HomeMy WebLinkAbout20091847.tiffCLERK TO THE BOARD
PHONE (970) 336-7215, Ext. 4226
FAX: (970) 352-0242
P. O. BOX 758
GREELEY, COLORADO 80632
COLORADO
September 1, 2009
EASTMAN KODAK COMPANY
OFFICE OF THE CONTROLLER
9952 EASTMAN PARK DRIVE
WINDSOR, CO 80551-1308
RE: THE BOARD OF EQUALIZATION, 2009, WELD COUNTY, COLORADO - STIPULATE
PETITIONER'S APPEAL AND AFFIRM ASSESSOR'S VALUE
DESCRIPTION OF PROPERTY: ACCOUNT #: P0008514 PARCEL #: 080726200015 - NON
HEALTH 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
$30,605,396 $28,832,299
oC'. ir'fl/1,f-E'3(Lr 7o)
2009-1847
AS0073
iii - f -e7
EASTMAN KODAK COMPANY - P0008514
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,
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
2009-1847
AS0073
n
2009
COUNTY BOARD OF EQUALIZATION
WELD COUNTY
ASSESSOR'S ACCOUNT NUMBER P0008514
STIPULATION (As To Tax Year 2009 Actual Value)
RE PETITION OF:
NAME: EASTMAN KODAK COMPANY
OFFICE OF THE CONTROLLER
9952 EASTMAN PARK DRIVE
WINDSOR CO 80551-1308
Petitioner(s), EASTMAN KODAK COMPANY 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:
NON HEALTH 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:
IMPROVEMENTS: $30,605,396
TOTAL $30,605,396
4. After further review and negotiation, the petitioner(s) and Weld County Assessor
agree to the following actual value for the subject property.
LAND: �0
IMPROVEMENTS: $28,832,299
TOTAL $28,832,299
P0008514 NON HEALTH W2 26 6 67
420!9- 12ir)
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:
eiscrat 5AuttCe
or Attorney
Address:
2/00 6 PPG /emu=
P/ T /S!/,c6 f, -- /5-77
Telephone: Telephone: e%/2 — `1" 74 tr%
County Assessor:
P0008514 NON HEALTH W2 26 6 67
ADDRESS:
1400 N.17th Avenue
Greeley, CO 80631
(970) 353-3845 ext. 3656
7I/lU��l
CHRISTOPHER
BRENDA
VALUATION REPORT
OF
PERSONAL PROPERTY
FOR
County Board of Equalization
EASTMAN KODAK COMPANY
PETITIONER
Vs.
WELD COUNTY ASSESSOR'S OFFICE
RESPONDENT
Schedule Number: P0008514
Log Number: 2572
Date: 8/5/2009
Time: 03:15 PM
Board: Board #1
PREPARED BY
APPRAISERS NAME
Sean McElroy
8/04/09
Weld County
M. WOODRUFF COUNTY
ASSESSOR
DONES, DEPUTY ASSESSOR
Signature Date
ASSESSOR'S OFFICE STAFF APPRAISER
CBOE_PP_010998
Page 1
o?009-/847
COST APPROACH
Location of the subject property is:
Street Address
City
9952 Eastman Park 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 $30,605,396 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 ye<
if it was in use on January 1, regardless of any destruction, conveyance, relocation or change in
taxable status.
COST APPROACH VALUE
$30,605,396
CBOE_PP_01 09
Page
MARKET APPROACH
Pursuant to Colorado Revised Statute the Assessor has considered the Market Approach to value on
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 on
Personal Property. Due to the insufficient information for the income on Personal Property, the Weld
County Assessor has not utilized the Income Approach.
CBOE_PP_010998
Page 3
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 of
$30,605,396 be affirmed for the tax year 2009.
FINAL VALUE
$30,605,396
CBOE_PP_01095
Page
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
P0008514
2009
0400
NON HEALTH W2 26 6 67
PROPERTY OWNER
EASTMAN KODAK COMPANY
OFFICE OF THE CONTROLLER
9952 EASTMAN PARK DRIVE
WINDSOR, CO 80551-1308
PROPERTY CLASSIFICATION
ASSESSOR'S VALUATION
ACTUAL VALUE PRIOR
TO
REVIEW
ACTUAL VALUE AFTER
REVIEW
PERSONAL PROP
30,605,396
30,605,396
TOTAL
$30,605,396
$30,605,396
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
2009-1847
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
915 101" 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 filed 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 9 Avg end 9th 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
mit, original installed cost, appraisal, etc.)
