Kodak 2010 Annual Report Download - page 70

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more than 60 million British pounds upon conclusion of the funding valuation for the period ending December 31, 2022. The amount
of potential future contributions is dependent on the funding status of the Plan as it fluctuates over the term of the guarantee and the
United Kingdom Pension Regulator’s approval of a funding plan agreed to by the Subsidiary and the Trustees to close the funding
gap identified by the Plan’s most recent local statutory funding valuation agreed to in March 2009. 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, 2010 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 Other
current liabilities in the accompanying Consolidated Statement of Financial Position, was as follows:
(in millions)
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
Actual warranty experience during 2010
(72)
2010 warranty provisions
54
Accrued warranty obligations as of December 31, 2010
$ 43
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 Other current liabilities in the accompanying Consolidated Statement of Financial
Position, was as follows:
(in millions)
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
New extended warranty and maintenance arrangements in 2010
438
Recognition of extended warranty and maintenance
arrangement revenue in 2010
(438)
Deferred revenue as of December 31, 2010
$ 130
Costs incurred under these extended warranty and maintenance arrangements for the years ended December 31, 2010 and 2009
amounted to $172 million and $193 million, respectively.