Kodak 2008 Annual Report Download

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Table of contents

  • Page 1

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  • Page 3
    ... Securities Exchange Act of 1934 For the transition period from to Commission File Number 1-87 EASTMAN KODAK COMPANY (Exact name of registrant as specified in its charter) NEW JERSEY (State of incorporation) 343 STATE STREET, ROCHESTER, NEW YORK (Address of principal executive offices) Registrant...

  • Page 4
    ...,483 shares of common stock. DOCUMENTS INCORPORATED BY REFERENCE PART III OF FORM 10-K The following items in Part III of this Form 10-K incorporate by reference information from the Notice of 2009 Annual Meeting and Proxy Statement: Item 10 - DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE...

  • Page 5
    ..., and Director Independence Principal Accounting Fees and Services 107 Item 13. 107 Item 14. PART II 20 Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Selected Financial Data Management's Discussion and Analysis of Financial...

  • Page 6
    ...• Consumer and professional photographic film • Photographic paper and processing chemicals • Wholesale photofinishing services Kodak was founded by George Eastman in 1880 and incorporated in 1901 in the State of New Jersey. The Company is headquartered in Rochester, New York. Through mid-2008...

  • Page 7
    ..., in order to manage Kodak's digital printing hardware, media and infrastructure offerings to retailers. The Retail Systems Solutions group's product and service offerings to retailers include retail kiosks and consumables, consumer and retailer software workflows, remote business monitoring, retail...

  • Page 8
    ...software at no charge to consumers, which provides easy organization and editing tools, and unifies the experience between digital cameras, home printers, and the Kodak Gallery services. Imaging Sensors: Kodak's line of CCD and CMOS sensors provides an attractive market opportunity, including mobile...

  • Page 9
    ... products include businesses in the commercial printing, data center, in-plant and digital service provider market segments. While there is price competition, the Company has generally been able to maintain price by adding more attractive features to its products through technological advances. The...

  • Page 10
    ...) Consumer Digital Imaging Group Film, Photofinishing and Entertainment Group Graphic Communications Group All Other Total For the Year Ended December 31, 2008 2007 2006 $ 250 $ 290 $ 215 52 60 76 231 214 209 3 25 21 $ 501 $ 549 $ 596 Research and development is headquartered in Rochester, New York...

  • Page 11
    ...with the Form 10-K for the year ended December 31, 2007 filed on February 27, 2008. Additionally, we filed with the New York Stock Exchange ("NYSE") the CEO certification, dated June 12, 2008, regarding our compliance with the NYSE's corporate governance listing standards pursuant to Section 303A.12...

  • Page 12
    .... Key assumptions used to value these benefit obligations, funded status and expense recognition include the discount rate for future payment obligations, the long-term expected rate of return on plan assets, salary growth, healthcare cost trend rate, and other economic and demographic factors...

  • Page 13
    .... Kodak's success depends in part on its ability to develop and introduce new products and services in a timely manner that keep pace with technological developments and that are accepted in the market. The Company continues to introduce new consumer and commercial digital product offerings. However...

  • Page 14
    ..., retain and motivate key employees, our business could be harmed. In order for the Company to be successful, we must continue to attract, retain and motivate executives and other key employees, including technical, managerial, marketing, sales, research and support positions. Hiring and retaining...

  • Page 15
    ... and market share. The markets in which we do business are highly competitive, and we encounter aggressive price competition for all our products and services from numerous companies globally. Over the past several years, price competition in the market for digital products, film and services has...

  • Page 16
    ... to acquire businesses over the fair value of their net assets at the date of the acquisition. The Company tests goodwill for impairment annually or whenever events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. This...

  • Page 17
    ... rely on manufacturing assets, company-owned or through relationships with design and manufacturing partners, which are located close to end markets and/or supplier networks. The FPEG segment of Kodak's business is centered in Rochester, New York, where film and photographic chemicals and related...

  • Page 18
    ...list is included as an unnumbered item in Part I of this report in lieu of being included in the Proxy Statement for the Annual Meeting of Shareholders. Date First Elected an to Executive Present Officer Office 2002 2005 2005 2007 2005 2005 2005 2007 2003 2003 2005 2005 2003 2005 2006 2006 2008 2008...

  • Page 19
    ...his 25 year career, including the Director and divisional vice president of Human Resources for the global Consumer Imaging business and the Human Resources Director for Kodak Colorado Division. Philip J. Faraci Philip Faraci was named President and Chief Operating Officer, Eastman Kodak Company, in...

