Kodak 2009 Annual Report Download - page 81

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The Company is presently designated as a potentially responsible party (“PRP”) under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (the “Superfund Law”), or under similar state laws, for
environmental assessment and cleanup costs as the result of the Company’s alleged arrangements for disposal of hazardous
substances at eight Superfund sites. With respect to each of these sites, the Company’s liability is minimal. In addition, the Company
has been identified as a PRP in connection with the non-imaging health businesses in two active Superfund sites. Numerous other
PRPs have also been designated at these sites. Although the law imposes joint and several liability on PRPs, the Company’s
historical experience demonstrates that these costs are shared with other PRPs. Settlements and costs paid by the Company in
Superfund matters to date have not been material. Future costs are also not expected to be material to the Company’s financial
position, results of operations or cash flows.
Uncertainties associated with environmental remediation contingencies are pervasive and often result in wide ranges of outcomes.
Estimates developed in the early stages of remediation can vary significantly. A finite estimate of costs does not normally become
fixed and determinable at a specific time. Rather, the costs associated with environmental remediation become estimable over a
continuum of events and activities that help to frame and define a liability, and the Company continually updates its cost estimates.
The Company has an ongoing monitoring and identification process to assess how the activities, with respect to the known
exposures, are progressing against the accrued cost estimates, as well as to identify other potential remediation issues.
Estimates of the amount and timing of future costs of environmental remediation requirements are by their nature imprecise because
of the continuing evolution of environmental laws and regulatory requirements, the availability and application of technology, the
identification of presently unknown remediation sites and the allocation of costs among the potentially responsible parties. Based
upon information presently available, such future costs are not expected to have a material effect on the Company’s competitive or
financial position. However, such costs could be material to results of operations in a particular future quarter or year.
Asset Retirement Obligations
As of December 31, 2009 and 2008, the Company has recorded approximately $62 million and $67 million, respectively, of asset
retirement obligations within Other long-term liabilities in the accompanying Consolidated Statement of Financial Position. The
Company’s asset retirement obligations primarily relate to asbestos contained in buildings that the Company owns. In many of the
countries in which the Company operates, environmental regulations exist that require the Company to handle and dispose of
asbestos in a special manner if a building undergoes major renovations or is demolished. Otherwise, the Company is not required to
remove the asbestos from its buildings. The Company records a liability equal to the estimated fair value of its obligation to perform
asset retirement activities related to the asbestos, computed using an expected present value technique, when sufficient information
exists to calculate the fair value. The Company does not have a liability recorded related to every building that contains asbestos
because the Company cannot estimate the fair value of its obligation for certain buildings due to a lack of sufficient information about
the range of time over which the obligation may be settled through demolition, renovation or sale of the building.
The following table provides asset retirement obligation activity:
For the Year Ended December 31,
(in millions) 2009 2008 2007
Asset retirement obligations as of January 1 $ 67 $ 64 $ 92
Liabilities incurred in the current period 4 9 24
Liabilities settled in the current period (13) (9) (55)
Accretion expense 3 3 3
Other 1 - -
Asset retirement obligations as of December 31 $ 62 $ 67 $ 64
Other Commitments and Contingencies
The Company has entered into noncancelable agreements with several companies, which provide Kodak with products and services
to be used in its normal operations. These agreements are related to raw materials, supplies, production and administrative services,
as well as marketing and advertising. The terms of these agreements cover the next one to twelve years. The minimum payments for
obligations under these agreements are approximately $387 million in 2010, $283 million in 2011, $66 million in 2012, $37 million in
2013, $15 million in 2014 and $43 million in 2015 and thereafter.
Rental expense, net of minor sublease income, amounted to $108 million in 2009, $117 million in 2008 and $130 million in 2007. The
approximate amounts of noncancelable lease commitments with terms of more than one year, principally for the rental of real
property, reduced by minor sublease income, are $81 million in 2010, $61 million in 2011, $47 million in 2012, $27 million in 2013,
$16 million in 2014 and $64 million in 2015 and thereafter.