Kodak 2006 Annual Report Download - page 61

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The Company adopted FIN 47 during the fourth quarter of 2005. FIN 47 requires that conditional asset retirement obligations, legal obligations to
perform an asset retirement activity in which the timing and/(or) method of settlement are conditional on a future event, be reported, along with
associated capitalized asset retirement costs, at their fair values. Upon initial application, FIN 47 requires recognition of (1) a liability, adjusted for
cumulative accretion from the date the obligation was incurred until the date of adoption of FIN 47, for existing asset retirement obligations; (2) an
asset retirement cost capitalized as an increase to the carrying amount of the associated long-lived asset; and (3) accumulated depreciation on the
capitalized asset retirement cost. Accordingly, the Company recognized the following amounts in its Statement of Financial Position at December 31,
2005 and Statement of Operations for the year ended December 31, 2005:
(dollar amounts in millions)
Additions to property, plant and equipment, gross $ 33
Additions to accumulated depreciation $ (33)
Additions to property, plant and equipment, net $ —
Asset retirement obligations $ 66
Cumulative effect of change in accounting principle, gross $ 66
Cumulative effect of change in accounting principle, net of tax $ 57
The adoption of FIN 47 reduced 2005 net earnings by $57 million, or $.20 per share.
The Company has determined the pro forma (loss) earnings from continuing operations, net (loss) earnings, and corresponding per share information
as if the provisions of FIN 47 had been adopted prior to January 1, 2004. The pro forma information is as follows:
(in millions, except per share data) 2005 2004
(Loss) earnings from continuing operations
As reported $ (1,354) $ 69
Pro forma $ (1,361) $ 64
(Loss) earnings from continuing operations, per basic and diluted share
As reported $ (4.70) $ .24
Pro forma $ ( 4.73) $ .22
Net (loss) earnings
As reported $ (1,261) $ 544
Pro forma $ ( 1,211) $ 539
Net (loss) earnings, per basic and diluted share
As reported $ (4.38) $ 1.90
Pro forma $ (4.21) $ 1.88
Number of shares used in earnings per share
Basic 287.9 286.6
Diluted 287.9 286.8
The liability for asset retirement obligations as of December 31, 2004 would have been $71 million if FIN 47 had been implemented prior to January 1,
2004.
Refer to Note 11, “Commitments and Contingencies,” for further discussion of the Company’s asset retirement obligations.