  • Page 20
    ...4B in revenues in 2008. Those include consumer inkjet printers, CMOS sensors for digital cameras and mobile phones, dry labs and kiosks for printing at retail, as well as high-volume digital production presses and digital plates for commercial printing. The result is a new Kodak - a company with 70...

  • Page 21
    ... Chairman's office in an executive capacity until early 2003. At that time, she took an operating line position as General Manager, Graphics and Printing Systems SPG, in the Commercial Imaging Group (now Graphic Communications Group). In mid-2005, Ms. Wilfong was appointed Director, Corporate Audit...

  • Page 22
    ... MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Eastman Kodak Company common stock is traded on the New York Stock Exchange under the symbol "EK." There were 55,759 shareholders of record of common stock as of January 31, 2009. Market Price Data 2008 Price per share: 1st Quarter 2nd Quarter 3rd...

  • Page 23
    ...On June 24, 2008, the Company announced that its Board of Directors authorized a share repurchase program allowing the Company, at management's discretion, to purchase up to $1.0 billion of its common stock. The program will expire at the earlier of December 31, 2009 or when the Company has used all...

  • Page 24
    ... and solutions for consumer, business, and commercial printing applications. Kodak has three reportable business segments, which are more fully described later in this discussion in "Kodak Operating Model and Reporting Structure." The three business segments are: Consumer Digital Imaging Group ("CDG...

  • Page 25
    ... the application of discounted cash flow and market comparable methods. Key assumptions used to determine the fair value of each reporting unit as of the Company's fiscal annual testing date (September 30, 2008) were: (a) expected cash flow for the period from 2009 to 2013; and (b) discount rates of...

  • Page 26
    ... Kodak's defined benefit pension and other postretirement benefit costs and obligations are dependent on the Company's key assumptions. These assumptions, which are reviewed at least annually by the Company, include the discount rate, long-term expected rate of return on plan assets ("EROA"), salary...

  • Page 27
    ... significant plans on high quality corporate bond yields in the respective countries as of the measurement date. Specifically, for its U.S. and Canada plans, the Company determines a discount rate using a cash flow model to incorporate the expected timing of benefit payments and a AA-rated corporate...

  • Page 28
    ..." section of Note 1, "Significant Accounting Policies," in the Notes to Financial Statements. Kodak Operating Model and Reporting Structure For 2008, the Company had three reportable segments: Consumer Digital Imaging Group ("CDG"), Film, Photofinishing and Entertainment Group ("FPEG"), and Graphic...

  • Page 29
    The changes in cost allocation methodologies referred to above increased (decreased) segment operating results for the years ended December 31, 2007 and 2006 as follows: For the Year Ended December 31, 2007 2006 $ (32) 28 (23) 27 $ (54) 75 (57) 36 - (in millions) Consumer Digital Imaging Group Film...

  • Page 30
    ...), Net and Income Taxes by Reportable Segment and All Other For the Year Ended December 31, Change 2007 Change -941% -30 -70 +32 -90 $ (17) 281 104 (25) 343 (662) 96 (7) (113) 87 -241% $ (256) +56% $ +92% -12 +49 -14 +113 $ (in millions) Consumer Digital Imaging Group Film, Photofinishing and...

  • Page 31
    ..., 2008 Amount Total net sales Gross profit margin $ 9,416 23.0% Change vs. 2007 -8.6% -1.7pp Volume -4.4% n/a Change vs. 2007 Price/Mix -6.4% -5.5pp Foreign Exchange 2.2% 0.2pp Manufacturing and Other Costs n/a 3.6pp As noted earlier in this MD&A, the Company's results of operations were severely...

  • Page 32
    ... offset by investments in new workflow products in Enterprise Solutions and stream technology within Digital Printing Solutions, and R&D related acquisitions made in the second quarter of 2008, both within GCG. Postemployment Benefit Plan Changes In the third quarter of 2008, the Company amended...

  • Page 33
    ...interest rates and lower cash balances in 2008 as compared with 2007. Income Tax Benefit (dollars in millions) For the Year Ended December 31, 2008 2007 ($874) ($256) ($147) ($51) 16.8% 19.9% Loss from continuing operations before income taxes Benefit for income taxes Effective tax rate The change...

  • Page 34
    ...price/mix in Digital Capture and Devices, partially offset by volume growth in Consumer Inkjet and Digital Capture and Devices, and favorable foreign exchange across all SPGs. Net worldwide sales of Digital Capture and Devices, which includes consumer digital still and video cameras, digital picture...

