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Home My WebLink About20091846.tiffCLERK TO THE BOARD PHONE (970) 336-7215, Ext. 4226 FAX: (970) 352-0242 P. O. BOX 758 GREELEY, COLORADO 80632 Wi�Dc. COLORADO September 3, 2009 KODAK POLYCHROME GRAPHICS TAX DEPT 3414 N DUKE ST 1ST FLOOR DURHAM, NC 27704 RE: THE BOARD OF EQUALIZATION, 2009, WELD COUNTY, COLORADO - STIPULATE PETITIONER'S APPEAL AND AFFIRM ASSESSOR'S VALUE DESCRIPTION OF PROPERTY: ACCOUNT #: P0008513 PARCEL #: 080726200015 - PLATE MANUFACTURING & PLATE II W2 26 6 67 Dear Petitioner: On July 28, July 30, and August 5, 2009, the Board of County Commissioners of Weld County, Colorado, convened, and acting as the Board of Equalization, pursuant to Section 39-8-101, C.R.S., et.seq., considered the Stipulation on your petition of appeal of the County Assessor's valuation of your property described above, for the year 2009. The Stipulation was entered into between the Assessor and said petitioner(s), and accepted by the Board of Equalization, agreeing that the assessment and valuation of the Weld County Assessor be Stipulated as follows: ACTUAL VALUE AS DETERMINED BY ASSESSOR ACTUAL VALUE AS STIPULATED $19,203,261 $12,200,000 2009-1846 AS0073 (0 ; 4s, 04, /l�-(tt rc5 44-3/0-1 KODAK POLYCHROME GRAPHICS - P0008513 Page 2 If you have questions or need additional information, please do not hesitate to contact me at (970) 336-7215, Extension 4226. Very truly yours, yy// Esther E. Gesick Deputy Clerk to the Board cc: Christopher Woodruff, Assessor ERNST & YOUNG LLP PROPERTY TAX SERVICES PO BOX 68964 INDIANAPOLIS, IN 46268 2009-1846 AS0073 f 2009 COUNTY BOARD OF EQUALIZATION WELD COUNTY ASSESSOR'S ACCOUNT NUMBER P0008513 STIPULATION (As To Tax Year 2009 Actual Value) RE PETITION OF: NAME: KODAK POLYCHROME GRAPHICS TAX DEPT 3414 N DUKE ST 1ST FLOOR DURHAM NC 27704 Petitioner(s), KODAK POLYCHROME GRAPHICS and the Weld County Assessor, hereby enter into this Stipulation regarding the tax year 2009 valuation of the subject property, and jointly move that the Board of Equalization to enter its order based on this Stipulation. Petitioner(s) and the Assessor agree and stipulate as follows: 1. The property subject to this Stipulation is described as: PLATE MANUFACTURING & PLATE II W2 26 6 67 2. The subject property is classified as Personal property 3. The County Assessor originally assigned the following actual value to the subject property for 2009. LAND: IQ IMPROVEMENTS: $19,203,262 TOTAL $19,203,262 4. After further review and negotiation, the petitioner(s) and Weld County Assessor agree to the following actual value for the subject property. LAND: IMPROVEMENTS: $12,200,000 TOTAL $12,200,000 P0006513 PLATE MANUFACTURING B PLATE II W226007 ,9c i- /J'% 5. The valuations, as established above, shall be binding only with respect to tax year 2009. 6. Brief narrative as to why the reduction was made: Value was adjusted based upon the evidence supplied to support the presence of economic obsolescence. 7. Both parties agree that the hearing scheduled before the Weld County Board of Equalization on 8/5/2009 at 3:15 PM be vacated. DATED this 4 day of August, 2009. Petitioner(s) or Attorney Address: Address: 2/0O Okt-t. PP6 /Cate ,% W-- P4- ( Seltaa Telephone: Telephone: 40. ?oil. 7(e 9 County Assessor: ADDRESS: 1400 N.17th Avenue Greeley, CO 80631 (970) 353-3845 ext. 3656 P0008513 PLATE MANUFACTURING S. PLATE II W226887 CHRISTOPHER BRENDA VALUATION REPORT OF PERSONAL PROPERTY FOR County Board of Equalization KODAK POLYCHROME GRAPHICS PETITIONER Vs. WELD COUNTY ASSESSOR'S OFFICE RESPONDENT Schedule Number: P0008513 Log Number: 2572 Date: 8/5/2009 Time: 03:15 PM Board: Board #1 PREPARED BY APPRAISERS NAME Sean McElroy 8/04/09 Weld Count, M. WOODRUFF COUNT ASSESSOI DONES, DEPUTY ASSESSO Signature Date ASSESSOR'S OFFICE STAFF APPRAISER CBOE_PP_010' Pac ,,PCU J_ /star COST APPROACH Location of the subject property is: Street Address City 1 Lithoplate Dr Windsor NARRATIVE The value on this account was originally derived from an asset listing supplied by the petitioner with their 2009 Personal Property Declaration. The declaration was sent to our office, was