Kodak 2013 Annual Report Download - page 92

Table of Contents
Asset Retirement Obligations
Kodak’s asset retirement obligations primarily relate to asbestos contained in buildings that Kodak owns. In many of the countries in which
Kodak operates, environmental regulations exist that require Kodak to handle and dispose of asbestos in a special manner if a building
undergoes major renovations or is demolished. Otherwise, Kodak is not required to remove the asbestos from its buildings. Kodak records a
liability equal to the estimated fair value of its obligation to perform asset retirement activities related to the asbestos, computed using an
expected present value technique, when sufficient information exists to calculate the fair value. Kodak does not have a liability recorded related
to every building that contains asbestos because Kodak cannot estimate the fair value of its obligation for certain buildings due to a lack of
sufficient information about the range of time over which the obligation may be settled through demolition, renovation or sale of the building.
The following table provides asset retirement obligation activity:
Other Commitments and Contingencies
Kodak has entered into non-cancelable agreements with several companies which provide Kodak with products and services to be used in its
normal operations. These agreements are related to raw materials, supplies, production and administrative services, as well as marketing and
advertising. The terms of these agreements cover the next one to five years. The minimum payments for obligations under these agreements are
approximately $61 million in 2014, $11 million in 2015, $3 million in 2016, $2 million in 2017, $2 million in 2018 and $2 million in 2019 and
thereafter.
Rental expense, net of minor sublease income, amounted to $15 million, $36 million, $60 million and $76 million in the four months ending
December 31, 2013, the eight months ending August 31, 2013 and the years ended December 31, 2012, and 2011, respectively. The amounts of
non-cancelable lease commitments with terms of more than one year, principally for the rental of real property, reduced by minor sublease
income, are $28 million in 2014, $20 million in 2015, $15 million in 2016, $12 million in 2017, $8 million in 2018 and $12 million in 2019 and
thereafter.
As of December 31, 2013, the Company had outstanding letters of credit of $122 million issued under the ABL Credit Agreement as well as
bank guarantees and letters of credit of $10 million, surety bonds in the amount of $22 million, and restricted cash and investments in trust of
$121 million, primarily to ensure the payment of possible casualty and workers’ compensation claims, environmental liabilities, legal
contingencies, rental payments, and to support various customs, hedging, tax and trade activities. The restricted cash and investments in trust
accounts are recorded within Restricted cash, Other current assets and Other long-term assets in the Consolidated Statement of Financial
Position.
Kodak’s Brazilian operations are involved in governmental assessments of indirect and other taxes in various stages of litigation, primarily
related to federal and state value-added taxes. Kodak is disputing these matters and intends to vigorously defend its position. Based on the
opinion of legal counsel and current reserves already recorded for those matters deemed probable of loss, management does not believe that the
ultimate resolution of these matters will materially impact Kodak’
s results of operations or financial position. Kodak routinely assesses all these
matters as to the probability of ultimately incurring a liability in its Brazilian operations and records its best estimate of the ultimate loss in
situations where it assesses the likelihood of loss as probable. As of December 31, 2013, the unreserved portion of these contingencies,
inclusive of any related interest and penalties, for which there was at least a reasonable possibility that a loss may be incurred, amounted to
approximately $38 million.
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Successor
Predecessor
(in millions)
For the Four Months
Ended December 31,
2013
For the Eight
Months Ended
August 31, 2013
For the Year Ended
December 31, 2012
Asset Retirement Obligations at start
of period
$
51
$
63
$
61
Liabilities incurred in the current
period
—
1
4
Liabilities settled in the current
period
—
(
5
)
(1
)
Accretion expense
1
1
3
Revision in estimated cash flows
—
(
1
)
(4
)
Foreign exchange impact
—
(
1
)
—
Impact of fresh start accounting
—
(
7
)
—
Asset Retirement Obligations at end
of period
$
52
$
51
$
63