Kodak 2014 Annual Report Download - page 81

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During the eight months ended August 31, 2013, Kodak determined that it was more likely than not that a portion of its deferred tax assets outside the U.S. would not be
realized due to changes in the business resulting from the KPP Global Settlement and the related sale of the Business. As a result, Kodak recorded a tax provision of $100
million associated with the establishment of a valuation allowance on those deferred tax assets.
Additionally, during the eight months ended August 31, 2013, Kodak determined that it was more likely than not that a portion of the deferred tax assets outside the U.S.
would not be realized due to the change in Kodak’s business as a result of restructuring associated with the emergence from bankruptcy and accordingly, recorded a provision
of $46 million associated with the establishment of a valuation allowance on those deferred tax assets.
During 2012, Kodak determined that it was more likely than not that a portion of the deferred tax assets outside the U.S. would not be realized due to reduced manufacturing
volumes negatively impacting profitability in a location outside the U.S. and accordingly, recorded a provision of $30 million, associated with the establishment of a valuation
allowance on those deferred tax assets.
In March 2011, Kodak filed a Request for Competent Authority Assistance with the United States Internal Revenue Service (“IRS”). The request related to a potential double
taxation issue with respect to certain patent licensing royalty payments received by Kodak in 2012 and 2011. In the twelve months ended December 31, 2012, Kodak received
notification that the IRS had reached agreement with the Korean National Tax Service (“NTS”) with regards to Kodak’s March 2011 request. As a result of the agreement
reached by the IRS and NTS, Kodak was due a partial refund of Korean withholding taxes in the amount of $123 million. Kodak had previously agreed with the licensees that
made the royalty payments that any refunds of the related Korean withholding taxes would be shared equally between Kodak and the licensees. The licensees’ share ($61
million) of the Korean withholding tax refund has therefore been reported as a licensing revenue reduction in Sales in the Consolidated Statement of Operations.
As of December 31,
(in millions)
2014
2013
Deferred tax assets
Pension and postretirement
obligations
$
221
$
219
Restructuring programs
5
6
Foreign tax credit
258
101
Inventories
20
18
Investment tax credit
100
125
Employee deferred compensation
43
60
Depreciation
45
-
Research and development costs
232
276
Tax loss carryforwards
355
372
Other deferred revenue
13
13
Other
111
168
Total deferred tax assets
$
1,403
$
1,358
Deferred tax liabilities
Depreciation
$
-
$
17
Leasing
7
23
Goodwill/Intangibles
51
49
Unremitted foreign earnings
176
236
Other
-
25
Total deferred tax liabilities
234
350
Net deferred tax assets before valuation
allowance
1,169
1,008
Valuation allowance
1,127
953
Net deferred tax assets
$
42
$
55
78