reviewed by a appraiser and then was input into our personal property computer program. The declaration was signed by the owner/agent declaring that the information provided on the declaration included a full and complete list of property and that no attempt had been made to mislead the Assessor as to it's age, quality, quantity or value. The actual value of $19,203,262 was determined by classifying the assets reported on the declaration, the year they were purchased and their original cost, and then applying the appropriate tables and factors as mandated by the Colorado Department of Property Taxation. Colorado law does not allow for the proration of personal property it must be valued for the entire yeE if it was in use on January 1, regardless of any destruction, conveyance, relocation or change in taxable status. COST APPROACH VALUE $19,203,262 CBOE_PP_010'. Pac MARKET APPROACH Pursuant to Colorado Revised Statute the Assessor has considered the Market Approach to value of Personal Property. Due to the insufficient information for the market of personal property, the Weld County Assessor has not utilized the Market Approach. INCOME APPROACH Pursuant to Colorado Revised Statute the Assessor has considered the Income Approach to value o Personal Property. Due to the insufficient information for the income on Personal Property, the Welc County Assessor has not utilized the Income Approach. CBOE_PP_0701 Pao CONCLUSION The subject property has been classified as Personal Property for property tax purposes. Personal Property values shall be determined by appropriate consideration of the Cost Approach, Market Approach, and Income Approach to value. {39-1-103)(5)(a) CRS} The Assessor has considered the three approaches to value for the subject property. It is the petitioner's responsibility to provide sufficient evidence to substantiate that the Assessor's value is incorrect. After consideration of the three approaches, it is the Weld County Assessor's request that the value $19,203,262 be affirmed for the tax year 2009. FINAL VALUE $19,203,262 CBOE_PP_01( Pa REAL AND PERSONAL PROPERTY NOTICE OF DETERMINATION Christopher M. Woodruff WELD Assessor 1400 N 17th Ave GREELEY, CO 80631 Date of Notice: 7/8/2009 Telephone: (970) 353-3845 Fax: (970) 304-6433 Office Hours: 8:00 AM - 5:00 PM SCHEDULE/ACCOUNT NO. TAX YEAR TAX AREA LEGAL DESCRIPTION/ PHYSICAL LOCATION P0008513 2009 0400 PLATE MANUFACTURING & PLATE II W2 26 6 67 PROPERTY OWNER 1 KODAK POLYCHROME GRAPHICS TAX DEPT 3414 N DUKE ST 1ST FLOOR DURHAM, NC 27704 PROPERTY CLASSIFICATION ASSESSOR'S VALUATION ACTUAL TAOLUE PRIOR REVIEW ACTUAL VALUE AFTER REVIEW PERSONAL PROP 19,203,261 19,203,261 TOTAL $19,203,261 $19,203,261 The Assessor has carefully studied all available information, giving particular attention to the specifics included on your protest. The Assessor's determination of value after review is based on the following: PPO4 - No change has been made to the valuation of this property. Colorado law requires us to send this notice of denial for all properties on which we do not adjust the value. If you disagree with the Assessor's decision, you have the right to appeal to the County Board of Equalization for further consideration, § 39-8-106(1)(a), C.R.S. The deadline for filing real property appeals is July 15. The deadline for filing personal property appeals is July 20. The Assessor establishes property values. The local taxing authorities (county, school district, city, fire protection, and other special districts) set mill levies. The mill levy requested by each taxing authority is based on a projected budget and the property tax revenue required to adequately fund the services it provides to its taxpayers. The local taxing authorities hold budget hearings in the fall. If you are concerned about mill levies, we recommend that you attend these budget hearings. Please refer to last year's tax bill or ask your Assessor for a listing of the local taxing authorities. Please refer to the reverse side of this notice for additional information. ERNST & YOUNG 2100 ONE PPG PLACE PITTSBURGH PA 15222 2009-1846 APPEAL PROCEDURES County Board of