Kodak 2007 Annual Report Download - page 13

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Because we sell our products and services worldwide, we are subject to changes in currency exchange rates and interest rates that may
adversely impact our results of operations and financial position.
Kodak, as a result of its global operating and financing activities, is exposed to changes in currency exchange rates and interest rates, which may
adversely affect its results of operations and financial position. Exchange rates and interest rates in certain markets in which the Company does busi-
ness tend to be more volatile than those in the United States and Western Europe. There can be no guarantees that the economic situation in developing
markets or elsewhere will not worsen, which could result in future effects on revenue and earnings should such events occur.
If we cannot protect our reputation due to product quality and liability issues, our business could be harmed.
Kodak products are becoming increasingly sophisticated and complicated to design and build as rapid advancements in technologies occur. Although
Kodak has established internal procedures to minimize risks that may arise from product quality and liability issues, there can be no assurance that Kodak
will be able to eliminate or mitigate occurrences of these issues and associated damages. Kodak may incur expenses in connection with, for example,
product recalls, service and lawsuits, and Kodak’s brand image and reputation as a producer of high-quality products could suffer.
Business disruptions could seriously harm our future revenue and financial condition and increase our costs and expenses.
Our worldwide operations could be subject to earthquakes, power shortages, telecommunications failures, water shortages, tsunamis, floods, hurricanes,
typhoons, fires, extreme weather conditions, medical epidemics and other natural or manmade disasters or business interruptions, for which we are pre-
dominantly self-insured. The occurrence of any of these business disruptions could seriously harm our revenue and financial condition and increase our
costs and expenses. In addition, some areas, including parts of the east coast of the United States, have previously experienced, and may experience in
the future, major power shortages and blackouts. These blackouts could cause disruptions to our operations or the operations of our suppliers, distributors
and resellers, or customers. These events could seriously harm our revenue and financial condition, and increase our costs and expenses.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
The Company’s worldwide headquarters is located in Rochester, New York.
The CDG segment of Kodak’s business in the United States is headquartered in Rochester, New York. A manufacturing facility in Harrow, England pro-
duces photographic paper. Kodak Gallery operations are managed from Emeryville, California. Kodak Consumer Inkjet Systems operations are located in
San Diego, California and Rochester, New York. Many of CDG’s businesses rely on manufacturing assets, company-owned or through relationships with
design and manufacturing partners, which are located close to end markets and/or supplier networks. There are a number of photofinishing laboratories in
the U.S.
The FPG segment of Kodak’s business is centered in Rochester, New York, where film and photographic chemicals and related materials are manufac-
tured. Additional manufacturing facilities supporting the business are located in Windsor, Colorado; China; Mexico; India; Brazil; and Russia. Entertainment
Imaging has business operations in Hollywood, California and Rochester, New York.
Products in the GCG segment are manufactured in the United States, primarily in Rochester, New York; Dayton, Ohio; Columbus, Georgia; Weatherford,
Oklahoma; and Windsor, Colorado. Manufacturing facilities outside the United States are located in the United Kingdom, Germany, Israel, Bulgaria, China,
Japan, Canada, and Mexico.
Properties within a country may be shared by all segments operating within that country.
Regional distribution centers are located in various places within and outside of the United States. The Company owns or leases administrative, manufac-
turing, marketing, and processing facilities in various parts of the world. The leases are for various periods and are generally renewable.
The Company has significantly reduced its property portfolio as a result of the 2004-2007 Restructuring Program. Under this program, the Company
planned to reduce its traditional manufacturing infrastructure by two-thirds below 2004 levels. The program was substantially complete by year-end 2007.
ITEM 3. LEGAL PROCEEDINGS
During March 2005, the Company was contacted by members of the Division of Enforcement of the SEC concerning the announced restatement of the
Company’s financial statements for the full year and quarters of 2003 and the first three unaudited quarters of 2004. An informal inquiry by the staff of the
SEC into the substance of that restatement is continuing. The Company continues to fully cooperate with this inquiry, and the staff has indicated that the
inquiry should not be construed as an indication by the SEC or its staff that any violations of law have occurred.
The Company is one of several Potentially Responsible Parties named in connection with the closure of the LWD, Inc. site, a former permitted hazardous
waste treatment facility in Calvert City, Kentucky. The Company has entered into a Consent Order with the EPA based upon evidence that the Company
sent waste to the facility for incineration. The Company’s expected cost in connection with this matter is estimated to be $150,000, of which the Company
has paid $87,200.