Kodak 2002 Annual Report Download - page 51

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Financials
51
NOTE 5: GOODWILL AND OTHER
INTANGIBLE ASSETS
Effective January 1, 2002, the Company adopted the provisions of
SFAS No. 142, “Goodwill and Other Intangible Assets,” under
which goodwill is no longer amortized, but is required to be
assessed for impairment at least annually. Goodwill, net was
$981 million and $948 million at December 31, 2002 and 2001,
respectively. Accumulated amortization amounted to $920 million
at December 31, 2001. The changes in the carrying amount of
goodwill by reportable segment for 2002 and 2001 were as
follows:
Photo- Health Commercial Consolidated
(in millions) graphy Imaging Imaging Total
Balance at
December 31, 2000 $ 719 $ 197 $ 31 $ 947
Goodwill related to
acquisitions 105 — 94 199
Goodwill impairment (43) — — (43)
Amortization of goodwill (110) (28) (15) (153)
Finalization of purchase
accounting 2 1 1 4
Currency translation
adjustments (4) (1) (1) (6)
Balance at
December 31, 2001 669 169 110 948
Goodwill related to
acquisitions 19 1 6 26
Goodwill written off
related to disposals — — (17) (17)
Finalization of purchase
accounting (1) 4 3 6
Currency translation
adjustments 15 2 1 18
Balance at
December 31, 2002 $ 702 $ 176 $ 103 $ 981
The aggregate amount of goodwill acquired during 2001 of
$199 million was attributable to $40 million for the purchase of
Ofoto, Inc. within the Photography segment, $77 million relating
to the purchase of Bell & Howell Company within the Commercial
Imaging segment and $82 million related to additional acquisitions
within the Photography and Commerical Imaging segments that
are all individually immaterial. The goodwill impairment charge of
$43 million related to the Company's PictureVision subsidiary
within the Photography segment, which was determined to be
impaired as a result of the Company's acquisition of Ofoto.
The aggregate amount of goodwill acquired during 2002 of
$26 million was attributable to acquisitions that are all
individually immaterial. The goodwill written off related to
disposals during 2002 of $17 million was attributable to the
disposal of Kodak Global Imaging, Inc. within the Commercial
Imaging segment. The $17 million charge to earnings relating to
the write-off of this goodwill is included in the loss from
discontinued operations, net of income taxes of $23 million in the
Consolidated Statement of Earnings. See Note 21, “Discontinued
Operations.”
Earnings and earnings per share from continuing operations
for the years ended December 31, 2001 and 2000, as adjusted
for the exclusion of goodwill amortization expense, were as
follows (in millions, except per share amounts):
Impact of
Year Ended Exclusion of
December 31, 2001 Goodwill
As Reported As Adjusted Amort. Exp.
Earnings from continuing
operations before income
taxes (as originally
reported) $ 115 $ 115 $ —
Adjustment for the
exclusion of goodwill
amortization — 153 153
Earnings from continuing
operations before income
taxes 115 268 153
Provision for income
taxes 34 58 24
Earnings from continuing
operations $ 81 $ 210 $ 129
Basic and diluted
earnings per share from
continuing operations $ .28 $ .72 $ .44
Impact of
Year Ended Exclusion of
December 31, 2000 Goodwill
As Reported As Adjusted Amort. Exp.
Earnings from continuing
operations before income
taxes (as originally
reported) $ 2,132 $ 2,132 $ —
Adjustment for the
exclusion of goodwill
amortization — 151 151
Earnings from continuing
operations before income
taxes 2,132 2,283 151
Provision for income
taxes 725 744 19
Earnings from continuing
operations $ 1,407 $ 1,539 $ 132
Basic earnings per share
from continuing operations $ 4.62 $ 5.05 $ .43
Diluted earnings per share
from continuing operations $ 4.59 $ 5.02 $ .43