Kodak 2003 Annual Report Download - page 53

Financials
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respectively, is included in other long-term assets in the accompanying
Consolidated Statement of Financial Position.
The Company recorded total charges for the years ended December
31, 2003 and 2002 of $7 million and $45 million, respectively, for other
than temporary impairments relating to certain of its strategic and non-
strategic venture investments, which were accounted for under the cost
method. There were no such charges incurred for the year ended
December 31, 2001. The strategic venture investment impairment charges
for the years ended December 31, 2003 and 2002 of $3 million and $27
million, respectively, were recorded in selling, general and administrative
expenses in the accompanying Consolidated Statement of Earnings. The
non-strategic venture investment impairment charges for the years ended
December 31, 2003 and 2002 of $4 million and $18 million, respectively,
were recorded in other charges, net, in the accompanying Consolidated
Statement of Earnings. The charges were taken in the respective periods
in which the available evidence, including subsequent financing rounds,
independent valuations and other factors indicated that the underlying
investments were permanently impaired.
NOTE 8: ACCOUNTS PAYABLE AND OTHER
CURRENT LIABILITIES
(in millions) 2003 2002
Accounts payable, trade $ 834 $ 720
Accrued advertising and promotional
expenses 738 574
Accrued employment-related liabilities 958 968
Other 1,177 1,089
Total $ 3,707 $ 3,351
The other component above consists of other miscellaneous current
liabilities that, individually, are less than 5% of the total current liabilities
component within the Consolidated Statement of Financial Position, and
therefore, have been aggregated in accordance with Regulation S-X.
NOTE 9: SHORT-TERM BORROWINGS AND
LONG-TERM DEBT
Short-Term Borrowings The Company’s short-term borrowings at
December 31, 2003 and 2002 were as follows:
(in millions) 2003 2002
Commercial paper $ 304 $ 837
Current portion of long-term debt 457 387
Short-term bank borrowings 185 218
Total $ 946 $ 1,442
The weighted-average interest rates for commercial paper outstand-
ing at December 31, 2003 and 2002 were 2.95% and 1.97%, respectively.
The weighted-average interest rates for short-term bank borrowings out-
standing at December 31, 2003 and 2002 were 3.79% and 3.83%,
respectively.
Lines of Credit The Company has $2,225 million in committed revolving
credit facilities, which are available for general corporate purposes includ-
ing the support of the Company’s commercial paper program. The credit
facilities are comprised of the $1,000 million 364-day committed revolving
credit facility (364-Day Facility) expiring in July 2004 and a 5-year com-
mitted facility at $1,225 million expiring in July 2006 (5-Year Facility). If
unused, they have a commitment fee of $4.5 million per year at the
Company’s current credit rating of Baa3 and BBB- from Moody’s and
Standard & Poors (S&P), respectively. Interest on amounts borrowed under
these facilities is calculated at rates based on spreads above certain refer-
ence rates and the Company’s credit rating. The Company issues letters of
credit under the 5-Year Facility. As of December 31, 2003, there were
$118 million of letters of credit outstanding under the 5-Year Facility. The
remainder of the 5-Year Facility and the 364-Day Facility was unused at
December 31, 2003. Under the 364-Day Facility and 5-Year Facility, there
is a financial covenant that requires the Company to maintain a debt to
EBITDA (earnings before interest, income taxes, depreciation and amorti-
zation) ratio of not greater than 3 to 1. In the event of violation of the
covenant, the facility would not be available for borrowing until the
covenant provisions were waived, amended or satisfied. The Company
was in compliance with this covenant at December 31, 2003. The
Company does not anticipate that a violation is likely to occur.
The Company has other committed and uncommitted lines of credit
at December 31, 2003 totaling $242 million and $1,722 million, respec-
tively. These lines primarily support borrowing needs of the Company’s
subsidiaries, which include term loans, overdraft coverage, letters of credit
and revolving credit lines. Interest rates and other terms of borrowing
under these lines of credit vary from country to country, depending on
local market conditions. Total outstanding borrowings against these other
committed and uncommitted lines of credit at December 31, 2003 were
$138 million and $316 million, respectively. These outstanding borrowings
are reflected in the short-term borrowings and long-term debt, net of cur-
rent portion balances in the accompanying Consolidated Statement of
Financial Position at December 31, 2003.
Accounts Receivable Securitization Program In March 2002, the
Company entered into an accounts receivable securitization program (the
Program), which provided the Company with borrowings up to a maximum
of $400 million. The Program, which is renewable annually subject to the
bank’s approval, was renewed in March 2003 with a maximum borrowing
level of $250 million. Under the Program, the Company sells certain of its
domestic trade accounts receivable without recourse to EK Funding LLC, a
Kodak wholly owned, consolidated, bankruptcy-remote, limited purpose,
limited liability corporation (EKFC). Kodak continues to service, administer
and collect the receivables. A bank, acting as the Program agent, purchas-
es undivided percentage ownership interests in those receivables on
behalf of the conduit purchasers, who have a first priority security interest
in the related receivables pool. The receivables pool at December 31,
2003, representing the outstanding balance of the gross accounts receiv-
able sold to EKFC, totaled approximately $585 million. As the Company
has the right at any time during the Program to repurchase all of the then
outstanding purchased interests for a purchase price equal to the out-
standing principal plus accrued fees, the receivables remain on the
Company’s Consolidated Statement of Financial Position, and the proceeds
from the sale of undivided interests are recorded as secured borrowings.
As the Program is renewable annually subject to the bank’s approval,
the secured borrowings under the Program are included in short-term bor-
rowings. At December 31, 2003, the Company had no outstanding secured
borrowings under the Program.