

30

45

Selling, general and administrative expenses

9

5

14

11

Research and development expenses

5

5

11

10

Loss from discontinued operations, before income taxes

(7
)

(8
)

(16
)

(26
)
Provision for income taxes related to discontinued operations

-

-

-

1

Loss from discontinued operations, net of income taxes

$
(7
)

$
(8
)

$
(16
)

$
(25
)

~~Loss from discontinued operations for the three and six months ended June 30, 2016 in~~impacts on the Consolidated Statement of ~~Operations also included $1 million and $2 million, respectively, associated with discontinued operations of the Personalized Imaging and Document Imaging Business.~~

~~The following table presents the aggregate carrying amount of major assets and liabilities of the Prosper Business:~~Operations:

(in millions)

June 30,
2016

December 31,
2015

ASSETS

Cash and cash equivalents

$
2

$
1

Receivables, net

11

15

Inventories, net

48

51

Property, plant and equipment, net

37

32

Intangible assets, net

37

38

Other assets

3

4

Assets of business held for sale

$
138

$
141

LIABILITIES

Accounts payable, trade

$
5

$
9

Current portion of long-term debt

-

1

Other current liabilities

16

12

Long-term debt, net of current portion

3

2

Other long-term liabilities

4

5

Liabilities of business held for sale

$
28

$
29

	Three Months Ended					Six Months Ended
	June 30,					June 30,
(in millions)	2017		2016			2017			2016
Revenues	$	—	$	25		$	—		$	39
Cost of revenues		—		18			—			30
Selling, general and administrative expenses		—		9			—			14
Research and development costs		—		5			—			11
Other operating (income) expense, net		—		—			12			—
Income (loss) from continuing operations before taxes		—		(7	)		(12	)		(16	)
Provision for income taxes		—		—			—			—
Income (loss) from continuing operations	$	—	$	(7	)	$	(12	)	$	(16	)

~~[18]~~

Intercompany liabilities between a dedicated entity of the Prosper Business and Kodak of approximately $7 million as of June 30, 2016 that are part of the proposed transaction are not reflected in the table above as these amounts have been eliminated in deriving the consolidated financial statements. There were no intercompany amounts that are part of the proposed transaction as of December 31, 2015.

Current assets held for sale as of June 30, 2016 and December 31, 2015 in the Consolidated Statement of Financial Position also included $2 million from assets under contract for sale not associated with the Prosper Business.

~~The following table presents cash flow information associated with the Prosper Business:~~

(in millions)

Six Months Ended
June 30,

2016

2015

Depreciation

2

3

Amortization

1

2

Capital expenditures

2

-

~~Depreciation and amortization of long-lived assets of the Prosper Business included in discontinued operations ceased on April 1, 2016.~~

Direct operating expenses of the discontinued operations are included in the results of discontinued operations. Indirect expenses that were historically allocated to the discontinued operations have been included in the results of continuing operations. Prior period results have been reclassified to conform to the current period presentation.

NOTE ~~19:~~22: FINANCIAL INSTRUMENTS

Kodak, as a result of its global operating and financing activities, is exposed to changes in foreign currency exchange rates and interest rates, which may adversely affect its results of operations and financial position. Kodak manages such exposures, in part, with derivative financial instruments. Foreign currency forward contracts are used to mitigate currency risk related to foreign currency denominated assets and liabilities. Kodak’s exposure to changes in interest rates results from its investing and borrowing activities used to meet its liquidity needs. Kodak does not utilize financial instruments for trading or other speculative purposes.

Kodak’s foreign currency forward contracts are not designated as hedges and are marked to market through net earnings (loss) at the same time that the exposed assets and liabilities are ~~re-measured~~remeasured through net earnings (loss) (both in Other (income) charges, net in the Consolidated Statement of Operations). The notional amount of such contracts open at June 30, ~~2016~~2017 and December 31, ~~2015~~2016 was approximately ~~$393~~$704 million and ~~$384~~$340 million, respectively. The majority of the contracts of this type held by Kodak as of June 30, 2017 are denominated in Swiss francs and euros. The majority of the contracts of this type held by Kodak as of December 31, 2016 were denominated in euros, British pounds, and Chinese ~~renminbi and British pounds.~~renminbi.

The net effect of foreign currency forward contracts in the results of operations is shown in the following table:

											Three Months Ended						Six Months Ended
											June 30,						June 30,
(in millions)	Three Months Ended June 30,					Six Months Ended June 30,					2017			2016			2017		2016
	2016			2015		2016			2015
Net (loss) gain from derivatives not designated as hedging instruments	$	(2	)	$	3	$	(1	)	$	20
Net loss from derivatives not designated as hedging instruments											$	(4	)	$	(2	)	$	—	$	(1	)

Kodak had no derivatives designated as hedging instruments for the three and six months ended June 30, ~~2016~~2017 and ~~2015.~~2016.

[20]

In the event of a default under the Company’s Senior Secured First Lien Term Credit ~~Agreements,~~Agreement, the Amended Credit Agreement, or a default under any derivative contract or similar obligation of Kodak, subject to certain minimum thresholds, the derivative counterparties would have the right, although not the obligation, to require immediate settlement of some or all open derivative contracts at their then-current fair value, but with liability positions netted against asset positions with the same counterparty.

As discussed in Note 15, “Redeemable, Convertible, Series A Preferred Stock”, the Company concluded that the Series A Preferred Stock is considered more akin to a debt-type instrument and that the economic characteristics and risks of the embedded conversion features, except where the conversion price was increased to the liquidation preference, were not considered clearly and closely related to the Series A Preferred Stock. The embedded conversion features not considered clearly and closely related are the conversion at the option of the holder (“Optional Conversion”); the ability of Kodak to automatically convert the stock after the second anniversary of issuance (“Mandatory Conversion”) and the conversion in the event of a fundamental change or reorganization (“Fundamental Change or Reorganization Conversion”). Accordingly, these embedded conversion features were bifurcated from the Series A Preferred Stock and separately accounted for on a combined basis as a single derivative liability which is reported in Other long-term liabilities in the Consolidated Statement of Financial Position. The derivative liability is being accounted for at fair value with changes in fair value being reported in Other (income) charges, net in the Consolidated Statement of Operations.

Fair Value

Fair values of marketable securities are determined using quoted prices in active markets for identical assets (Level 1 fair value measurements). Fair values of Kodak’s foreign currency forward contracts are determined using observable inputs (Level 2 fair value measurements) and are based on the present value of expected future cash flows (an income approach valuation technique) considering the risks involved and using discount rates appropriate for the duration of the contracts. ~~As of June 30, 2016, the~~The gross fair value of ~~the~~ foreign currency forward contracts in an asset position ~~(which~~ are reported in Receivables, net ~~in the Consolidated Statement of Financial Position) was $4 million~~ and the gross fair value of ~~the~~ foreign currency forward contracts in a liability position ~~(which~~ are reported in Other current ~~liabilities) was $8 million. The fair value~~liabilities in the Consolidated Statement of ~~marketable securities~~

~~[19]~~

~~was not material as of June 30, 2016 and neither~~Financial Position. Neither the fair value of marketable securities nor the gross fair ~~value~~values of the foreign currency forward contracts ~~were~~was material as of June 30, 2017 and December 31, ~~2015.~~2016.

Transfers between levels of the fair value hierarchy are recognized based on the actual date of the event or change in circumstances that caused the transfer. There were no transfers between levels of the fair value hierarchy during the three orand six months ended June 30, ~~2016.~~2017.

The fair value of ~~long-term borrowings~~the embedded conversion features derivative liability is ~~measured~~calculated using unobservable inputs (Level 3 fair measurements). The value of the Optional Conversion and Mandatory Conversion is calculated using a binomial lattice model. The following table presents the key inputs in the determination of the fair value of the Optional Conversion and Mandatory Conversion at June 30, 2017 and December 31, 2016:

	Valuation Date
	June 30, 2017			December 31, 2016
Total value of embedded derivative liability ($ millions)	$	7		$	43
Kodak's closing stock price		9.10			15.50
Expected stock price volatility		43.76	%		42.85	%
Risk free rate		1.78	%		1.93	%
Yield on the preferred stock		11.79	%		11.38	%

The Fundamental Change and Reorganization Conversion value at issuance was calculated as the difference between the total value of the Series A Preferred Stock and the sum of the net present value of the cash flows if the Series A Preferred Stock is redeemed on its fifth anniversary and the values of the other embedded derivatives. The Fundamental Change and Reorganization Conversion value reduces the value of the embedded conversion features derivative liability. Unless events occur which would alter the likelihood of a ~~nonrecurring basis. Fair~~fundamental change or reorganization event, the value of the Fundamental Change and Reorganization Conversion reflects the value as of the issuance date, amortized for the passage of time.

The fair values of long-term borrowings (Level 2 fair value measurements) are determined by reference to quoted market prices of similar instruments, if available, or by pricing models based on the value of related cash flows discounted at current market interest rates. The fair values of long-term borrowings were ~~$650~~$414 million and ~~$586~~$406 million at June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively.

The carrying values of cash and cash equivalents and restricted cash ~~and short-term borrowings and current portion of long-term debt~~ approximate their fair values.

[~~20]~~21]

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

CAUTIONARY STATEMENT PURSUANT TO SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This report on Form 10-Q includes ~~"forward–~~“forward–looking ~~statements"~~statements” as that term is defined under the Private Securities Litigation Reform Act of 1995.

Forward–looking statements include statements concerning Kodak’s plans, objectives, goals, strategies, future events, future revenue or performance, capital expenditures, liquidity, investments, financing needs and business trends and other information that is not historical information. When used in this document, the words “estimates,” “expects,” “anticipates,” “projects,” “plans,” “intends,” “believes,” “predicts,” “forecasts,” “strategy,” “continues,” “goals,” ~~targets,”~~“targets” or future or conditional verbs, such as “will,” “should,” “could,” or “may,” and ~~variations of such words or~~ similar expressions, as well as statements that do not relate strictly to historical or current facts, are intended to identify forward–looking statements. All forward–looking statements, including ~~without limitation,~~ management’s examination of historical operating trends and data, are based upon Kodak’s expectations and various assumptions. Future events or results may differ from those anticipated or expressed in the forward-looking statements. Important factors that could cause actual events or results to differ materially from the forward-looking statements include, among others, the risks and uncertainties ~~and other factors~~ described in more detail in Kodak’s Annual Report on Form 10–K for the year ended December 31, ~~2015~~2016 under the headings “Business,” “Risk Factors,” “Legal ~~Proceedings”~~Proceedings,” and/or “Management’s Discussion and Analysis of Financial Condition and Results of Operations–Liquidity and Capital Resources,” in the corresponding sections of this report on Form 10-Q and in Kodak’s quarterly report on Form 10-Q for the quarter ended March 31, ~~2016,~~2017, and in other filings Kodak makes with the ~~U.S. Securities and Exchange Commission~~SEC from time to time, as well as the following:

~~Kodak’s ability to comply with the covenants in its various credit facilities;~~

Kodak’s ability to improve and sustain its operating structure, cash flow, profitability and other financial results;

~~Kodak’s ability to improve and sustain its operating structure, cash flow, profitability and other financial results;~~

the ability of Kodak to achieve cash forecasts, financial projections, and projected growth;

~~the ability of Kodak to achieve cash forecasts, financial projections, and projected growth;~~

Kodak’s ability to achieve the financial and operational results contained in its business plans;

~~Kodak’s ability to achieve the financial and operational results contained in its business plans;~~

Kodak’s ability to fund continued investments, capital needs and restructuring payments and service its debt and Series A Preferred Stock;

~~Kodak’s ability to fund continued investments, capital needs and restructuring payments and service its debt;~~

Kodak’s ability to comply with the covenants in its various credit facilities;

~~Kodak’s ability to discontinue, sell or spin-off certain businesses or operations, including the Prosper Business, or otherwise monetize assets;~~

Kodak’s ability to discontinue, sell or spin-off certain businesses or operations, or otherwise monetize assets;

~~changes in foreign currency exchange rates, commodity prices and interest rates;~~

changes in foreign currency exchange rates, commodity prices and interest rates;

~~Kodak’s ability to effectively anticipate technology trends and develop and market new products, solutions and technologies, including its micro 3D printing of touch sensors;~~

Kodak’s ability to effectively anticipate technology trends and develop and market new products, solutions and technologies;

~~Kodak’s ability to effectively compete with large, well-financed industry participants;~~

Kodak’s ability to effectively compete with large, well-financed industry participants;

continued sufficient availability of borrowings and letters of credit under the Amended Credit Agreement, Kodak’s ability to obtain additional financing if and as needed and Kodak’s ability to provide or facilitate financing for its customers;

~~Kodak’s ability to attract and retain key executives, managers and employees;~~

the performance by third parties of their obligations to supply products, components or services to Kodak; and

the impact of the global economic environment on Kodak.

