Kodak 2004 Annual Report Download - page 81

Financials
79
2004 SUMMARY ANNUAL REPORT
2004. The accelerated depreciation relates to long-lived assets accounted
for under the held and used model of SFAS No. 144. The year-to-date
amount of $24 million relates to $17 million of manufacturing facilities and
equipment and $7 million of photofi nishing facilities and equipment that will
be used until their abandonment.
The year-to-date charges of $82 million included $45 million ap-
plicable to the D&FIS segment, $6 million applicable to the Health segment
and $1 million applicable to the Commercial Imaging segment. The balance
of $30 million was applicable to manufacturing, research and development,
and administrative functions, which are shared across segments. The
program-to-date charges of $479 million included $253 million applicable
to the D&FIS segment, $26 million applicable to the Health segment and
$10 million applicable to the Commercial Imaging segment. The balance of
$190 million was applicable to manufacturing, research and development,
and administrative functions, which are shared across segments.
As of the end of the fi rst quarter of 2004, the Company had commit-
ted to all of the initiatives originally contemplated under the Third Quarter,
2003 Restructuring Program. The Company committed to the elimination of
a total of 5,850 positions under the Third Quarter, 2003 Restructuring Pro-
gram. The remaining 25 positions to be eliminated under the Third Quarter,
2003 Restructuring Program are expected to be completed during 2005.
First Quarter, 2003 Restructuring Program
In the early part of the fi rst quarter of 2003, as part of its continuing
focused cost reduction efforts and in addition to the remaining initiatives
under the Fourth Quarter, 2002 Restructuring Program, the Company an-
nounced its First Quarter, 2003 Restructuring Program that included new
initiatives to further reduce employment within a range of 1,800 to 2,200
employees. A signifi cant portion of these new initiatives related to the
rationalization of the Company’s photofi nishing operations in the U.S. and
Europe. Specifi cally, as a result of declining fi lm and photofi nishing volumes
and in response to global economic and political conditions, the Company
began to implement initiatives to: (1) close certain photofi nishing operations
in the U.S. and EAMER, (2) rationalize manufacturing capacity by eliminat-
ing manufacturing positions on a worldwide basis and (3) eliminate selling,
general and administrative positions, particularly in the D&FIS segment.
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 First Quarter, 2003
Restructuring Program and the remaining balances in the related reserves
at December 31, 2004:
Long-lived Asset
Exit Impairments
Number of Severance Costs and Inventory Accelerated
(dollars in millions) Employees Reserve Reserve Total Write-downs Depreciation
Q1, 2003 charges 425 $ 31 $ — $ 31 $ — $ —
Q1, 2003 utilization (150) (2) — (2) — —
Balance at 3/31/03 275 29 — 29 — —
Q2, 2003 charges 500 17 4 21 5 —
Q2, 2003 utilization (500) (13) — (13) (5) —
Balance at 6/30/03 275 33 4 37 — —
Q3, 2003 charges 925 19 4 23 1 16
Q3, 2003 utilization (400) (12) (1) (13) (1) (16)
Balance at 9/30/03 800 40 7 47 — —
Q4, 2003 charges — — — — — 8
Q4, 2003 utilization (625) (17) (3) (20) — (8)
Balance at 12/31/03 175 23 4 27 — —
Q1, 2004 charges — — — — — 6
Q1, 2004 reversal — (1) — (1) — —
Q1, 2004 utilization (150) (11) (3) (14) — (6)
Balance at 3/31/04 25 11 1 12 — —
Q2, 2004 charges — — — — — 1
Q2, 2004 utilization — (2) — (2) — (1)
Balance at 6/30/04 25 9 1 10 — —
Q3, 2004 utilization (25) (1) (1) (2) — —
Balance at 9/30/04 — 8 — 8 — —
Q4, 2004 utilization — (1) — (1) — —
Balance at 12/31/04 — $ 7 $ — $ 7 $ — $ —