Equalization Hearings will be held from July 1 through August 5 at 915 10th Street, Greeley, CO To appeal the Assessor's decision, complete the Petition to the County Board of Equalization shown below, and mail or deliver a copy of both sides of this form to: WELD COUNTY BOARD OF EQUALIZATION 915 10TH Street, P.O. Box 758 Greeley, Colorado 80632 Telephone (970) 356-4000 Ext, 4225 To preserve your appeal rights, your Petition to the County Board of Equalization must be postmarked or delivered on or before July 15 for real property and on or before July 20 for personal property — after such date, your right to appeal is lost. You may be required to prove that you fled a timely appeal; therefore, we recommend that all correspondence be mailed with proof of mailing. You will be notified of the date and time scheduled for your hearing. The County Board of Equalization must mail a written decision to you within five business days following the date of the decision. The County Board of Equalization must conclude hearings and render decisions by August 5, § 39-8-107(2), C.R.S. If you do not receive a decision from the County Board of Equalization and you wish to continue your appeal, you must file an appeal with the Board of Assessment Appeals by September 11. If you are dissatisfied with the County Board of Equalization's decision and you wish to continue your appeal, you must appeal within 30 days of the date of the County Board's written decision to ONE of the following: Board of Assessment Appeals District Court 1313 Sherman Street, Room 315 99 Avid 9t" Street, P.O. Box C Denver, CO 80203 Greeley, Colorado 80632 (303) 866-5880 Telephone (970) 356-4000 Ext. 4520 www.dola.colorado.gov/baa Binding Arbitration For a list of arbitrators, contact the County Commissioners at the address listed for the County Board of Equalization. If the date for filing any report, schedule, claim, tax return, statement, remittance, or other document falls upon a Saturday, Sunday, or legal holiday, it shall be deemed to have been timely filed if filed on the next business day, § 39-1-120(3), C.R.S. PETITION TO COUNTY BOARD OF EQUALIZATION What is your estimate of the property's value as of June 30, 2008? (Your opinion of value in terms of a specific dollar amount is required for real property pursuant to § 39-8-106(1.5), C.R.S.) What is the basis for your estimate of value or your reason for requesting a review? (Please attach additional sheets as necessary and any supporting documentation, i.e., comparable sales, rent roll, original installed cost, ppraisal, etc.) I UG- /I/$ -T /t- EGuNPM/C 03SJIE'SGE-AIGL, v/5 c nvy ✓Av�t� OP U^De2LYN6 4S'SfS =S r/s,Pftc7?fJ ,9i+° ova 74-SSFSstry) lik &els - exv4gi - E-746, 1_, 7 Elkta/i Et - 485 6'sSet .4 i� S�Gdr� r,� 17,4-1,0C, ATTESTATION I, the undersigned owner or agent' of the property identified above, affirm that the statements connaaiRecl her�i -n..n any attachments hereto are true complete. Sigiature ( Telephone Number Date Attach letter of authorization signed by property owner. 15 -OPT -AR PR 207-08/08 NOD #, 7553 0ct-31-2007 02:30pm From- T -B60 P.002/002 F -1B2 August 3, 2007 GENERAL APPOINTMENT OF AGENCY I have authorized Ernst & Young TO represent Eastman Kodak Company and all related subsidiaries for all property tax matters. Ernst & Young has the general power to represent us in receiving notices of value, filing of realms, obtaining copies of appraisals, tax assessments, or any other information relevant to property tax matters. Ernst & Young is also authorized to negotiate and accept any settlement reached with all assessment and appraisal authorities to including boards of equalization, appraisal review boards, state tax commissions, or other entities exercising authorities or review of property tax assessments, abatements, exemptions or any matter upon which it has administrative jurisdiction. This appointment of agency remains in effect for tax year(s) 2007 thru 2009 or until revoked in writing by Eastman Kodak Company or Ernst & Young. signed (Ernst & Young) cc -PROW,4glieT K M f M'wtt✓`-ti gmst & Young ILP printed name and title Eastman Kodak Company 343 