Good day, ladies and gentlemen and welcome to the Eastman Kodak Fourth Quarter 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, today's conference may be recorded. I would like to introduce your host for today's conference, Mr. Bill Love. Sir, please go ahead.

Thank you, Michelle, and good afternoon, everyone. My name is Bill Love, and Eastman Kodak Company's Treasurer and Director of Investor Relations. Welcome to the fourth quarter 2016 Kodak earnings call. At 4:15 PM this afternoon, Kodak filed its annual report on Form 10-K and issued its release on financial results for the full year and fourth quarter of 2016. You may access the presentation and webcast for today's call on our Investors Center at investor.kodak.com. During today's call, we will be making certain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. All forward-looking statements 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 these forward-looking statements include, among others, the risks, uncertainties and other factors described in more detail in Kodak’s filings with the U.S. Securities and Exchange Commission from time to time. 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 presentation and are expressly qualified in their entirety by the cautionary statements included or referenced in this presentation. In addition, the release just issued and the presentation provided contains certain measures that are deemed non-GAAP measures. Reconciliations to the most directly comparable GAAP measures have been provided with the release and with the presentation on our Web site in our Investors Center at investor.kodak.com. Speakers on today's call will be Jeff Clarke, Chief Executive Officer of Kodak; and David Bullwinkle, Chief Financial Officer of Kodak. Jeff will provide some opening remarks, his perspectives on Kodak's financial performance, and guidance for 2017. Then Dave will summarize fourth quarter 2016 results, provide an update on cost reductions and review cash performance before we open it up to questions. I will now turn the call over to Kodak's CEO, Jeff Clarke.

Thank you, Bill. Welcome, everyone and thank you for joining the Q4 investor call for Kodak. I am encouraged by the progress made in 2016. We have improved our operational efficiency, reduced costs and significantly improved the company's capital structure. We continued progress toward a healthier and more balanced product portfolio with notable growth in SONORA plates and FLEXCEL NX packaging and will continue to leverage our technologies and growth opportunities in 2017. While I am pleased with our progress, we were short on two of our 2016 goals. During 2016, we used cash of $22 million after adjusting for currency and debt prepayments, net of preferred stock proceeds versus our objective to generate between $10 million and $30 million of cash. The variance to our target was driven by the timing of working capital, non-cash items in EBITDA, and the deconsolidation of the utilities infrastructure in Eastman Business Park. Dave will share more specifics with you in his remarks. We continue to work towards the disposition of our PROSPER business but have not yet entered into a binding sales agreement. There are multiple global parties interested in PROSPER and in order to maximize the value, we have been patient as prospective buyers work to develop their most competitive bid for the business. We announced in December the sale process was delayed and have taken longer than we originally anticipated. As I have said in the past, PROSPER is a complex business with great technology but still requires additional investment in its next generation ULTRASTREAM platform which has added to the time needed in the sale diligence and negotiating process. PROSPER had a strong year and is now better positioned for the sale process. Annuities grew 40% and EBITDA improved 11% inclusive of our increased investment in ULTRASTREAM. Our focus…

Thanks, Jeff, and good afternoon. Today the company filed its Form 10-K for the year ended December 31, 2016 with the Securities and Exchange Commission. I recommend you read this filing in its entirety. As noted in Jeff's opening remarks, revenues was within our guidance and operational EBITDA was at the high end of our guidance on a constant currency basis. We fell short of our expected cash generation target and I will walk you through the cash usage in more detail shortly. First, some important updates and notable items in the quarter and 10-K filing. As illustrated on Slide 13, during the fourth quarter we closed on the $200 million issuance of Series A preferred stock to funds managed by Southeastern Asset Management Inc. With proceeds from this issuance and existing cash, we repaid in full the $262 million of senior secured second lien term loans. The repayment of this expensive debt will save the company $17 million in cash on an annual basis. Through this investment we lowered Kodak's weighted average interest rate by nearly 200 basis points and improved our capital structure and operational flexibility. We have reported the preferred stock as mezzanine equity on our balance sheet. Further details of the terms of the preferred stock outstanding and the associated accounting is included in Note 18 redeemable, convertible Series A preferred stock in our Form 10-K. Also during the quarter it was determined, Kodak was no longer the primary beneficiary of Red Rochester LLP. In 2013, Kodak sold certain utilities and related facilities, entered into a utility supply and servicing arrangement with Red and had accounted for Red as a variable interest entity which required consolidation of its financial statements with Kodak's. As a result of this determination, Kodak is required to de-consolidate Red's financial statements.…

[Operator Instructions] Our first question comes from the line of Gary Ribe with MACRO Consulting. Your line is open. Please go ahead.

I know you can't too much about the PROSPER process but I guess you guys kind of put a one year timeline on it to begin with and we are bumping up right against that now. I mean do you guys have any kind of idea as to how long it's going to take you guys to really finish this up. I mean the trade press is leaking various rumors and stuff and I realize you can't say too much but is there some sort of timeline where you hope to get back to investors?