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ATTESTATION
I, the undersigned owner or agent' of the property identified above, affirm that the statements
co efeinpnd on any attachments pfetto a 7 true arld complete. 7/RD1/49
Telephone Number Date
1 Attach letter of authorization signed by property owner.
15 -DPI -AR
PR 207-08/08
NOD #: 7554
Oct -31-2007 02:30pm From- T-860 P 002/002 F-182
August 3, 2007
GENERAL APPOINTMENT OF AGENCY
T 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 returns, obtaining copies of appraisals, tax assessments, or any other
informationtelevant 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 thrn 2009 or until revoked
in writing by Eastman Kodak Company or Ernst & Young.
Tueed- '4k-yK. 1 c f la.rtr i teD
printed name and title
Eastman Kodak Company
343 State Street
Rochester, New York 14650
mailing address
to -'Win
date
6955-, fl- 51.0"
Telephone
signed (Ernst & Young)
Ernst & Young LT.?
Property Tax Services
P. O. Box 68964
Indianapolis, TN 46268
mailing address
317/280-3400
telephone
317/280-6102
fax number
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AUDIT -EXPRESS STOP FINANCING ,.
AUDIT-QUALEX INC.
Audit-Test-AKB - ._. .......
Cinesite, Inc. -._ ..__..
Eastman Kodak Company - EKC
Eastman Kodak Company - GA
EASTMAN KODAK COMPANY - LOCATION
Eastman Kodak Company -TX
EASTMAN KODAK COMPANY -LEASE
ENCAD INC.
Event Imaging Solutions, Inc.
Express Stop Financing
FPC, Inc ....
FPC, Inc - Protek
KODAK GRAPHIC COMMUNICATIONS COMPANY
KODAK IMAGING NETWORK INC.
KODAK POLYCHROME GRAPHICS
KODAK POLYCHROME GRAPHICS -LEASED
KODAK REAL ESTATE
Kodak Versamark, Inc
Laser -Pacific Media Corp
Nexpress Solutions
Pacific Film Laboratories, Inc
Pacific Video Inc
PACIFIC VIDEO INC.-1017
PACIFIC VIDEO INC.-809
Pakon, Inc
Practice Works
Practice Works Systems, LLC
Qualex Inc. - Lease
Qualex Inc
Qualex - Ohio
Qualex Inc - CLO Durham
Qualex Inc -OSP Durham
Qualex Inc -Wake
Qualex Inc. - OSP
QUALEX INC.-041
QUALEX INC.-048
QUALEX INC.-309
QUALEX INC.-405
QUALEX INC.-503
QUALEX INC.-514
QUALEX INC.-570
QUALEX INC. 702
Qualex OSP warehouse
Qualex Photofinishing Labs Inc. - QPLI
QUALEX PHOTOFINISHING LABS INC.-065
QUALEX PHOTOFINISHING LABS INC.-083
QUALEX PHOTOFINISHING LABS INC.-307
QUALEX PHOTOFINISHING LABS INC.-414
QUALEX PHOTOFINISHING LABS INC.-461
AUDIT-ESF
AUDIT-QUAL
Audit -Test
Cinesite
Kodak
EKC-GA
EKC-LOC
TXCOLLIN
EKC LSE
ENCAD
EIS
ESF
FPC
FPC-PRO
KGCC
KINI
KPG
KPG-LN
KODAK -REAL
VMARK
LPMC
Nexpress
PFL
PVI
PAVID-1017
PAVID-809
Pakon
PW
PW-MD
QL
Qual....
'Q -OHIO
Q-CLO
QOSP-DUR
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QOSP
QP-041
QP-048
QP-309
QP-405
QP-503
QP-514
QP-570
QP-702
Qualex CA
QPLI
QPLI-065
QPLI 083
QPLI-307
QPLI-414
QPLI 461
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COLORADO
July 27, 2009
EASTMAN KODAK COMPANY
OFFICE OF THE CONTROLLER
9952 EASTMAN PARK DRIVE
WINDSOR, CO 80551-1308
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.: P0008514
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.
EASTMAN KODAK COMPANY - P0008514
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
<-L
y
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.
i
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/F52/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
follows:
KPG Impacted Cost
Minimum
Maximum
Existing
KCD Impacted Cost
Minimum
Maximum
Existing (estimated)
concluded the net realizable
$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
(cost centers 10093 and 10094 only) sites
2009.
value for the assets impacted to be as
$5.2 million and $1.89 million for the KPG and KCD
for the assessment period beginning January 1,
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-
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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 the impacted
assets as identified in the worksheets be assessed using the ranges listed above (Historical
cost * rent realizable value * assessment ration) to determine taxable value.
Respectfully submitted,
Darrell
[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. Smalley I Tax Senior Manager I State and Local Tax
Ernst & Young LLP
6
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-
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uwg81aHs9Bzh05LziIdfd40mzlrUPb6y0Qg1I7gN1SsGMdPYfDyN-OwrpdICSmkTXzAkjp8jpR82cxKpZ>
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.
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