Kodak 2013 Annual Report Download - page 94

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Table of Contents
Warranty Costs
Kodak has warranty obligations in connection with the sale of its products and equipment. The original warranty period is generally one year or
less. The costs incurred to provide for these warranty obligations are estimated and recorded as an accrued liability at the time of sale. Kodak
estimates its warranty cost at the point of sale for a given product based on historical failure rates and related costs to repair. The change in
Kodak’s accrued warranty obligations balance, which is reflected in Other current liabilities in the accompanying Consolidated Statement of
Financial Position, was as follows:
(in millions)
Kodak also offers its customers extended warranty arrangements that are generally one year, but may range from three months to three years
after the original warranty period. Kodak provides repair services and routine maintenance under these arrangements. Kodak has not separated
the extended warranty revenues and costs from the routine maintenance service revenues and costs, as it is not practicable to do so. Therefore,
these revenues and costs have been aggregated in the discussion that follows. The change in Kodak’s deferred revenue balance in relation to
these extended warranty and maintenance arrangements, which is reflected in Other current liabilities in the accompanying Consolidated
Statement of Financial Position, was as follows:
(in millions)
Costs incurred under these extended warranty and maintenance arrangements for the four months ended December 31, 2013, eight months
ended August 31, 2013 and year ended December 31, 2012 amounted to $54 million, $107 million and $151 million, respectively.
PAGE 88
Accrued warranty obligations as of December 31, 2011 (Predecessor):
$
40
Actual warranty experience
(58
)
Warranty provisions
47
Accrued warranty obligations as of December 31, 2012 (Predecessor):
$
29
Actual warranty experience
(24
)
Warranty provisions
13
Accrued warranty obligations as of August 31, 2013 (Predecessor):
$
18
Actual warranty experience
$
(10
)
Warranty provisions
5
Accrued warranty obligations as of December 31, 2013 (Successor):
$
13
Deferred revenue on extended warranties as of December 31, 2011 (Predecessor):
$
48
New extended warranty and maintenance arrangements
200
Recognition of extended warranty and maintenance arrangement revenue
(205)
Deferred revenue on extended warranties as of December 31, 2012 (Predecessor):
$
43
New extended warranty and maintenance arrangements
139
Recognition of extended warranty and maintenance arrangement revenue
(148)
Deferred revenue on extended warranties as of August 31, 2013 (Predecessor):
$
34
Impact of fresh start accounting
$
(8)
New extended warranty and maintenance arrangements
68
Recognition of extended warranty and maintenance arrangement revenue
(64)
Deferred revenue on extended warranties as of December 31, 2013 (Successor):
$
30