Note 11 - Leases

12 Months Ended

Dec. 31, 2019

NOTE 11: LEASES

Kodak as lessee

The table below presents the lease-related assets and liabilities on the balance sheet:

	Classification in the	December 31,
(in millions)	Consolidated Statement of Financial Position	2019
Assets
Operating lease assets	Operating lease right-of-use assets	$	49
Finance lease assets	Property, plant and equipment, net		5
Total lease assets		$	54

Liabilities
Current
Operating	Current portion of operating leases	$	12
Finance	Short-term borrowings and current portion of long-term debt		1
Noncurrent
Operating	Operating leases, net of current portion		48
Finance	Long-term debt, net of current portion		4
Total lease liabilities		$	65

Weighted-average remaining lease term
Operating		7 years
Finance⁽¹⁾		338 years
Weighted-average discount rate
Operating ⁽²⁾			14.12	%
Finance			6.79	%

⁽¹⁾

One finance lease has a remaining term of 968 years. The weighted-average lease term excluding the lease with a remaining term of 968 years is 4 years.

⁽²⁾

Upon adoption of ASC 842, Kodak’s incremental borrowing rate of 16.50% as of January 1, 2019 was used for existing operating leases.

Lease Costs

The table below presents certain information related to the lease expense for finance and operating leases. Lease expense is presented gross of sublease income. See “Kodak as Lessor” section below for income from subleases.

	Year Ended
	December 31,
(in millions)	2019
Finance lease expense
Amortization of leased assets	$	3
Interest on lease liabilities		—
Operating lease expense		25
Variable lease expense ⁽¹⁾		10
Total lease expense	$	38

⁽¹⁾

Variable lease expense is related to real estate leases and primarily includes taxes, insurance and operating costs.

Other Information

The table below presents supplemental cash flow information related to leases.

	Year Ended
	December 31,
(in millions)	2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for operating leases	$	25
Operating cash flow for finance leases		—
Financing cash flow for finance leases		2
	$	27

Undiscounted Cash Flows

The table below reconciles the undiscounted cash flows for the next five years and thereafter to the finance lease liabilities and operating lease liabilities recorded on the balance sheet.

(in millions)	Operating Leases			Finance Leases
2020	$	21		$	1
2021		15			1
2022		17			1
2023		9			—
2024		8			—
Thereafter		28			117
Total minimum lease payments		98			120
Less: amount of lease payments representing interest		(38	)		(115	)
Present value of future minimum lease payments		60			5
Less: current obligations under leases		12			1
Long-term lease obligations	$	48		$	4

Prior Period Disclosures under ASC 840

For the year ended December 31, 2018, operating lease expense was $21 million, net of sublease income of $7 million.

Future minimum contractual lease payments for operating leases having initial or remaining noncancelable lease terms in excess of one year as of December 31, 2018 were as follows:

(in millions)	At December 31, 2018
2019	$	20
2020		21
2021		13
2022		3
2023		3
Thereafter		7
	$	67

Kodak as Lessor

Kodak’s net investment in sales-type leases as of December 31, 2019 was $4 million. The current portion of the net investment in sales-type leases is included in Trade receivables in the Consolidated Statement of Financial Position. The portion of the net investment in sales-type leases due after one year is included in Other long-term assets.

The table below reconciles the undiscounted cash flows to be received for the next five years and thereafter to the net investment in sales-type leases recorded in the Consolidated Statement of Financial Position:

(in millions)
2020	$	2
2021		1
2022		1
2023 and thereafter		—
Total minimum lease payments		4
Less: unearned interest		—
Less: allowance for doubtful accounts		—
Net investment in sales-type leases	$	4

Undiscounted cash flows to be received for the next five years and thereafter for operating leases and subleases are:

(in millions)
2020	$	10
2021		8
2022		6
2023		5
2024		4
Thereafter		14
Total minimum lease payments	$	47

Income recognized on operating lease arrangements for the year ended December 31, 2019 is presented below (income recognized for sales-type lease arrangements is $0 million):

	Year Ended
	December 31,
(in millions)	2019
Lease income - operating leases:
Lease income	$	9
Sublease income		6
Variable lease income ⁽¹⁾		6
Total lease income	$	21

⁽¹⁾

Variable lease income primarily represents operating costs under real estate leases and incremental variable income based on usage under equipment leases.

Equipment subject to operating leases and the related accumulated depreciation were as follows:

	As of December 31,
(in millions)	2019			2018
Equipment subject to operating leases	$	29		$	34
Accumulated depreciation		(20	)		(19	)
Equipment subject to operating leases, net	$	9		$	15

Equipment subject to operating leases, net is included in Property, plant and equipment, net in the Consolidated Statement of Financial Position.