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Note 5 - Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2017

Disclosure Text Block [Abstract]

Goodwill and Other Intangible Assets Disclosure [Text Block]

NOTE 5:  GOODWILL AND OTHER INTANGIBLE ASSETS

The following table presents the changes in the carrying value of goodwill by reportable segment.  The Enterprise Inkjet Systems, Advanced Materials and 3D Printing Technology, and Eastman Business Park segments do not have goodwill and are therefore not presented.

(in millions)		Print Systems				Flexographic Printing				Software and Solutions				Consumer and Film				Consolidated Total
Balance as of December 31, 2015		$	56			$	20			$	6			$	6			$	88
Impairment			—				—				—				—				—
Balance as of December 31, 2016		$	56			$	20			$	6			$	6			$	88
Impairment			(56	)			—				—				—				(56	)
Balance as of December 31, 2017		$	—			$	20			$	6			$	6			$	32

Gross goodwill and accumulated impairment losses were $96 million and $64 million as of December 31, 2017, respectively, and $96 million and $8 million as of December 31, 2016, respectively.

The Print Systems segment has two goodwill reporting units: Prepress Solutions and Electrophotographic Printing Solutions. The Software and Solutions segment has two goodwill reporting units: Kodak Technology Solutions and Unified Workflow Solutions.  The Consumer and Film segment has two goodwill reporting units: Consumer Products and Motion Picture, Industrial Chemicals and Films.  The Flexographic Printing segment, Enterprise Inkjet Systems segment, Advanced Materials and 3D Printing segment and the Eastman Business Park segment each have one goodwill reporting unit.

Based upon the results of Kodak’s December 31, 2017 annual impairment test, no impairment of goodwill is indicated.

Given the decline in Kodak’s financial projections for the year and in its market capitalization from the last goodwill impairment test (December 31, 2016), Kodak performed an interim goodwill impairment test as of September 30, 2017.  Kodak utilized the discounted cash flow method and guideline public company method for the reporting units with goodwill.  For these reporting units, Kodak selected equal weighting of the guideline public company method and the discounted cash flow method as the valuation approaches produced comparable ranges of fair value.  Fair values for the other reporting units were estimated using the discounted cash flow method only.

Based upon the results of Kodak’s September 30, 2017 analysis, Kodak concluded that the Prepress Solutions reporting unit’s carrying value exceeded its fair value and recorded a pre-tax goodwill impairment loss of $56 million in the Consolidated Statement of Operations.  No impairment of goodwill was indicated for the other reporting units.

Due to the change in Kodak’s reporting units as of January 1, 2015 and the delay in commercializing new technologies in the Micro 3D Printing reporting unit, Kodak concluded that the carrying value of the Micro 3D Printing reporting unit exceeded its implied fair value.  The fair value of the Micro 3D Printing reporting unit was estimated using the discounted cash flow method in which the future cash flows, including a terminal value at the end of the projection period, were discounted to present value.  Kodak recorded a pre-tax impairment charge of $6 million in the first quarter of 2015 that is included in Goodwill impairment loss, net in the Consolidated Statement of Operations representing the entire amount of goodwill for this reporting unit.

Based upon the results of Kodak’s 2015 goodwill impairment analysis, Kodak concluded that the carrying value of the Intellectual Property Solutions reporting unit exceeded its implied fair value and recorded a pre-tax impairment charge of $2 million in the fourth quarter of 2015 that is included in Goodwill impairment loss, net in the Consolidated Statement of Operations representing the entire amount of goodwill for this reporting unit. No impairment of goodwill was indicated for any other reporting units.

The gross carrying amount and accumulated amortization by major intangible asset category as of December 31, 2017 and 2016 were as follows:

		As of December 31, 2017
		Gross Carrying				Accumulated								Weighted-Average
(in millions)		Amount				Amortization				Net				Amortization Period
Technology-based		$	105			$	64			$	41			6 years
Kodak trade name			38				—				38			Indefinite life
Customer-related			11				6				5			6 years
Other			3				1				2			21 years
Total		$	157			$	71			$	86

		As of December 31, 2016
		Gross Carrying				Accumulated								Weighted-Average
(in millions)		Amount				Amortization				Net				Amortization Period
Technology-based		$	122			$	57			$	65			6 years
Kodak trade name			40				—				40			Indefinite life
Customer-related			26				12				14			6 years
Other			2				—				2			21 years
Total		$	190			$	69			$	121

In the fourth quarter of 2017 and the first quarter of 2016, Kodak concluded the carrying value of the Kodak trade name exceeded its fair value.  Pre-tax impairment charges of $2 million and $5 million, respectively, are included in Other operating expense (income), net in the Consolidated Statement of Operations.

In the third quarter of 2017, due to canceling its copper mesh touch screen program, Kodak wrote off related intangible assets with a gross carrying amount of $33 million and accumulated amortization of $21 million and recorded an impairment charge of $12 million.

During the first quarter of 2017, Kodak recorded a pre-tax charge of $4 million to adjust the Prosper intangible asset carrying value to the amount that would have been recorded had the Prosper intangible assets been continuously classified as held and used. Refer to Note 13, “Other Operating Expense (Income), net” and Note 25, “Discontinued Operations”.

In the second quarter of 2016, in two separate transactions, Kodak sold certain assets in the Design2Launch and brand protection businesses.  The assets sold included intangible assets with a gross carrying amount of $5 million and accumulated amortization of $2 million.

In the first quarter of 2016, due to the exit of its position in silver metal mesh touch screen development, Kodak wrote off intangible assets with a gross carrying amount of $14 million and accumulated amortization of $6 million.  An impairment charge of $8 million was recorded in Other operating expense (income), net in the Consolidated Statement of Operations.  

Amortization expense related to intangible assets was $18 million, $19 million and $25 million for the years ended December 31, 2017, 2016 and 2015, respectively. 

Estimated future amortization expense related to intangible assets that are currently being amortized as of December 31, 2017 was as follows:

(in millions)
2018		$	12
2019			7
2020			6
2021			5
2022			5
2023 and thereafter			13
Total		$	48

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- References

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- 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.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-URI http://asc.fasb.org/topic&trid=2144416

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