Kodak 2006 Annual Report Download - page 94

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Certain of the conversion features contained in the Convertible Securities are deemed to be embedded derivatives as defined under SFAS No. 133,
“Accounting for Derivative Instruments and Hedging Activities.” These embedded derivatives include the Parity Clause, the Credit Rating Clause, and
any specified corporate transaction outside of the Company’s control such as a hostile takeover. Based on an external valuation, these embedded
derivatives were not material to the Company’s financial position, results of operations or cash flows.
NOTE 10: OTHER LONG-TERM LIABILITIES
(in millions) 2006 2005
Deferred royalty revenue from licensees $ 545 $ 501
Environmental liabilities 154 171
Deferred compensation 134 158
Asset retirement obligations 101 75
Deferred income taxes 1 33
Minority interest in Kodak companies 21 20
Other 327 267
Total $ 1,283 $ 1,225
The other component above consists of other miscellaneous long-term liabilities that, individually, are less than 5% of the total liabilities component in
the accompanying Consolidated Statement of Financial Position, and therefore, have been aggregated in accordance with Regulation S-X.
NOTE 11: COMMITMENTS AND CONTINGENCIES
Environmental
Cash expenditures for pollution prevention and waste treatment for the Company’s current facilities were as follows:
(in millions) 2006 2005 2004
Recurring costs for pollution prevention and waste treatment $ 65 $ 79 $ 75
Capital expenditures for pollution prevention and waste treatment 3 7 7
Site remediation costs 2 2 3
Total $ 70 $ 88 $ 85
At December 31, 2006 and 2005, the Company’s undiscounted accrued liabilities for environmental remediation costs amounted to $154 million and
$171 million, respectively. These amounts are reported in 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, 2006, estimated future investigation and remediation costs of $65 mil-
lion are accrued for this site and are included in the $154 million reported in other long-term liabilities.
The Company has obligations relating to other operating sites and former operations with estimated future investigation, remediation and monitoring
costs of $16 million. At December 31, 2006, these costs are accrued and included in the $154 million reported in other long-term liabilities.
The Company has obligations relating to plant closures and former operations. As a result of four plant closures, the Company has estimated future
investigation, remediation and monitoring cost of $23 million. The Company has obligations with estimated future investigation, remediation and
monitoring costs of $9 million at sites of former operations. At December 31, 2006, these costs are accrued and included in the $154 million reported
in other long-term liabilities.
In 2005, the Company completed its acquisition of KPG through the redemption of Sun Chemical Corporation’s 50 percent interest in the joint venture,
and also completed its acquisition of Creo. As a result of the two acquisitions, the Company has obligations with estimated future investigation,
remediation and monitoring costs of $20 million. The closure of a Creo plant located in West Virginia was announced in the third quarter of 2005 with
remediation at a cost of $15 million and is included in the $20 million. At December 31, 2006, these costs are accrued and included in the $154 million
reported in other long-term liabilities.