Kodak 2010 Annual Report Download - page 67

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Environmental expenditures that relate to an existing condition caused by past operations and that do not provide future benefits are
expensed as incurred. Costs that are capital in nature and that provide future benefits are capitalized. Liabilities are recorded when
environmental assessments are made or the requirement for remedial efforts is probable, and the costs can be reasonably
estimated. The timing of accruing for these remediation liabilities is generally no later than the completion of feasibility studies. The
Company has an ongoing monitoring and identification process to assess how the activities, with respect to the known exposures,
are progressing against the accrued cost estimates, as well as to identify other potential remediation sites that are presently
unknown.
At December 31, 2010 and 2009, the Company’s undiscounted accrued liabilities for environmental remediation costs amounted to
$103 million and $102 million, respectively. These amounts were reported in Other long-term liabilities in the accompanying
Consolidated Statement of Financial Position.
The Company is currently implementing a Corrective Action Program required by the Resource Conservation and Recovery Act
(“RCRA”) at Eastman Business Park (formerly known as Kodak Park) in Rochester, NY. The Company is currently in the process of
completing, and in many cases has completed, RCRA Facility Investigations (“RFI”), Corrective Measures Studies (CMS) and
Corrective Measures Implementation (“CMI”) for areas at the site. At December 31, 2010, estimated future investigation and
remediation costs of $53 million were accrued for this site, the majority of which relates to long-term operation, maintenance of
remediation systems and monitoring costs.
In addition, the Company has accrued for obligations with estimated future investigation, remediation and monitoring costs of $11
million relating to other operating sites, $20 million at sites associated with former operations, and $19 million of retained obligations
for environmental remediation and Superfund matters related to certain sites associated with the non-imaging health businesses sold
in 1994.
Cash expenditures for the aforementioned investigation, remediation and monitoring activities are expected to be incurred over the
next twenty-five to thirty years for most of the sites. For these known environmental liabilities, the accrual reflects the Company’s
best estimate of the amount it will incur under the agreed-upon or proposed work plans. The Company’s cost estimates were
determined using the ASTM Standard E 2137-06, “Standard Guide for Estimating Monetary Costs and Liabilities for Environmental
Matters,” and have not been reduced by possible recoveries from third parties. The overall method includes the use of a probabilistic
model which forecasts a range of cost estimates for the remediation required at individual sites. The projects are closely monitored
and the models are reviewed as significant events occur or at least once per year. The Company’s estimate includes investigations,
equipment and operating costs for remediation and long-term monitoring of the sites.
The Company is presently designated as a potentially responsible party (“PRP”) under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (the “Superfund Law”), or under similar state laws, for
environmental assessment and cleanup costs as the result of the Company’s alleged arrangements for disposal of hazardous
substances at eight Superfund sites. With respect to each of these sites, the Company’s liability is minimal. In addition, the Company
has been identified as a PRP in connection with the non-imaging health businesses in two active Superfund sites. Numerous other
PRPs have also been designated at these sites. Although the law imposes joint and several liability on PRPs, the Company’s
historical experience demonstrates that these costs are shared with other PRPs. Settlements and costs paid by the Company in
Superfund matters to date have not been material.
The Company has been named as third-party defendant (along with approximately 200 other entities) in an action initially brought by
the New Jersey Department of Environmental Protection (NJDEP) in the Supreme Court of New Jersey, Essex County against
Occidental Chemical corporation and several other companies that are successors in interest to Diamond Shamrock Corporation.
The NJDEP seeks recovery of all costs associated with the investigation, removal, cleanup and damage to natural resources
occasioned by Diamond Shamrock’s disposal of various forms of chemicals in the Passaic River. The damages are alleged to
potentially range “from hundreds of millions to several billions of dollars.” Pursuant to New Jersey’s Court Rules, the defendants
were required to identify all other parties which could be subject to permissive joinder in the litigation based on common questions of
law or fact. Third-party complaints seeking contribution from more than 200 entities, which have been identified as potentially
contributing to the contamination in the Passaic, were filed on February 5, 2009. Based on currently available information, the
Company is unable to determine the likelihood or reasonably estimate a range of loss pertaining to this matter at this time.
Uncertainties associated with environmental remediation contingencies are pervasive and often result in wide ranges of outcomes.
Estimates developed in the early stages of remediation can vary significantly. A finite estimate of costs does not normally become
fixed and determinable at a specific time. Rather, the costs associated with environmental remediation become estimable over a
continuum of events and activities that help to frame and define a liability, and the Company continually updates its cost estimates.
The Company has an ongoing monitoring and identification process to assess how the activities, with respect to the known
exposures, are progressing against the accrued cost estimates, as well as to identify other potential remediation issues.