Kodak 2004 Annual Report Download - page 37

Financials
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2 0 0 4 ฀ S U M M A R Y ฀ A N N U A L ฀ R E P O R T
ditional฀$117฀million฀if฀its฀Moody’s฀or฀S&P฀long-term฀debt฀credit฀ratings฀are฀
reduced฀below฀the฀current฀ratings฀of฀Baa3฀and฀BBB-,฀respectively.฀Further฀
downgrades฀in฀the฀Company’s฀credit฀rating฀or฀disruptions฀in฀the฀capital฀
markets฀could฀impact฀borrowing฀costs฀and฀the฀nature฀of฀its฀funding฀alterna-
tives.฀However,฀the฀Company฀has฀access฀to฀$2,225฀million฀in฀committed฀
revolving฀credit฀facilities฀to฀meet฀unanticipated฀funding฀needs,฀should฀it฀be฀
necessary,฀of฀which฀$103฀million฀has฀been฀utilized฀to฀support฀issued฀letters฀
of฀credit฀as฀of฀December฀31,฀2004.฀฀
At฀December฀31,฀2004,฀the฀Company฀had฀outstanding฀letters฀of฀
credit฀totaling฀$110฀million฀and฀surety฀bonds฀in฀the฀amount฀of฀$117฀million฀
primarily฀to฀ensure฀the฀completion฀of฀environmental฀remediations,฀the฀pay-
ment฀of฀casualty฀and฀workers’฀compensation฀claims,฀and฀to฀meet฀various฀
customs฀and฀tax฀obligations.
In฀February฀2005,฀the฀Company฀issued฀$31฀million฀in฀letters฀of฀credit฀
in฀support฀of฀Workers’฀Compensation฀liabilities.฀These฀letters฀of฀credit,฀
issued฀under฀the฀Company’s฀5-year฀revolver,฀reduce฀borrowing฀availability฀
under฀the฀5-year฀revolver฀by฀$31฀million.
As฀of฀December฀31,฀2004,฀the฀impact฀that฀our฀contractual฀obligations฀
are฀expected฀to฀have฀on฀our฀liquidity฀and฀cash฀flow฀in฀future฀periods฀is฀as฀
follows:
(in฀millions)฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ Total฀฀฀฀฀฀฀ 2005฀฀฀฀฀฀฀ 2006฀฀฀฀฀฀฀ 2007฀฀฀฀฀฀฀ 2008฀฀฀฀฀฀฀ 2009฀฀฀฀฀฀฀฀฀ 2010+
Long-term฀debt(1)฀฀฀฀฀฀฀฀฀฀฀฀ $฀2,252฀฀฀฀฀฀ $฀ 400฀฀฀฀฀฀฀ $฀ 509฀฀฀฀฀฀฀ $฀฀฀฀฀ 4฀฀฀฀฀฀฀฀ $฀ 250฀฀฀฀฀฀ $฀฀฀฀฀ 1฀฀฀฀฀฀฀ $฀1,088
Operating฀lease฀obligations฀฀฀฀฀฀฀ ฀ 515฀฀฀฀฀฀฀฀ ฀ 128฀฀฀฀฀฀฀฀฀฀฀ ฀ 97฀฀฀฀฀฀฀฀฀฀฀ ฀ 79฀฀฀฀฀฀฀฀฀฀฀ ฀ 61฀฀฀฀฀฀฀฀฀฀฀฀ ฀ 46฀฀฀฀฀฀฀฀฀฀฀ ฀ 104฀฀฀
Purchase฀obligations(2)฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ 859฀฀฀฀฀฀฀฀ ฀ 182฀฀฀฀฀฀฀฀฀ ฀ 171฀฀฀฀฀฀฀฀ ฀ 155฀฀฀฀฀฀฀฀฀฀ ฀ 117฀฀฀฀฀฀฀฀฀฀฀฀ ฀ 75฀฀฀฀฀฀฀฀฀฀฀ ฀ 159
Total(3)(4)฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ $฀3,626฀฀฀฀฀฀ $฀ 710฀฀฀฀฀฀฀฀ $฀ 777฀฀฀฀฀ $฀ 238฀฀฀฀฀฀฀฀ $฀ 428฀฀฀฀฀฀฀฀ $฀ 122฀฀฀฀฀฀ $฀1,351
(1)฀฀฀Represents฀maturities฀of฀the฀Company’s฀long-term฀debt฀obligations฀as฀shown฀on฀the฀Consolidated฀Statement฀of฀Financial฀Position.฀See฀Note฀9,฀“฀Short-Term฀Borrow-
ings฀and฀Long-Term฀Debt.”