Yes. Again, I am not going to say anything different than what I said in the remarks. But maybe to give you back and this is a bit of a predictability issue and then there is a question of us making decisions along the way that can maximize the value. And so I am very pleased that we have made those decisions and that gives us the best opportunity for the highest valuation of PROSPER. But if you go back to when, a little over a year ago, when we first raised this issue, this opportunity to sell PROSPER, announced it, I will remind you that it was due to unsolicited inbound interest. And so we were in the middle of that process that has continued. Then we made the strategic decision and announced it to investors, customers and employees in part because it was very strategic and material. And second, because there was the major trade show, Drupa, that was coming up in June. And every four years this is the world series/Olympics of the industry and a very, very ideal place to showcase the PROSPER technology and also expand the bidder list and in fact that was successful in getting more people interested. And as you saw in my remarks, this is a business that loses money today, it's making great progress and we are also investing significantly in next generation. So it's not an easy business for due diligence, there is a lot of complexity in it and there are multiple parties involved. So the reason that it hasn’t happened is because we want to get the best value for the business and we continue to march down that path. And I believe from predictability perspective, it was the right thing to give that estimate at that time. That was our best information. It turned that when Drupa happened in June, several more people came into the mix. Next question, Gary. Did you have another one?

Yes. So just to kind of summarize, are you pleased with how the process is going at this point?

I will be pleased when the money is in the bank.

Okay. Got it. Just to go to the plates business. It's kind of another year where you are seeing some kind of intense competition and so forth. Can you comment on the potential for any industry consolidation?

I can't comment on that Gary. No. Obviously there are a lot of players out there. There are some regional players and three major players. So today we are out just doing as best we can to compete. As we said, there was about 5% price decline over the year that was a lot with some positive news last year on aluminum and significant positive news on our ability to consolidate factories. We were able to take supply out of the industry and ultimately that is the consolidation that happens in a non-organic way. It's when the industry realizes that there is just simply too much past to for us to continue to drive the appropriate earnings and return on cost of capitals that are required for this business. So I can't comment about anything inorganic but on an organic basis, we are going to continue to drive productivity improvements. We are going to continue to invest capital and to do so continue to differentiate our product set and that will allow us to continue hold or gain share.

[Operator Instructions]

All right. So we had the one question, I am not hearing anymore so let me summarize again and thank everyone on joining the call. First of all -- Michelle, is there another call?

We do. We have a question from the line of Peter Rabover with Artko Capital. Your line is open. Please go ahead.

So I guess, it's just a bigger picture question but you have been over three years out of bankruptcy and I think we went from a cost cutting phase to, I guess, a growth phase. And the stock price has been the same and at what point do you change your strategy and realize that things aren't working. And I mean I think everybody is aware and you are aware internally that the some of the parts has probably worked more than the current stock price and obviously you have two new broad members that probably feel the same way. So I guess what are the data points for you to feel like, hey, look all this investment stuff is not worth it and we are better off selling this company to interested parties.

Well, first of all, thanks, Peter for your question. We are continuing to streamline this company. So while we are not going to be making the absolutely significant 30%, 40% cuts that we had in the past, we are going to continue to run this company with better cost performance. In terms of selling the pieces off, as noted, we have streamlined our investments in micro-3D printing. We believe that there is a modest investment stream going forward with a large payoff. Effectively the company over the last really seven-eight years has invested by $50 million in this technology. And we think with single digit millions, where we are at the product line it makes sense to continue that loss given the prospects of the technology and the pipeline we now have. So in terms of selling that piece off, we think that is a good organic continued investment. PROSPER is obviously the most notable example where we curtailed investment and changed the strategy to your point and look to monetize the asset. And so that was an investment of the company of hundreds and hundreds of millions of dollars, it had, again, a 40% growth in annuities. So it is beginning to pay off. In my remarks, I noted that PROSPER, if we weren't investing in the next generation, I guess which would still have a life of 10 to 15 years, would be profitable now. But in talking to the bidders of the business, particularly Drupa and other investors or other potential buyers, people are very excited about ULTRASTREAM. Now it is a continued investment. That’s a continued investment as we noted this year and that’s one we think will allow us to sell the business forward. So on that one we are sticking with the strategy. We…

No, I understand.

A follow up.

No, not really a follow up. I guess it's just been frustrating for the last few years as a shareholder to see slower progress than expected and I guess that was just my comment on that. I am curious whether with the new board you expect some changes to the strategy?

I expect that the current board and new members of the board will continue to be pragmatic with the company's opportunities to increase shareholder value, inorganically. I would not expect significant changes to the investment streams for packaging, for software, and for our graphic arts business.

And I am showing no further questions at this time.

Okay. Well, I want to thank everyone for joining the call. Let me summarize again about four more points here. Kodak was profitable on a GAAP basis in 2016. That’s the first time since 2013, if you adjust for some of the technicalities around coming out of bankruptcy including the sales of intellectual property. That’s the first GAAP profit the company has had in a decade. The company's performance is representing increased quality of earnings. To Peter's comment, I wish those that we were showing up significantly faster but it is a significant improvement in the quality of earnings as we run off the consumer inkjet business. We are executing well on key areas. SONORA plate, the FLEXCEL NX packaging business and the growth of annuities in the PROSPER business. Cash flow has performed significantly better year-over-year along with quality of earnings and as Dave took you through, 2017 is a year where we need to manage through some significant aluminum pricing and foreign exchange headwinds. The indicative cash flow the company is stronger than our projections. 2017 is a year where we are going to have to expect -- where we expect of year-over-year improvements on comparable operational EBITDA and cash flow and continued strong revenue and market share growth in our leading product areas, including FLEXCEL NX, software and PRINERGY. Thank you again for your questions today and for your support of Kodak.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone have a great day.