~~the performance by third parties of their obligations to supply products, components or services to Kodak; and~~

~~the impact of the global economic environment on Kodak.~~

There may be other factors that may cause Kodak’s actual results to differ materially from the forward–looking statements. All forward–looking statements attributable to Kodak or persons acting on its behalf apply only as of the date of this report on Form 10-Q and are expressly qualified in their entirety by the cautionary statements included or referenced in this document. Kodak undertakes no obligation to update or revise forward–looking statements to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events.

OVERVIEW

Kodak is a global commercial printing and imaging company with proprietary technologies in materials science, digital imaging science and software, and deposition processes (methods whereby one or more layers of various materials in gaseous, liquid or small particle form are deposited on a substrate in precise quantities and positions). Kodak leverages its core technology products and services to develop solutions for the product goods packaging and graphic communications markets, and is commercializing products ~~for the~~in functional printing ~~market.~~markets. Kodak also offers brand licensing and intellectual property opportunities, provides products and services for motion pictures and other commercial films, and sells ink to its existing installed consumer inkjet printer base.

~~[21]~~

Revenue declined ~~$37~~$42 million ~~(8.5%~~(10%) and ~~$86~~$62 million ~~(10.2%~~(8%) compared to the prior year quarter and first six months, respectively. ~~Operating cost reductions more than offset the resulting impact of the revenue decline on earnings.~~

[22]

Kodak’s strategy is to:

~~Use Kodak’s divisional structure to drive accountability, transparency, and speed of decision making;~~

Use Kodak’s divisional structure to drive accountability, transparency and speed of decision making;

~~Focus product investment in growth engines - Sonora, Packaging, Micro 3D Printing and Software and Services;~~

Focus product investment in growth engines - Sonora, Prosper, FLEXCEL NX Systems and Plates, Advanced Materials and 3D Printing and Software and Services;

~~Maintain stable market leadership position and cash flows associated with Print Systems;~~

Maintain its stable market leadership position and cash flows associated with Print Systems;

~~Manage the expected decline in and maximize cash generated by mature businesses;~~

Manage the expected decline in and maximize cash generated by mature businesses;

~~Continue to streamline processes to drive cost reductions and improve operating leverage; and~~

Continue to streamline processes to drive cost reductions and improve operating leverage; and

~~Continue to explore opportunities to monetize the asset base.~~

Continue to explore opportunities to monetize the asset base.

A discussion of opportunities and challenges related to Kodak’s strategy follows:

Print Systems’ digital plate products include traditional digital plates and KODAK SONORA Process Free Plates. SONORA process free plates allow Kodak customers to skip the plate processing step prior to mounting plates on a printing press. This improvement in the printing process saves time and costs for customers. Also, SONORA process free plates reduce the environmental impact of the printing process because they eliminate the use of chemicals (including solvents), water and power that is otherwise required to process a traditional plate. While digital plate offerings are experiencing pricing pressure, innovations in Kodak product lines which command premium prices, such as SONORA Process Free Plates, are expected to offset some of the long-term price erosion in the market. Print Systems’ revenues declined $25 million (9%) and $48 million (9%) compared with the prior year quarter and first six months, respectively, with close to half of the decline due to lower pricing on plates.

Print Systems’ revenues accounted for approximately 62% and 61% of Kodak’s revenues for the three and six months ended June 30, 2017. Print Systems’ revenues declined $22 million (9%) and $40 million (8%) compared with the prior year quarter and first six months, respectively. Segment earnings declined $6 million (27%) and $11 million (28%) compared with the prior year quarter and first six months, respectively, driven by competitive pricing pressures. While digital plate offerings are experiencing market driven volume and pricing pressure, innovations in Kodak product lines which command premium prices, such as SONORA Process Free Plates, are expected to offset some of the long-term erosion in the market and manufacturing efficiencies are expected to mitigate the impact on earnings from revenue declines.

In Enterprise Inkjet Systems, the legacy Versamark business is expected to continue to decline as a percentage of the segment’s total revenue as the Prosper business continues to grow. The Prosper Inkjet Systems business is expected to continue to build scale and profitability. Investment in the next generation Prosper technology, Ultrastream, is focused on the ability to place Ultrastream writing systems in original equipment manufacturer and hybrid applications. Enterprise Inkjet Systems’ revenue decreased $9 million (20%) and $4 million (5%) but the segment earnings improved $7 million and $11 million compared with the prior year quarter and first six months, respectively, driven by a streamlining of the Prosper business.

Flexographic Packaging revenue increased $2 million (6%) and $6 million (9%) and segment earnings increased $2 million (33%) and $4 million (40%) compared with the prior year quarter and first six months, respectively, as the digital business continues to build scale.

The Software and Solutions segment is comprised of Unified Workflow Solutions and Kodak Technology Solutions which includes enterprise services and solutions. Unified Workflow Solutions is an established product line, whereas Kodak Technology Solutions includes document management and managed print services businesses as well as businesses that leverage existing technologies and intellectual property in new applications. The contributions these business initiatives make to earnings are expected to grow with a modest amount of additional investment. Sales in Software and Solutions are project-based and can vary from year to year depending on the nature and number of projects in existence that year.

Consumer and Film’s revenue continues to decline ($15 million (24%) and $23 million (19%) compared with the prior year quarter and first six months, respectively). Segment earnings declined $15 million and $25 million compared with the prior year quarter and first six months, respectively, driven by the declining installed base of consumer inkjet printers and one-time items that favorably impacted the prior year. However, the Consumer and Film segment’s revenues are expected to grow in the second half of the year driven by growth in brand licensing. Kodak plans to continue to promote the use of film to utilize as much film manufacturing capacity as possible.

In Micro 3D Printing and Packaging, the earnings contribution from Packaging offsets the cost of developing the Micro 3D Printing business. Kodak expects that growth in Packaging, as well as the transition from investment to commercialization of product in Micro 3D Printing, will result in revenue and earnings growth in this segment.

Film and related component manufacturing operations and Kodak Research Laboratories utilize capacity at Eastman Business Park (“EBP”), which helps cost absorption for both Kodak operations and tenants at EBP.

The Software and Solutions segment is comprised of Kodak Technology Solutions, which includes Enterprise Services and Solutions, and Unified Workflow Solutions. Unified Workflow Solutions is an established product line, whereas Kodak Technology Solutions includes growing product lines that leverage existing technologies and intellectual property in new applications. These business initiatives generally do not require substantial additional investment, and Kodak expects that they will grow in contribution to earnings. Software and Solutions’ revenue declined $6 million (22%) and $12 million (22%) in the prior year quarter and first half, respectively, primarily due to reductions in government contracts.

Kodak plans to capitalize on its intellectual property through new business opportunities in 3D printing materials, smart material applications, and functional printing markets including printed electronics.

Kodak plans to continue to pursue monetization of its asset base, selling and licensing intellectual property, selling and leasing excess capacity in its properties, and pursuing rights to an earn-out from a previous divestiture.

The Consumer and Film segment’s revenues are expected to continue to decline. Consumer and Film’s revenue declined $5 million (8%) and $21 million (15%) compared with the prior year quarter and first six months, respectively.

~~In Enterprise Inkjet Systems, the legacy Versamark business is expected to continue to decline.~~

Selling, general and administrative expenses (“SG&A”) and research and development (“R&D”) expenses declined a combined $10 million (14%) and $26 million (19%) from the second quarter and first six months of 2015 to the second quarter and first six months of 2016, respectively, as the result of a number of actions including headcount reductions, reduced overhead costs, savings from global benefit changes, facilities consolidations and renegotiations of vendor contracts and the focusing of R&D spending on materials science. Lower interest cost on pension plans also impacted operating costs.

Kodak plans to continue to pursue monetization of its asset base, including selling the Prosper Business, selling and licensing intellectual property, selling and leasing excess capacity in its properties, and pursuing rights to an earn-out from a previous divestiture.

CURRENT KODAK OPERATING MODEL AND REPORTING STRUCTURE

Effective January 1, 2017, Kodak changed its organizational structure. Micro 3D Printing within the Micro 3D Printing and Packaging segment was moved into the Intellectual Property Solutions segment which has been renamed the Advanced Materials and 3D Printing Technology segment. The Flexographic Packaging business, formerly part of the Micro 3D Printing and Packaging segment, is now being reported as a dedicated segment.

[23]

Additionally, effective April 1, 2017, digital front-end controllers within the Prosper business in the Enterprise Inkjet Systems segment was moved to the Unified Workflow Solutions business within the Software and Solutions segment.

Prior period segment results have been revised to conform to the current period segment reporting structure.

~~[22]~~

Print Systems

The Print Systems segment is comprised of Prepress Solutions, which includes Kodak’s digital offset plate offerings and computer-to-plate imaging solutions, and Electrophotographic Printing Solutions, which offers high-quality digital printing solutions using electrically charged toner based technology. The Print Systems segment provides digital and traditional product and service offerings to a variety of commercial industries, including commercial print, direct mail, book publishing, newspapers and magazines and packaging. ~~While the businesses in this segment are experiencing pricing pressure, continued innovations in Kodak product lines that can command premium prices offset some of the long term market price erosion.~~

Prepress Solutions capitalizes on a contract-based, stable and recurring cash flow-generative business model. The average duration of customer contracts is two ~~to three~~ years. These contracts offer stability and generate recurring revenue. The core of the business is the manufacturing of aluminum digital printing plates of varying sizes. These plates can be as small as 23cm x 27cm and as large as 126cm x 287cm. Unexposed plates are sold to commercial printing companies for use in the offset printing process. Kodak also manufactures equipment, known as Computer to Plate (“CTP”) equipment, which images the plates with a laser. The plates are used in the offset printing process, which transfers ink from the plate onto a rubber blanket and then onto the substrate to be printed. Due to the nature of the imaging and printing process, a new plate must be used for each printing run. As a result, there is a recurring revenue stream from the sale of these plates.

The Print Systems products and services are sold globally to customers through both a direct sales team as well as indirectly through dealers.

Prepress Solutions:

·	~~Prepress Solutions:~~

Digital offset plates include KODAK SONORA Process Free Plates. KODAK SONORA Process Free Plates are prepared directly with a CTP thermal output device and do not require subsequent processing chemistry, processing equipment or chemical disposal. As a result, the plates deliver cost savings and efficiency for customers and promote environmental sustainability practices.

Digital offset plates includes KODAK SONORA Process Free Plates. KODAK SONORA Process Free Plates are prepared directly with a CTP thermal output device and do not require subsequent processing chemistry, processing equipment or chemical disposal. As a result, the plates deliver cost savings and efficiency for customers and promote environmental sustainability practices.

CTP output devices are used by customers to transfer images onto aluminum offset printing plates and provide consistent and high quality imaging for offset press applications. CTP products provide high resolution, consistency and stability in thermal imaging. Kodak also offers a lower cost CTP system using TH5 imaging technology, which provides a highly efficient and cost-effective imaging solution at a lower price point.

Electrophotographic Printing Solutions:

NEXPRESS printers produce high-quality, differentiated printing of short-run, personalized print applications, such as direct mail, books, marketing collateral and photo products.

DIGIMASTER printers use monochrome electrophotographic printing technology for transactional printing, short-run books, corporate documentation, manuals and direct mail.

