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Note 5 - Goodwill and Other Intangible Assets
3 Months Ended
Mar. 31, 2020
Disclosure Text Block [Abstract]  
Goodwill and Other Intangible Assets

NOTE 5: GOODWILL AND OTHER INTANGIBLE ASSETS

 

The following table presents the carrying value of goodwill by reportable segment.

 

(in millions)

 

Traditional Printing

 

 

Digital Printing

 

 

Advanced Materials and Chemicals

 

 

Brand

 

 

Total

 

As of December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

$

56

 

 

$

6

 

 

$

14

 

 

$

 

 

$

76

 

Accumulated impairment losses

 

 

(56

)

 

 

 

 

 

(8

)

 

 

 

 

 

(64

)

Balance as of December 31, 2019

 

 

 

 

 

6

 

 

 

6

 

 

 

 

 

 

12

 

Goodwill reallocation

 

 

 

 

 

 

 

 

(6

)

 

 

6

 

 

 

 

Balance as of March 31, 2020

 

$

 

 

$

6

 

 

$

 

 

$

6

 

 

$

12

 

 

As a result of the change in segments that became effective as of January 1, 2020, Kodak’s goodwill reporting units changed. Refer to Note 22, “Segment Information” for additional information on the change to Kodak’s organizational structure. The Digital Printing segment has three goodwill reporting units: Electrophotographic Printing Solutions, Prosper and Versamark and Software. The Advanced Materials and Chemicals segment has three goodwill reporting units: Motion Picture and Industrial Films and Chemicals, Advanced Materials and Functional Printing and Kodak Services for Business.  The Traditional Printing segment and Brand segment each have one goodwill reporting unit.  

 

As of December 31, 2019, the goodwill balance of $12 million under the prior year segment reporting structure was comprised of $6 million for the Brand, Film and Imaging segment and $6 million for the Kodak Software segment, which had only one reporting unit (Software).  The goodwill in the Brand, Film and Imaging segment was reported in the Consumer Products reporting unit.

 

The goodwill previously reported in the Consumer Products goodwill reporting unit was transferred to the Brand goodwill reporting unit using a relative fair value allocation to affected reporting units.  Goodwill previously reported in the Software reporting unit was transferred to the Digital Printing segment where it continues to remain its own reporting unit.

 

Kodak performed an interim test of impairment for goodwill as of March 31, 2020 due to the decline in its market capitalization from the last goodwill impairment test (December 31, 2019) and the uncertainty resulting from the COVID-19 pandemic on its operations.  Based on the results of the March 31, 2020 analysis, no impairment of goodwill was indicated.  As of March 31, 2020, the Brand reporting unit had negative carrying value.

 

The gross carrying amount and accumulated amortization by major intangible asset category as of March 31, 2020 and December 31, 2019 were as follows:

 

 

 

March 31, 2020

(in millions)

 

Gross Carrying

Amount

 

 

Accumulated

Amortization

 

 

Net

 

 

Weighted-Average

Amortization Period

Technology-based

 

$

99

 

 

$

77

 

 

$

22

 

 

5 years

Kodak trade name

 

 

18

 

 

 

 

 

 

18

 

 

Indefinite life

Customer-related

 

 

11

 

 

 

8

 

 

 

3

 

 

4 years

Total

 

$

128

 

 

$

85

 

 

$

43

 

 

 

 

 

 

December 31, 2019

(in millions)

 

Gross Carrying

Amount

 

 

Accumulated

Amortization

 

 

Net

 

 

Weighted-Average

Amortization Period

Technology-based

 

$

99

 

 

$

76

 

 

$

23

 

 

5 years

Kodak trade name

 

 

21

 

 

 

 

 

 

21

 

 

Indefinite life

Customer-related

 

 

11

 

 

 

8

 

 

 

3

 

 

4 years

Total

 

$

131

 

 

$

84

 

 

$

47

 

 

 

 

Kodak also performed an interim test of impairment for the Kodak trade name as of March 31, 2020.  The interim impairment test of the Kodak trade name used the income approach, specifically the relief from royalty method.  Based on the result of the interim impairment test, Kodak concluded the carrying value of the Kodak trade name exceeded its fair value.  Pre-tax impairment charges of $3 million are included in Other operating income, net in the Consolidated Statement of Operations.

 

Amortization expense related to intangible assets was $1 million and $2 million for the three months ended March 31, 2020 and 2019, respectively.

 

Estimated future amortization expense related to intangible assets that are currently being amortized as of March 31, 2020 was as follows:

 

(in millions)

 

 

 

 

Q2 - Q4 2020

 

$

4

 

2021

 

 

5

 

2022

 

 

5

 

2023

 

 

4

 

2024

 

 

4

 

2025 and thereafter

 

 

3

 

Total

 

$

25