Kodak 2012 Annual Report Download - page 13

an additional prepayment of loans in an amount equal to 75% of U.S. Liquidity (as defined in the agreement) above $200 million. Additionally,
our ability to convert a portion of the loans under the Junior DIP Facility at emergence is subject to us receiving a cash purchase price of at least
$600 million from the disposition of any combination of certain specified assets that are not part of the Commercial Imaging business, including
any combination of the Document Imaging and Personalized Imaging businesses and trademarks, trademark licenses, domain names and related
intellectual property assets and materials; provided that the consent of a certain majority of the Junior DIP Facility lenders would be necessary to
exclude the assets of the Document Imaging and Personalized Imaging businesses from the disposition. If we fail to satisfy the condition or it is
not waived, we will be required to pay in cash all of our loans under the Junior DIP Facility at emergence, which could adversely affect the
Debtors’ ability to emerge from chapter 11.
Our plan of reorganization and related disclosure statement is not yet available, and the contents of our plan of reorganization are
uncertain and highly speculative.
We have not distributed a plan of reorganization to creditors or filed a plan of reorganization with the Bankruptcy Court and may not do so for
some time. The plan of reorganization will be accompanied by a disclosure statement approved by the Bankruptcy Court and will provide
“adequate information” (as used in the Bankruptcy Code) to those stakeholders entitled to vote on the plan of reorganization. All prepetition
claims against the Debtors will likely be subject to compromise in our plan of reorganization and the nature and amount of distributions to
prepetition creditors is highly speculative at this time. Additionally, it is unlikely that we will propose to make any distribution on account of the
stock of the Company in connection with our plan of reorganization. Any investment in our securities prior to review of a Bankruptcy Court-
approved disclosure statement is also highly speculative. The contents of our plan of reorganization will depend on many factors beyond the
value of our assets, including the amount of claims against those assets, the resolution of intercompany claims, the results of strategic processes
that are underway, our business results, our financing activities, and the outcome of negotiations with creditors. The contents of our plan of
reorganization are uncertain and may be dramatically different than the current expectations of the Company or any of its stakeholders. The plan
of reorganization also may treat prepetition claims of certain customers, suppliers and continuing business partners more favorably than general
unsecured creditors.
The Company’s future pension and other postretirement benefit plan costs and required level of contributions could be unfavorably
impacted by changes in actuarial assumptions, future market performance of plan assets and obligations imposed by legislation or
pension authorities which could adversely affect the Company’s financial position, results of operations, and cash flow.
We have significant defined benefit pension and other postretirement benefit obligations. The funded status of the Company’s U.S. and non U.S.
defined benefit pension plans and other postretirement benefit plans, and the related cost reflected in the Company’s financial statements, are
affected by various factors that are subject to an inherent degree of uncertainty, particularly in the current economic environment. Key
assumptions used to value these benefit obligations, funded status and expense recognition include the discount rate for future payment
obligations, the long term expected rate of return on plan assets, salary growth, healthcare cost trend rates, and other economic and demographic
factors. Significant differences in actual experience, or significant changes in future assumptions or obligations imposed by legislation, pension
authorities, or the Bankruptcy Court could lead to a potential future need to contribute cash or assets to the Company’s plans in excess of
currently estimated contributions and benefit payments and could have an adverse effect on the Company’s consolidated results of operations,
financial position or liquidity.
The Kodak Limited Pension Plan in the United Kingdom has a significant underfunded position, which Kodak Limited does not have
the capacity to fully fund. Any demands made against Kodak Limited in respect of the pension deficiency or other amounts due to this
pension plan could result in the insolvent liquidation of Kodak Limited and other non-U.S. subsidiaries.
Kodak Limited is the statutory employer with respect to the Kodak Pension Plan in the United Kingdom (the “KPP”), which has an underfunded
position of approximately $1.5 billion (calculated in accordance with U.S. GAAP) as of December 31, 2012. The Company previously issued a
guarantee to Kodak Limited and the trustee of the KPP under which it guaranteed the ability of Kodak Limited to make certain contributions to
the KPP. Refer to Note 1, “Bankruptcy Proceedings—Eastman Kodak Company Guarantee” in the Notes to Financial Statements in Item 8
below, for a description of the guarantee. The trustee of the KPP
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