Kodak 2013 Annual Report Download - page 15

Table of Contents
If we fail to manage distribution of the Company’s products and services properly, our revenue, gross margins and earnings could be
adversely impacted.
We use a variety of different distribution methods to sell and deliver the Company’s products and services, including third party resellers and
distributors and direct and indirect sales to both enterprise accounts and customers. Successfully managing the interaction of direct and indirect
channels to various potential customer segments for the Company’s products and services is a complex process. Moreover, since each
distribution method has distinct risks and costs, Kodak’s failure to achieve the most advantageous balance in the delivery model for the
Company’s products and services could adversely affect our revenue, gross margins and earnings. This has concentrated the Company’s credit
and operational risk and could result in an adverse impact on our financial performance.
We may be required to recognize impairments in the value of the Company’s goodwill and/or other long-
lived assets resulting from the
application of fresh start accounting, which could adversely affect our results of operations.
Upon emergence from bankruptcy, we applied fresh start accounting pursuant to which the reorganization value was allocated to the individual
assets and liabilities based on their estimated fair values. The excess reorganization value over the fair value of identified tangible and
intangibles assets is reported as goodwill. In connection with fresh start, we also fair valued our other long-lived assets, including intangible
assets. The determination of reorganization value, equity value of Successor Company common stock and fair value of assets and liabilities is
dependent on various estimates and assumptions, including financial projections and the realization of certain events. We test goodwill and
indefinite lived intangible assets 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. We evaluate other long-lived assets for impairments whenever events or
changes in circumstances indicate the carrying value may not be recoverable. Impairments could occur in the future if the expected future cash
flows of the Company decline, market or interest rate environments deteriorate, or if carrying values change materially compared with changes
in their respective fair values.
Kodak’s future results could be harmed if we are unsuccessful in our efforts to expand sales in emerging markets.
Because we are seeking to expand our sales and number of customer relationships outside the United States, and specifically in emerging
markets in Asia, Latin America and Eastern Europe, the Company’s business is subject to risks associated with doing business internationally,
such as:
There can be no assurance that we will be able to market and sell our products in all of Kodak’s targeted markets. If our efforts are not
successful, our business growth and results of operations could be harmed. As a global company, Kodak is subject to regulatory requirements
and laws in the jurisdictions in which we operate, and any alleged non-compliance with these requirements or laws could result in an adverse
financial or reputational impact.
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support of multiple languages;
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recruitment of sales and technical support personnel with the skills to design, manufacture, sell and supply products;
• compliance with governmental regulation of imports and exports, including obtaining required import or export approval for the
Company
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s products;
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complexity of managing international operations;
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exposure to foreign currency exchange rate fluctuations;
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commercial laws and business practices that may favor local competition;
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multiple, potentially conflicting, and changing governmental laws, regulations and practices, including differing export, import, tax,
anti
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corruption, labor, and employment laws;
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difficulties in collecting accounts receivable;
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limitations or restrictions on the repatriation of cash;
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limitations or reductions in protection of intellectual property rights;
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complications in logistics and distribution arrangements; and
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political or economic instability.