CTP output devices that are used by customers to transfer images onto aluminum offset printing plates and provide consistent and high quality imaging for offset press applications. CTP products provide high resolution, consistency and stability in thermal imaging. Kodak also offers a lower cost CTP system using TH5 imaging technology, which provides a highly efficient and cost-effective imaging solution at a lower price point.

·	~~Electrophotographic Printing Solutions:~~

~~NEXPRESS printers produce high-quality, differentiated printing of short-run, personalized print applications, such as direct mail, books, marketing collateral and photo products.~~

~~DIGIMASTER printers use monochrome electrophotographic printing technology for transactional printing, short-run books, corporate documentation, manuals and direct mail.~~

The Print Systems segment also provides service and support related to these products.

Enterprise Inkjet Systems

The Enterprise Inkjet Systems segment contains the Prosper business and the Versamark business. The Enterprise Inkjet Systems products include production press systems, consumables (primarily ink), inkjet components and services.

Prosper:

The Prosper business product offerings, including the PROSPER Press systems and PROSPER Components, feature ultrafast inkjet droplet generation. This includes the PROSPER 6000 Press, which delivers a continuous flow of ink that enables constant and consistent operation, with uniform ink droplet size and accurate placement, even at very high print speeds. Applications of the PROSPER Press include publishing, commercial print, direct mail and packaging. PROSPER System Components are integrated into original equipment manufacturer partner products and systems. Sales of equipment that incorporate the PROSPER Writing Systems result in recurring revenue from sales of ink and other consumables and equipment service. The level of recurring revenue depends on the application for which the equipment is used, which drives the total number of pages printed and, therefore, the amount of ink usage.

Versamark:

[~~23]~~24]

~~Micro 3D Printing~~The KODAK VERSAMARK Products are the predecessor products to the PROSPER Press. Users of KODAK VERSAMARK Products continue to purchase ink and ~~Packaging~~

~~The Micro 3D Printing and Packaging segment includes flexographic printing equipment and plates and related~~other consumables ~~and services,~~ as well as printed functional materials and components. Micro 3D Printing is a new line of business that seeks to provide innovative printing techniques to customers for both premium marketing applications and manufacturing applications. Because Micro 3D Printing is a new line of business, the Micro 3D Printing andservice from Kodak.

Flexographic Packaging

The Flexographic Packaging segment ~~currently requires~~consists of flexographic imaging equipment, printing plates, consumables and related services, which enable graphic customization of a ~~higher degree~~wide variety of ~~investment~~packaging materials.

FLEXCEL NX:

The FLEXCEL NX System, a fully-integrated digital flexographic plate imaging solution, enables prepress service providers and ~~has~~printers to create printing plates that provide high quality flexographic printing and enhance the efficiency of customers’ printing processes.

Other Packaging Business:

The FLEXCEL SR Plates portfolio comprises a ~~lower contribution~~full range of analog flexographic plates designed for trade shops and packaging printers that have not yet transitioned to ~~earnings than other segments. Micro 3D Printing~~digital technology. Kodak also manufactures and ~~Packaging products~~sells DITR Film, a no-process alternative to conventional graphic arts film and a wide range of analog and digital letterpress plates. Also included under this category are ~~sold directly by Kodak~~equipment service and ~~indirectly through dealers.~~the legacy APPROVAL proofing business.

·	~~Micro 3D Printing~~

The Micro 3D Printing products offer many advantages over traditionally manufactured products, including lower cost points and reduced adverse environmental impact. Traditionally manufactured products require higher material costs, additional manufacturing steps, and, for the most widely used technology, the mining of a rare metal. Kodak is working with lead customers in large format and industrial markets to achieve market introduction in 2016.

·	~~Packaging~~

The Packaging business consists of flexographic printing equipment and related consumables and services, which enable graphic customization of a wide variety of packaging materials. The FLEXCEL NX system provides imaging devices to deliver high productivity and consistency, as well as a full tonal range for flexographic printing.

Software and Solutions

The Software and Solutions segment is comprised of Unified Workflow Solutions and Kodak Technology Solutions, which includes ~~Enterprise Services~~enterprise services and ~~Solutions, and Unified Workflow Solutions.~~solutions. Unified Workflow Solutions is an established product line whereas Kodak Technology Solutions includes ~~growing product lines~~document management and managed print services businesses as well as businesses that leverage existing Kodak technologies and intellectual property in new applications. ~~These business initiatives generally do not require substantial additional investment and it is expected that they will grow in contribution to earnings.~~

~~The Software and~~Unified Workflow Solutions:

Unified Workflow Solutions ~~segment~~ offers a leading suite of solutions for print production workflow, including the PRINERGY workflow production software, by providing customer value through automation, web integration and integration with other Kodak systems and third-party offerings. Kodak believes it is a leader in production workflow solutions for the commercial print and packaging industries with over 13,000 systems installed in some of the largest printing and packaging establishments around the world. Production workflow software is used by customers to manage digital and conventional print content from file creation to output. Production workflow software manages content and color, reduces manual errors and helps customers manage the collaborative creative process. Kodak believes it is a leader in production workflow solutions for the commercial print and packaging industries with over 15,000 systems installed in some of the largest printing and packaging establishments around the world. The Unified Workflow Solutions business includes digital front-end controllers which manage the delivery of personalized content to digital presses while controlling color and print consistency.

~~The Software and~~Kodak Technology Solutions:

Kodak Technology Solutions ~~segment also~~ assists organizations with challenges and opportunities created by the worldwide digital transformation. It provides print and managed media services that assist customers with solutions for their printing requirements and document management services, including expertise in the capture, archiving, retrieval and delivery of documents. ~~Software and~~Kodak Technology Solutions serves enterprise customers primarily in ~~numerous sectors, including governments, pharmaceuticals and life sciences, consumer and luxury product goods and retail~~the government and financial ~~services.~~services sectors.

Consumer and Film

The Consumer and Film segment is comprised of three lines of business: ~~Motion Picture,~~Consumer Products, Industrial Film and Chemicals, and ~~Films;~~ Motion Picture.

[25]

Consumer Products:

Includes licensing of Kodak brands to third parties and consumer products. Kodak currently licenses its brand for use with a range of consumer products including batteries, cameras and camera accessories, printers and recordable media. Kodak intends to continue efforts to grow its portfolio of consumer product licenses to generate both ongoing royalty streams and upfront payments.

Consumer Inkjet ~~Solutions; and Consumer Products.~~

·	~~Motion Picture, Industrial Chemicals and Films:~~

~~Includes the motion picture film business serving the entertainment and advertising industries. Motion picture products are sold directly to studios, laboratories and independent filmmakers.~~

~~Offers industrial films, including films used by the electronics industry to produce printed circuit boards.~~

~~The business also includes related component businesses: Polyester Film; Solvent Recovery; and Specialty Chemicals, Inks and Dispersions.~~

~~[24]~~

·	~~Consumer Inkjet Solutions:~~

~~Involves~~Solutions, which involves the sale of ink to an existing installed ~~base of consumer inkjet printers~~

·	~~Consumer Products:~~

Includes licensing of Kodak brands to third parties and consumer products. Kodak currently licenses its brand for use with a range of consumer products including batteries, cameras and camera accessories and recordable media. Kodak intends to continue efforts to grow its portfolio of consumer product licenses in order to generate both ongoing royalty streams and upfront payments.

~~Enterprise Inkjet Systems~~

~~The Enterprise Inkjet Systems segment contains a large~~ base of ~~customers which use KODAK VERSAMARK printing systems, comprising~~consumer inkjet ~~printing heads, inks, head refurbishment services~~printers.

Kodak developed consumer products, including the Super 8 camera.

Industrial Film and Chemicals:

Offers industrial film, including films used by the electronics industry to produce printed circuit boards, as well as ~~on-site maintenance service from Kodak.~~manufactures professional and consumer still photographic film.

~~Intellectual Property Solutions~~Includes related component businesses: Polyester Film; Solvent Recovery; and Specialty Chemicals, Inks and Dispersions.

Motion Picture:

Includes the motion picture film business serving the entertainment and advertising industries. Motion picture products are sold directly to studios, external laboratories and independent filmmakers.

Kodak motion picture film processing laboratories offering onsite processing services at strategic locations in the U.S. and Europe.

Advanced Materials and 3D Printing Technology

The ~~Intellectual Property Solutions~~Advanced Materials and 3D Printing Technology segment contains the ~~research laboratories~~Kodak Research Laboratories and ~~includes licensing as well as~~associated new business ~~development activities~~opportunities, touch sensor films with copper mesh technology and intellectual property licensing not directly related to ~~Kodak’s patents and proprietary technology. Through this segment~~other business divisions. Kodak conducts research and files patent applications with fundamental inventions from the Kodak Research Laboratories. Additionally, Kodak continues to file ~~significant numbers of~~ new patent applications in areas aligned with its core businesses. Via these core business patent applications along with the research inventions, Kodak maintains a large worldwide portfolio of pending applications and issued patents. Because product solutions in Advanced Materials and 3D Printing are in the process of being commercialized or are new business opportunities, a higher degree of investment is required.

Advanced Materials:

Advanced Materials is developing solutions for component smart materials based on the materials science inventions and innovations from the research laboratories. There are multiple applications that Kodak contemplates addressing in this category and the initial focus is light blocking particles for the textile market.

Kodak actively seeks opportunities to leverage its patents and associated technology in licensing and/or cross-licensing deals to support both revenue growth and its ongoing businesses. While revenues from these licensing activities tend to be unpredictable in nature, this segment still carries the potential for material revenue ~~generation. The Intellectual Property Solutions~~generation from intellectual property licensing and new materials businesses.

3D Printing:

3D Printing products have the potential to offer many advantages over traditionally manufactured products, including lower cost points, freedom of digital design, customization for small or large runs, and improvements in sustainable manufacturing. Kodak has been focusing its 3D printed touch screen technology on industrial applications (such as consumer appliances). Kodak has decided to cancel the copper mesh touch screen program and to focus on printed electronics and materials development for 3D printing. Kodak is assessing the market situation in the printed electronics segment ~~also actively pursues additional revenues via new business~~and is working with a lead customer to ascertain feasibility and achieve market introduction in 2019. On materials development through commercialization partnerships and grants or external investment in commercialization of new technologies and products. A recent example of a technology and commercialization partnership is the joint development agreement between Carbon 3D, afor 3D printing, ~~company, and~~ Kodak ~~which will utilize~~is working with 3D printing customers to produce materials ~~science capability of the Kodak Research Laboratories.~~for their printers.

Eastman Business Park

The Eastman Business Park segment includes the operations of ~~the~~ Eastman Business Park, a more than ~~1,200 acre~~1,200-acre technology center and industrial complex in Rochester, New York and the leasing activities related to that space. A large portion of this facility is used in Kodak’s own manufacturing and other operations, while the remaining portion is occupied by external tenants or available for rent to external tenants.