(2)฀฀฀Purchase฀obligations฀include฀agreements฀related฀to฀supplies,฀production฀and฀administrative฀services,฀as฀well฀as฀marketing฀and฀advertising,฀that฀are฀enforceable฀and฀
legally฀binding฀on฀the฀Company฀and฀that฀specify฀all฀significant฀terms,฀including:฀fixed฀or฀minimum฀quantities฀to฀be฀purchased;฀fixed,฀minimum฀or฀variable฀price฀provi-
sions;฀and฀the฀approximate฀timing฀of฀the฀transaction.฀Purchase฀obligations฀exclude฀agreements฀that฀are฀cancelable฀without฀penalty.฀The฀terms฀of฀these฀agreements฀
cover฀the฀next฀two฀to฀eighteen฀years.฀฀
(3)฀฀฀Funding฀requirements฀for฀the฀Company’s฀major฀defined฀benefit฀retirement฀plans฀and฀other฀postretirement฀benefit฀plans฀have฀not฀been฀determined,฀therefore,฀they฀
have฀not฀been฀included.฀In฀2004,฀the฀Company฀made฀contributions฀to฀its฀major฀defined฀benefit฀retirement฀plans฀and฀other฀postretirement฀benefit฀plans฀of฀$196฀million฀
($30฀million฀relating฀to฀its฀U.S.฀defined฀benefit฀plans)฀and฀$254฀million฀($250฀million฀relating฀to฀its฀U.S.฀other฀postretirement฀benefits฀plan),฀respectively.฀The฀Company฀
expects฀to฀contribute฀approximately฀$22฀million฀and฀$282฀million,฀respectively,฀to฀its฀U.S.฀defined฀benefit฀plans฀and฀other฀postretirement฀benefit฀plans฀in฀2005.฀
(4)฀฀Because฀their฀future฀cash฀outflows฀are฀uncertain,฀the฀other฀long-term฀liabilities฀presented฀in฀Note฀10:฀Other฀Long-Term฀Liabilities฀are฀excluded฀from฀this฀table.฀
฀
As฀a฀result฀of฀the฀cumulative฀impact฀of฀the฀ongoing฀position฀elimina-
tions฀under฀its฀Third฀Quarter,฀2003฀and฀2004-2006฀Restructuring฀Programs฀
as฀disclosed฀in฀Note฀16,฀the฀Company฀incurred฀curtailment฀gains฀and฀losses฀
with฀respect฀to฀certain฀of฀its฀retirement฀plans฀in฀2004.฀These฀curtailment฀
events,฀as฀well฀as฀the฀merger฀of฀two฀of฀the฀Company’s฀major฀non-U.S.฀
plans,฀resulted฀in฀the฀remeasurement฀of฀the฀respective฀plans’฀obliga-
tions,฀which฀impacted฀the฀accounting฀for฀the฀additional฀minimum฀pension฀
liabilities.฀As฀a฀result฀of฀these฀remeasurements,฀the฀Company฀was฀required฀
to฀increase฀its฀additional฀minimum฀pension฀liabilities฀by฀$90฀million฀during฀
2004.฀This฀increase฀is฀reflected฀in฀the฀postretirement฀liabilities฀component฀
within฀the฀accompanying฀Consolidated฀Statement฀of฀Financial฀Position฀as฀
of฀December฀31,฀2004.฀The฀net-of-tax฀amount฀of฀$61฀million฀relating฀to฀the฀
recording฀of฀the฀additional฀minimum฀pension฀liabilities฀is฀reflected฀in฀the฀
accumulated฀other฀comprehensive฀loss฀component฀within฀the฀accompany-
ing฀Consolidated฀Statement฀of฀Financial฀Position฀as฀of฀December฀31,฀2004.฀
The฀related฀increase฀in฀the฀long-term฀deferred฀tax฀asset฀of฀$29฀million฀was฀
reflected฀in฀the฀other฀long-term฀assets฀component฀within฀the฀accompany-
ing฀Consolidated฀Statement฀of฀Financial฀Position฀as฀of฀December฀31,฀2004.
OFF-BALANCE฀SHEET฀฀ ฀ ฀
ARRANGEMENTS
The฀Company฀guarantees฀debt฀and฀other฀obligations฀under฀agreements฀
with฀certain฀affiliated฀companies฀and฀customers.฀At฀December฀31,฀2004,฀
these฀guarantees฀totaled฀a฀maximum฀of฀$356฀million,฀with฀outstanding฀
guaranteed฀amounts฀of฀$149฀million.฀The฀maximum฀guarantee฀amount฀
includes฀guarantees฀of฀up฀to:฀$160฀million฀of฀debt฀for฀Kodak฀Polychrome฀
Graphics฀(KPG),฀an฀unconsolidated฀affiliate฀in฀which฀the฀Company฀has฀a฀
50%฀ownership฀interest฀($30฀million฀outstanding);฀$128฀million฀of฀cus-
tomer฀amounts฀due฀to฀banks฀in฀connection฀with฀various฀banks’฀financing฀of฀
customers’฀purchase฀of฀products฀and฀equipment฀from฀Kodak฀($71฀million฀
outstanding);฀and฀$68฀million฀for฀other฀unconsolidated฀affiliates฀and฀third฀
parties฀($48฀million฀outstanding).฀The฀KPG฀debt฀facility฀and฀the฀related฀
guarantee฀mature฀on฀December฀31,฀2005.฀The฀guarantees฀for฀the฀other฀
unconsolidated฀affiliates฀and฀third฀party฀debt฀mature฀between฀2005฀and฀
2010.฀The฀customer฀financing฀agreements฀and฀related฀guarantees฀typically฀
have฀a฀term฀of฀90฀days฀for฀product฀and฀short-term฀equipment฀financing฀
arrangements,฀and฀up฀to฀five฀years฀for฀long-term฀equipment฀financing฀
arrangements.฀These฀guarantees฀would฀require฀payment฀from฀Kodak฀only฀
in฀the฀event฀of฀default฀on฀payment฀by฀the฀respective฀debtor.฀In฀some฀cases,฀
particularly฀for฀guarantees฀related฀to฀equipment฀financing,฀the฀Company฀