State Street Rochester, New York 14650 mailing address t07" 14101 date fax number Gas -,1$--54O1 telephone Property Tax Services P. O. Box 68964 Indianapolis, TN 46268 mailing address 317/280-3400 telephone 317280-6102 AUDIT -EXPRESS STOP FINANCING AUDIT-ESF AUDIT-QUALEX INC. AUDIT QUAL Audit-Test-AKB Audit Test Cinesite, Inc. Cinesite Eastman Kodak Company - EKC Kodak Eastman Kodak Company GA EKC GA EASTMAN KODAK COMPANY -LOCATION EKC-LOC Eastman Kodak Company -TX TXCOLLIN EASTMAN KODAK COMPANY -LEASE EKC-LSE ENCAD INC _. ..._. - ENCAD.. Event Imaging Solutions, Inc. EIS Express Stop Financing ESF FPC, Inc FPC FPC, Inc - Protek FPC-PRO KODAK GRAPHIC COMMUNICATIONS COMPANY l KGCC KODAK IMAGING NETWORK INC !KINI KODAK POLYCHROME GRAPHICS KPG KODAK POLYCHROME GRAPHICS -LEASED KPG-LN KODAK REAL ESTATE KODAK -REAL Kodak Versamark, Inc VMARK Laser -Pacific Media Corp i LPMC Nexpress Solutions Nexpress Pacific Film Laboratories, Inc PFL Pacific Video Inc PVI PACIFIC VIDEO INC. 1017 PAVID-1017 PACIFIC VIDEO INC. 809 PAVID-809 Pakon, Inc Pakon Practice Works lPW Practice Works Systems, LLC PW-MD Qualex Inc - Lease QL Qualex Inc Qual Qualex - Ohio Q OHIO Qualex Inc - CLO Durham Q-CLO Qualex Inc -OSP Durham QOSP-DUR Qualex Inc -Wake Q WAKE Qualex Inc - OSP QOSP QUALEX INC.-041 QP-041 QUALEX INC.-048 QP-048 QUALEX INC. 309 QP 309 _. QUALEX INC405. QP-405 QUALEX INC 503 QP-503 QUALEX INC 514 QP-514 QUALEX INC 570 QP-570 QUALEX INC 702 QP-702 Qualex OSP warehouse Qualex CA Qualex Photofinishing Labs Inc. - QPLI QPLI QUALEX PHOTOFINISHING LABS INC.-065 QPLI-065 QUALEX PHOTOFINISHING LABS INC.-083 QPLI 083 QUALEX PHOTOFINISHING LABS INC. 307 QPLI-307 QUALEX PHOTOFINISHING LABS INC.-414 QPLI-414 QUALEX PHOTOFINISHING LABS INC.-461 QPLI-461 J ERNST &YOUNG At4r. COLORADO July 27, 2009 KODAK POLYCHROME GRAPHICS TAX DEPT 3414 N DUKE ST 1ST FLOOR DURHAM, NC 27704 Dear Petitioner(s): CLERK TO THE BOARD PHONE (970) 356-4000 EXT 4226 FAX: (970) 352-0242 WEBSITE: www.co.weld.co.us 915 10TH STREET P.O. BOX 758 GREELEY, COLORADO 80632 Parcel No.: 080726200015 Account No.: P0008513 The Weld County Board of Equalization has set a date of August 5, 2009, at or about the hour of 3:15 PM, to hold a hearing on your valuation for assessment. This hearing will be held at the Weld County Centennial Center, First Floor Hearing Room, 915 10th Street, Greeley, Colorado. You have a right to attend this hearing and present evidence in support of your petition. The Weld County Assessor or his designee will be present. The Board will make its decision on the basis of the record made at the aforementioned hearing, as well as your petition, so it would be in your interest to have a representative present. If you plan to be represented by an agent or an attorney at your hearing, prior to the hearing you shall provide, in writing to the Clerk to the Board's Office, an authorization for the agent or attorney to represent you. If you do not choose to attend this hearing, a decision will still be made by the Board by the close of business on August 5, 2009, and mailed to you on or before August 12, 2009. Because of the volume of cases before the Board of Equalization, all cases shall be limited to 15 minutes. Also due to volume, cases cannot be rescheduled. It is imperative that you provide evidence to support your position. This may include evidence that similar homes in your area are valued less than yours or you are being assessed on improvements you do not have. Please note: The fact that your valuation has increased cannot be your sole basis of appeal. Without documented evidence as indicated above, the Board will have no choice but to deny your appeal. If you wish to obtain the data supporting the Assessor's valuation of your property, please submit a written request directly to the Assessor's Office by fax (970) 304-6433, or if you have questions, call (970) 353-3845. Upon receipt of your written request, the Assessor will notify you of the estimated cost of providing such information. Payment must be made prior to the Assessor providing such information, at which time the Assessor will make the data available within three (3) working