Kodak 2005 Annual Report Download - page 62

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cumulative accretion from the date the obligation was incurred until the date of adoption of FIN 47, for existing asset retirement obligations; (2) an
asset retirement cost capitalized as an increase to the carrying amount of the associated long-lived asset; and (3) accumulated depreciation on the
capitalized asset retirement cost. Accordingly, the Company has recognized the following amounts in its Statement of Financial Position at
December 31, 2005 and Statement of Operations for the year ended December 31, 2005:
(dollar amounts in millions)
Additions to property, plant and equipment, gross $ 33
Additions to accumulated depreciation $ (33)
Additions to property, plant and equipment, net $ —
Asset retirement obligations $ 66
Cumulative effect of change in accounting principle, gross $ 66
Cumulative effect of change in accounting principle, net of tax $ 57
The adoption of FIN 47 reduced 2005 net earnings by $57 million, or $.20 per share.
The Company’s conditional asset retirement obligations primarily relate to asbestos contained in buildings that Kodak owns. Environmental regulations
exist in many of the countries that Kodak operates in 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 suffi cient information exists to calculate the fair value. Kodak does not have a liability recorded related to each building that contains
asbestos because Kodak cannot estimate the fair value of its obligation for certain buildings due to a lack of suffi cient information about the range of
time over which the obligation may be settled through demolition, renovation or sale of the building.
The Company has determined the pro forma (loss) earnings from continuing operations, net (loss) earnings, and corresponding per share information
as if the provisions of FIN 47 had been adopted prior to January 1, 2003. The pro forma information is as follows:
(in millions, except per share data) 2005 2004 2003
(Loss) earnings from continuing operations
As reported $ (1,455) $ 81 $ 189
Pro forma $ (1,462) $ 76 $ 185
(Loss) earnings from continuing operations, per basic and diluted share
As reported $ (5.05) $ .28 $ .66
Pro forma $ (5.08) $ .26 $ .65
Net (loss) earnings
As reported $ (1,362) $ 556 $ 253
Pro forma $ (1,312) $ 551 $ 249
Net (loss) earnings, per basic and diluted share
As reported $ (4.73) $ 1.94 $ .88
Pro forma $ (4.56) $ 1.92 $ .87
Number of shares used in earnings per share
Basic 287.9 286.6 286.5
Diluted 287.9 286.8 290.8
The liability for asset retirement obligations as of the dates noted below would have been as follows if FIN 47 had been implemented prior to
January 1, 2003:
(dollar amounts in millions)
December 31, 2004 $ 71
December 31, 2003 $ 65