Kodak 2011 Annual Report Download - page 52

Off-Balance Sheet Arrangements
The Company guarantees debt and other obligations of certain customers. The debt and other obligations are primarily due to banks and leasing
companies in connection with financing of customers' purchases of equipment and product from the Company. At December 31, 2011, the maximum
potential amount of future payments (undiscounted) that the Company could be required to make under these customer-related guarantees was $25
million and the carrying amount of the liability related to these customer guarantees was not material.
The customer financing agreements and related guarantees, which mature between 2012 and 2016, typically have a term of 90 days for product and
short-term equipment financing arrangements, and up to five years for long-term equipment financing arrangements. These guarantees would
require payment from the Company only in the event of default on payment by the respective debtor. In some cases, particularly for guarantees
related to equipment financing, the Company has collateral or recourse provisions to recover and sell the equipment to reduce any losses that might
be incurred in connection with the guarantees. However, any proceeds received from the liquidation of these assets may not cover the maximum
potential loss under these guarantees.
Eastman Kodak Company (“EKC”) also guarantees potential indebtedness to banks and other third parties for some of its consolidated
subsidiaries. The maximum amount guaranteed is $185 million, and the outstanding amount for those guarantees is $161 million. Of this
outstanding amount, $75 million is recorded within Short-term borrowings and current portion of long-term debt, and Long-term debt, net of current
portion. Additionally $12 million is recorded within Other current liabilities and Other long-term liabilities. The remaining $74 million of
outstanding guarantees represent parent guarantees providing financial assurance to third parties that the Company’s subsidiaries will fulfill their
future performance or financial obligations under various contracts, and do not represent recorded liabilities. These guarantees expire in 2012
through 2019. Pursuant to the terms of the Company's Amended Credit Agreement, obligations of the Borrowers to the Lenders under the
Amended Credit Agreement, as well as secured agreements in an amount not to exceed $125 million, are guaranteed by the Company and the
Company’s U.S. subsidiaries and included in the above amounts. As of December 31, 2011, these secured agreements totaled $63 million.
EKC has issued a guarantee to Kodak Limited (the “Subsidiary”) and the Trustees (the “Trustees”) of the Kodak Pension Plan of the United Kingdom (the
“Plan”). Under that arrangement, EKC guaranteed to the Subsidiary and the Trustees the ability of the Subsidiary, only to the extent it becomes necessary
to do so, to (1) make contributions to the Plan to ensure sufficient assets exist to make plan benefit payments, and (2) make contributions to the Plan such
that it will achieve full funded status by the funding valuation for the period ending December 31, 2022. The guarantee expires (a) upon the conclusion of
the funding valuation for the period ending December 31, 2022 if the Plan achieves full funded status or on payment of the balance if the Plan is
underfunded by no more than 60 million British pounds by that date, (b) 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, or (c) June 30, 2024 on payment of the balance in the event that the Plan
is underfunded by 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. The funded status of the plan
may be materially impacted by future changes in key assumptions used in the valuation of the plan, particularly the discount rate and expected rate of return
on plan assets. 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.
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, 2011 was not material to the Company’s financial position, results of operations or cash flows.
50