Kodak 2007 Annual Report Download - page 77

76
NOTE 18: 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 investments, interests in
pooled funds, and various types of interest rate, foreign currency and equity market financial instruments.
In March 1999, the Company amended the KRIP 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 em-
ployees 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 the Cash Balance Plus plan and the Company’s defined
contribution plan, the Savings and Investment Plan (SIP), the Company will match dollar-for-dollar on the first 1% contributed to SIP and $.50 for each
dollar on the next 4% contributed. Company contributions to SIP were $14 million, $15 million, and $13 million for 2007, 2006, and 2005, 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 Company also sponsors unfunded defined benefit plans for certain U.S. employees, primarily executives. The benefits of these plans are obtained by
applying KRIP provisions to all compensation, including amounts being deferred, and without regard to the legislated qualified plan maximums, reduced by
benefits under KRIP.
Most subsidiaries and branches operating outside the U.S. have defined benefit retirement plans covering substantially all employees. Contributions by
the Company for these plans are typically deposited under government or other fiduciary-type arrangements. Retirement benefits are generally based on
contractual agreements that provide for benefit formulas using years of service and/or compensation prior to retirement. The actuarial assumptions used
for these plans reflect the diverse economic environments within the various countries in which the Company operates.
The measurement date used to determine the pension obligation for all funded and unfunded U.S. and Non-U.S. defined benefit plans is December 31.