Kodak 2011 Annual Report Download - page 15

If we cannot effectively anticipate technology trends and develop and market new products to respond to changing customer preferences, the
Company’s revenue, earnings and cash flow, could be adversely affected.
We must develop and introduce new products and services in a timely manner to keep pace with technological developments and achieve customer
acceptance. If we are unable to anticipate new technology trends, for example in consumer electronics, print advertising, and commercial and consumer
printing, and develop improvements to the Company’s current technology to address changing customer preferences, this could adversely affect the
Company’s revenue, earnings and cash flow. Due to changes in technology and customer preferences, the market for traditional film and paper products
and services is in decline. The Company’s success depends in part on the Company’s ability to manage the decline of the market for these traditional
products by continuing to reduce the Company’s cost structure to maintain profitability.
Even if a chapter 11 plan of reorganization is consummated, continued weakness or worsening of economic conditions could continue to adversely
affect the Company’s financial performance and the Company’s liquidity.
The global economic recession and declines in consumption in the Company’s end markets have adversely affected sales of both commercial and consumer
products and profitability for such products and was a factor leading to the Company filing for voluntary petitions for relief under chapter 11 of the U.S.
Bankruptcy Code. Further, global financial markets have been experiencing volatility. Consumer discretionary spending may not return to pre-recession
levels in certain geographies. Continued slower sales of consumer digital products due to the uncertain economic environment could lead to reduced sales
and earnings while inventory increases. Economic conditions could also accelerate the continuing decline in demand for traditional products, which could
also place pressure on the Company’s results of operations and liquidity. While the Company is seeking to increase sales in markets that have already
experienced an economic recovery such as Asia, there is no guarantee that anticipated economic growth levels in those markets will continue in the future,
or that the Company will succeed in expanding sales in these markets. In addition, accounts receivable and past due accounts could increase due to a
decline in the Company’s customers’ ability to pay as a result of the economic downturn, and the Company’s liquidity, including the Company’s ability to
use credit lines, could be negatively impacted by failures of financial instrument counterparties, including banks and other financial institutions. If the
global economic weakness and tightness in the credit markets continue for a greater period of time than anticipated or worsen, the Company’s profitability
and related cash generation capability could be adversely affected and, therefore, affect the Company’s ability to meet the Company’s anticipated cash
needs, impair the Company’s liquidity or increase the Company’s costs of borrowing.
If we cannot attract, retain and motivate key employees, the Company’s revenue and earnings could be harmed.
In order for us to be successful, we must continue to attract, retain and motivate executives and other key employees, including technical, managerial,
marketing, sales, research and support positions. Hiring and retaining qualified executives, research and engineering professionals, and qualified sales
representatives, particularly in the Company’s targeted growth markets, is critical to the Company’s future. If we cannot attract qualified individuals,
retain key executives and employees or motivate the Company’s employees, the Company’s business could be harmed. The Company’s filing for chapter
11 may create additional distractions and uncertainty for employees, and impact the Company’s ability to retain key employees and effectively recruit new
employees. The Company’s ability to take measures to motivate and retain key employees may be restricted while operating under chapter 11. We may
experience increased levels of employee attrition.
Due to the nature of the products we sell and the Company’s worldwide distribution, we are subject to changes in currency exchange rates,
interest rates and commodity costs that may adversely impact the Company’s results of operations and financial position.
As a result of the Company’s global operating and financing activities, we are exposed to changes in currency exchange rates and interest rates, which may
adversely affect the Company’
s results of operations and financial position. Exchange rates and interest rates in markets in which we do business tend to be
volatile and at times, the Company’s sales can be negatively impacted across all of the Company’s segments depending upon the value of the U.S. dollar,
the Euro and other major currencies. In addition, the Company’s products contain silver, aluminum, petroleum based or other commodity-based raw
materials, the prices of which have been and may continue to be volatile. If the global economic situation remains uncertain or worsens, there could be
further volatility in changes in currency exchange rates, interest rates and commodity prices, which could have negative effects on the Company’s revenue
and earnings.
If we are unable to provide competitive financing arrangements to the Company’s customers or if we extend credit to customers whose
creditworthiness deteriorates, this could adversely impact the Company’s revenues, profitability and financial position.
The competitive environment in which we operate may require us to provide financing to the Company’s customers in order to win a contract. Customer
financing arrangements may include all or a portion of the purchase price for the Company’s products and services. We may also assist customers in
obtaining financing from banks and other sources and may provide financial guarantees on behalf of the Company’s customers. The Company’s success
may be dependent, in part, upon the Company’s ability to provide customer financing on competitive terms and on the Company’s customers’
creditworthiness. The tightening of credit in the global financial markets has adversely affected the ability of the Company’s customers to obtain financing
for significant purchases, which resulted in a decrease in, or cancellation of, orders for the Company’s products and services, and we can provide no
assurance that this trend will not continue. If we are unable
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