Kodak 2012 Annual Report Download - page 75

Table of Contents
NOTE 8: GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill was $278 million and $277 million as of December 31, 2012 and 2011, respectively. The carrying value of goodwill by reportable
segments is as follows:
Gross goodwill and accumulated impairment losses were $1.697 billion and $1.403 billion, respectively, as of December 31, 2010, $1.688
billion and $1.411 billion, respectively, as of December 31, 2011, and $1.689 billion and $1.411 billion, respectively, as of December 31, 2012.
As of December 31, 2010, the net goodwill balance of $294 million, under the prior year segment reporting structure, was comprised of $201
million for the Consumer Digital Imaging Group and $93 million for the Graphic Communications Group.
As of December 31, 2011, the net goodwill balance of $277 million, under the prior year segment reporting structure, was comprised of $197
million for the Consumer Digital Imaging Group and $80 million for the Graphic Communications Group.
As a result of the change in segments that became effective as of September 30, 2012, Kodak’s reporting units changed. The Personalized and
Document Imaging segment has three reporting units: Personalized Imaging, Document Imaging and Intellectual Property. The Graphics,
Entertainment and Commercial Films segment has two reporting units: Graphics and Entertainment Imaging and Commercial Films. The Digital
Printing and Enterprise Segment has four reporting units: Digital Printing, Packaging and Functional Printing, Enterprise Services and Solutions,
and Consumer Inkjet Systems.
Prior to the September 30, 2012 change in reporting units, the only reporting units with goodwill remaining were the Consumer Digital Imaging
Group (“CDG”) and the Business Services and Solutions Group (“BSSG”). Consumer Inkjet Systems which was part of the CDG reporting unit
was transferred to the Digital Printing and Enterprise segment. Personalized Imaging and Intellectual Property, which were part of the CDG
reporting unit, are now included in the Personalized and Document Imaging Segment. Document Imaging, which was part of the BSSG
reporting unit, was transferred to the Personalized and Document Imaging segment. Workflow software which was part of BSSG was transferred
to the Graphics, Entertainment and Commercial Films segment. Enterprise Services and Solutions which was part of BSSG is included in the
Digital Printing and Enterprise Segment. Goodwill was reassigned to affected reporting units using a relative fair value allocation.
Based upon the results of Kodak’s September 30, 2012 annual impairment test analysis, no impairment of goodwill was indicated.
On February 1, 2013, Kodak sold its digital imaging patents. The cash flows related to the Intellectual Property reporting unit from patent
licensing activity will significantly change and the fair value may be materially impacted as a result of the sale. The goodwill assigned to the
Intellectual Property reporting unit as of December 31, 2012 approximated $113 million.
During 2011, due to the impact of continued pricing pressures and higher commodity costs within prepress solutions, as well as higher start-up
costs associated with the commercialization and placement of PROSPER printing systems, Kodak concluded that the carrying value of goodwill
for its Commercial Printing reporting unit exceeded the implied fair value of goodwill. Kodak recorded a pre-tax impairment charge of $8
million in 2011 that was included in Other operating (income) expenses, net in the Consolidated Statement of Operations.
During 2010, due to continuing challenging business conditions driven, in part, by rising commodity prices and a continuation of significant
declines in the FPEG business caused by digital substitution, Kodak concluded there was an indication of a possible goodwill impairment related
to the FPEG segment. Based on its analysis, Kodak concluded that there was an impairment of
71
(in millions)
Graphics,
Entertainment and
Commercial Films
Segment
Digital Printing
and Enterprise
Segment
Personalized and
Document Imaging
Segment
Consolidated
Total
Balance as of December 31, 2010
$
9
$
17
$
268
$
294
Impairment
(8
)
—
—
(
8
)
Divestiture
—
—
(
10
)
(10
)
Currency translation adjustments
—
—
1
1
Balance as of December 31, 2011:
$
1
$
17
$
259
$
277
Currency translation adjustments
—
—
1
1
Balance as of December 31, 2012:
$
1
$
17
$
260
$
278