Kodak 2004 Annual Report Download - page 86

Financials
84
EASTMAN KODAK COMPANY
The Company expects to contribute approximately $22 million and
$107 million in 2005 for U.S. and Non-U.S. defi ned benefi t pension plans,
respectively.
The following pension benefi t payments, which refl ect expected future
service, are expected to be paid:
(in millions) U.S. Non-U.S.
2005 $ 434 $ 188
2006 426 187
2007 425 186
2008 425 183
2009 431 177
2010-2014 2,288 894
NOTE 18: OTHER POSTRETIREMENT
BENEFITS
The Company provides healthcare, dental and life insurance benefi ts to U.S.
eligible retirees and eligible survivors of retirees. Generally, to be eligible for
the plan, individuals retiring prior to January 1, 1996 were required to be
55 years of age with ten years of service or their age plus years of service
must have equaled or exceeded 75. For those retiring after December 31,
1995, the individuals must be 55 years of age with ten years of service
or have been eligible as of December 31, 1995. Based on the eligibility
requirements, these benefi ts are provided to U.S. retirees who are covered
by the Company’s KRIP plan and are funded from the general assets of the
Company as they are incurred. However, those under the Cash Balance
Plus portion of the KRIP plan would be required to pay the full cost of their
benefi ts under the plan. The Company’s subsidiaries in the United Kingdom
and Canada offer similar healthcare benefi ts.
During the quarter ended June 30, 2004, the Company adopted
the provisions of FSP 106-2 with respect to its U.S. Postretirement Plan,
which resulted in a remeasurement of the Plan’s accumulated projected
benefi t obligation (APBO) as of April 1, 2004. This remeasurement takes
into account the impact of the subsidy the Company will receive under the
Medicare Prescription Drug, Improvement and Modernization Act of 2003
(the Act) and certain actuarial assumption changes including: (1) changes
in participation rates, (2) a decrease in the Company’s Medicare plan
premiums and (3) a decrease in the discount rate from 6.00% to 5.75%.
The actuarially determined impact of the subsidy reduced the APBO by
approximately $228 million. The effect of the subsidy on the measurement
of the net periodic postretirement benefi t cost was to reduce the cost by
approximately $52 million as follows:
12 months ended
December 31, 2004
Effect of
Effect of Assumption
(in millions) Subsidy Changes Total
Service cost $ — $ 1 $ 1
Interest cost 13 13 26
Amortization of Actuarial gain 17 8 25
$ 30 $ 22 $ 52
The measurement date used to determine the net benefi t obligation
for the Company’s other postretirement benefi t plans is December 31.
Changes in the Company’s benefi t obligation and funded status for
the U.S., United Kingdom and Canada postretirement benefi t plans are as
follows:
2004 2003
(in millions) (Restated)
Net benefi t obligation at beginning of year $ 3,540 $ 3,690
Acquisitions/divestitures (33) —
Service cost 15 16
Interest cost 189 213
Plan participants’ contributions 17 6
Plan amendments (15) (30)
Actuarial gain (82) (117)
Curtailments (17) 1
Settlements (99) —
Benefi t payments (254) (254)
Currency adjustments 9 15
Net benefi t obligation at end of year $ 3,270 $ 3,540
Funded status at end of year $ (3,270) $ (3,540)
Unamortized net actuarial loss 1,188 1,401
Unamortized prior service cost (251) (326)
Net amount recognized and recorded
at end of year $ (2,333) $ (2,465)
Postretirement benefi t cost for the Company’s U.S., United Kingdom
and Canada postretirement benefi t plans included:
2004 2003 2002
(in millions) (Restated)
Components of net postretirement
benefi t cost
Service cost $ 15 $ 17 $ 16
Interest cost 189 213 213
Amortization of:
Prior service cost (59) (61) (60)
Actuarial loss 85 69 58
230 238 227
Curtailments (63) 1 —
Settlements (64) — —
Total net postretirement benefi t cost $ 103 $ 239 $ 227
Net postretirement benefi t income
from discontinued operations — (1) —
Net postretirement benefi t cost
from continuing operations $ 103 $ 238 $ 227
The U.S. plan represents approximately 97% and 97% of the total
other postretirement net benefi t obligation as of December 31, 2004 and
2003, respectively, and, therefore, the weighted-average assumptions used
to compute the other postretirement benefi t amounts approximate the U.S.
assumptions.