  • Page 35
    ... attributable to unfavorable price/mix within Digital Capture and Devices and lower intellectual property royalties, partially offset by reduced manufacturing and other costs primarily in consumer inkjet printers, digital cameras and digital frames, as well as favorable foreign exchange. Included in...

  • Page 36
    ... 19% 7% $ 31 1% $ 104 3% $ (73) -70% For the Year Ended December 31, 2008 Amount Total net sales Gross profit margin $ 3,334 26.7% Change vs. 2007 -2.3% -1.9pp Volume -1.6% n/a Change vs. 2007 Price/Mix -4.1% -1.1pp Foreign Exchange 3.4% -0.6pp Manufacturing and Other Costs n/a -0.2pp 34

  • Page 37
    ... high single digits during 2008. Net worldwide sales of Digital Printing Solutions decreased 6% compared with the prior year. Unfavorable price/mix and declines in volume were partially offset by favorable foreign exchange for all products. Volume declines were largely attributable to black-andwhite...

  • Page 38
    ...% -34% 34% 56% 123% 75% 334% 212% -2% -8% $ For the Year Ended December 31, 2007 Amount Total net sales Gross profit margin $ 10,301 24.7% Change vs. 2006 -2.5% 1.6pp Volume -2.2% n/a Change vs. 2006 Price/Mix -3.4% -4.2pp Foreign Exchange 3.1% 1.4pp Manufacturing and Other Costs n/a 4.4pp 36

  • Page 39
    ...the Health Group (See Note 22, "Discontinued Operations" in the Notes to Financial Statements) and higher interest rates. This increase was partially offset by an impairment of an equity method investment. Income Tax (Benefit) Provision (dollars in millions) For the Year Ended December 31, 2007 2006...

  • Page 40
    ... 18% 8% $ (17) -1% $ (206) -7% $ 189 92% For the Year Ended December 31, 2007 Amount Total net sales Gross profit margin $ 3,247 25.5% Change vs. 2006 7.8% 4.3pp Volume 12.2% n/a Change vs. 2006 Price/Mix -7.0% -6.8pp Foreign Exchange 2.6% 1.7pp Manufacturing and Other Costs n/a 9.4pp 38

  • Page 41
    ... year, primarily reflecting higher digital camera volumes, increased intellectual property royalties, sales of new digital picture frames, and favorable foreign exchange, partially offset by unfavorable price/mix and lower snapshot printing volumes. Net worldwide sales of Retail Systems Solutions...

  • Page 42
    ... Volume -15.1% n/a Change vs. 2006 Price/Mix -2.1% -3.0pp Foreign Exchange 2.6% 1.6pp Manufacturing and Other Costs n/a 0.4pp Worldwide Revenues Net sales for FPEG decreased 15% primarily due to Film Capture and Traditional Photofinishing, primarily reflecting continuing declines in the consumer...

  • Page 43
    ... and inkjet printing solutions, partially offset by volume and price/mix declines in black-and-white electrophotographic solutions. Net worldwide sales of Document Imaging were flat in 2007 compared with the prior year. Unfavorable volume and price/mix were offset by favorable foreign exchange. Net...

  • Page 44
    ...the first quarter of 2008, and expects the savings to be fully realized by the end of the second quarter of 2009 as most of the actions and severance payouts are completed. On December 17, 2008, the Company committed to a plan to implement a targeted cost reduction program (the 2009 Program) to more...

  • Page 45
    ... in Note 15, "Income Taxes." Investing Activities Net cash used in continuing operations from investing activities increased $147 million for the year ended December 31, 2008 as compared with 2007 due primarily to lower cash proceeds received from sales of assets and businesses of $92 million in...

  • Page 46
    ... of the sale of the Health Group. These reductions in cash usage were partially offset by repurchases of the Company's common stock of $301 million in 2008. On June 24, 2008, the Company announced that its Board of Directors authorized a share repurchase program allowing the Company, at management...

  • Page 47
    ...the current credit ratings. As of the filing date of this Form 10-K, the Company has not been requested to materially increase its letters of credit or other financial support. Additional downgrades in the Company's credit rating or disruptions in the capital markets could impact borrowing costs and...

  • Page 48
    ... which are typically performed at least every three years. The limit of potential future payments is dependent on the funding status of the Plan as it fluctuates over the term of the guarantee. Currently, the Plan's local funding valuation is in process and expected to be completed in March 2009. In...