[26]

Segment Revenues ~~from Continuing Operations by Reportable Segment~~

									Three Months Ended				Six Months Ended
									June 30,				June 30,
(in millions)	Three Months Ended June 30,				Six Months Ended June 30,				2017		2016		2017		2016
	2016		2015		2016		2015
Print Systems	$	258	$	283	$	489	$	537		236	$	258		449	$	489
Micro 3D Printing and Packaging		35		33		64		64
Enterprise Inkjet Systems										35		44		72		76
Flexographic Packaging										37		35		70		64
Software and Solutions		21		27		43		55		22		21		43		45
Consumer and Film		61		66		117		138		47		62		96		119
Enterprise Inkjet Systems		19		21		39		44
Intellectual Property Solutions		-		-		-		-
Advanced Materials and 3D Printing Technology										—		—		—		—
Eastman Business Park		3		4		7		7		4		3		8		7
Consolidated total	$	397	$	434	$	759	$	845	$	381	$	423	$	738	$	800

~~[25]~~

Segment Operational EBITDA and Consolidated Earnings (Loss) from Continuing Operations Before Income Taxes

(in millions)

Three Months Ended
June 30,

Six Months Ended
June 30,

2016

2015

2016

2015

Print Systems

$
22

$
20

$
40

$
33

Micro 3D Printing and Packaging

2

4

3

4

Software and Solutions

(2
)

1

-

3

Consumer and Film

10

8

17

26

Enterprise Inkjet Systems

5

5

10

12

Intellectual Property Solutions

(4
)

(6
)

(8
)

(14
)
Eastman Business Park

1

2

1

1

Total of reportable segments

34

34

63

65

All Other ⁽¹⁾

2

-

5

4

Corporate components of pension and OPEB income⁽²⁾

40

33

81

66

Depreciation and amortization

(27
)

(36
)

(54
)

(72
)
Restructuring costs and other

(7
)

(5
)

(12
)

(22
)
Overhead supporting, but not directly absorbed by
discontinued operations ⁽³⁾

(4
)

(6
)

(8
)

(11
)
Stock based compensation

(1
)

(5
)

(3
)

(11
)
Consulting and other costs ⁽⁴⁾

(2
)

(5
)

(3
)

(7
)
Idle costs ⁽⁵⁾

(1
)

(1
)

(2
)

(2
)
Manufacturing costs originally planned to be absorbed by silver metal mesh touch screen production ⁽⁶⁾

(1
)

-

(1
)

-

Other operating income (expense), net ⁽⁷⁾

6

1

(8
)

(2
)
Interest expense ⁽⁷⁾

(16
)

(15
)

(32
)

(30
)
Other charges, net ⁽⁷⁾

(1
)

(2
)

(2
)

(12
)
Reorganization items, net ⁽⁷⁾

-

-

-

(5
)
Consolidated loss from continuing operations before income
taxes

$
22

$
(7
)

$
24

$
(39
)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(in millions)	2017			2016			2017			2016
Print Systems	$	16		$	22		$	29		$	40
Enterprise Inkjet Systems		1			(6	)		1			(10	)
Flexographic Packaging		8			6			14			10
Software and Solutions		(1	)		(2	)		(1	)		(1	)
Consumer and Film		(5	)		10			(8	)		17
Advanced Materials and 3D Printing Technology		(7	)		(8	)		(15	)		(15	)
Eastman Business Park		2			1			2			1
All Other ⁽¹⁾		—			2			—			5
Corporate components of pension and OPEB income ⁽²⁾		35			40			71			81
Depreciation and amortization		(22	)		(27	)		(41	)		(57	)
Restructuring costs and other		(11	)		(7	)		(24	)		(12	)
Stock based compensation		(3	)		(1	)		(5	)		(3	)
Consulting and other costs ⁽³⁾		—			(2	)		(1	)		(3	)
Idle costs ⁽⁴⁾		(1	)		(1	)		(2	)		(2	)
Manufacturing costs originally planned to be absorbed by silver metal mesh touch screen production ⁽⁵⁾		—			(1	)		—			(1	)
Other operating (expense) income, net ⁽⁶⁾		(2	)		6			(12	)		(8	)
Interest expense ⁽⁶⁾		(8	)		(16	)		(16	)		(32	)
Other income (charges), net ⁽⁶⁾		9			(1	)		29			(2	)
Consolidated earnings from continuing operations before income taxes	$	11		$	15		$	21		$	8

⁽¹⁾	~~Earnings of the~~ RED utilities variable interest ~~entity.~~entity which was deconsolidated as of December 31, 2016 (interest and depreciation of RED are included in the respective lines below).

⁽²⁾	Composed of interest cost, expected return on plan assets, amortization of actuarial gains and losses, and ~~curtailments~~curtailment and settlement components of pension and other postretirement benefit expenses.

⁽³⁾

⁽⁴⁾	Consulting and other costs are professional services and ~~other~~internal costs associated with certain corporate strategic initiatives.

⁽⁵⁾⁽⁴⁾

Consists of third party costs such as security, maintenance and utilities required to maintain land and buildings in certain locations not used in any Kodak operations.

⁽⁶⁾⁽⁵⁾

Consists of manufacturing costs originally planned to be absorbed by silver metal mesh touch screen production that are ~~now~~ excluded from the segment measure of ~~segment~~ profit and loss.

⁽⁷⁾⁽⁶⁾

As reported in the Consolidated Statement of Operations.

[27]

Segment Measure of Profit and Loss

~~[26]~~

originally planned to be absorbed by silver metal mesh touch screen production; other operating ~~(income)~~ expense, net (unless otherwise indicated); interest expense; and other (income) charges, ~~net~~net. Overhead costs no longer absorbed by the Prosper discontinued operations of $4 million and ~~reorganization items, net.~~$8 million in the three and six months ended June 30, 2016, respectively, were also excluded from segment earnings while the business was reported in discontinued operations. As the Prosper business is no longer reported in discontinued operations, overhead allocations are included in the Enterprise Inkjet Solutions segment measure for all periods presented.

Kodak’s segments are measured using Operational EBITDA both before and after allocation of corporate selling, general and administrative expenses (“SG&A”). The segment earnings measure reported is after allocation of corporate SG&A as this most closely aligns with U.S. GAAP. Research and development activities not directly related to the other segments are reported within the ~~Intellectual Property Solutions~~Advanced Materials and 3D Printing Technology segment.

Change in Segment Measure of ~~Profit and Loss~~Profitability

~~2016~~2017 COMPARED WITH ~~2015~~2016

SECOND QUARTER ~~AND YEAR TO DATE~~

RESULTS OF OPERATIONS

																															Three Months Ended June 30,															Six Months Ended June 30,
(in millions)	Three Months Ended June 30,															Six Months Ended June 30,															2017			% of Sales			2016			% of Sales			$ Change			2017			% of Sales			2016			% of Sales			$ Change
	2016			% of Sales			2015			% of Sales			$ Change			2016			% of Sales			2015			% of Sales			$ Change
Revenues	$	397					$	434					$	(37	)	$	759					$	845					$	(86	)	$	381					$	423					$	(42	)	$	738					$	800					$	(62	)
Cost of revenues		297						350						(53	)		573						678						(105	)		290						316						(26	)		564						605						(41	)
Gross profit		100			25	%		84			19	%		16			186			25	%		167			20	%		19			91			24	%		107			25	%		(16	)		174			24	%		195			24	%		(21	)
Selling, general and administrative expenses		50			13	%		58			13	%		(8	)		90			12	%		110			13	%		(20	)		53			14	%		58			14	%		(5	)		106			14	%		103			13	%		3
Research and development costs		10			3	%		12			3	%		(2	)		19			3	%		25			3	%		(6	)		15			4	%		16			4	%		(1	)		30			4	%		31			4	%		(1	)
Restructuring costs and other		7			2	%		5			1	%		2			11			1	%		22			3	%		(11	)		11			3	%		7			2	%		4			18			2	%		11			1	%		7
Other operating (income) expense, net		(6	)		-2	%		(1	)					(5	)		8			1	%		2						6
Income from continuing operations before interest expense, other charges, net, reorganization items, net and income taxes		39			10	%		10			2	%		29			58			8	%		8			1	%		50
Other operating expense (income), net																																2						(6	)					8			12						8						4
Earnings (loss) from continuing operations before interest expense, other (income) charges, net and income taxes																																10			3	%		32			8	%		(22	)		8			1	%		42			5	%		(34	)
Interest expense		16			4	%		15			3	%		1			32			4	%		30			4	%		2			8			2	%		16			4	%		(8	)		16			2	%		32			4	%		(16	)
Other charges, net		1						2						(1	)		2						12			-1	%		(10	)
Reorganization items, net		-						-						-			-						5			1	%		(5	)
Income (loss) from continuing operations before income taxes		22			6	%		(7	)		-2	%		29			24			3	%		(39	)		-5	%		63
Other (income) charges, net																																(9	)		(2	)%		1			0	%		(10	)		(29	)		(4	)%		2			0	%		(31	)
Earnings from continuing operations before income taxes																																11			3	%		15			4	%		(4	)		21			3	%		8			1	%		13
Provision for income taxes		6			2	%		8			2	%		(2	)		12			2	%		13			2	%		(1	)		4			1	%		6			1	%		(2	)		7			1	%		13			2	%		(6	)
Income (loss) from continuing operations		16			4	%		(15	)		-3	%		31			12			2	%		(52	)		-6	%		64
Earnings (loss) from continuing operations																																7			2	%		9			2	%		(2	)		14			2	%		(5	)		-1	%		19
Loss from discontinued operations, net of income taxes		(8	)		-2	%		(8	)		-2	%		-			(19	)		-3	%		(25	)		-3	%		6			(3	)		-1	%		(1	)		0	%		(2	)		(3	)		0	%		(2	)		-0	%		(1	)
Net income (loss)		8			2	%		(23	)		-5	%		31			(7	)		-1	%		(77	)		-9	%		70			4			1	%		8			2	%		(4	)		11			1	%		(7	)		-1	%		18
Less: Net earnings attributable to noncontrolling interests		1						1						-			4			1	%		5			1	%		(1	)		—			—			1			0	%		(1	)		—			—			4			1	%		(4	)
NET INCOME (LOSS) ATTRIBUTABLE TO EASTMAN KODAK COMPANY	$	7			2	%	$	(24	)		-6	%	$	31		$	(11	)		-1	%	$	(82	)		-10	%	$	71
NET EARNINGS (LOSS) ATTRIBUTABLE TO EASTMAN KODAK COMPANY																															$	4			1	%	$	7			2	%	$	(3	)	$	11			1	%	$	(11	)		-1	%	$	22

[28]

~~Revenues~~Revenue

Current Quarter

For the three months ended June 30, ~~2016,~~2017, revenues decreased approximately ~~$37~~$42 million compared with the same period in ~~2015.~~2016. The decline was primarily driven by volume and pricing declines within Print Systems ($17 million) and volume declines within ~~Print~~Consumer and Film ($15 million) and Enterprise Inkjet Systems ($~~14 million and $13 million, respectively)~~7 million). Also contributing to the decrease was the unfavorable impact of foreign currency ($6 million). Partially offsetting these impacts were volume ~~declines in Consumer and Film~~improvements within Flexographic Packaging ($~~7 million) and Software and Solutions ($6~~5 million). See segment discussions for additional details.

~~[27]~~

Year to Date

For the six months ended June 30, ~~2016,~~2017 revenues decreased approximately ~~$86~~$62 million compared with the same period in ~~2015.~~2016. The decline was primarily driven by volume and pricing declines within Print Systems ($32 million) and volume declines within Consumer and Film ($~~26 million), Print Systems ($21 million) and Software and Solutions ($11~~23 million). Also contributing to the decrease ~~were pricing declines within Print Systems ($25 million) and~~was the unfavorable impact of foreign currency ($712 million). Partially offsetting these impacts were volume improvements within Flexographic Packaging ($8 million). See segment discussions for additional details.

Gross Profit

Current Quarter

~~Gross~~The decrease in gross profit for the three months ended June 30, ~~2016 increased by~~2017 of approximately $16 million compared with the same period in ~~2015 as cost improvements within Print Systems ($19 million),~~2016 reflected volume and ~~lower costs within Consumer and Film ($4 million) driven by lower depreciation, more than offset~~ pricing declines within Print Systems ($1410 million) and volume declines within Consumer and Film ($9 million). ~~Also contributing to the increase was a favorable impact from pension income~~Partially offsetting these decreases were volume improvements within Flexographic Packaging ($3 million). See segment discussions for additional details.

Year to Date

The ~~increase~~decrease in gross profit for the six months ended June 30, ~~2016~~2017 of approximately ~~$19~~$21 million compared with the same period in 2016 reflected ~~lower depreciation expense ($19 million) driven by Consumer~~volume and Film ($9 million) and lower accelerated depreciation from restructuring ($5 million). Cost improvements within Print Systems ($29 million, excluding the impact of lower depreciation) and favorable impacts from pension income ($7 million) were offset by pricing declines within Print Systems ($2518 million), ~~unfavorable manufacturing costs in~~volume declines within Consumer and Film ($14 million) and increased inventory write-offs due to restructuring ($6 ~~million, excluding~~million). Partially offsetting these decreases were manufacturing cost improvements within Print Systems ($6 million), volume improvements within Flexographic Packaging ($5 million) and reduced costs with the ~~impact~~deconsolidation of ~~lower depreciation), and unfavorable foreign currency~~the RED utilities variable interest entity ($53 million). See segment discussions for additional details.

