Kodak 2009 Annual Report Download - page 83

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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. The Plan’s most recent local funding valuation was completed in March 2009. 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 funded status of the Plan (calculated in
accordance with U.S. GAAP) is included in Pension and other postretirement liabilities presented in the Consolidated Statement of
Financial Position.
Indemnifications
The Company issues indemnifications in certain instances when it sells businesses and real estate, and in the ordinary course of
business with its customers, suppliers, service providers and business partners. Further, the Company indemnifies its directors and
officers who are, or were, serving at the Company's request in such capacities. Historically, costs incurred to settle claims related to
these indemnifications have not been material to the Company’s financial position, results of operations or cash flows. Additionally,
the fair value of the indemnifications that the Company issued during the year ended December 31, 2009 was not material to the
Company’s financial position, results of operations or cash flows.
Warranty Costs
The Company has warranty obligations in connection with the sale of its products and equipment. The original warranty period is
generally one year or less. The costs incurred to provide for these warranty obligations are estimated and recorded as an accrued
liability at the time of sale. The Company estimates its warranty cost at the point of sale for a given product based on historical failure
rates and related costs to repair. The change in the Company's accrued warranty obligations balance, which is reflected in Accounts
payable and other current liabilities in the accompanying Consolidated Statement of Financial Position, was as follows:
(in millions)
Accrued warranty obligations as of December 31, 2007 $ 44
Actual warranty experience during 2008 (69)
2008 warranty provisions 90
Accrued warranty obligations as of December 31, 2008 $ 65
Actual warranty experience during 2009 (92)
2009 warranty provisions 88
Accrued warranty obligations as of December 31, 2009 $ 61
The Company also offers its customers extended warranty arrangements that are generally one year, but may range from three
months to three years after the original warranty period. The Company provides repair services and routine maintenance under
these arrangements. The Company has not separated the extended warranty revenues and costs from the routine maintenance
service revenues and costs, as it is not practicable to do so. Therefore, these revenues and costs have been aggregated in the
discussion that follows. The change in the Company's deferred revenue balance in relation to these extended warranty and
maintenance arrangements, which is reflected in Accounts payable and other current liabilities in the accompanying Consolidated
Statement of Financial Position, was as follows:
(in millions)
Deferred revenue as of December 31, 2007 $ 148
New extended warranty and maintenance arrangements in 2008 387
Recognition of extended warranty and maintenance
arrangement revenue in 2008 (382)
Deferred revenue as of December 31, 2008 $ 153
New extended warranty and maintenance arrangements in 2009 413
Recognition of extended warranty and maintenance
arrangement revenue in 2009 (436)
Deferred revenue as of December 31, 2009 $ 130
Costs incurred under these extended warranty and maintenance arrangements for the years ended December 31, 2009 and 2008
amounted to $193 million and $175 million, respectively.