Kodak 2005 Annual Report Download - page 106

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NOTE 17: RETIREMENT PLANS
Substantially all U.S. employees are covered by a noncontributory defi ned benefi t 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 suffi cient to meet minimum funding
requirements as determined by employee benefi t and tax laws plus additional amounts the Company determines to be appropriate. Generally, benefi ts
are based on a formula recognizing length of service and fi nal average earnings. Assets in the trust fund are held for the sole benefi t of participating
employees and retirees. They are comprised of corporate equity and debt securities, U.S. government securities, partnership and joint venture
investments, interests in pooled funds, and various types of interest rate, foreign currency and equity market fi nancial instruments.
On March 25, 1999, the Company amended this plan 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 KRIP plan or the Cash Balance Plus plan. Written elections were made
by employees in 1999, and were effective January 1, 2000. The Cash Balance Plus 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 this plan and the Company’s defi ned
contribution plan, the Savings and Investment Plan (SIP), the Company will match SIP contributions for an amount up to 3% of pay, for employee
contributions of up to 5% of pay. Company contributions to SIP were $13 million, $15 million and $15 million for 2005, 2004 and 2003, respectively.
As a result of employee elections to the Cash Balance Plus plan, the reductions in future pension expense will be almost entirely offset by the cost of
matching employee contributions to SIP. The impact of the Cash Balance Plus plan is shown as a plan amendment.
The Company also sponsors unfunded defi ned benefi t plans for certain U.S. employees, primarily executives. The benefi ts of these plans are obtained
by applying KRIP provisions to all compensation, including amounts being deferred, and without regard to the legislated qualifi ed plan maximums,
reduced by benefi ts under KRIP.
Most subsidiaries and branches operating outside the U.S. have defi ned benefi t retirement plans covering substantially all employees. Contributions
by the Company for these plans are typically deposited under government or other fi duciary-type arrangements. Retirement benefi ts are generally
based on contractual agreements that provide for benefi t formulas using years of service and/or compensation prior to retirement. The actuarial
assumptions used for these plans refl ect the diverse economic environments within the various countries in which the Company operates.
The measurement date used to determine the pension obligation for all major funded and unfunded U.S. and Non-U.S. defi ned benefi t plans
comprising a majority of the plan assets and benefi t obligations is December 31.