Kodak 2001 Annual Report Download - page 73

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71
Note 16: Other Postretirement Benefits
The Company provides healthcare, dental and life insurance benefits to
U.S. eligible retirees and eligible survivors of retirees. In general, these
benefits are provided to U.S. retirees that are covered by the Company’s
KRIP plan. These benefits are funded from the general assets of the
Company as they are incurred. Certain non-U.S. subsidiaries offer
healthcare benefits; however, the cost of such benefits is not material to
the Company.
Changes in the Company’s benefit obligation and funded status are
as follows:
(in millions) 2001 2000
Net benefit obligation at
beginning of year $2,602 $2,307
Service cost 14 12
Interest cost 195 169
Plan participants’ contributions 23
Plan amendments –62
Actuarial loss 446 229
Curtailments –1
Benefit payments (213) (181)
Net benefit obligation
at end of year $3,046 $2,602
Funded status at end of year $(3,046) $(2,602)
Unamortized net loss 1,106 700
Unamortized plan amendments (450) (510)
Net amount recognized and
recorded at end of year $(2,390) $(2,412)
The weighted-average assumptions used to compute other postretirement
benefit amounts were as follows:
2001 2000
Discount rate 7.25% 7.50%
Salary increase rate 4.30% 4.30%
Healthcare cost trend(a) 10.00% 8.00%
(a) decreasing to 5.00% by 2007
(in millions) 2001 2000 1999
Components of net
postretirement
benefit cost
Service cost $14 $12 $13
Interest cost 195 169 152
Amortization of:
Prior service cost (60) (67) (68)
Actuarial loss 40 18 8
189 132 105
Curtailments –(6) (90)
Total net postretirement
benefit cost $189 $126 $ 15
There were no curtailment gains or losses recognized as a result of the
2001 restructuring programs.
The Company recorded curtailment gains of $6 million and $71
million in 2000 and 1999, respectively, as a result of the reduction in
employees from the 1997 restructuring program. Additionally, the
Company recorded curtailment gains in 1999 of $15 million as a result
of the sale of the Office Imaging operations, and $4 million related to
the establishment of the NexPress joint venture.
The Company will no longer fund healthcare and dental benefits for
employees who elected to participate in the Company’s Cash Balance
Plus plan, effective January 1, 2000. This change is not expected to have
a material impact on the Company’s future postretirement benefit cost.
Assumed healthcare cost trend rates have a significant effect on
the amounts reported for the healthcare plans. A one percentage point
change in assumed healthcare cost trend rates would have the
following effects:
1% 1%
increase decrease
Effect on total service and interest
cost components $ 7 $ (3)
Effect on postretirement benefit
obligation 102 (58)