Kodak 2012 Annual Report Download - page 39

Table of Contents
Loss on Early Extinguishment of Debt, Net
On March 5, 2010, the Company issued $500 million of aggregate principal amount of 9.75% senior secured notes due March 1, 2018. The net
proceeds of this issuance were used to repurchase all of the $300 million of 10.5% senior secured notes due 2017 previously issued to Kohlberg,
Kravis, Roberts & Co. L.P. (the “KKR Notes”) and $200 million of 7.25% senior notes due 2013 (collectively the “Notes”). Kodak recognized a
net loss of $102 million on the early extinguishment of the Notes in the first quarter of 2010, representing the difference between the carrying
values of the Notes and the costs to repurchase. This difference between the carrying values and costs to repurchase was primarily due to the
original allocation of the proceeds received from the issuance of the KKR Notes to Additional paid-in-capital for the value of the detachable
warrants issued to the holders of the KKR Notes.
Other Income (Charges), Net
For details, refer to Note 17, “Other Income (Charges), Net.”
Reorganization Items, Net
For details, refer to Note 4, “Reorganization Items, Net.”
Income Tax (Benefit) Provision
The change in Kodak’s effective tax rate from continuing operations for 2012 as compared with 2011 is primarily attributable to: (1) a benefit as
a result of tax accounting impacts related to items reported in Accumulated other comprehensive loss in the Consolidated Statement of Financial
Position as of December 31, 2012, (2) a benefit as a result of Kodak reaching a settlement with a taxing authority in a location outside the U.S.
during the year ended December 31, 2012, (3) a benefit as a result of the U.S Internal Revenue Service federal audit settlement for calendar years
2001 through 2005 during the year ended December 31, 2011, (4) an increase as a result of foreign withholding taxes on undistributed earnings,
(5) a decrease as a result of Kodak reaching a settlement with taxing authorities outside the U.S., (6) a decrease as a result of losses generated in
the U.S. and certain jurisdictions outside the U.S. for which no benefit was recognized due to management’s conclusion that it was more likely
than not that the tax benefits would not be realized, (7) an increase as a result of the establishment of a deferred tax asset valuation allowance in
certain jurisdictions outside the U.S., and (8) a benefit as a result of the release of a deferred tax asset valuation allowance in a certain
jurisdiction outside the U.S. during the year ended December 31, 2011.
The change in Kodak’s effective tax rate from continuing operations for 2011 as compared with 2010 is primarily attributable to: (1) a pre-tax
goodwill impairment charge of $626 million that resulted in a tax benefit of only $2 million due to the limited amount of tax deductible goodwill
that existed as of December 31, 2010, (2) a decrease associated with the release of deferred tax asset valuation allowances in certain jurisdictions
outside of the U.S., (3) incremental withholding taxes related to non-recurring licensing agreements entered into during 2010 as compared with
2011, (4) the mix of earnings from operations in certain jurisdictions outside the U.S. during the year ended December 31, 2010, (5) a provision
associated with the establishment of a deferred tax asset valuation allowance outside the U.S. during the year ended December 31, 2011, (6) a
provision associated with legislative tax rate changes in a jurisdiction outside the U.S., (7) a provision related to withholding taxes in
undistributed earnings during the year ended December 31, 2011, (8) a benefit as a result of Kodak reaching a settlement with a taxing authority
in a location outside the U.S. during the year ended December 31, 2011, (9) a benefit as a result of the U.S. Internal Revenue Service federal
audit settlement for calendar years 2001 through 2005 during the year ended December 31, 2011, and (10) losses generated within the U.S. and
certain jurisdictions outside the U.S. for which no benefit was recognized due to management’s conclusion that it was more likely than not that
the tax benefits would not be realized.
36
For the Year Ended
December 31,
(dollars in millions)
2012
2011
2010
Loss from continuing operations before income taxes
($
1,560
)
($
699
)
($
425
)
(Benefit) provision for income taxes
($
257
)
$
8
$
110
Effective tax rate
16.5
%
(1.1
)%
(25.9
)%
Benefit for income taxes @ 35%
($
546
)
($
245
)
($
149
)
Difference between tax at effective vs statutory rate
$
289
$
253
$
259