Selling, General and Administrative Expenses

Consolidated SG&A decreased ~~$8 million and $20~~$5 million for the three months ended June 30, 2017 due to lower investment in segment selling and marketing activities ($7 million) driven by participation in drupa 2016 in the prior year, partially offset by lower pension income ($3 million). For the six months ended June 30, ~~2016, respectively, as compared with the prior year period primarily~~2017, consolidated SG&A increased $3 million due to ~~cost reduction actions and favorable impacts from~~lower pension income ($~~3 million and $7 million, respectively).~~7 million) partially offset by higher costs in 2016 from participation in drupa 2016.

Included in both the three and six months ended June 30, 2016 was $4$6 million related to participation in drupa 2016, a print industry trade show which occurs every four years.

Research and Development Costs

Consolidated R&D expenses ~~decreased $2 million and $6 million~~did not materially change for the three and six months ended June 30, ~~2016, respectively,~~2017 as compared with the prior year ~~period as the company focused investment in material science projects~~quarter and ~~eliminated programs that no longer aligned with this strategy.~~ first six months.

PRINT SYSTEMS SEGMENT

	Three Months Ended June 30,									Six Months Ended June 30,									Three Months Ended June 30,									Six Months Ended June 30,
(in millions)																			2017			2016			$ Change			2017			2016			$ Change
Revenues																			$	236		$	258		$	(22	)	$	449		$	489		$	(40	)
	2016			2015			$ Change			2016			2015			$ Change
Revenues	$	258		$	283		$	(25	)	$	489		$	537		$	(48	)
Operational EBITDA before allocation of corporate SG&A costs		34			34			-			64			59			5
Allocation of corporate SG&A costs		12			14			(2	)		24			26			(2	)
Operational EBITDA	$	22		$	20		$	2		$	40		$	33		$	7		$	16		$	22		$	(6	)	$	29		$	40		$	(11	)
Operational EBITDA as a % of revenues		9	%		7	%					8	%		6	%					7	%		9	%					6	%		8	%

Revenues

Current Quarter

The decrease in Print Systems revenues for the three months ended June 30, ~~2016~~2017 of approximately ~~$25~~$22 million primarily reflected lower pricing ~~in Prepress Solutions~~ ($127 million) ~~as a result of~~due to competitive pressures in the industry and lower volumes ~~in Prepress Solutions~~ ($76 million) driven by declines in consumables and ~~fewer equipment placements.~~service in Prepress Solutions. Also contributing to the decline was lower volume in Electrophotographic Printing Solutions ($64 million) ~~driven by fewer equipment placements.~~due to declines in consumables and service. Unfavorable foreign currency ($4 million) also negatively impacted revenues.

[~~28]~~29]

Year to Date

The decrease in Print Systems revenues for the six months ended June 30, ~~2016~~2017 of approximately ~~$48~~$40 million primarily reflected lower pricing ($2414 million) ~~in Prepress Solutions as a result of~~due to competitive pressures in the industry and lower volumes ~~in Prepress Solutions~~ ($109 million) driven by declines in consumables and ~~fewer equipment placements.~~service in Prepress Solutions. Also contributing to the decline was lower volume in Electrophotographic Printing Solutions ($119 million) due to ~~fewer equipment placements and~~ declines in consumables and service. Unfavorable foreign currency ($7 million) also negatively impacted revenues.

Operational EBITDA

Current Quarter

The ~~increase~~decrease in Print Systems Operational EBITDA for the three months ended June 30, ~~2016~~2017 of approximately $2$6 million reflected ~~manufacturing costs improvements~~lower pricing in Prepress ~~due to~~Solutions ($7 million) as well as lower ~~aluminum costs~~volume in Electrophotographic Printing Solutions ($93 million). Partially offsetting these declines were lower investment in marketing, advertising and ~~improved manufacturing efficiency~~sales activities ($63 million), driven by the ~~closure of the Leeds, England plant in the third quarter of 2015. Partially offsetting these improvements were pricing declines in Prepress Solutions ($12 million). Increased SG&A spend due to~~prior year participation in drupa 2016 and favorable product mix in Electrophotographic Printing Solutions ($21 million). In addition, manufacturing cost improvements in Prepress consumables ($3 million) ~~was~~were offset by ~~other SG&A cost reductions~~higher aluminum costs ($23 million).

Year to Date

The ~~increase~~decrease in Print Systems Operational EBITDA for the six months ended June 30, ~~2016~~2017 of approximately $7$11 million reflected pricing and volume declines in Prepress Solutions ($14 million and $2 million, respectively) as well as lower volume in Electrophotographic Printing Solutions ($4 million). Partially offsetting these declines were manufacturing costs improvements in Prepress consumables due to ~~lower aluminum costs ($17 million) and~~ improved manufacturing efficiency ($98 million)~~, driven~~ partially offset by ~~the closure of the Leeds, England plant in the third quarter of 2015, and SG&A cost reductions~~higher aluminum costs ($52 million). ~~Partially offsetting these improvements were pricing declines in Prepress Solutions ($24 million) as a result of competitive pricing pressures in the industry.~~

~~MICRO 3D PRINTING AND PACKAGING~~ENTERPRISE INKJET SYSTEMS SEGMENT

	Three Months Ended June 30,									Six Months Ended June 30,									Three Months Ended June 30,									Six Months Ended June 30,
(in millions)																			2017			2016			$ Change			2017			2016			$ Change
Revenues																			$	35		$	44		$	(9	)	$	72		$	76		$	(4	)
	2016			2015			$ Change			2016			2015			$ Change
Revenues	$	35		$	33		$	2		$	64		$	64		$	—
Operational EBITDA before allocation of corporate SG&A costs		4			6			(2	)		7			8			(1	)
Allocation of corporate SG&A costs		2			2			-			4			4			-
Operational EBITDA	$	2		$	4		$	(2	)	$	3		$	4		$	(1	)	$	1		$	(6	)	$	7		$	1		$	(10	)	$	11
Operational EBITDA as a % of revenues		6	%		12	%					5	%		6	%					3	%		(14	)%					1	%		(13	)%

Revenues

Current Quarter

The decrease in Enterprise Inkjet Systems revenues for the three months ended June 30, 2017 of approximately $9 million primarily reflected lower volume of Prosper systems and component sales ($6 million), due to focusing on high volume applications, and reduced volume of VERSAMARK service and consumables ($3 million) due to declines in the installed base of VERSAMARK systems partially offset by increased volume of Prosper service and consumable sales ($2 million) driven by a larger installed base of Prosper systems. Unfavorable foreign currency ($1 million) also negatively impacted revenues.

Year to Date

The decrease in Enterprise Inkjet Systems revenues for the six months ended June 30, 2017 of approximately $4 million primarily reflected reduced volume of VERSAMARK service and consumables ($5 million) due to declines in the installed base of VERSAMARK systems and lower volume of Prosper systems and component sales ($4 million) due to focusing on high volume applications. These unfavorable drivers were partially offset by increased volume of Prosper service and consumable sales ($5 million) primarily driven by a larger installed base of Prosper systems and higher volume of VERSAMARK equipment sales ($2 million) due to the sale of used equipment in the first quarter of 2017. Unfavorable foreign currency ($2 million) also negatively impacted revenues.

Operational EBITDA

Current Quarter

The increase in Enterprise Inkjet Systems Operational EBITDA for the three months ended June 30, 2017 of approximately $7 million was primarily due to a lower level of investment in marketing, advertising and sales activities ($5 million), due in part to the $3 million for participation in drupa 2016 in the prior year quarter and reduced investment in R&D activities ($2 million). A portion of the lower investment in marketing, advertising and sales activities and R&D activities represent savings from the Prosper restructuring actions announced in January 2017 (refer to the “Restructuring Costs and Other – Prosper Business Cost Reduction” section in this Management’s Discussion and Analysis).

[30]

Year to Date

The increase in Enterprise Inkjet Systems Operational EBITDA for the six months ended June 30, 2017 of approximately $11 million was primarily due to a lower level of investment in marketing, advertising and sales activities ($6 million) and R&D activities ($3 million). A portion of the lower investment in marketing, advertising and sales activities and R&D activities represent savings from the Prosper restructuring actions announced in January 2017 (refer to the “Restructuring Costs and Other – Prosper Business Cost Reduction” section in this Management’s Discussion and Analysis).

FLEXOGRAPHIC PACKAGING SEGMENT

	Three Months Ended June 30,								Six Months Ended June 30,
(in millions)	2017			2016			$ Change		2017			2016			$ Change
Revenues	$	37		$	35		$	2	$	70		$	64		$	6

Operational EBITDA	$	8		$	6		$	2	$	14		$	10		$	4
Operational EBITDA as a % of revenues		22	%		17	%				20	%		16	%

Revenues

Current Quarter

The increase in ~~Micro 3D Printing and~~the Flexographic Packaging revenues for the three months ended June 30, ~~2016~~2017 of approximately $2 million primarily reflected volume improvements in ~~Packaging~~FLEXCEL NX consumables ($35 million) due to a larger installed base of ~~Flexcel~~FLEXCEL NX systems ~~driving growth in revenues from Flexcel~~and higher FLEXCEL NX ~~consumables,~~unit placements ($1 million). These favorable impacts were partially offset by ~~lower Packaging equipment revenue~~unfavorable FLEXCEL NX price mix ($2 million), declining revenues from other packaging products ($1 million) ~~driven by fewer unit placements~~ and ~~declines in legacy products~~the unfavorable impact of currency ($1 million).

Year to Date

~~Micro 3D Printing and~~The increase in the Flexographic Packaging revenues for the six months ended June 30, ~~2016 were unchanged as~~2017 of approximately $6 million primarily reflected volume improvements in ~~Packaging~~FLEXCEL NX consumables ($58 million), due to a larger installed base of ~~Flexcel~~FLEXCEL NX systems ~~driving growth in~~partially offset by declining revenues from ~~Flexcel NX consumables, was offset by fewer Packaging units placements ($2 million) declines in legacy~~other packaging products ($1 million), and the unfavorable ~~foreign~~impact of currency ~~impacts~~ ($21 million).

Operational EBITDA

Current Quarter

~~The decrease in Micro 3D Printing and~~Flexographic Packaging Operational EBITDA increased for the three months ended June 30, ~~2016 of~~2017 by approximately $2 million ~~reflected higher SG&A costs~~from volume improvements in FLEXCEL NX consumables ($14 million) ~~due to participation~~partially offset by unfavorable price mix in drupa 2016 and higher R&D costs ($1 million) due to increased investment in Ultra NX within Packaging and copper mesh technology within Micro 3D Printing. Improved Packaging gross profit driven by increased sales of FlexcelFLEXCEL NX consumables ($2 million) ~~was offset by lower gross profit from legacy products ($1 million) and unfavorable currency impacts ($1 million)~~.

~~[29]~~

Year to Date

~~The decrease in Micro 3D Printing and~~Flexographic Packaging Operational EBITDA increased for the six months ended June 30, ~~2016 of~~2017 by approximately $1$4 million ~~reflected higher SG&A costs~~from volume improvements in FLEXCEL NX consumables ($6 million) and cost improvements in other packaging products ($2 million) partially offset by declining revenues from other packaging products ($1 million) ~~due to participation in drupa 2016 and higher R&D costs ($1 million) due to~~, increased investment in ~~Ultra NX within Packaging~~marketing and ~~copper mesh technology within Micro 3D Printing. Improved Packaging gross profit driven by increased~~ sales activities ($1 million) and the unfavorable impact of ~~Flexcel NX consumables~~currency ($31 million) ~~was offset by unfavorable currency impacts ($3 million)~~.