  • Page 49
    ... for the year ended December 31, 2007 as compared with 2006. Net cash used in discontinued operations increased $308 million in 2007 as compared with the prior year due primarily to the impact of the sale of the Health Group segment and HPA in 2007. Investing Activities Net cash used in continuing...

  • Page 50
    ... with the Company's sale of its pharmaceutical, consumer health and household products businesses during that year. Investing Activities Net cash used in continuing operations from investing activities decreased $1,083 million for the year ended December 31, 2006 as compared with 2005, due primarily...

  • Page 51
    ... change. The forward-looking statements contained in this report are subject to a number of factors and uncertainties, including the successful: • execution of the digital growth and profitability strategies, business model and cash plan; • alignment of the Company's cost structure to the new...

  • Page 52
    ... operating data for 2008 and for the four years prior is shown on page 103. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company, as a result of its global operating and financing activities, is exposed to changes in foreign currency exchange rates, commodity prices, and...

  • Page 53
    ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of Eastman Kodak Company: In our opinion, the consolidated financial statements listed in the index appearing under Item 15(a)(1) present fairly, ...

  • Page 54
    Eastman Kodak Company CONSOLIDATED STATEMENT OF OPERATIONS For the Year Ended December 31, (in millions, except per share data) Net sales Cost of goods sold Gross profit Selling, general and administrative expenses Research and development costs Restructuring costs, rationalization and other Other ...

  • Page 55
    ... (loss) income Treasury stock, at cost; 123,123,705 shares as of December 31, 2008 and 103,292,930 shares as of December 31, 2007 Total shareholders' equity TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY The accompanying notes are an integral part of these consolidated financial statements. As of...

  • Page 56
    Eastman Kodak Company CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (in millions, except share and per share data) Additional Paid In Capital $ 867 Accumulated Other Comprehensive (Loss) Income $ (467) - Common Stock (1) Shareholders' Equity as of December 31, 2005 Net loss Other comprehensive ...

  • Page 57
    Eastman Kodak Company CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY continued (in millions, except share and per share data) Additional Paid In Capital $ 881 $ Accumulated Other Comprehensive (Loss) Income $ (635) - Common Stock (1) Shareholders' Equity as of December 31, 2006 Net earnings Other ...

  • Page 58
    Eastman Kodak Company CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY continued (in millions, except share and per share data) Additional Paid In Capital $ 889 Accumulated Other Comprehensive (Loss) Income $ 452 - Common Stock (1) Shareholders' Equity as of December 31, 2007 Net loss Other ...

  • Page 59
    ... to shareholders Exercise of employee stock options Net cash used in continuing operations Net cash provided by discontinued operations Net cash used in financing activities Effect of exchange rate changes on cash Net (decrease) increase in cash and cash equivalents Cash and cash equivalents...

  • Page 60
    ... Kodak Company CONSOLIDATED STATEMENT OF CASH FLOWS continued Supplemental Cash Flow Information (in millions) For the Year Ended December 31, 2008 2007 2006 Cash paid for interest and income taxes was: Interest, net of portion capitalized of $3, $2 and $3 (1) Income taxes (1) The following non-cash...

  • Page 61
    ... the reporting period. Actual results could differ from those estimates. Change in Estimate In the first quarter of 2008, the Company performed an updated analysis of expected industry-wide declines in the traditional film and paper businesses and its useful lives on related assets. This analysis...

  • Page 62
    ... 12, "Financial Instruments." Cash Equivalents All highly liquid investments with a remaining maturity of three months or less at date of purchase are considered to be cash equivalents. Inventories Inventories are stated at the lower of cost or market. The cost of all of the Company's inventories...

  • Page 63
    ... incentive programs include cash and volume discounts, price protection, promotional, cooperative and other advertising allowances, and coupons. For those incentives that require the estimation of sales volumes or redemption rates, such as for volume rebates or coupons, the Company uses historical...

  • Page 64
    ...price allocated to research and development projects that have not yet reached technological feasibility and for which no alternative future use exists is expensed in the period of acquisition. This will change when the Company adopts SFAS No. 141R, "Business Combinations," effective January 1, 2009...

  • Page 65
    ... 2008, 2007 and 2006 because the Company reported a net loss from continuing operations; therefore, the effects would be anti-dilutive: For the Year Ended December 31, 2008 2007 2006 25.2 0.2 25.4 30.9 0.4 31.3 34.6 0.2 34.8 (in millions of shares) Employee stock options Unvested share-based awards...

