Kodak 2006 Annual Report Download - page 106

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The following table summarizes the activity with respect to the charges recorded in connection with the focused cost reduction actions that the Com-
pany has committed to under the 2004-2007 Restructuring Program and the remaining balances in the related reserves at December 31, 2006:
Long-lived Asset
Exit Impairments
Number of Severance Costs and Inventory Accelerated
(dollars in millions) Employees Reserve Reserve Total Write-downs Depreciation
2004 charges 9,625 $ 418 $ 99 $ 517 $ 157 $ 152
2004 reversals — (6) (1) (7) — —
2004 utilization (5,175) (169) (47) (216) (157) (152)
2004 other adj. & reclasses — 24 (15) 9 — —
Balance at 12/31/04 4,450 267 36 303 — —
2005 charges 8,125 497 84 581 161 391
2005 reversals — (3) (6) (9) — —
2005 utilization (10,225) (377) (95) (472) (161) (391)
2005 other adj. & reclasses — (113) 4 (109) — —
Balance at 12/31/05 2,350 271 23 294 — —
2006 charges 5,625 318 69 387 100 285
2006 reversals — (3) (1) (4) — —
2006 utilization (5,700) (416) (67) (483) (100) (285)
2006 other adj. & reclasses — 58 — 58 — —
Balance at 12/31/06 2,275 $ 228 $ 24 $ 252 $ — $ —
As a result of the initiatives being implemented under the 2004-2007 Restructuring Program, severance payments will be paid during periods through
2008 since, in many instances, the employees whose positions were eliminated can elect or are required to receive their payments over an extended
period of time. Most exit costs were paid during 2006. However, certain costs, such as long-term lease payments, will be paid over periods after
2006.
The charges of $772 million recorded in 2006, excluding reversals, included $158 million applicable to the Film and Photofinishing Systems Group
segment, $27 million applicable to the Consumer Digital Group segment, $22 million applicable to the Health Group segment, and $38 million appli-
cable to the Graphic Communications Group segment, and $28 million applicable to All Other. The balance of $499 million was applicable to manufac-
turing, research and development, and administrative functions, which are shared across all segments.
Pre-2004 Restructuring Programs
At December 31, 2006, the Company had remaining exit costs reserves of $11 million, relating to restructuring plans committed to or executed prior
to 2004. Most of these remaining exit costs reserves represent long-term lease payments, which will continue to be paid over periods throughout and
after 2007.
NOTE 17: RETIREMENT PLANS
Substantially all U.S. employees are covered by a noncontributory defined benefit 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 sufficient to meet minimum funding
requirements as determined by employee benefit and tax laws plus additional amounts the Company determines to be appropriate. Generally, benefits
are based on a formula recognizing length of service and final average earnings. Assets in the trust fund are held for the sole benefit of participating
employees and retirees. They are comprised of corporate equity and debt securities, U.S. government securities, partnership and joint venture invest-
ments, interests in pooled funds, and various types of interest rate, foreign currency and equity market financial 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 defined contribu-
tion 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 $15 million, $13 million and $15 million for 2006, 2005 and 2004, respectively. As a result