Kodak 2010 Annual Report Download - page 68

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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 on
information presently available, the Company does not believe it is reasonably possible that losses for known exposures could
exceed current accruals by material amounts, although costs could be material to a particular quarter or year, with the possible
exception of matters related to the Passaic River, which are described above.
A Consent Decree was signed in 1994 in settlement of a civil complaint brought by the U.S. Environmental Protection Agency
(“EPA”) and the U.S. Department of Justice. In connection with the Consent Decree, the Company performed various activities, and
submitted a certification stating that it has completed the requirements of the Consent Decree. The Company received an
acknowledgement of completion from the EPA on February 5, 2010, and the Consent Decree was terminated by the court
overseeing this matter on October 26, 2010.
Asset Retirement Obligations
As of December 31, 2010 and 2009, the Company has recorded approximately $57 million and $62 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)
2010
2009
2008
Asset retirement obligations as of January 1
$ 62
$ 67
$ 64
Liabilities incurred in the current period
-
4
9
Liabilities settled in the current period
(8)
(13)
(9)
Accretion expense
3
3
3
Other
-
1
-
Asset retirement obligations as of December 31
$ 57
$ 62
$ 67
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 eleven years. The minimum payments
for obligations under these agreements are approximately $340 million in 2011, $271 million in 2012, $40 million in 2013, $18 million
in 2014, $16 million in 2015 and $32 million in 2016 and thereafter.
Rental expense, net of minor sublease income, amounted to $96 million, $108 million, and $117 million in 2010, 2009, and 2008,
respectively. 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 $75 million in 2011, $66 million in 2012, $45 million in 2013, $27
million in 2014, $21 million in 2015 and $58 million in 2016 and thereafter.
In December 2003, the Company sold a property in France for approximately $65 million, net of direct selling costs, and then leased
back a portion of this property for a nine-year term. The entire gain on the property sale of approximately $57 million was deferred
and no gain was recognizable upon the closing of the sale as the Company’s continuing involvement in the property is deemed to be
significant. As a result, the Company is accounting for the transaction as a financing transaction. Future minimum lease payments
under this noncancelable lease commitment are approximately $5 million per year for 2010 through 2012.