days, subject to any confidentiality requirements. KODAK POLYCHROME GRAPHICS - P0008513 Page 2 Please advise me if you decide not to keep your appointment as scheduled. If you need any additional information, please call me at your convenience. Very truly yours, BOARD OF EQUALIZATION '4,5 Esther E. Gesick Deputy Clerk to the Board cc: Christopher Woodruff, Assessor ERNST AND YOUNG LLP PROPERTY TAX SERVICES PO BOX 68964 INDIANAPOLIS, IN 46268 Esther Gesick From: Sent: To: Cc: Subject: Chris, Darrell.Smalley@ey.com Thursday, July 30, 2009 1:40 PM Chris Woodruff Brenda Dones; Raelene Churyk; Cyndy Giauque; Esther Gesick; Sean Mcelroy; Robert Kohl Re: Kodak: Weld County Personal Property Information Thanks much for the note. While the public announcement occurred in 1st quarter 2009, it unfortunately was the final result of continued market erosion for plate product and film finishing operations. The closure is a lagging indicator that suggests the value of the business enterprise and its underlying equipment was steadily declining for periods prior to that. We will work to illustrate this as of January 1, 2009 and June 30, 2008 in line with Colorado statutes. Thanks, Darrell Darrell E. Smalley Ernst & Young Original Message From: Chris Woodruff [cwoodruff@co.weld.co.us] Sent: 07/30/2009 10:58 AM CST To: Darrell Smalley Cc: Brenda Dones <bdones@co.weld.co.us>; Raelene Churyk <rchuryk@co.weld.co.us>; Cyndy Giauque <cgiauque@co.weld.co.us>; Esther Gesick <egesick@co.weld.co.us>; Sean Mcelroy <smcelroy@co.weld.co.us> Subject: RE: Kodak: Weld County Personal Property Information Darrell, My schedule shows that the hearing has been scheduled for Wednesday, August 5 at 3:15PM. I am not sure why you haven't received notification yet. I have reviewed what you sent and I believe that I have a statutory impediment to adopting your methodology and value. Colorado law focuses the valuation procedures for personal property to January 1 of each year. The inventory of property is established at that time, as are any other salient data needed for the appraisal. Once we establish the actual value for January 1, we then trend it to the real property appraisal date (6-30-2008) using state published factors. In this case, the closure of the lines in Windsor was not announced until March 2009. The methodology you propose asks us to take notice of that fact and to establish the value of the property based upon events which will occur during 2009. I believe that I cannot do this under the law. We understand that in all probability there will be no value in these lines in 2010, because as of January 1 all of the events concerning the disposition of the personal property will have taken place. Colorado law also prohibits the proration of personal property values, even in the case of mid year destruction or disposal. I am still willing to discuss additional obsolescence on the value of the equipment that existed and was publicly known as of January 1, 2009 but not on the basis of events which are now taking place. Best wishes, Christopher M Woodruff Weld County Assessor 1400 N 17th Ave Greeley, CO 80631 (970) 353-3845 ext 3697 (phone) (970) 304-6433 (fax) cwoodruff@co.weld.co.us Original Message From: Darrell.Smalley@ey.com [mailto:Darrell.Smalley@ey.com] Sent: Thursday, July 30, 2009 9:52 AM To: Chris Woodruff Cc: Robert.Kohl@ey.com Subject: Fw: Kodak: Weld County Personal Property Information Chris, Let me know if you and your team have had a chance to review and have any questions. Would be helpful to get a sense of whether this is a matter that you think we can resolve prior to a hearing. Also, is there a hearing date? My assistant is checking the mail daily and hasn't received anything in Pittsburgh. I know we have a hearing scheduled for real property on Monday that Yvette and Rob are prepared to attend, if necessary. However, we haven't seen a notice for personal property. Hoping to reach conclusion on personal property prior to a hearing, but needed to know if there was a date so that travel could be arranged. I'm in Florida with the family on vacation, but have cell / blackberry. Let me know your thoughts. Take