Kodak 2008 Annual Report Download - page 96

94
NOTE 19: ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME
The components of Accumulated other comprehensive (loss) income, net of tax, were as follows:
As of December 31,
(in millions) 2008 2007 2006
Unrealized holding losses related to available-for-sale securities $ - $ - $ (10)
Unrealized (losses) gains related to hedging activity (6) 10 -
Translation adjustments 231 311 197
Pension and other postretirement benefits liability adjustments (974) 131 (436)
Adjustment to initially apply SFAS No. 158 for pension and other
postretirement benefits - -(386)
Total $ (749) $ 452 $ (635)
NOTE 20: STOCK OPTION AND COMPENSATION PLANS
The Company accounts for stock-based compensation in accordance with SFAS No. 123R, "Share-Based Payment," using the fair
value recognition provisions of SFAS No. 123, "Accounting for Stock-Based Compensation." The Company recognized expense
under SFAS No. 123R in the amount of $18 million, $20 million and $17 million for the years ended December 31, 2008, 2007 and
2006, respectively. The related impact on basic and diluted earnings per share for the years ended December 31, 2008, 2007 and
2006 was a reduction of $.06, $.07 and $.06, respectively. The impacts on the Company's cash flows for 2008, 2007 and 2006 were
not material. Stock-based compensation costs for employees related to manufacturing activities were included in the costs
capitalized in inventory at period end.
Of the SFAS No. 123R expense amounts noted above, compensation expense related to the vesting of stock options during the
years ended December 31, 2008, 2007 and 2006 was $10 million, $10 million and $8 million, respectively. Compensation expense
related to unvested stock and performance awards during the years ended December 31, 2008, 2007 and 2006 was $8 million, $10
million and $9 million, respectively.
The Company’s stock incentive plans consist of the 2005 Omnibus Long-Term Compensation Plan (the “2005 Plan”), the 2000
Omnibus Long-Term Compensation Plan (the “2000 Plan”), and the 1995 Omnibus Long-Term Compensation Plan (the “1995
Plan”). The Plans are administered by the Executive Compensation and Development Committee of the Board of Directors. Stock
options are generally non-qualified and are at exercise prices not less than 100% of the per share fair market value on the date of
grant. Stock-based compensation awards granted under the Company’s stock incentive plans are generally subject to a three-year
vesting period from the date of grant.
Under the 2005 Plan, 11 million shares of the Company's common stock may be granted to employees between January 1, 2005
and December 31, 2014. This share reserve may be increased by: shares that are forfeited pursuant to awards made under the
1995 and 2000 Plans; shares retained for payment of tax withholding; shares issued in connection with reinvestments of dividends
and dividend equivalents; shares delivered for payment or satisfaction of tax withholding; shares reacquired on the open market
using cash proceeds from option exercises; and awards that otherwise do not result in the issuance of shares. The 2005 Plan is
substantially similar to and is intended to replace the 2000 Plan, which expired on January 18, 2005. Options granted under the 2005
Plan generally expire seven years from the date of grant, but may be forfeited or canceled earlier if the optionee's employment
terminates prior to the end of the contractual term. The 2005 Plan provides for, but is not limited to, grants of unvested stock,
performance awards, and Stock Appreciation Rights (“SARs”), either in tandem with options or freestanding. SARs allow optionees
to receive payment equal to the increase in the market price of the Company's stock from the grant date to the exercise date. As of
December 31, 2008, 3,333 freestanding SARs were outstanding under the 2005 Plan at an option price of $24.59. Compensation
expense recognized for the years ended December 31, 2008, 2007, or 2006 on those freestanding SARs was not material.
Under the 2000 Plan, 22 million shares of the Company's common stock were eligible for grant to a variety of employees between
January 1, 2000 and December 31, 2004. The 2000 Plan was substantially similar to, and was intended to replace, the 1995 Plan,
which expired on December 31, 1999. The options generally expire ten years from the date of grant, but may expire sooner if the
optionee's employment terminates. The 2000 Plan provided for, but was not limited to, grants of unvested stock, performance
awards, and SARs, either in tandem with options or freestanding. As of December 31, 2008, 45,154 freestanding SARs were
outstanding under the 2000 Plan at option prices ranging from $23.25 to $60.50. Compensation expense recognized for the years
ended December 31, 2008, 2007, or 2006 on those freestanding SARs was not material.