Kodak 2011 Annual Report Download - page 96

2011 Activity
The $133 million of charges for the year 2011 includes $10 million of charges for accelerated depreciation and $2 million for inventory
write-downs, which were reported in Cost of sales in the accompanying Consolidated Statement of Operations. The remaining costs
incurred of $121 million, including $105 million of severance costs, $15 million of exit costs, and $1 million of long-lived asset
impairments, were reported as Restructuring costs, rationalization and other in the accompanying Consolidated Statement of
Operations. The severance and exit costs reserves require the outlay of cash, while long-lived asset impairments, accelerated depreciation
and inventory write-downs represent non-cash items.
The 2011 severance costs related to the elimination of approximately 1,225 positions, including approximately 575 manufacturing/service,
550 administrative, and 100 research and development positions. The geographic composition of these positions includes approximately
725 in the United States and Canada, and 500 throughout the rest of the world.
The charges of $133 million recorded in 2011 included $47 million applicable to FPEG, $34 million applicable to GCG, $9 million
applicable to CDG, and $43 million that was applicable to manufacturing/service, research and development, and administrative functions,
which are shared across all segments.
As a result of these initiatives, severance payments will be paid during periods through 2012 since, in many instances, the employees whose
positions were eliminated can elect or are required to receive their payments over an extended period of time. In addition, certain exit costs,
such as long-term lease payments, will be paid over periods throughout 2012 and beyond.
NOTE 18: RETIREMENT PLANS
Substantially all U.S. employees are covered by a noncontributory defined benefit plan, the Kodak Retirement Income Plan (“KRIP”), which is
funded by Company contributions to an irrevocable trust fund. The funding policy for KRIP is to contribute amounts sufficient to meet minimum
funding requirements as determined by employee benefit and tax laws plus any additional amounts the Company determines to be
appropriate. Generally, benefits are based on a formula recognizing length of service and final average earnings. Assets in the trust fund are held for
the sole benefit of participating employees and retirees. They are comprised of corporate equity and debt securities, U.S. government securities,
partnership investments, interests in pooled funds, commodities, real estate, and various types of interest rate, foreign currency, debt, and equity market
financial instruments.
In March 1999, the Company amended the KRIP to include a separate cash balance formula for all U.S. employees hired after February 1999. All U.S.
employees hired prior to that date were granted the option to choose the traditional KRIP plan or the Cash Balance plan. Written elections were made
by employees in 1999, and were effective January 1, 2000. The Cash Balance plan credits employees' accounts with an amount equal to 4% of their
pay, plus interest based on the 30-year treasury-bond rate. In addition, for employees participating in the Cash Balance plan and the Company's
defined contribution plan, the Savings and Investment Plan (“SIP”), the Company matches dollar-for-dollar on the first 1% contributed to SIP and $.50
for each dollar on the next 4% contributed. Company contributions to SIP were $10 million and $11 million for 2011 and 2010, respectively.
The Company also sponsors unfunded defined benefit plans for certain U.S. employees, primarily executives. The benefits of these plans are obtained
by applying KRIP provisions to all compensation, including amounts being deferred, and without regard to the legislated qualified plan maximums,
reduced by benefits under KRIP. Employees covered by the Cash Balance plan also receive an additional benefit equal to 3% of their annual
pensionable earnings.
Many subsidiaries and branches operating outside the U.S. have defined benefit retirement plans covering substantially all employees. Contributions
by the Company for these plans are typically deposited under government or other fiduciary-type arrangements. Retirement benefits are generally
based on contractual agreements that provide for benefit formulas using years of service and/or compensation prior to retirement. The actuarial
assumptions used for these plans reflect the diverse economic environments within the various countries in which the Company operates.
The measurement date used to determine the pension obligation for all funded and unfunded U.S. and Non-U.S. defined benefit plans is December 31.
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