SOFTWARE AND SOLUTIONS SEGMENT

	Three Months Ended June 30,									Six Months Ended June 30,									Three Months Ended June 30,								Six Months Ended June 30,
(in millions)																			2017			2016			$ Change		2017			2016			$ Change
Revenues																			$	22		$	21		$	1	$	43		$	45		$	(2	)
	2016			2015			$ Change			2016			2015			$ Change
Revenues	$	21		$	27		$	(6	)	$	43		$	55		$	(12	)
Operational EBITDA before allocation of corporate SG&A costs		-			3			(3	)		3			7			(4	)
Allocation of corporate SG&A costs		2			2			-			3			4			(1	)
Operational EBITDA	$	(2	)	$	1		$	(3	)	$	—		$	3		$	(3	)	$	(1	)	$	(2	)	$	1	$	(1	)	$	(1	)	$	—
Operational EBITDA as a % of revenues		-10	%		4	%					0	%		5	%					(5	)%		(10	)%				(2	)%		(2	)%

Revenues

Current Quarter

The ~~decrease~~increase in Software and Solutions revenues for the three months ended June 30, ~~2016~~2017 of approximately $6$1 million primarily reflected volume ~~declines in Kodak Technology Solutions due to lower revenues from government contracts ($3 million), the divestiture of the Design2Launch business ($1 million), and lower volume~~improvements in Unified Workflow Solutions ($1 million).

[31]

Year to Date

The decrease in Software and Solutions revenues for the six months ended June 30, ~~2016~~ 2017 of approximately ~~$12~~$2 million primarily reflected volume declines in Kodak Technology Solutions due to ~~lower revenues from government contracts ($9 million),~~ the ~~divestiture~~divestitures of the Design2Launch ~~business~~and brand protection businesses in the second quarter of 2016 ($~~1 million), and lower volume in Unified Workflow Solutions ($1~~2 million).

Operational EBITDA

Current Quarter

The ~~decrease~~improvement in Software and Solutions Operational EBITDA for the three months ended June 30, ~~2016~~2017 of approximately $3$1 million was primarily ~~reflected the volume declines described above ($2 million) and participation in drupa 2016~~due to lower R&D costs ($1 million).

Year to Date

~~The decrease in~~ Software and Solutions Operational EBITDA for the six months ended June 30, ~~2016 of approximately $3 million~~2017 was unchanged compared to the prior year, primarily ~~reflected the volume declines described above~~reflecting lower R&D costs ($2 million) offset by increased sales and ~~participation in drupa 2016~~marketing initiatives ($1 million).

CONSUMER AND FILM SEGMENT

	Three Months Ended June 30,									Six Months Ended June 30,									Three Months Ended June 30,									Six Months Ended June 30,
(in millions)																			2017			2016			$ Change			2017			2016			$ Change
Revenues																			$	47		$	62		$	(15	)	$	96		$	119		$	(23	)
	2016			2015			$ Change			2016			2015			$ Change
Revenues	$	61		$	66		$	(5	)	$	117		$	138		$	(21	)
Operational EBITDA before allocation of corporate SG&A costs		13			11			2			23			32			(9	)
Allocation of corporate SG&A costs		3			3			-			6			6			-
Operational EBITDA	$	10		$	8		$	2		$	17		$	26		$	(9	)	$	(5	)	$	10		$	(15	)	$	(8	)	$	17		$	(25	)
Operational EBITDA as a % of revenues		16	%		12	%					15	%		19	%					(11	)%		16	%					(8	)%		14	%

~~[30]~~

Revenues

Current Quarter

The decrease in Consumer and Film revenues for the three months ended June 30, ~~2016~~2017 of approximately $5$15 million reflected volume declines in Consumer Inkjet Systems ($75 million) driven by lower sales of ink to the existing installed base of ~~printers. The~~printers and volume ~~decline~~declines in Industrial Film and Chemicals ($4 million) driven by lower demand for ~~film products ($5 million) was offset by~~photo paper chemicals. Additionally, the prior year included $5 million from the fulfillment of a significant industrial ~~films order in the current quarter ($5 million).~~film order.

Year to Date

The decrease in Consumer and Film revenues for the six months ended June 30, ~~2016~~2017 of approximately ~~$21~~$23 million reflected volume declines in Consumer Inkjet Systems ($169 million) driven by lower sales of ink to the existing installed base of printers and in ~~Motion Picture,~~ Industrial Film and Chemicals ~~and Films~~ ($103 million) ~~due to declining~~driven by lower demand for photo paper chemicals. Additionally, the prior year included $5 million fulfillment of a significant industrial film ~~products.~~

~~Included in the current year was~~order and $3 million related to the fulfillment of motion picture film volume commitments.

Operational EBITDA

Current Quarter

The ~~increase~~decrease in Consumer and Film Operational EBITDA for the three months ended June 30, ~~2016~~2017 of approximately $2$15 million ~~reflected improved gross profit in Motion Picture, Industrial Chemicals and Films~~was driven by the impact of the significant industrial films order ($4 million), as well as improved price/mix within Motion Picture, Industrial Chemicals and Films ($2 million). Partially offsetting these improvements was a $5 million impact from lower sales of ink ~~mentioned above.~~($4 million), unfavorable manufacturing costs in Motion Picture ($2 million), due to higher material costs, and increased investment in sales and marketing initiatives ($1 million). The prior year included the impact of a significant industrial film order ($4 million).

Year to Date

The decrease in Consumer and Film Operational EBITDA for the six months ended June 30, ~~2016~~2017 of approximately $9$25 million was driven by ~~the impact from~~ lower sales of ink ~~as mentioned above~~ ($137 million), ~~as well as~~ unfavorable ~~cost impacts~~manufacturing costs in Motion Picture ~~Industrial Chemicals and Films~~ ($73 million) ~~primarily~~ due to ~~lower production volumes. Partially offsetting these decreases was~~higher material costs, unfavorable cost absorption in Industrial Film and Chemicals ($2 million), and increased investment in sales and marketing initiatives ($2 million). The prior year included the ~~favorable~~ impact ~~from the~~of a significant industrial ~~films~~film order ($4 million), and the fulfillment of motion picture film volume commitments ($3 million)~~, and lower costs in Consumer Inkjet ($1 million)~~.

~~ENTERPRISE INKJET SYSTEMS~~[32]

ADVANCED MATERIALS AND 3D PRINTING TECHNOLOGY SEGMENT

	Three Months Ended June 30,									Six Months Ended June 30,									Three Months Ended June 30,								Six Months Ended June 30,
(in millions)																			2017			2016			$ Change		2017			2016			$ Change
Revenues																			$	-		$	-		$	-	$	-		$	-		$	-
	2016			2015			$ Change			2016			2015			$ Change
Revenues	$	19		$	21		$	(2	)	$	39		$	44		$	(5	)
Operational EBITDA before allocation of corporate SG&A costs		6			6			-			12			14			(2	)
Allocation of corporate SG&A costs		1			1			-			2			2			-
Operational EBITDA	$	5		$	5		$	-		$	10		$	12		$	(2	)	$	(7	)	$	(8	)	$	1	$	(15	)	$	(15	)	$	-
Operational EBITDA as a % of revenues		26	%		24	%					26	%		27	%				N/A			N/A					N/A			N/A

~~Revenues~~

~~Current Quarter~~

~~The decrease in Enterprise Inkjet Systems revenues for the three months ended June 30, 2016 of approximately $2 million reflected lower volumes of service~~Advanced Materials and ~~consumables due to expected declines in the installed base of systems and components.~~

~~Year to Date~~

The decrease in Enterprise Inkjet Systems revenues for the six months ended June 30, 3016 of approximately $5 million reflected lower volumes of service and consumables ($4 million) due to expected declines in the installed base of systems and components.

~~[31]~~

~~Operational EBITDA~~

~~Year to Date~~

~~The decrease in Enterprise Inkjet Systems~~3D Printing Technology Operational EBITDA ~~for the six months ended June 30, 2016 of approximately $2 million was primarily driven by the volume declines discussed above.~~

~~INTELLECTUAL PROPERTY SOLUTIONS SEGMENT~~

Intellectual Property Solutions Operational EBITDA for the three months and the six months ended June 30, 2016 improved approximately $2 million and $6 million, respectively, due to lower R&D costs as the company focused investment in materials science projects and eliminated programs that no longer aligned with this strategy.did not change significantly. R&D not directly related to other segments is included in the ~~Intellectual Property Solutions~~Advanced Materials and 3D Printing Technology segment.

EASTMAN BUSINESS PARK SEGMENT

Eastman Business Park revenue and Operational EBITDA did not change significantly.

A tenant that represented approximately thirty percent of segment revenues, for both the six months ended June 30, 2017 and the year ended December 31, 2016 notified Kodak that it does not plan to renew its lease upon expiration in the third quarter of 2018.

RESTRUCTURING COSTS AND OTHER

Kodak recorded $8$11 million and ~~$13~~$24 million of charges for the three and six months ended June 30, ~~2016,~~2017, respectively, of which $7$11 million and ~~$11~~$18 million, respectively, ~~were~~was reported as Restructuring costs and other and $0 million and $6 million, respectively, was reported as Cost of revenues in the accompanying Consolidated Statement of Operations. In addition, $1 million was reported as discontinued operations in both the three and six months ended June 30, 2016 and $1 million was reported as Cost of revenues for the six months ended June 30, 2016.

Kodak made cash payments related to restructuring of approximately $4 million and ~~$10~~$7 million during the ~~quarter~~three and six months ended June 30, ~~2016, respectively.~~2017.

The restructuring actions implemented in the first half of ~~2016~~2017 are expected to generate future annual cash savings of approximately ~~$14~~$16 million. These savings are expected to reduce future annual Cost of revenues, SG&A and R&D expenses by $6$5 million, $7$9 million, and $1$2 million, respectively. Kodak began realizing a portion of these savings in the first half, and expects the majority of the annual savings to be in effect by the ~~end~~second half of ~~2016~~2017 as actions are completed.

Prosper Business Cost Reduction

On January 12, 2017, Kodak announced an action to streamline costs in its Prosper business. This action is pursuant to Kodak’s initiative to focus the Prosper business on developing next generation Ultrastream technology with solutions that place writing systems in original equipment manufacturer and hybrid applications and the continued placement of Prosper 6000 presses and components in suitable high volume applications. Kodak expects the action to be substantially completed by the end of the third quarter of 2017.

As a result of this decision, Kodak currently expects to incur total restructuring and related charges of $13 to $17 million, including $5 to $7 million of charges related to separation benefits, $6 million of non-cash related charges for inventory write-downs, $2 to $3 million of non-cash related charges for asset write-offs and up to $1 million in other cash related charges associated with this action.

During the three and six months ended June 30, 2017 under this program, Kodak incurred severance charges of $2 million and $5 million, inventory write-downs of $0 million and $6 million, and asset write-offs of $0 million and $2 million, respectively.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES UPDATE

Updates to critical accounting policies and estimates in Kodak’s 2016 Annual Report on Form 10-K are presented in this section. Refer to Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the 2016 Annual Report on Form 10-K for a complete discussion of all Kodak’s critical accounting policies.

Taxes

As of June 30, 2017, Kodak’s deferred tax asset valuation allowance is $1,151 million. Of this amount, $248 million was attributable to the Company’s net deferred tax assets outside the U.S. of $331 million, and $903 million related to the Company’s net deferred tax assets in the U.S. of $846 million, for which Kodak believes it is more likely than not that the assets will not be realized.

[33]

Kodak establishes valuation allowances for deferred income tax assets in accordance with U.S. GAAP, which provides that such valuation allowances shall be established unless realization of the income tax benefits is more likely than not. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. At each reporting period, Kodak considers the scheduled reversal of deferred tax liabilities and assets, available taxes in carryback periods, tax planning strategies and projected future taxable income in making this assessment.

Kodak continues to improve profitability in its businesses, particularly outside the U.S. Accordingly, Kodak may be able to make the determination that the realization of those deferred tax assets in certain foreign jurisdictions are more likely than not in the near future. If Kodak was to make a determination that it is more likely than not that deferred tax assets, for which there is currently a valuation allowance, would be realized, the related valuation allowance would be reduced and a benefit to earnings would be recorded. Kodak will continue to evaluate whether valuation allowances are needed, at a jurisdictional level, in future reporting periods. It is possible that sufficient positive evidence, including sustained profitability, may become available in future periods with respect to one or more jurisdictions to reach a conclusion that all or part of the valuation allowance with respect to such jurisdictions could be reversed.

