August 10, 2005 – Kodak said in a regulatory filing that the Security and Exchange Commission has initiated an informal inquiry into its restatement of earnings for fiscal 2003 and the first three quarters of 2004.
The restatements, which trimmed profits in 2003 by $12 million and in 2004 by $93 million, primarily stem from methods Kodak used to account for income taxes and retiree benefits. Informal inquiries are not unexpected following a restatement of financial results and Kodak has said that they are cooperating fully with the SEC.
The company has begun to address problems in its accounting practices that led to the restatements, hiring a new tax officer and bolstering the staff in its controller’s office.
Kodak is currently in the midst of restructuring as they struggle to compete in the digital imaging market. The company has closed several plants and has cut 13,475 jobs since January and expects to cut an additional 10,000 jobs. Kodak has lost money in the last three quarters and has assumed $3.3 billion in debt.
Kodak also announced on Tuesday another restatement of earnings for the second quarter, revising the $146 million loss it reported July 20 to a $154 million loss. The current restatement concerns Kodak’s health group, while the issues that garnered SEC attention concern the whole company.