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Note 8: Goodwill And Other Intangible Assets

12 Months Ended

Dec. 31, 2012

Goodwill and Intangible Assets Disclosure [Text Block]

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:

(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

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 goodwill related to the FPEG segment. Kodak recorded a pre-tax impairment charge of $626 million in the fourth quarter of 2010 that was included in Other operating expenses (income), net in the Consolidated Statement of Operations.

The gross carrying amount and accumulated amortization by major intangible asset category as of December 31, 2012 and 2011 were as follows:

	As of December 31, 2012
(in millions)	Gross Carrying Amount		Accumulated Amortization		Net		Weighted-Average Amortization Period (years)
Technology-based	$	51	$	47	$	4		8
Customer-related		222		172		50		10
Other		16		9		7		18

Total	$	289	$	228	$	61		10

	As of December 31, 2011
(in millions)	Gross Carrying Amount		Accumulated Amortization		Net		Weighted-Average Amortization Period (years)
Technology-based	$	146	$	133	$	13		7
Customer-related		223		157		66		10
Other		16		8		8		18

Total	$	385	$	298	$	87		9

Amortization expense related to intangible assets was $27 million, $41 million, and $60 million for the years ended December 31, 2012, 2011, and 2010, respectively.

Estimated future amortization expense related to purchased intangible assets as of December 31, 2012 was as follows (in millions):

2013	$	14
2014		11
2015		10
2016		10
2017		9
2018+		7
Total	$	61

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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