Kodak 2002 Annual Report Download - page 53

Financials
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The remaining carrying value of the Company’s investments
accounted for under the cost method at December 31, 2002 and
2001 of $29 million and $51 million, respectively, is included in
other long-term assets in the accompanying Consolidated
Statement of Financial Position.
NOTE 7: ACCOUNTS PAYABLE AND OTHER
CURRENT LIABILITIES
(in millions) 2002 2001
Accounts payable, trade $ 720 $ 674
Accrued advertising and promotional
expenses 574 568
Accrued employment-related liabilities 968 749
Accrued restructuring liabilities 197 318
Other 892 967
Total payables $ 3,351 $ 3,276
The other component above consists of other miscellaneous
current liabilities that, individually, are less than 5% of the total
current liabilities component within the Consolidated Statement of
Financial Position, and therefore, have been aggregated in
accordance with Regulation S-X.
NOTE 8: SHORT-TERM BORROWINGS AND
LONG-TERM DEBT
Short-Term Borrowings The Company’s short-term borrowings
at December 31, 2002 and 2001 were as follows:
(in millions) 2002 2001
Commercial paper $ 837 $ 1,140
Current portion of long-term debt 387 156
Short-term bank borrowings 218 238
Total short-term borrowings $ 1,442 $ 1,534
The weighted average interest rates for commercial paper
outstanding during 2002 and 2001 were 2.0% and 3.6%,
respectively. The weighted average interest rates for short-term
bank borrowings outstanding during 2002 and 2001 were 3.8%
and 6.2%, respectively.
Lines of Credit The Company has $2,225 million in committed
revolving credit facilities (the EKC Credit Facility) renegotiated in
2002, which are available to support the Company’s commercial
paper program and for general corporate purposes. The EKC
Credit Facility is comprised of a 364-day committed facility at
$1,000 million expiring in July 2003 and a 5-year committed
facility at $1,225 million expiring in July 2006. If unused, they
have a commitment fee of $3 million per year, at the Company’s
current credit rating. Interest on amounts borrowed under these
facilities is calculated at rates based on spreads above certain
reference rates and the Company’s credit rating of BBB+
(Standard & Poor’s) and Baa1 (Moody’s). There were no amounts
outstanding under these arrangements at December 31, 2002. The
EKC Credit Facility includes a covenant that requires the
Company to maintain a certain debt to EBITDA (earnings before
interest, income taxes, depreciation and amortization) ratio. In
the event of violation of the covenant, the facility would not be
available for borrowing until the covenant provisions were waived,
amended or satisfied. The Company was in compliance with this
covenant at December 31, 2002. The Company does not
anticipate that a violation is likely to occur.
The Company has other committed and uncommitted lines of
credit at December 31, 2002 totaling $241 million and $1,993
million, respectively. These lines primarily support borrowing
needs of the Company’s subsidiaries, including term loans,
overdraft coverage, letters of credit and revolving credit lines.
Interest rates and other terms of borrowing under these lines of
credit vary from country to country, depending on local market
conditions. Total outstanding borrowings against these other
committed and uncommitted lines of credit at December 31, 2002
were $143 million and $465 million, respectively. These
outstanding borrowings are reflected in the short-term bank
borrowings and long-term debt balances at December 31, 2002.
Accounts Receivable Securitization Program In March
2002, the Company entered into an accounts receivable
securitization program (the Program), which provides the
Company with borrowings up to a maximum of $400 million.
Under the Program, the Company sells certain of its domestic
trade accounts receivable without recourse to EK Funding LLC, a
Kodak wholly owned, consolidated, bankruptcy-remote, limited
purpose, limited liability corporation (EKFC). Kodak continues to
service, administer and collect the receivables. A bank, acting as
the Program agent, purchases undivided percentage ownership
interests in those receivables on behalf of the conduit purchasers,
who have a first priority security interest in the related
receivables pool. The receivables pool at December 31, 2002,
representing the outstanding balance of the gross accounts
receivable sold to EKFC, totaled approximately $634 million. As
the Company has the right at any time during the Program to
repurchase all of the then outstanding purchased interests for a
purchase price equal to the outstanding principal plus accrued
fees, the receivables remain on the Company’s Consolidated
Statement of Financial Position, and the proceeds from the sale
of undivided interests are recorded as secured borrowings.
As the Program is renewable annually subject to the bank’s
approval, the secured borrowings under the Program are included
in short-term borrowings. The Company expects the Program to
be renewed upon its expiration in March 2003 at a minimum
borrowing level of $250 million. At December 31, 2002, the