Kodak 2004 Annual Report Download - page 80

Financials
78
EASTMAN KODAK COMPANY
Long-lived Asset
Exit Impairments
Number of Severance Costs and Inventory Accelerated
(dollars in millions) Employees Reserve Reserve Total Write-downs Depreciation
Q3, 2003 charges 1,700 $ 123 $ — $ 123 $ 1 $ 14
Q3, 2003 utilization (100) (3) — (3) (1) (14)
Balance at 9/30/03 1,600 120 — 120 — —
Q4, 2003 charges 2,150 103 40 143 109 7
Q4, 2003 utilization (2,025) (48) (28) (76) (109) (7)
Q4, 2003 other adj.
& reclasses — 5 — 5 — —
Balance at 12/31/03 1,725 180 12 192 — —
Q1, 2004 charges 2,000 44 7 51 6 14
Q1, 2004 utilization (2,075) (76) (5) (81) (6) (14)
Q1, 2004 other adj.
& reclasses — 18 — 18 — —
Balance at 3/31/04 1,650 166 14 180 — —
Q2, 2004 charges — — — — — 6
Q2, 2004 reversal — (2) (2) (4) — —
Q2, 2004 utilization (1,375) (62) (2) (64) — (6)
Balance at 6/30/04 275 102 10 112 — —
Q3, 2004 charges — — — — — 3
Q3, 2004 reversal — (2) — (2) — —
Q3, 2004 utilization (225) (42) (2) (44) — (3)
Balance at 9/30/04 50 58 8 66 — —
Q4, 2004 charges — 1 — 1 — 1
Q4, 2004 reversal — — (1) (1) — —
Q4, 2004 utilization (25) (28) (5) (33) — (1)
Q4, 2004 other adj.
& reclasses — (1) — (1) — —
Balance at 12/31/04 25 $ 30 $ 2 $ 32 $ — $ —
The following table summarizes the activity with respect to the
charges recorded in connection with the focused cost reduction ac-
tions that the Company has committed to under the Third Quarter, 2003
Restructuring Program and the remaining balances in the related reserves
at December 31, 2004:
The severance charges of $45 million and the exit costs of $7 mil-
lion were reported in restructuring costs and other in the accompanying
Consolidated Statement of Earnings for the year ended December 31,
2004. Included in the $45 million charge taken for severance costs was a
net curtailment gain of $17 million. The net curtailment gain is disclosed in
Note 17, “Retirement Plans” and Note 18, “Other Postretirement Benefi ts.”
During 2004, the Company made $208 million of severance payments
and $14 million of exit costs payments related to the Third Quarter, 2003
Restructuring Program. In addition, the Company reversed $4 million of
severance reserves and $3 million of exit costs reserves during 2004. The
severance reserve reversals were recorded, as severance payments were
less than originally estimated. The $2 million exit costs reserve reversal
recorded during the second quarter of 2004 resulted from the Company
settling a lease obligation for an amount that was less than originally
estimated. The additional $1 million of exit costs reserves reversed in the
fourth quarter of 2004 resulted from the Company settling certain exit
cost obligations for an amount that was less than originally estimated. The
severance and exit costs reserve reversals were included in restructuring
costs and other in the accompanying Consolidated Statement of Earnings
for the year ended December 31, 2004. The remaining severance payments
relating to initiatives already implemented under the Third Quarter, 2003
Restructuring Program will be paid during 2005 since, in many instances,
the employees whose positions were eliminated can elect or are required
to receive their severance payments over an extended period of time. Most
exit costs were paid during 2004. However, certain costs, such as long-
term lease payments, will be paid over periods after 2004.
As a result of initiatives implemented under the Third Quarter, 2003
Restructuring Program, the Company recorded $24 million of accelerated
depreciation on long-lived assets in cost of goods sold in the accompany-
ing Consolidated Statement of Earnings for the year ended December 31,