  • Page 66
    ... in fiscal years ending after December 15, 2006. This Statement requires employers to recognize the overfunded or underfunded status of a defined benefit postretirement plan as an asset or liability in its statement of financial position, and to recognize changes in that funded status in the year in...

  • Page 67
    ... on investment strategies, major categories of plan assets, concentrations of risk within plan assets and valuation techniques used to measure the fair value of plan assets. This new standard requires new disclosures only, and will have no impact on the Company's Consolidated Financial Statement...

  • Page 68
    ... of Financial Position at each respective balance sheet date. The increase in miscellaneous receivables is primarily due to an amendment to an intellectual property licensing agreement with an existing licensee executed during the third quarter of 2008. Under the terms of this amendment, cash...

  • Page 69
    ... AND OTHER INTANGIBLE ASSETS Goodwill was $896 million and $1,657 million as of December 31, 2008 and 2007, respectively. The changes in the carrying amount of goodwill by reportable segment for 2007 and 2008 were as follows: (in millions) Consumer Digital Imaging Group $ 196 8 204 (9) 195 Film...

  • Page 70
    ...was $80 million, $106 million, and $120 million for the years ended December 31, 2008, 2007 and 2006, respectively. Estimated future amortization expense related to purchased intangible assets as of December 31, 2008 was as follows (in millions): 2009 2010 2011 2012 2013 2014+ Total $ 72 60 41 26 13...

  • Page 71
    ... than 5% of the Company's total assets, and therefore, have been aggregated in accordance with Regulation S-X. NOTE 7: ACCOUNTS PAYABLE AND OTHER CURRENT LIABILITIES (in millions) Accounts payable, trade Accrued employment-related liabilities Accrued advertising and promotional expenses Deferred...

  • Page 72
    ... Securities are due in 2033, on October 15, 2010 the security holders will have the right to require the Company to purchase their Convertible Securities for cash at a price equal to 100% of the principal amount of the Convertible Securities, plus any accrued and unpaid interest. Because the...

  • Page 73
    ... of up to $300 million, proceeds from sales of assets used in the Company's non-digital products and services businesses to prepay or repay debt or pay cash restructuring charges within 12 months from the date of sale of the assets, or proceeds from the sale of inventory in the ordinary course of...

  • Page 74
    ... upon the occurrence of specified corporate transactions such as a consolidation, merger or binding share exchange pursuant to which the Company's common stock would be converted into cash, property or securities; and (5) if the Senior Unsecured credit rating assigned to the Convertible Securities...

  • Page 75
    ... note to shares of the Company's common stock. The holders have the right to require the Company to purchase their Convertible Securities for cash at a purchase price equal to 100% of the principal amount of the Convertible Securities plus any accrued and unpaid interest on October 15, 2010, October...

  • Page 76
    ... Consolidated Statement of Financial Position. The Company is currently implementing a Corrective Action Program required by the Resource Conservation and Recovery Act ("RCRA") at Eastman Business Park (formerly known as Kodak Park) in Rochester, NY. The Company is currently in the process of...

  • Page 77
    ... to have a material effect on the Company's competitive or financial position. However, such costs could be material to results of operations in a particular future quarter or year. Asset Retirement Obligations As of December 31, 2008 and 2007, the Company has recorded approximately $67 million and...

  • Page 78
    ... which are typically performed at least every three years. The limit of potential future payments is dependent on the funding status of the Plan as it fluctuates over the term of the guarantee. Currently, the Plan's local funding valuation is in process and expected to be completed in March 2009. In...

  • Page 79
    ... of sale for a given product based on historical failure rates and related costs to repair. The change in the Company's accrued warranty obligations balance, which is reflected in Accounts payable and other current liabilities in the accompanying Consolidated Statement of Financial Position, was...

  • Page 80
    ... exchange rates, commodity prices and interest rates, which may adversely affect its results of operations and financial position. The Company manages such exposures, in part, with derivative financial instruments. The fair values of these derivative contracts are reported in Other current assets...

  • Page 81
    ... NET (in millions) Income (charges): Interest income Gain (loss) on foreign exchange transactions Support for an educational institution Loss on early extinguishment of debt MUTEC equity method investment impairment Other Total For the Year Ended December 31, 2008 2007 2006 $ 71 7 (10) (4) (9) 55...

