The sad news that Kodak has filed for bankruptcy in the US (Chapter 11 there) makes the collapse of Kodak one of the the biggest in US history. The precise figures will take some time to come out, but consider these – Kodak has assets of $5.13bn and liabilities of $6.75bn a deficit of $1.62bn. The share price of Kodak reached $94 a share 15 years ago, but are now only a few cents. The market value of Kodak shrank over this period from $31bn to under $200m. That is an enormous collapse.

This is what happens when businesses cannot adapt quickly enough to changing markets. I want to use the analogy of the dinosaurs, but this would be very harsh on Kodak who did attempt to adapt – providing digital camera’s and ink for printers. Perhaps one of their biggest failings is that in the early 1990’s they developed a digital camera, but it is alleged that the Board of Directors were so terrified of the implications of the death of film that they sold the camera to… Apple. Ever since Kodak have been playing catch up and losing, almost as though they became frozen in time, like the images that they helped us all to create. Cashflows into the company have been deteriorating each year according the the 2010/11 Annual Report and Proxy Statement.

There is concern for Kodak’s UK arm, which has been downsizing dramatically over the last 10 years. In particular the deficit on its Final Salary staff pension scheme is estimated to be £576m which is now unlikely to materialise. According to the Financial Times, the company had paid £37.2m in 2010 and was scheduled to pay a further £37.7m in 2011. There  were agreements to pay roughly £37m a year to the fund to help plug the deficit each year which would be increased to £62m in 2022. However, pension members should be covered by the Pension Protection Fund and there ought to be no alteration to those already in receipt of a pension from Kodak. All members of Final Salary schemes are meant to recieve an annual statement about the scheme, this should show if your scheme has a problem. Employees are probably well placed to determine if the company is doing the right things to make profits in the future and so ensure the future of the pension scheme. If you have concerns over your pension do contact me, planning a good retirement can be complex.

Reflecting on the history and demise of Kodak reminded me of a new play currently showing at The National Theatre called “The Travelling Light” a new play by Nicholas Wright and starring Antony Sher, which is a very moving story of the the first motion pictures made by a Jewish community in Russia. It powerfully captures the joy of  a revelation and “new idea” perhaps also capturing the essence of “popular capitalism” it is thoroughly worth seeing. It will be on tour in in March and April, but can also been seen in some cinemas on 9th February 2012.

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