Kodak 2006 Annual Report Download - page 32

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The Company early adopted the provisions of SFAS No. 123R on January 1, 2005, utilizing the modified prospective approach of adoption. Previously,
the Company accounted for its employee stock incentive plans under Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued
to Employees” and the related interpretations under FASB Interpretation No. 44, “Accounting for Certain Transactions Involving Stock Compensation.”
Accordingly, no stock-based employee compensation cost was reflected in net earnings for the year ended December 31, 2004, as all options granted
had an exercise price equal to the market value of the underlying common stock on the date of grant.
Kodak Operating Model and Reporting Structure
As of and for the year ended December 31, 2006 the Company had four reportable segments: Consumer Digital Imaging Group (CDG), Film & Photofin-
ishing Systems Group (FPG), Graphic Communications Group (GCG), and Health Group (KHG). The balance of the Company’s operations, which indi-
vidually and in the aggregate do not meet the criteria of a reportable segment, are reported in All Other. A description of the segments is as follows:
Consumer Digital Imaging Group Segment (CDG): The CDG segment encompasses digital capture, kiosks, home printing systems, digital imaging
services and imaging sensors. This segment provides consumers and professionals with digital products and services, and includes the licensing
activities related to the Company’s intellectual property in this product category.
Film & Photofinishing Systems Group Segment (FPG): The FPG segment encompasses consumer and professional film, photographic paper and
photofinishing, aerial and industrial film, and entertainment products and services. This segment provides consumers, professionals and cinematogra-
phers with traditional products and services.
Graphic Communications Group Segment (GCG): The Graphic Communications Group segment serves a variety of customers in the creative,
in-plant, data center, commercial printing, packaging, newspaper and digital service bureau market segments with a range of software, media and
hardware products that provide customers with a variety of solutions for prepress equipment, workflow software, digital and traditional printing, docu-
ment scanning and multi-vendor IT services. Products include digital and traditional prepress consumables, including plates, chemistry, and media;
workflow and proofing software; color and black and white electrophotographic equipment and consumables; high-speed, high-volume continuous
inkjet printing systems; wide-format inkjet printers; high-speed production document scanners; micrographic peripherals; and media (including micro-
graphic films). The Company also provides maintenance and professional services for Kodak and other manufacturers’ products, as well as providing
imaging services to customers.
Health Group Segment (KHG): The KHG segment provides digital medical imaging and information products, and systems and solutions, which are
key components of sales and earnings growth. These include laser imagers, digital print films, computed and digital radiography systems, dental
radiographic imaging systems, dental practice management software (DPMS), advanced picture-archiving and communications systems (PACS), and
healthcare information solutions (HCIS). Products of the Health Group segment also include traditional analog medical and dental films, chemicals,
and processing equipment and related services. The Company’s history in traditional analog imaging has made it a worldwide leader in this area and
has served as the foundation for building its important digital imaging business. The Health Group segment serves the general radiology market and
specialty health markets, including dental, mammography, orthopedics and oncology. The segment also provides molecular imaging for the biotech-
nology research market.
All Other: All Other is composed of Kodak’s display business, business development and other small, miscellaneous businesses. The development
initiatives in consumer inkjet technologies continue to be reported in All Other through the end of 2006.
Prior period segment results have been restated to conform to the current period segment reporting structure.