  • Page 82
    ...: For the Year Ended December 31, 2008 2007 2006 $ (306) $ (90) $ (204) (in millions) Amount computed using the statutory rate Increase (reduction) in taxes resulting from: State and other income taxes, net of federal Export sales and manufacturing credits Foreign tax credits benefitted Impact of...

  • Page 83
    ... and liabilities were as follows: As of December 31, 2008 2007 (in millions) Deferred tax assets Pension and postretirement obligations Restructuring programs Foreign tax credit Investment tax credits Employee deferred compensation Tax loss carryforwards Other deferred revenue Other Total deferred...

  • Page 84
    ...2007, the Company's tax rate was 7.5%, which is 50% of the normal 15% tax rate for the jurisdiction in which Kodak operates. As a result of new legislation effective for 2008, the corporate income rate increased to 9%, which was 50% of the new 2008 tax rate of 18%. Thereafter, the Company's tax rate...

  • Page 85
    ... the IRS covering tax years 1999-2000. As a result, the Company recognized a tax benefit from continuing operations in the United States of $17 million, including interest. Also during 2007, the Company reached a settlement with the taxing authorities in two locations outside of the U.S. resulting...

  • Page 86
    ... $23 million of severance related charges for pension plan curtailments, settlements, and special termination benefits, which are reflected in Pension and other postretirement liabilities and Other long-term assets in the Consolidated Statement of Financial Position. The remaining amounts are...

  • Page 87
    ... 1, 2000. The Cash Balance 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 plan and the Company's defined contribution plan, the Savings and Investment Plan...

  • Page 88
    ... 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...

  • Page 89
    ... income (loss) for all major funded and unfunded U.S. and Non-U.S. defined benefit plans consisted of: As of December 31, (in millions) U.S. Net transition obligation Prior service cost (credit) Net actuarial (gain) loss Total $ 10 839 849 $ 2008 Non-U.S. 1 (4) 922 919 $ U.S. 7 (977) (970) $ 2007...

  • Page 90
    ... For the Year Ended December 31, 2007 U.S. Non-U.S. $ 71 304 (537) 6 $ 27 205 (259) 1 58 $ (in millions) Major defined benefit plans: Service cost Interest cost Expected return on plan assets Amortization of: Transition asset Prior service cost Actuarial loss Pension (income) expense before special...

  • Page 91
    ...rate Salary increase rate Expected long-term rate of return on plan assets 6.52% 4.51% 8.99% Of the total plan assets attributable to the major U.S. defined benefit plans at December 31, 2008 and 2007, 98% relate to the Kodak Retirement Income Plan ("KRIP", "the Plan"). The expected long-term rate...

  • Page 92
    ...13% 36%-43% Asset Category Equity securities Debt securities Real estate Cash Other Total 2008 6% 25% 7% 17% 45% 100% The Company's weighted-average asset allocations for its major non-U.S. defined benefit pension plans, by asset category are as follows: As of December 31, 2007 2008 Target 32% 35...

  • Page 93
    ... Selling general and administrative expenses, and Research and development costs in the Consolidated Statement of Operations for the year ended December 31, 2008. The Company's subsidiaries in the United Kingdom and Canada offer similar healthcare benefits. The measurement date used to determine the...

  • Page 94
    ... postretirement benefit cost from continuing operations for the Company's U.S., United Kingdom and Canada plans included: For the Year Ended December 31, 2007 2006 (in millions) Components of net postretirement benefit cost Service cost Interest cost Amortization of: Prior service credit Actuarial...

  • Page 95
    ... rate Salary increase rate The weighted-average assumptions used to determine the net postretirement benefit cost were as follows: For the Year Ended December 31, 2008 2007 7.23% 5.98% 4.48% 4.49% Discount rate Salary increase rate The weighted-average assumed healthcare cost trend rates used...

  • Page 96
    ...the Executive Compensation and Development Committee of the Board of Directors. Stock options are generally non-qualified and are at exercise prices not less than 100% of the per share fair market value on the date of grant. Stock-based compensation awards granted under the Company's stock incentive...

  • Page 97
    ... outstanding under the 1995 Plan at option prices ranging from $31.30 to $73.06. Compensation expense recognized for the years ended December 31, 2008, 2007, or 2006 on those freestanding SARs was not material. Further information relating to stock options is as follows: Shares Under Option 36,043...

  • Page 98
    ... impact on the Company's cash flows or results of operations for the years ended December 31, 2008 and 2007, or its financial position as of December 31, 2008 and 2007. The fair value of each option award is estimated on the date of grant using the Black-Scholes option valuation model that uses the...