Utilization of post-emergence net operating losses (“NOL”) and tax credits may be subject to limitations in the event of significant changes in stock ownership of the Company in the future. Section 382 of the Internal Revenue Code of 1986, as amended, imposes annual limitations on the utilization of NOL carryforwards, other tax carryforwards, and certain built-in losses as defined under that Section, upon an ownership change. In general terms, an ownership change may result from transactions that increase the aggregate ownership of five percent stockholders in Kodak’s stock by more than 50 percentage points over a testing period (generally three years). The Company has a relatively high concentration of five percent stockholders. There have been several recently reported transactions with those five percent stockholders that, combined with future transactions, could aggregate an ownership change during the testing period in excess of 50 percentage points. A Section 382 ownership change would significantly impair Kodak’s ability to utilize NOLs and tax credits in the U.S. As of December 31, 2016, Kodak had available U.S. NOL carry-forwards for income tax purposes of approximately $801 million and unused foreign tax credits of $335 million. Any impairment of these tax attributes would be fully offset by a corresponding decrease in Kodak’s U.S. valuation allowance, which would result in no net tax provision.

Valuation and Useful Lives of Long-Lived Assets, Including Goodwill and Intangible Assets

In the third quarter of 2017, Kodak decided to cancel the copper mesh touch screen program. As of June 30, 2017, the estimated undiscounted cash flows were greater than the carrying value of the long-lived assets associated with this operation. Therefore no impairment was reported as of June 30, 2017. There were approximately $11 million of tangible and $16 million of intangible long-lived assets associated with the touch screen technology operation as of June 30, 2017. Kodak expects an impairment of the long-lived assets of the copper mesh touch screen program of $9 million to $27 million to occur during the quarter ended September 30, 2017. The value of the impairment will depend on alternative uses for the intangible and tangible assets in other 3D printing technology programs utilizing Kodak’s copper manufacturing process and/or the estimated ability to otherwise recover value from the tangible assets.

LIQUIDITY AND CAPITAL RESOURCES

					June 30,		December 31,
(in millions)	June 30, 2016		December 31, 2015		2017		2016
Cash and cash equivalents	$	513	$	546
Cash, cash equivalents and restricted cash					$	389	$	478

Cash Flow Activity

(in millions)

Six Months Ended
June 30,

2016

2015

Change

Cash flows from operating activities:

Net cash used in operating activities

$
(30
)

$
(104
)

$
74

Cash flows from investing activities:

Net cash provided by (used in) investing activities

4

(19
)

23

Cash flows from financing activities:

Net cash used in financing activities

(8
)

(4
)

(4
)
Effect of exchange rate changes on cash

2

(9
)

11

Net decrease in cash and cash equivalents ⁽¹⁾

$
(32
)

$
(136
)

$
104

~~[32]~~

⁽¹⁾

The beginning cash and cash equivalents balance for the six month period ended June 30, 2016 in the cash flow activity above included $546 million of cash reported in the Statement of Financial Position and $1 million of cash reported in Current assets held for sale. The ending cash and cash equivalents balance for the six month period ended June 30, 2016 in the cash flow activity above included $513 million of cash reported in the Statement of Financial Position and $2 million of cash reported in Current assets held for sale.

	Six Months Ended
	June 30,
(in millions)	2017			2016			Change
Cash flows from operating activities:
Net cash used in operating activities	$	(74	)	$	(30	)	$	(44	)
Cash flows from investing activities:
Net cash used in investing activities		(14	)		(2	)		(12	)
Cash flows from financing activities:
Net cash used in financing activities		(7	)		(8	)		1
Effect of exchange rate changes on cash		6			2			4
Net decrease in cash, cash equivalents and restricted cash	$	(89	)	$	(38	)	$	(51	)

Operating Activities

Net cash used in operating activities ~~decreased $74~~increased $44 million for the six months ended June 30, ~~2016~~2017 as compared with the corresponding period in ~~2015~~2016 due to increased cash usage for working capital driven by inventory increases in anticipation of sequential quarter sales growth at higher rates relative to prior year sequential quarter sales growth and lower cash earnings.

[34]

Cash earnings included lower interest expense ($16 million) in the current year period primarily due to ~~a lower net loss, which includes~~ the prepayment of the Senior Secured Second Lien Term Credit Agreement and $10 million in net litigation proceeds from DuPont ~~and more cash provided by changes in working capital~~received in the ~~current~~prior year period.

Investing Activities

Net cash ~~provided by~~used in investing activities increased ~~$23~~$12 million for the six months ended June 30, ~~2016~~2017 as compared with the corresponding period in ~~2015~~2016 primarily due to ~~the reduction~~a decrease in proceeds received from sales of ~~restricted cash in the current year~~assets and an increase in ~~restricted cash in the prior year~~additions to ~~support the Company’s borrowing base and increased proceeds from the sales of businesses/assets.~~properties.

Financing Activities

Net cash used in financing activities ~~increased $4~~decreased $1 million in the six months ended June 30, ~~2016~~2017 as compared with the corresponding period in ~~the 2015 primarily~~2016 due to payment of contingent consideration related to the sale of a business and scheduled debt service payments in the prior year period, partially offset by the dividend payments made to the holders of Series A Preferred Stock made in the current year period.

Sources of Liquidity

Available liquidity includes cash balances and the unused portion of the Amended Credit Agreement. The Amended Credit Agreement had ~~$30~~$22 million of net availability as of June 30, ~~2016.~~2017. The amount of available liquidity is subject to fluctuations and includes cash balances held by various entities worldwide. At June 30, ~~2016~~2017 and December 31, ~~2015,~~2016 approximately ~~$273~~$170 million and ~~$302~~$205 million, respectively, of cash and cash equivalents were held within the U.S. and approximately ~~$240~~$200 million and ~~$244~~$229 million, respectively, of cash and cash equivalents were held outside the U.S. Cash balances held outside of the U.S. are generally required to support local country operations and may have high tax costs or other limitations that delay the ability to repatriate, and therefore may not be readily available for transfer to other jurisdictions. Additionally, in China, where approximately ~~$136~~$117 million of cash and cash equivalents was held as of June 30, ~~2016,~~2017, there are limitations related to net asset balances that may impact the ability to make cash available to other jurisdictions in the world. Under the terms of the Senior Secured First Lien Term Credit Agreement ~~Senior Secured Second Lien Term Credit Agreement (collectively the~~(the “Term Credit ~~Agreements” and together with the Amended Credit Agreement, the “Credit Agreements”~~Agreement”), and the Amended Credit Agreement, the Company is permitted to invest up to $100 million in subsidiaries and joint ventures that are not party to these loan agreements.

As of June 30, ~~2016~~2017 and December 31, ~~2015~~2016, Kodak had funded ~~$23~~$0 million and ~~$30~~$25 million, respectively, to the Eligible Cash account held with the Amended ~~Credit Agreement~~ and ~~Amended~~Restated Credit Agreement Administrative ~~Agents,~~Agent which iswas classified as Restricted cash in the Consolidated Statement of Financial Position, supporting the Excess Availability amount. During the second quarter of 2017, the Company reduced the amount of outstanding letters of credit issued under the Amended Credit Agreement by $20 million, which increased the amount of Excess Availability by a corresponding amount, enabling the Company to release the Eligible Cash. The reduction of outstanding letters of credit was primarily attributable to the substitution of partially collateralized surety bonds in place of outstanding letters of credit. If the Company’s credit ratings were to decline, the Company would be required to provide up to $19 million of letters of credit to the issuers of the surety bonds to fully collateralize the bonds. Under the Amended Credit Agreement, if Excess Availability ($22 million at June 30, 2017) falls below 12.5% of lender commitments ~~(currently $18.75 million)~~($18.75 million at June 30, 2017), Kodak ~~may, in addition to the requirement~~would be required to be in compliance with the minimum Fixed Charge Coverage Ratio (the only financial covenant in the Amended Credit Agreement) and could become subject to cash dominion control. In addition to Eligible Cash, the borrowing base is supported by Eligible Receivables, Eligible Inventory and Eligible Equipment. To the extent the assets supporting the borrowing base decline and/or letters of credit issued under the Amended Credit Agreement increase, if the remaining assets included in the borrowing base are not sufficient to support the required Excess Availability amount, funding of Eligible Cash may be required. Kodak intends to maintain Excess Availability above the minimum ~~threshold which may require additional funding of Eligible Cash.~~threshold. Since Excess Availability was greater than 12.5% of ~~lenders~~lender commitments as of June 30, 2017, Kodak is not required to have a minimum Fixed Charge Coverage Ratio of 1.0 to 1.0. As of June 30, ~~2016,~~2017, Kodak is in compliance with all covenants under the Amended Credit Agreement and, had Kodak been required to have a Fixed Charge Coverage Ratio of 1.0 to 1.0, EBITDA as(as defined in the Amended Credit ~~agreement,~~agreement) exceeded Fixed Charges by approximately ~~$48~~$1 million.

Under the terms of the Senior Secured First Lien Term Credit ~~Agreements,~~Agreement (the “Term Credit Agreement”), Kodak is required to maintain a Secured Leverage Ratio (the only financial covenant in the Term Credit Agreement) not to exceed ~~specified levels.~~2.75 to 1. The ~~secured leverage ratio~~Secured Leverage Ratio is tested at the end of each quarter based on the prior four quarters and is generally determined by dividing secured debt, net of U.S. cash and cash equivalents, by consolidated EBITDA, as calculated under the ~~credit agreements. The maximum secured leverage ratio permitted under the Senior Secured First Lien~~ Term Credit ~~Agreement (which is more restrictive than the corresponding ratio permitted under the Senior Secured Second Lien Term Credit Agreement) is 2.75 to 1.~~Agreement. As of June 30, ~~2016,~~2017, Kodak’s EBITDA, as calculated under the Term Credit ~~Agreements,~~Agreement, exceeded the EBITDA necessary to satisfy the covenant ~~ratios~~ratio by approximately ~~$44~~$26 million.

The combination of the stricter covenant requirements, Kodak’s ongoing investment in growth businesses, and softening and volatility of global economic conditions and foreign currency exchange rates could make it difficult for Kodak to satisfy the leverage covenants on an on-going basis.

Kodak intends to conduct its operations in a manner that will result in continued compliance with the ~~secured leverage ratio covenants;~~Secured Leverage Ratio covenant; however, compliance for future quarters may depend on Kodak undertaking one or more non-operational transactions, such as a monetization of assets, a debt refinancing, the raising of equity capital, or a similar transaction. If Kodak is unable to remain in compliance and does not make alternate

~~[33]~~

arrangements with its term lenders, an event of default would occur under Kodak’s credit agreements which, among other remedies, would entitle the lenders or their agents to declare the outstanding obligations under the Term Credit ~~Agreements~~Agreement to be immediately due and payable.

The holders of the 5.50% Series A Convertible Preferred Stock are entitled to cumulative dividends payable quarterly in cash at a rate of 5.50% per annum. The Company declared a cash dividend of approximately $3 million in June 2017, which was paid on July 17, 2017.

Kodak made net contributions (funded plans) or paid benefits (unfunded plans) totaling approximately $7$6 million to its defined benefit pension and postretirement benefit plans in the first six months of ~~2016.~~2017. For the balance of ~~2016,~~2017, the forecasted contribution (funded plans) and benefit payment (unfunded plans) requirements for its pension and postretirement plans are approximately ~~$11~~$12 million.

[35]

Cash flow from investing activities included ~~$12~~$17 million of capital expenditures for the six months ended June 30, ~~2016.~~2017. Kodak expects approximately ~~$30~~$35 million to ~~$35~~$40 million of total capital expenditures for ~~2016. Additionally,~~2017. Kodak ~~intends~~is expanding its manufacturing facility in Weatherford, Oklahoma to ~~utilize a variety of methods~~provide additional production capacity for FLEXCEL NX Plates. The additional capacity will supplement Kodak’s existing plate manufacturing facility in Yamanashi, Japan and is designed to ~~finance customer equipment purchases~~meet increasing demand. The new production line is expected to be in full production by early 2019 and will initially focus on supplying FLEXCEL NX Plates to customers in the ~~future, including expansion~~United States, Canada and Latin America. Kodak invested approximately $3 million in the first half of ~~existing third party finance programs~~2017, expects to invest approximately $12 million for the full year 2017 and ~~internal financing through both leasing and installment loans.~~expects the total investment for the project to be approximately $16 million.

