Kodak 2010 Annual Report Download - page 40

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The repurchase of the 2013 Notes resulted in a gain on early debt extinguishment of approximately $9 million, reported in Loss on
early extinguishment of debt, net in the Consolidated Statement of Operations for the year ended December 31, 2010. The gain was
a result of the principal repayment of approximately $190 million being less than the carrying value of the repurchased debt of $200
million. $300 million of the 2013 Notes remain outstanding as of December 31, 2010.
Credit Facilities and Other Banking Arrangements
The Company has a revolving asset-based lending facility (the “Amended Credit Agreement”) that provides for a maximum
borrowing availability of up to $500 million. On October 18, 2010, non-extending lender commitments expired capping the
Company’s borrowing limit to the $410 million of extending lender commitments as of that date. The Company may add additional
lender commitments to the Amended Credit Agreement up to the maximum borrowing availability. The termination date of the
Amended Credit Agreement is March 31, 2012. Advances under the Amended Credit Agreement are available based on the
Company’s respective borrowing base from time to time. The borrowing base is calculated based on designated percentages of
eligible accounts receivable, inventory, machinery and equipment and, once mortgages are recorded, certain real property, subject
to applicable reserves. As of December 31, 2010, based on this borrowing base calculation and after deducting the face amount of
letters of credit outstanding of $122 million and $90 million of collateral to secure other banking arrangements, the Company had
$192 million available to borrow under the Amended Credit Agreement. As of December 31, 2010, the Company had no debt for
borrowed money outstanding under the Amended Credit Agreement.
Under the terms of the Amended Credit Agreement, the Company has agreed to certain affirmative and negative covenants
customary in similar asset-based lending facilities. In the event the Company’s excess availability under the borrowing base formula
under the Amended Credit Agreement falls below $100 million for three consecutive business days, among other things, the
Company must maintain a fixed charge coverage ratio of not less than 1.1 to 1.0 until the excess availability is greater than $100
million for 30 consecutive days. For the year ended December 31, 2010, excess availability was greater than $100 million. The
Company is also required to maintain cash and cash equivalents in the U.S. of at least $250 million. The negative covenants limit,
under certain circumstances, among other things, the Company’s ability to incur additional debt or liens, make certain investments,
make shareholder distributions or prepay debt, except as permitted under the terms of the Amended Credit Agreement. The
Company was in compliance with all covenants under the Amended Credit Agreement as of December 31, 2010.
In addition to the Amended Credit Agreement, the Company has other committed and uncommitted lines of credit as of December
31, 2010 totaling $19 million and $131 million, respectively. These lines primarily support operational and borrowing needs of the
Company’s subsidiaries, which include term loans, overdraft coverage, revolving credit lines, letters of credit, bank guarantees and
vendor financing programs. Interest rates and other terms of borrowing under these lines of credit vary from country to country,
depending on local market conditions. As of December 31, 2010, usage under these lines was approximately $51 million, all of which
were supporting non-debt related obligations.
In addition to the lines of credit noted above, there were bank guarantees and letters of credit of $18 million and surety bonds of $23
million outstanding under other banking arrangements primarily to ensure payment of possible casualty and workers’ compensation
claims, environmental liabilities, legal contingencies, rental payments, and to support various customs and trade activities.
Refer to Note 8, “Short-Term Borrowings and Long-Term Debt,” in the Notes to Financial Statements for additional information about
the Company’s credit facilities and other banking arrangements.
Credit Quality
Moody's and Standard & Poor’s (“S&P”) ratings for the Company, including their outlooks, as of the filing date of this Form 10-K are
as follows:
Corporate
Rating
Secured
Rating
Senior
Unsecured Rating
Outlook
Most
Recent Update
Moody's
B3
Ba3
Caa1
Stable
February 24, 2010
S&P
B-
B-
CCC
Negative
January 26, 2011
On January 26, 2011, S&P placed its B- rating on the Company’s Corporate Rating and all related issue-level ratings, on
CreditWatch with negative implications.
On February 24, 2010, Moody’s issued a rating of Ba3 on the Company’s $500 million 9.75% Senior Secured Notes due 2018.
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
$10 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.