care, Darrell Darrell E. Smalley I Tax Senior Manager I State and Local Tax Ernst & Young LLP 2100 One PPG Place, Pittsburgh, Pennsylvania 15222 Office: +1 412 804 7689 I Mobile: +1 412 370 5940 Fax: +1 866 713 0520 Website: www.ey.com <http://console.mxlogic.com/redir/?1osuhjLtASOOC ssUCratVrBPt- LtdZ5VUQsEK6XCQdz7PP-EHFV_Bw1VrBPrWtQTPgar3NEVsd7dTT3rX9Inc96y02GEglid402- uwg81aHs9Bzh05LziIdfd40mzlrUPb6y0Qg1I7gN1SsGMdPYfDyN-OwrhdICSmkTXzAkjp8jpR82cxKpZ> Assistant: Carolyn Adamcyk I Phone: +412 644 0550 I carolyn.adamcyk@ey.com <mailto:carolyn.adamcyk@ey.com> Thank you for considering the environmental impact of printing emails. 2 Forwarded by Darrell E. Smalley/Cons/TAX/EYLLP/US on 07/30/2009 11:45 AM Darrell E. Smalley/Cons/TAX/EYLLP/US 07/29/2009 07:53 AM To Chris Woodruff <cwoodruff@co.weld.co.us>, Raelene Churyk <rchuryk@co.weld.co.us>, Sean Mcelroy <smcelroy@co.weld.co.us>, Brenda Dones <bdones@co.weld.co.us> cc Robert P. Kohl/FS2/TAX/EYLLP/US@EY-NAmerica, "Michael Kurtz" <michael.kurtz@kodak.com>, melvin.graham@kodak.com Subject Kodak: Weld County Personal Property Information Weld County Team, We do apologize for the delay in providing additional information. The organization continues to methodically curtail its operations and make final decisions and funnel data to us. However, given time constraints of trying to resolve this matter and the fact that the value was impaired at January 1, 2009, regardless of what equipment is ultimately scrapped in place or sent to another plant as a spare, we wanted to try and resolve this week. As we've discussed in prior weeks and as noted below, we are requesting that an obsolescence adjustment be applied to the 2009 assessed value for the KPG plant and cost centers 10093 and 10094 of the KCD plant. We've provided a listing of the assets impacted. This is based upon severe economic conditions that continue to exist and have been the catalyst for which the organization has determined that its plate production be moved to Columbus, GA and film finishing to Rochester, NY. As of today, the KPG organization is considering the transfer of equipment with a historical cost of approximately $8.7 million to either Columbus, GA or other facilities within Kodak. For the Windsor plant, equipment with a historical cost of approximately $14.7 million is being considered for transfer to Rochester, NY. In both instances, this equipment will be used as spare parts for exiting manufacturing operations, if needed or scrapped. The remaining equipment will be scrapped in place. It is estimated that costs to dismantle, package and ship equipment identified as spares to be in the range of 10% to 15% of historic cost. As noted below, our request is that the equipment impacted by the closure be assessed at its net realizable value being an estimate of the value of an asset that may be realized upon the sale of the asset, less a reasonable prediction of the costs associated with either the eventual sale or the disposal of the asset in question. To determine our ranges, we considered various metrics in the industry of scrap/salvage rates as both a percentage of historical cost and replacement cost new including rates published in Marshall and Swift, general input from scrap/salvage dealer sources, and other data from recent valuation experiences. Given these sources, we concluded a reasonable scrap rate to be in the range of 4% to 10% of either historical or replacement cost new. As mentioned above we used two methods to build our range: 1.) a cost -based estimate and 2.) a reproduction cost -based estimate. Based on our research, under the cost -based method we would estimate ranges of 5% to 10% of historical cost basis. Under the reproduction cost new -based method, we estimated the reproduction cost new by utilizing trends as published by 3 Marshall and Swift and the Bureau of Labor Statistics and applying to original cost based on the year of the asset. The average reproduction cost new for the subject assets was approximately 1.6 times the cost basis. Based on our research, we then applied our estimates of net realizable value on reproduction cost new basis (i.e., 