  • Page 99
    ... Onex Corporation, for up to $2.55 billion. The price was composed of $2.35 billion in cash at closing and $200 million in additional future payments if Onex achieves certain returns with respect to its investment. The Company recognized a pre-tax gain of $986 million on the sale of the Health Group...

  • Page 100
    ... to the Company's intellectual property in digital imaging products. Film, Photofinishing and Entertainment Group Segment ("FPEG"): FPEG encompasses consumer and professional film, onetime-use cameras, graphic arts film, aerial and industrial film, and entertainment imaging products and services. In...

  • Page 101
    ... total assets: Consumer Digital Imaging Group Film, Photofinishing and Entertainment Group Graphic Communications Group All Other Total of segments Cash and marketable securities Deferred income tax assets Other corporate reserves Assets of discontinued operations Consolidated total assets 2008 As...

  • Page 102
    (in millions) Intangible asset amortization expense from continuing operations: Consumer Digital Imaging Group Film, Photofinishing and Entertainment Group Graphic Communications Group All Other Consolidated total Depreciation expense from continuing operations: Consumer Digital Imaging Group Film, ...

  • Page 103
    ... costs, rationalization and other), which reduced net earnings from continuing operations $49 million; changes to postemployment benefit plans, which increased pre-tax earnings and net earnings from continuing operations by $94 million; a $3 million pre-tax loss on the sale of assets and businesses...

  • Page 104
    ... the full year amount. The Company's diluted net earnings (loss) per share in the above table may include the effect of contingent convertible debt instruments. (11) Effective January 1, 2008, the Company changed its cost allocation methodologies related to employee benefits and corporate expenses...

  • Page 105
    ... Discontinued operations Cumulative effect of accounting change Total Cash dividends declared and paid - on common shares - per common share Common shares outstanding at year end Shareholders at year end Statement of Financial Position Data Working capital Property, plant and equipment, net Total...

  • Page 106
    Eastman Kodak Company SUMMARY OF OPERATING DATA - UNAUDITED continued (in millions, except per share data, shareholders, and employees) 2008 2007 Supplemental Information Net sales from continuing operations - CDG $ 3,088 $ 3,247 - FPEG 2,987 3,632 - GCG 3,334 3,413 - All Other 7 9 Research and ...

  • Page 107
    ... filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to management, including the Company's Chief Executive Officer and Chief Financial...

  • Page 108
    ... "Board Structure and Corporate Governance - Board of Directors" in the Company's Notice of 2009 Annual Meeting and Proxy Statement (the "Proxy Statement"), which will be filed within 120 days after December 31, 2008. The information required by Item 10 regarding audit committee financial expert...

  • Page 109
    ...at fiscal year end Run rate The Company continues to manage its run rate of awards granted over time to levels it believes are reasonable in light of changes in its business and number of outstanding shares while ensuring that our overall executive compensation program is competitive, relevant, and...

  • Page 110
    ... financial statements: Report of independent registered public accounting firm Consolidated statement of operations Consolidated statement of financial position Consolidated statement of shareholders' equity Consolidated statement of cash flows Notes to financial statements 2. Financial statement...

  • Page 111
    ... Frank S. Sklarsky Chief Financial Officer, and Executive Vice President /s/ Diane E. Wilfong Diane E. Wilfong Chief Accounting Officer, and Corporate Controller Date: February 27, 2009 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the...

  • Page 112
    SCHEDULE II EASTMAN KODAK COMPANY VALUATION AND QUALIFYING ACCOUNTS Balance at Beginning Of Period Charges to Earnings and Equity Amounts Written Off Balance at End of Period (in millions) Year ended December 31, 2008 Deducted in the Statement of Financial Position: From Current Receivables: ...

  • Page 113
    ...Kodak Company and The Bank of New York, as Trustee. (Incorporated by reference to the Eastman Kodak Company Current Report on Form 8-K for the date October 10, 2003 as filed on October 10, 2003, Exhibit 4.) Secured Credit Agreement, dated as of October 18, 2005, among Eastman Kodak Company and Kodak...

  • Page 114
    ..., dated December 9, 2008, to Philip J. Faraci Letter Agreement Dated November 3, 2004. (10.2) (10.3) Eastman Kodak Company Deferred Compensation Plan for Directors, as amended and restated effective January 1, 2009. Eastman Kodak Company Non-Employee Director Annual Compensation Program. The equity...

