Kodak 2008 Annual Report Download - page 16
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14
The implementation of new legislation or regulations or changes in existing laws or regulations could increase the
Company’s cost to comply and consequently reduce our profitability.
New business legislation or regulations or changes to existing laws or regulation, including interpretations of existing regulations by
courts or regulators, could adversely affect Kodak’s results of operations by increasing the Company’s cost to comply. For example,
tax, labor, environmental and securities laws and regulations may be enacted in the future that require the Company to adopt new
policies, internal controls and other compliance practices or modify existing production facilities and operations. Each of these
compliance initiatives could lead to internal and external cost increases.
The Company may be required to recognize additional impairments in the value of its goodwill, which would increase
expenses and reduce profitability.
Goodwill represents the excess of the amount we paid to acquire businesses over the fair value of their net assets at the date of the
acquisition. The Company tests goodwill for impairment annually or whenever events occur or circumstances change that would
more likely than not reduce the fair value of a reporting unit below its carrying amount. This may occur for various reasons including
changes in actual or expected income or cash flows of a reporting unit. In the fourth quarter 2008, we recorded a pre-tax non-cash
charge of $785 million to write-off a significant portion of the goodwill balance within the GCG segment. We will continue to evaluate
current market conditions that may affect the fair value of our reporting units to assess whether any further goodwill impairment
exists in the future. Continued adverse or worsening market conditions for certain businesses may have a significant impact on the
fair value of the reporting units and could result in additional future impairments of goodwill.