Kodak 2013 Annual Report Download - page 93

Table of Contents
In connection with assessments in Brazil, local regulations may require Kodak to post security for a portion of the amounts in dispute. As of
December 31, 2013, Kodak has posted security composed of $10 million of pledged cash reported within Restricted cash in the Consolidated
Statement of Financial Position and liens on certain Brazilian assets with a net book value of approximately $131 million. Generally, any
encumbrances on the Brazilian assets would be removed to the extent the matter is resolved in Kodak’s favor.
Kodak is involved in various lawsuits, claims, investigations and proceedings, including commercial, customs, employment, environmental,
and health and safety matters, which are being handled and defended in the ordinary course of business. Kodak is also subject to various
assertions, claims, proceedings and requests for indemnification concerning intellectual property, including patent infringement suits involving
technologies that are incorporated in a broad spectrum of Kodak’s products. These matters are in various stages of investigation and litigation,
and are being vigorously defended. Much of the litigation against the Debtors was stayed as a result of the chapter 11 filing and is being
resolved in accordance with the Bankruptcy Code and the orders of the Bankruptcy Court. Kodak does not believe that it is probable that the
outcome in any of these matters, individually or collectively, will have a material adverse effect on its financial condition or results of
operations, although litigation is inherently unpredictable. Therefore, judgments could be rendered or settlements entered that could adversely
affect Kodak’s operating results or cash flows in a particular period. Kodak routinely assesses all of its litigation and threatened litigation as to
the probability of ultimately incurring a liability, and records its best estimate of the ultimate loss in situations where it assesses the likelihood
of loss as probable.
NOTE 13: GUARANTEES
Kodak 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 Kodak. At December 31, 2013, the maximum
potential amount of future payments (undiscounted) that Kodak could be required to make under these customer-related guarantees was $14
million. At December 31, 2013, the carrying amount of any liability related to these customer guarantees was not material.
The customer financing agreements and related guarantees, which mature between 2014 and 2017, 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 Kodak only in the event of default on payment by the respective customer. In some cases, particularly for
guarantees related to equipment financing, Kodak 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 would not cover
the maximum potential loss under these guarantees.
EKC also guarantees obligations to third parties for some of its consolidated subsidiaries. The maximum amount guaranteed, and the
outstanding amount for those guarantees, is $79 million.
Indemnifications
Kodak 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, Kodak indemnifies officers and directors 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
Kodak’
s financial position, results of operations or cash flows. Additionally, the fair value of the indemnifications that Kodak issued during the
year ended December 31, 2013 was not material to Kodak
’s financial position, results of operations or cash flows.
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