Kodak 2008 Annual Report Download - page 48

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(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 15, “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 2008, the Company made contributions to its major defined
benefit retirement plans and benefit payments for its other postretirement benefit plans of $101 million ($29 million relating to
its U.S. defined benefit plans) and $204 million ($199 million relating to its U.S. other postretirement benefits plan),
respectively. The Company expects to contribute approximately $130 million ($29 million relating to its U.S. defined benefit
plans) and $175 million ($170 million relating to its U.S. other postretirement benefits plan), respectively, to its defined benefit
plans and other postretirement benefit plans in 2009.
(5) Because their future cash outflows are uncertain, the other long-term liabilities presented in Note 9, “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 companies in connection with financing of customers' purchases of equipment and product from the Company. At
December 31, 2008, the maximum potential amount of future payments (undiscounted) that the Company could be required to make
under these customer-related guarantees was $75 million. At December 31, 2008, the carrying amount of any liability related to
these customer guarantees was not material.
The customer financing agreements and related guarantees, which mature between 2009 and 2013, 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 the Company only in the event of default on payment by the respective debtor. In
some cases, particularly for guarantees related to equipment financing, the Company has collateral or recourse provisions to recover
and sell the equipment to reduce any losses that might be incurred in connection with the guarantees. However, any proceeds
received from the liquidation of these assets are not expected to be material and would not cover the maximum potential amount of
future payments under these guarantees.
Despite the current economic environment, the Company believes that the guarantees disclosed above will not have a material
impact on the results of operations or financial position of the Company. With respect to the guarantees that the Company issued in
the year ended December 31, 2008, the Company assessed the fair value of its obligation to stand ready to perform under these
guarantees by considering the likelihood of occurrence of the specified triggering events or conditions requiring performance as well
as other assumptions and factors.
Eastman Kodak Company (“EKC”) also guarantees amounts owed to banks and other third parties for some of its consolidated
subsidiaries. The maximum amount guaranteed is $509 million, and the outstanding debt under those guarantees, which is recorded
within the Short-term borrowings and current portion of long-term debt, and Long-term debt, net of current portion components in the
accompanying Consolidated Statement of Financial Position, is $189 million. These guarantees expire in 2009 through 2013.
Pursuant to the terms of the Company's $2.7 billion Senior Secured Credit Agreement dated October 18, 2005, obligations under the
$2.7 billion Secured Credit Facilities (the “Credit Facilities”) and other obligations of the Company and its subsidiaries to the Credit
Facilities’ lenders are guaranteed.
During the fourth quarter of 2007, EKC issued a guarantee to Kodak Limited (the “Subsidiary”) and the Trustees (the “Trustees”) of
the Kodak Pension Plan of the United Kingdom (the “Plan”). Under this arrangement, EKC guarantees to the Subsidiary and the
Trustees the ability of the Subsidiary, only to the extent it becomes necessary to do so, to (1) make contributions to the Plan to
ensure sufficient assets exist to make plan benefit payments, and (2) make contributions to the Plan such that it will achieve full
funded status by the funding valuation for the period ending December 31, 2015. The guarantee expires upon the conclusion of the
funding valuation for the period ending December 31, 2015 whereby the Plan achieves full funded status or earlier, in the event that
the Plan achieves full funded status for two consecutive funding valuation cycles which are typically performed at least every three
years. The limit of potential future payments is dependent on the funding status of the Plan as it fluctuates over the term of the
guarantee. Currently, the Plan’s local funding valuation is in process and expected to be completed in March 2009. In conjunction
with that funding valuation process, EKC and the Subsidiary are in discussions with the Trustees regarding the amount of future
annual contributions and the date by which the Plan will achieve full funded status. These negotiations may require changes to the
existing guarantee described above. The funding status of the Plan is included in Pension and other postretirement liabilities
presented in the Consolidated Statement of Financial Position.