Kodak 2012 Annual Report Download - page 83

Table of Contents
Environmental
Cash expenditures for pollution prevention and waste treatment for Kodak’s current facilities were as follows:
Environmental expenditures that relate to an existing condition caused by past operations and that do not provide future benefits are expensed as
incurred. Costs that are capital in nature and that provide future benefits are capitalized. Liabilities are recorded when environmental assessments
are made or the requirement for remedial efforts is probable, and the costs can be reasonably estimated. The timing of accruing for these
remediation liabilities is generally no later than the completion of feasibility studies. Kodak has an ongoing monitoring and identification process
to assess how the activities, with respect to the known exposures, are progressing against the accrued cost estimates.
At December 31, 2012 and 2011, Kodak’s undiscounted accrued liabilities for environmental remediation costs amounted to $116 million and
$96 million, respectively. These amounts are reported in Other long-term liabilities as of December 31, 2011 and Other long-term liabilities and
Liabilities subject to compromise as of December 31, 2012 in the accompanying Consolidated Statement of Financial Position.
The Company is currently implementing a Corrective Action Program required by the Resource Conservation and Recovery Act (“RCRA”) at
Eastman Business Park (formerly known as Kodak Park) in Rochester, NY. The Company is currently in the process of completing, and in many
cases has completed, RCRA Facility Investigations (“RFI”), Corrective Measures Studies (“CMS”) and Corrective Measures Implementation
(“CMI”) for areas at the site. At December 31, 2012, estimated future investigation and remediation costs of $49 million were accrued for this
site, the majority of which relates to long-term operation, maintenance of remediation systems and monitoring costs.
In addition, Kodak has accrued for obligations with estimated future investigation, remediation and monitoring costs of $9 million relating to
other operating sites, $17 million at sites associated with former operations, and $41 million of retained obligations for environmental
remediation and Superfund matters related to certain sites associated with the non-imaging health businesses sold in 1994.
Cash expenditures for the aforementioned investigation, remediation and monitoring activities are expected to be incurred over the next thirty
years for most of the sites. For these known environmental liabilities, the accrual reflects Kodak
’s best estimate of the amount it will incur under
the agreed-upon or proposed work plans. Kodak’s cost estimates were determined using the ASTM Standard E 2137-06, “Standard Guide for
Estimating Monetary Costs and Liabilities for Environmental Matters,” and have not been reduced by possible recoveries from third parties. The
overall method includes the use of a probabilistic model which forecasts a range of cost estimates for the remediation required at individual sites.
The projects are closely monitored and the models are reviewed as significant events occur or at least once per year. Kodak’s estimate includes
investigations, equipment and operating costs for remediation and long-term monitoring of the sites. Accrued liabilities of Debtor entities related
to sites subject to the bankruptcy proceedings have been classified as liabilities subject to compromise as of December 31, 2012. Liabilities
subject to compromise are reported at Kodak’s current estimate, where an estimate is determinable, of the allowed claim amount.
Kodak is presently designated as a potentially responsible party (“PRP”) under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended (the “Superfund Law”), or under similar state laws, for environmental assessment and cleanup costs as the
result of Kodak’s alleged arrangements for disposal of hazardous substances at eight Superfund sites. In connection with the chapter 11 filing,
the Debtors have provided withdrawal notifications or entered into settlement negotiations with involved regulatory agencies.
Among these matters is a case in which the Company and Sterling Drug were named by the U.S. Environmental Protection Agency (EPA) as a
PRP with potential liability for the study and remediation of the Lower Passaic River Study Area (LPRSA) portion of the Diamond Alkali
Superfund Site, based on the Company’s ownership of Sterling Drug from 1988 to 1994 and retention of certain
79
For the Year Ended December 31,
(in millions)
2012
2011
2010
Recurring costs for pollution prevention and waste treatment
$
28
$
33
$
34
Capital expenditures for pollution prevention and waste treatment
1
1
1
Site remediation costs
1
2
2
Total
$
30
$
36
$
37