2.5% to 5%). In order to build our range, we derived this as a percentage of cost basis (net realizable value over cost) equates to 4% to 8%. Derivations (on a unit basis) below: Low Cost = 1.00 Reproduction Cost New = 1.6 Net realizable value= 1.6 *.025 = 0.04 Net realizable value / Cost = 0.04 / 1.00 = 4% High Cost = 1.00 Reproduction Cost New = 1.6 Net realizable value= 1.6 *.05 = 0.08 Net realizable value / Cost = 0.08 / 1.00 = 8% We then took the minimum and maximum of the estimated data set from the two methods to build our range: Minimum (4%, 5%, 8%, 10%) = 4% Maximum (4%, 5%, 8%, 10%) = 10% Using this data, we concluded the net realizable value for the assets impacted to be as follows: KPG Impacted Cost Minimum Maximum Existing KCD Impacted Cost Minimum Maximum Existing (estimated) $74 million $2.96 million $7.4 million $19.2 million $27 million $1.08 million $2.7 million $4.7 million We are respectfully requesting a value of $5.2 million and $1.89 million for the KPG and KCD (cost centers 10093 and 10094 only) sites for the assessment period beginning January 1, 2009. I am out of the office through Monday, but am reachable via email and cell phone. Take care, Darrell Darrell E. Smalley I Tax Senior Manager I State and Local Tax Ernst & Young LLP 2100 One PPG Place, Pittsburgh, Pennsylvania 15222 Office: +1 412 804 7689 I Mobile: +1 412 370 5940 Fax: +1 866 713 0520 Website: www.ey.com <http://console.mxlogic.com/redir/?1osuhjLtAS000 ssUCratVrBPt- LtdZ5VUQsEK6XCQdz7PP-EHFV_Bw1VrBPrWtQTPgar3NEVsd7dTT3rX9Inc96y02GEglid402- uwg81aHs9Bzh05LziIdfd40mzlrUPb6y0Qg1I7gN1SsGMdPYfDyN-OwrjdICSmkTXzAkjp81pR82cxKpZ> 4 Assistant: Carolyn Adamcyk I Phone: +412 644 0550 I carolyn.adamcyk@ey.com <mailto:carolyn.adamcyk@ey.com> Thank you for considering the environmental impact of printing emails. Forwarded by Darrell E. Smalley/Cons/TAX/EYLLP/US on 07/29/2009 07:15 AM Darrell E. Smalley/Cons/TAX/EYLLP/US 06/04/2009 02:27 PM To Raelene Churyk <rchuryk@co.weld.co.us> cc Brenda Dones <bdones@co.weld.co.us> Subject Kodak Information Raelene, Wanted to provide you with the information on our obsolescence conclusions for the KCD and KPG cites. As we noted when we filed the returns and when we spoke with you and your team in late May, 2008 and 2009 have been challenging years for the Eastman Kodak Company and its subsidiaries. Due to significantly increasing economic pressures and worldwide manufacturing production over capacity, the organization was forced to perform a worldwide evaluation of the sustainability of its global manufacturing operations. As a result, the organization announced that certain operations at its Windsor, Colorado facility would be permanently closed. Specifically, the printing plate division (KPG) and the converting and packaging division for motion picture films (KCD) will permanently close during 2009. As we discussed, although the organization had made some significant capital investments at the KPG site during the past year, the entire site will be permanently closed. The organization is currently evaluating which assets will be transferred to Columbus, GA and other locations as spare parts only. However, the majority of the remaining assets will be scrapped. The plant in Columbus, GA was built in the mid 1990's and contains state of the are "in line" plate processing equipment. While the Columbus and Windsor plants produce the same product, the Columbus plant is able to produce in a more efficient manner . Furthermore, this plant has excess capacity that results form a recent expansion and addition of a 3rd manufacturing line. As shown on the Personal Property Declaration Schedule for KPG, the cost of the taxable personal property at the site as of January 1, 2009 is $74,957,888. Kodak is systematically writing down any property that has remaining book value. None of this property will remain on the books and records at the end of 2009. The impact on the KCD site is also significant. Cost centers 10093 and 10094 have been idled. These cost centers are responsible for 16 mm and 35 mm film processing and finishing. Certain equipment from cost center 10093 will be transferred