Kodak 2007 Annual Report Download - page 37

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Moody’s ratings reflect their views regarding the Company’s significant challenges to replace revenue and cash flow from declining legacy film businesses
as well as the Company’s market position, operating profit margin and free cash flow volatility, asset returns (net of cash), financial leverage, and liquidity.
The stable rating outlook reflects Moody’s expectation that the Company will continue to maintain liquidity and generate earnings sufficient to withstand
further secular declines of its legacy film businesses, lack of substantial profitability in certain of its digital businesses and its sizable new business start-up
costs.
The Company is in compliance with all covenants or other requirements set forth in its credit agreements and indentures. Further, the Company does not
have any rating downgrade triggers that would accelerate the maturity dates of its debt. However, the Company could be required to increase the dollar
amount of its letters of credit or provide other financial support up to an additional $70 million at the current credit ratings. As of the filing date of this Form
10-K, the Company has not been requested to materially increase its letters of credit or other financial support. Downgrades in the Company’s credit rating
or disruptions in the capital markets could impact borrowing costs and the nature of its funding alternatives.
Contractual Obligations
The impact that our contractual obligations are expected to have on the Company’s liquidity and cash flow in future periods is as follows:
As of December 31, 2007
(in millions) Total 2008 2009 2010 2011 2012 2013+
Long-term debt (1) $ 1,589 $ 300 $ 45 $ 43 $ 40 $ 38 $ 1,123
Operating lease obligations 412 99 81 68 45 36 83
Purchase obligations (2) 1,130 563 178 121 87 87 94
Uncertain tax positions and interest (3) 62 62 — — — — —
Total (4) (5) $ 3,193 $ 1,024 $ 304 $ 232 $ 172 $ 161 $ 1,300
(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 Borrowings
and Long-Term Debt” in the Notes to Financial Statements.
(2) Purchase obligations include agreements related to supplies, production and administrative services, as well as marketing and advertising, that are enforceable and le-
gally binding on the Company and that specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions;
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 sixteen years. See Note 11, “Commitments and Contingencies,” in the Notes to Financial Statements.
(3) Due to uncertainty regarding the completion of tax audits and possible outcomes, the remaining estimate of the timing of payments related to uncertain tax positions and
interest cannot be made. See Note 16, “Income Taxes,” in the Notes to Financial Statements for additional information regarding the Company’s uncertain tax positions.
(4) 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 2007, the Company made contributions to its major defined benefit retirement plans and benefit payments for its other postretirement benefit plans
of $111 million ($38 million relating to its U.S. defined benefit plans) and $218 million ($212 million relating to its U.S. other postretirement benefits plan), respectively.
The Company expects to contribute approximately $51 million ($23 million relating to its U.S. defined benefit plans) and $209 million ($204 million relating to its U.S.
other postretirement benefits plan), respectively, to its defined benefit plans and other postretirement benefit plans in 2008.
(5) 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.
Off-Balance Sheet Arrangements
The Company guarantees debt and other obligations of certain customers. The debt and other obligations are primarily due to banks and leasing compa-
nies in connection with financing of customers’ purchases of equipment and product from the Company. At December 31, 2007, the following customer
guarantees were in place:
As of December 31, 2007
(in millions) Maximum Amount Amount Outstanding
Customer amounts due to banks and leasing companies $ 150 $ 117
Other third-parties 2 —
Total guarantees of customer debt and other obligations $ 152 $ 117