Kodak 2008 Annual Report Download - page 33
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31
Other Operating Expenses (Income), Net
The Other operating expenses (income), net category includes gains and losses on sales of capital assets and businesses, and
goodwill and other long-lived asset impairment charges. The year-over-year change in Other operating expenses (income), net was
largely driven by the goodwill impairment charge of $785 million in 2008, as compared with significant one-time gains on sales of
capital assets and businesses recognized in 2007. Refer to Note 5, “Goodwill and Other Intangible Assets,” for more information on
the 2008 charge.
Other Income (Charges), Net
The Other income (charges), net category includes interest income, income and losses from equity investments, and foreign
exchange gains and losses. The decrease in Other income (charges), net was primarily attributable to a decrease in interest income
due to lower interest rates and lower cash balances in 2008 as compared with 2007.
Income Tax Benefit
(dollars in millions) For the Year Ended
December 31,
2008 2007
Loss from continuing operations before income taxes ($874) ($256)
Benefit for income taxes ($147) ($51)
Effective tax rate 16.8% 19.9%
The change in the Company’s effective tax rate from continuing operations is primarily attributable to: (1) a $270 million benefit
recognized during the second quarter of 2008 for interest earned on a refund received from the U.S. Internal Revenue Service, (2)
losses generated within the U.S. and in certain jurisdictions outside the U.S. in 2008 that were not benefited due to the impact of
valuation allowances, (3) a tax benefit recorded in continuing operations in 2007 for losses in certain jurisdictions due to the
recognition of an offsetting tax expense on the pre-tax gain in discontinued operations, (4) the release or establishment of valuation
allowances in certain jurisdictions outside the U.S., which are evaluated separately by jurisdiction and dependent on its specific
circumstances, (5) the mix of earnings from operations in certain lower-taxed jurisdictions outside the U.S., (6) adjustments for
uncertain tax positions and tax audits, and (7) a pre-tax goodwill impairment charge of $785 million that resulted in a tax benefit of
only $4 million due to a full valuation allowance in the U.S. and the limited amount of tax deductible goodwill that existed as of
December 31, 2008.