to Rochester to be used as spare parts. None of the equipment in 10094 will be transferred and it will be scrapped in place. The change from traditional film projection to digital projection within the motion picture industry is what is driving the material decline for the product manufactured within 10093 and 10094 at the KCD site. Additionally, the organization has excess operating capacity at its Rochester, NY facility where the film that is processed in Colorado is eventually shipped for coating. The cost of the taxable personal property relating to the idled cost centers as of January 1, 2009 is $26,958,480 or approximately 18% of the total reported cost for KCD. 5 Based upon continued discussions with the organization, we have concluded that the Windsor operations have incurable functional obsolescence due to their mechanical inadequacy when compared to more efficient operations in other parts of the organization as well as their technologically inadequacy when compared to other production units within the organization (i.e. Rochester and Columbus). Furthermore, the current and continuing market conditions in the film and print plate industries along with the lack of demand for their products have presented adverse economic conditions that contribute to economic obsolescence. The Colorado Personal Property Manual notes that the "assessor must consider and document all elements of physical depreciation and functional and economic obsolescence as of January 1 each year before placing a value on personal property." Further, The Colorado & Utah Coal Company, v Rorex, 149 Colo. 502, 369 P.2d 796 (1962), states that "Whenever obsolescence becomes known to the Assessor, whether through his efforts or through those of others, it should be a component of the value of the item to be assessed." We have received information for what equipment is getting transferred from KCD to Rochester. Right now, KPG is looking like the greater % of the equipment will be scrapped or used as a spare part; however, this decision is not final. Given the circumstances, we are requesting that for the 2009 tax year, the impacted KCD and KPG assets be taxed at a scrap value. To determine these proposed values, we leveraged several sources of information. First, we reviewed rates for similar equipment as published by Marshall and Swift. Second, we contacted scrap/salvage dealer sources to review values for similar equipment. Third, we leveraged our experiences from recent valuation experiences for like property. We've applied these rates either to the historical cost or a calculated estimate of reproduction/replacement costs new for each of the assets (depending on the bench marking relationship of the net realizable source) and have summarized and illustrated the low and high end of the calculation as a percentage of the original cost by cost center/location. The following outlines the net realizable value for the impacted assets as a percentage of historical cost: KCD 16 mm (10093) KCD 35 mm (10094) KPG all operations 5% to 11% of historical cost 3% to 10% of historical cost 4% to 10% of historical cost. These costs do not take into consideration dismantling or any other costs to prepare to prepare for sale which could make realized amounts zero or less. I am attaching the spreadsheets that outline which assets that will be impacted and what the current decisions are (i.e., scrapped, transferred, etc.). Column E and Column F note the status of the assets for KCD and KPG, respectively. We are respectfully requesting that your office review this information and that assets as identified in the worksheets be assessed using the ranges listed above cost * rent realizable value * assessment ration) to determine taxable value. Respectfully submitted, Darrell the impacted (Historical [attachment "P0008514 - 2009 KCD Return from Assessor - Adjusted Final to Assessor.xls.zip" deleted by Darrell E. Smalley/Cons/TAX/EYLLP/US] [attachment "P0008513 - 2009 KPG Return from Assessor - Adjusted Final to Assessor.xls.zip" deleted by Darrell E. Smalley/Cons/TAX/EYLLP/US] Darrell E. 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