Kodak believes that its liquidity position is adequate to fund its operating and investing needs for the next year and to provide the flexibility to respond as necessary to ~~further~~any changes in the business environment.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Kodak, as a result of its global operating and financing activities, is exposed to changes in foreign currency exchange rates, commodity prices, and interest rates, which may adversely affect its results of operations and financial position. In seeking to minimize the risks associated with such activities, Kodak may enter into derivative contracts. Kodak does not utilize financial instruments for trading or other speculative purposes. Foreign currency forward contracts are used to hedge existing foreign currency denominated assets and liabilities, especially those of Kodak’s International Treasury Center, as well as forecasted foreign currency denominated intercompany sales. Kodak’s exposure to changes in interest rates results from its investing and borrowing activities used to meet its liquidity needs. Long-term debt is generally used to finance long-term investments, while short-term debt is used to meet working capital requirements.

Using a sensitivity analysis based on estimated fair value of open foreign currency forward contracts using available forward rates, if the U.S. dollar had been 10% stronger at June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, the fair value of open forward contracts would have decreased ~~$17~~$19 million and ~~$16~~$20 million, respectively. Such changes in fair value would be substantially offset by the revaluation or settlement of the underlying positions hedged.

Kodak is exposed to interest rate risk primarily through its borrowing activities. Kodak may utilize borrowings to fund its working capital and investment needs. The majority of short-term and long-term borrowings are in variable rate instruments. There is inherent roll-over risk for borrowings and marketable securities as they mature and are renewed at current market rates. The extent of this risk is not predictable because of the variability of future interest rates and business financing requirements.

Kodak’s Senior Secured First Lien Term Credit Agreement ~~Senior Secured Second Lien Term Credit Agreement~~ and Amended Credit Agreement are in variable-rate instruments, the Senior Secured First Lien Term Credit Agreement with an interest rate floor. At June 30, ~~2016 and~~2017 the three-month LIBOR rate was approximately 1.30%. At December 31, ~~2015,~~2016 the one-month LIBOR rate was approximately ~~0.47% and 0.43%, respectively. If~~0.77%. When LIBOR rates ~~were to~~ rise above the 1% ~~and 1.25% floors,~~floor, interest expense ~~would increase~~increases approximately $7$4 million per annum for each 1% of LIBOR above the floor.

Kodak’s financial instrument counterparties are high-quality investment or commercial banks with significant experience with such instruments. Kodak manages exposure to counterparty credit risk by requiring specific minimum credit standards and diversification of counterparties. Kodak has procedures to monitor the credit exposure amounts. The maximum credit exposure at June 30, ~~2016~~2017 was not significant to Kodak.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Kodak maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in Kodak’s reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including Kodak’s Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Kodak’s management, with participation of Kodak’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of Kodak’s disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Kodak’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, Kodak’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective.

~~[34]~~

Changes in Internal Control over Financial Reporting

There have been no changes in Kodak’s internal control over financial reporting during the most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, Kodak’s internal control over financial reporting.

[~~35]~~36]

Part II. Other Information

Item 1. Legal Proceedings

Subsequent to the Company’s Bankruptcy Filing, between January 27, 2012 and March 22, 2012, several putative class action suits were filed in federal court in the Western District of New York against the committees of the Company’s Stock Ownership Plan (‘SOP’) and Savings and Investment Plan (“SIP”), and certain former and current executives of the Company. The suits were consolidated into a single action brought under the Employee Retirement Income Security Act (“ERISA”), styled as In re Eastman Kodak ERISA Litigation. The allegations concern the decline in the Company’s stock price and its alleged impact on SOP and SIP. Plaintiffs were seeking the recovery of any losses to the applicable plans, a constructive trust, the appointment of an independent fiduciary, equitable relief, as applicable, and attorneys’ fees and costs. Defendants and plaintiffs, individually and as class representatives, entered into a settlement agreement which was preliminarily approved by the court on April 27, 2016, and is conditioned on final court approval and entry of a final order. The Company is not a party to the litigation or the settlement agreement, and is not obligated to make any payments under the settlement agreement.

Kodak’s Brazilian operations are involved in various litigation matters and have received or been the subject of numerous governmental assessments related to indirect and other taxes in various stages of litigation, as well as civil litigation and disputes associated with former employees and contract labor. The tax matters, which comprise the majority of the litigation matters, are primarily related to federal and state value-added taxes and income taxes. Kodak’s Brazilian operations are disputing these matters and intend to vigorously defend their position. Kodak routinely assesses these matters as to the probability of ultimately incurring a liability in its Brazilian operations and records its best estimate of the ultimate loss in situations where it assesses the likelihood of loss as probable. As of June 30, ~~2016,~~2017, Kodak maintained accruals of approximately $13 million for claims aggregating approximately ~~$210~~$213 million inclusive of interest and penalties where appropriate. In connection with assessments and litigation in Brazil, local regulations may require Kodak to post security for a portion of the amounts in dispute. Generally, any encumbrances of the Brazilian assets would be removed to the extent the matter is resolved in Kodak’s favor.

Kodak is involved in various lawsuits, claims, investigations, remediations and proceedings, including, from time to time, commercial, customs, employment, environmental, and health and safety matters, which are being handled and defended in the ordinary course of business. Kodak is also subject, from time to time, to various assertions, claims, proceedings and requests for indemnification concerning intellectual property, including patent infringement suits involving technologies that are incorporated in a broad spectrum of ~~its~~Kodak’s products. These matters are in various stages of investigation and litigation, and are being vigorously defended. Based on information currently available, Kodak does not believe that it is probable that the outcomes in any of these matters, individually or collectively, will have a material adverse effect on its financial condition or results of operations. Litigation is inherently unpredictable, and judgments could be rendered or settlements entered that could adversely affect Kodak’s operating results or cash flows in a particular period. Kodak routinely assesses all of its litigation and threatened litigation as to the probability of ultimately incurring a liability, and records its best estimate of the ultimate loss in situations where it assesses the likelihood of loss as probable.

Item 1A. Risk Factors

Reference is made to the Risk Factors set forth in Part I, Item 1A. of the ~~2015~~2016 Form 10-K. The Risk Factors remain applicable from the ~~2015~~2016 Form 10-K.

Item 2. Unregistered Sales of Securities and Use of Proceeds

(a)	Sales of unregistered securities during the quarter ended June 30, ~~2016~~2017

Not Applicable

(b)	Issuer purchases of equity securities during the quarter ended June 30, ~~2016~~2017

Repurchases related to Stock Compensation Plans ⁽¹⁾:

Total Number

of Shares

Purchased

Average

Price Paid

per Share

Total Number of Shares

Purchased as Part of

Publicly Announced Plans

or Programs

Maximum That May

Be Purchased

under the Plans or

Programs

Total Number

of Shares

Purchased

Average

Price Paid

per Share

Total Number of Shares

Purchased as Part of

Publicly Announced Plans

or Programs

Maximum That May

Be Purchased

under the Plans or

Programs

April 1 through 30

69,401

11.00

n/a

June 1 through 30

16,324

14.96

n/a

9,344

9.74

Total

85,725

9,344

⁽¹⁾	These repurchases are made pursuant to the terms of the 2013 Omnibus Incentive Plan providing the Company the right to withhold amounts deliverable under the plan ~~in order~~ to satisfy minimum statutory tax withholding requirements.

~~[36]~~

Items 3 and 4.

Not applicable.

Item 5. Other Information

Pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012, which added Section 13(r) to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), Kodak hereby incorporates by reference herein Exhibit 99.1 to this report. Exhibit 99.1 includes disclosure publicly filed by an entity that may be considered an “affiliate” (as such term is defined in Rule 12b-2 of the Exchange Act) of Kodak.Not applicable.

Item 6. Exhibits

(a)	Exhibits required as part of this report are listed in the index appearing below.

[37]

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

EASTMAN KODAK COMPANY

(Registrant)

~~Date:~~Date August 9, ~~2016~~2017		/s/ Eric Samuels
		Eric Samuels
		Chief Accounting Officer and Corporate Controller
		(Chief Accounting Officer and Authorized Signatory)

[38]

Eastman Kodak Company

Index to Exhibits


†~~(10.1)~~(3.1)	Fourth Amended and Restated ~~Credit~~By-Laws of Eastman Kodak Company (Incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K as filed on May 25, 2017).
(4.1)	Shareholder Agreement, dated ~~May 26, 2016,~~as of April 17, 2017, by and among Eastman Kodak Company, Longleaf Partners Small-Cap Fund, C2W Partners Master Fund Limited, Deseret Mutual Pension Trust and Southeastern Asset Management, Inc. (Incorporated by reference to Exhibit 4.6 of the Company’s Amendment No. 2 to Registration Statement on Form S-3 as Borrower, the guarantors named therein as Guarantors, the lenders named therein as Lenders, Bank of America, N.A. as Administrative and Collateral Agent, and Bank of America, N.A. and J.P. Morgan Chase Bank, N.A. as Joint Lead Arrangers and Joint Bookrunners, filed ~~herewith.~~

†(~~10.2)~~	~~Amended and Restated Security Agreement, dated~~on May ~~26, 2016, from the grantors referred therein as Grantors to Bank of America, N.A. as Agent, filed herewith.~~5, 2017).

*~~(10.3)~~(10.1)	~~Employment~~Separation and General Release Agreement ~~between Eastman Kodak Company and David E. Bullwinkle, dated June 20, 2016, filed herewith.~~

*(10.4)	~~Retention Letter~~ between Eastman Kodak Sàrl and Philip Cullimore, dated ~~May~~April 24, ~~2016,~~2017, filed herewith.

*~~(10.5)~~(10.2)	Eastman Kodak Company ~~Administrative Guide for the 2016 Performance Period under the~~2013 Omnibus Incentive Plan Form of Executive ~~Compensation for Excellence~~Restricted Stock Unit and ~~Leadership Plan,~~Nonqualified Stock Option Award Agreement (with Forfeiture upon Termination), filed herewith.
*(10.3)	Eastman Kodak Company 2013 Omnibus Incentive Plan Form of Director Restricted Stock Unit Award Agreement (One Year Vesting), filed herewith.
(31.1)	Certification signed by Jeffrey J. Clarke, filed herewith.

(31.2)	Certification signed by David E. Bullwinkle, filed herewith.

(32.1)	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by Jeffrey J. Clarke, filed herewith.

(32.2)	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 signed by David E. Bullwinkle, filed herewith.

~~(99.1)~~	~~Section 13(r) Disclosure, filed herewith.~~

(101.CAL)	XBRL Taxonomy Extension Calculation Linkbase.

(101.INS)	XBRL Instance Document.

(101.LAB)	XBRL Taxonomy Extension Label Linkbase.

(101.PRE)	XBRL Taxonomy Extension Presentation Linkbase.

(101.SCH)	XBRL Taxonomy Extension Schema Linkbase.

(101.DEF)	XBRL Taxonomy Extension Definition Linkbase

* Management contract or compensatory plan or ~~arrangement.~~arrangement

†	Eastman Kodak Company requested confidential treatment of certain information contained in this exhibit. Such information was filed separately with the Securities and Exchange Commission pursuant to an application for confidential treatment under 17 C.F.R. §§ 200.80(b)(4) and 240.24b-2.

[39]

	June 30, 2016
(in millions)	Gross Carrying Amount		Accumulated Amortization		Net		Weighted-Average Amortization Period
Technology-based	$	75	$	40	$	35	3 years
Kodak trade name		40		-		40	Indefinite life
Customer-related		26		10		16	6 years
Other		2		-		2	20 years
Total	$	143	$	50	$	93