Note 24 - Discontinued Operations

9 Months Ended

Sep. 30, 2013

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

NOTE 24:  DISCONTINUED OPERATIONS

On the Effective Date, as a part of the Global Settlement and pursuant to the Amended SAPA, Kodak consummated the sale of certain assets of the Business to the KPP Purchasing Parties for net cash consideration, in addition to the assumption by the KPP Purchasing Parties of certain liabilities of the Business, of $325 million. Up to $35 million in aggregate of the purchase price is subject to repayment to KPP if the Business does not achieve certain annual adjusted EBITDA targets over the four-year period ending December 31, 2018. Certain assets and liabilities of the Business in certain jurisdictions were not transferred at the initial closing, which took place on the Effective Date, but are contemplated to be transferred at a series of future deferred closings in accordance with the Amended SAPA.Kodak will operate the Business relating to the deferred closing jurisdictions, subject to certain covenants, until the applicable deferred closing occurs, and will deliver to (or receive from) a KPP subsidiary at each deferred closing a true-up payment reflecting the actual economic benefit (or detriment) to the Business in the applicable deferred closing jurisdiction(s) from the time of the initial closing through the time of the applicable deferred closing. Up to the time of the deferred closing, the results of the operations of the Business will be reported as Earnings (loss) from discontinued operations, net of income taxes in the Consolidated Statement of Operations and the assets and liabilities of the Business will be categorized as Assets held for sale or Liabilities held for sale in the Consolidated Statement of Financial Position, as appropriate.

Kodak recognized a pre-tax loss on the sale of the Business of approximately $163 million during the third quarter 2013 predecessor period. The pre-tax loss excludes recognition of $64 million of non-refundable consideration related to the delayed closings, which non-refundable consideration was received on the Effective Date, and $35 million of contingent consideration, subject to repayment to KPP which was also received by Kodak on the Effective Date. The pre-tax loss includes the recognition of approximately $1.5 billion of unamortized pension losses previously reported in accumulated other comprehensive income.

The following table summarizes the major classes of assets and liabilities related to the disposition of the Business which have been segregated and included in assets held for sale and liabilities held for sale in the Consolidated Statement of Financial Position:

	Successor		Predecessor
	As of September 30, 2013		As of December 31, 2012
(in millions)
Receivables, net	$	21	$	180
Inventories, net		79		123
Property, plant and equipment, net		12		86
Goodwill		-		146
Other assets		11		43
Current assets held for sale	$	123	$	578
Trade payables	$	26	$	77
Miscellaneous payables and accruals		18		159
Pension liabilities		2		1,525
Other liabilities		-		12
Liabilities subject to compromise		-		8
Current liabilities held for sale	$	46	$	1,781

Discontinued operations of Kodak include the Business (excluding the consumer film business, for which Kodak has entered into an ongoing supply arrangement with one or more KPP Purchasing Parties), digital capture and devices business (exited in the third quarter of 2012), Kodak Gallery (exited in the third quarter of 2012), and other miscellaneous businesses.

The significant components of revenues and earnings (loss) from discontinued operations, net of income taxes, are as follows:

	Successor			Predecessor						Successor			Predecessor
	One Month Ended September 30, 2013			Two Months Ended August 31, 2013			Three Months Ended September 30, 2012			One Month Ended September 30, 2013			Eight Months Ended August 31, 2013			Nine Months Ended September 30, 2012
(in millions)
Revenues from Personalized and Document Imaging	$	20		$	201		$	344		$	20		$	734		$	978
Revenues from Digital Capture and Devices operations		-			1			2			-			6			35
Revenues from Kodak Gallery operations		-			-			2			-			-			29
Revenues from other discontinued operations		-			2			11			-			18			37
Total revenues from discontinued operations	$	20		$	204		$	359		$	20		$	758		$	1,079
Pre-tax earnings (loss) from Personalized and Document Imaging	$	11		$	(169	)	$	19		$	11		$	(217	)	$	28
Pre-tax earnings (loss) from Digital Capture and Devices operations		1			-			(7	)		1			2			(77	)
Pre-tax earnings from Kodak Gallery operations		-			-			3			-			1			6
Pre-tax loss from other discontinued operations		-			-			(1	)		-			(18	)		(7	)
(Provision) benefit for income taxes related to discontinued operations		(2	)		91			(4	)		(2	)		97			(10	)
Earnings (loss) from discontinued operations, net of income taxes	$	10		$	(78	)	$	10		$	10		$	(135	)	$	(60	)

Kodak was required to use a portion of the proceeds from the divestiture of the Business to repay $200 million of the Junior DIP Credit Agreement. Interest expense on the debt that was required to be repaid as a result of the sale of the Personalized Imaging and Document Imaging businesses has therefore been allocated to discontinued operations ($0, $4 million, and $14 million for the one month ended September 30, 2013 (Successor) and the two and eight months ended August 31, 2013 (Predecessor), respectively, and $5 million and $14 million for the three and nine months ended September 30, 2012 (Predecessor), respectively).

Depreciation and amortization of long-lived assets of the Personalized Imaging and Document Imaging businesses included in discontinued operations ceased as of July 1, 2013.

Direct operating expenses of the discontinued operations are included in the results of discontinued operations.  Indirect expenses that were historically allocated to the discontinued operations have been included in the results of continuing operations. Prior period results have been reclassified to conform to the current period presentation.