Kodak 2002 Annual Report Download - page 55

Financials
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These amounts are reported in the other long-term liabilities in
the accompanying Consolidated Statement of Financial Position.
The Company is currently implementing a Corrective Action
Program required by the Resource Conservation and Recovery Act
(RCRA) at the Kodak Park site in Rochester, NY. As part of this
program, the Company has completed the RCRA Facility
Assessment (RFA), a broad-based environmental investigation of
the site. The Company is currently in the process of completing,
and in some cases has completed, RCRA Facility Investigations
(RFI) and Corrective Measures Studies (CMS) for areas at the
site. At December 31, 2002, estimated future investigation and
remediation costs of $67 million are accrued on an undiscounted
basis by the Company and are included in the $148 million
reported in other long-term liabilities.
Additionally, the Company has retained certain obligations for
environmental remediation and Superfund matters related to
certain sites associated with the non-imaging health businesses
sold in 1994. In addition, the Company has been identified as a
potentially responsible party (PRP) in connection with the non-
imaging health businesses in five active Superfund sites. At
December 31, 2002, estimated future remediation costs of $49
million are accrued on an undiscounted basis and are included in
the $148 million reported in other long-term liabilities.
The Company has obligations relating to two former
manufacturing sites located outside the United States.
Investigations were completed in the fourth quarter of 2001,
which facilitated the completion of cost estimates for the future
remediation and monitoring of these sites. The Company’s
obligations with respect to these two sites include an estimate of
its cost to repurchase one of the sites and demolish the buildings
in preparation for its possible conversion to a public park. The
repurchase of the site was completed in the first quarter of 2002.
At December 31, 2002, estimated future investigation,
remediation and monitoring costs of $27 million are accrued on
an undiscounted basis and are included in the $148 million
reported in other long-term liabilities.
Additionally, the Company has approximately $5 million
accrued on an undiscounted basis in the $148 million reported in
other long-term liabilities at December 31, 2002 for remediation
relating to other facilities, which are not material to the
Company’s financial position, results of operations, cash flows or
competitive position.
Cash expenditures for the aforementioned investigation,
remediation and monitoring activities are expected to be incurred
over the next thirty years for each site. For these known
environmental exposures, the accrual reflects the Company’s best
estimate of the amount it will incur under the agreed-upon or
proposed work plans. The Company’s cost estimates were
determined using the ASTM Standard E 2137-01 “Standard Guide
for Estimating Monetary Costs and Liabilities for Environmental
Matters,” and have not been reduced by possible recoveries from
third parties. The overall method includes the use of a
probabilistic model which forecasts a range of cost estimates for
the remediation required at individual sites. The projects are
closely monitored and the models are reviewed as significant
events occur or at least once per year. The Company’s estimate
includes equipment and operating costs for remediation and long-
term monitoring of the sites. The Company does not believe it is
reasonably possible that the losses for the known exposures could
exceed the current accruals by material amounts.
A Consent Decree was signed in 1994 in settlement of a civil
complaint brought by the U.S. Environmental Protection Agency
and the U.S. Department of Justice. In connection with the
Consent Decree, the Company is subject to a Compliance
Schedule, under which the Company has improved its waste
characterization procedures, upgraded one of its incinerators, and
is evaluating and upgrading its industrial sewer system. The total
expenditures required to complete this program are currently
estimated to be approximately $27 million over the next six
years. These expenditures are primarily capital in nature and,
therefore, are not included in the environmental accrual at
December 31, 2002.
The Company is presently designated as a PRP under the
Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended (the Superfund Law), or under
similar state laws, for environmental assessment and cleanup
costs as the result of the Company’s alleged arrangements for
disposal of hazardous substances at six such active sites. With
respect to each of these sites, the Company’s liability is minimal.
Furthermore, numerous other PRPs have also been designated at
these sites and, although the law imposes joint and several
liability on PRPs, the Company’s historical experience
demonstrates that these costs are shared with other PRPs.
Settlements and costs paid by the Company in Superfund matters
to date have not been material. Future costs are also not
expected to be material to the Company’s financial position,
results of operations or cash flows.
The Clean Air Act Amendments were enacted in 1990.
Expenditures to comply with the Clean Air Act implementing
regulations issued to date have not been material and have been
primarily capital in nature. In addition, future expenditures for
existing regulations, which are primarily capital in nature, are not
expected to be material. Many of the regulations to be
promulgated pursuant to this Act have not been issued.
Uncertainties associated with environmental remediation
contingencies are pervasive and often result in wide ranges of
outcomes. Estimates developed in the early stages of remediation
can vary significantly. A finite estimate of cost does not normally
become fixed and determinable at a specific time. Rather, the
costs associated with environmental remediation become
estimable over a continuum of events and activities that help to
frame and define a liability, and the Company continually updates
its cost estimates. The Company has an ongoing monitoring and
identification process to assess how the activities, with respect to
the known exposures, are progressing against the accrued cost