  • Page 115
    ... to the Eastman Kodak Company Annual Report on Form 10-K for the fiscal year ended December 31, 2004, Exhibit 10.) (10.17) (10.18) (10.19) Administrative Guide for the 2004-2005 Performance Cycle of the Leadership Program under Article 12 of the 2000 Omnibus Long-Term Compensation Plan, as...

  • Page 116
    ...the 2004-2005 Performance Cycle of the Leadership Program under Section 13 of the 2000 Omnibus Plan, as amended January 1, 2009. Eastman Kodak Company Executive Compensation for Excellence and Leadership Plan, as amended, effective January 1, 2009. Eastman Kodak Company Executive Protection Plan, as...

  • Page 117
    ...income taxes Adjustments: Minority interest in income of subsidiaries with fixed charges Undistributed (earnings) loss of equity...(1) Capitalized interest Total fixed charges Ratio of earnings to fixed charges (1 2008 2007 Year Ended December 31 2006 2005 2004 $ (874) $ (256) $ (583) $ (1,208...

  • Page 118
    EXHIBIT (21) SUBSIDIARIES OF EASTMAN KODAK COMPANY Companies Consolidated Eastman Kodak Company Laser-Pacific Media Corporation FPC, Inc. Qualex Inc. Qualex Canada Photofinishing Inc. Eastman Gelatine Corporation Kodak Imaging Network, Inc. (formerly Ofoto, Inc.) Kodak Graphic Communications Canada ...

  • Page 119
    ...Ltd. Kodak (Wuxi) Company Limited Kodak (Xiamen) Company Limited Kodak (Shanghai) International Trading Co. Ltd. Shanghai Da Hai Camera Co., Ltd. China China China China China China China Delaware Mexico Mexico Mexico Belgium Denmark Norway Switzerland Thailand Austria Hungary Finland Italy New York...

  • Page 120
    ... and No. 333-125355) of Eastman Kodak Company of our report dated February 26, 2009 relating to the financial statements, financial statement schedule and the effectiveness of internal control over financial reporting, which appears in this Annual Report on Form 10-K. /s/ PricewaterhouseCoopers LLP...

  • Page 121
    ...; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. 3. 4. Date: February 27, 2009 /s/ Antonio M. Perez Antonio M. Perez Chairman and Chief Executive Officer 119

  • Page 122
    ... to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. 3. 4. Date: February 27, 2009 /s/ Frank S. Sklarsky...

  • Page 123
    ... with the Annual Report of Eastman Kodak Company (the "Company") on Form 10-K for the period ended December 31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Antonio M. Perez, Chairman and Chief Executive Officer of the Company, certify, pursuant...

  • Page 124
    ...In connection with the Annual Report of Eastman Kodak Company (the "Company") on Form 10-K for the period ended December 31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Frank S. Sklarsky, Chief Financial Officer of the Company, certify, pursuant to...

  • Page 125
    NOTICE OF 2009 ANNUAL MEETING AND PROXY STATEMENT Date of Notice April 2, 2009 EASTMAN KODAK COMPANY 343 STATE STREET ROCHESTER, NEW YORK 14650

  • Page 126
    ... OF NAMED EXECUTIVE OFFICERS 49 53 55 58 62 63 65 66 68 68 69 72 73 74 75 76 78 Summary Compensation Table Employment and Retention Arrangements Grants of Plan-Based Awards in 2008 Table Outstanding Equity Awards at 2008 Fiscal Year-End Table Option Exercises and Stock Vested Table Pension Benefits...

  • Page 127
    ..., Eastman Kodak Company, 343 State Street, Rochester, NY 14650-0218, (585) 724-5492, e-mail: [email protected]. The Annual Meeting will be accessible by the handicapped. If you require special assistance, contact the Coordinator, Shareholder Services. By Order of the Board of Directors...

  • Page 128
    QUESTIONS & ANSWERS Q. Why am I receiving these proxy materials? A. Our Board of Directors (the Board) is providing these proxy materials to you on the internet, or has delivered printed versions to you by mail in connection with Kodak's 2009 Annual Meeting of Shareholders (the Annual Meeting), ...

  • Page 129
    ... E-mail at [email protected]. Reference "Proxy Materials Order" on the subject line. In the message, include your full name, address and the three numbers located in the shaded bar on the Notice, and state that you want to receive a paper copy of current and/or future meeting materials...

  • Page 130
    ... vote your Kodak shares, the records of the Company must show that you held your shares as of the close of business on March 16, 2009, the record date for the Annual Meeting. Each share of common stock is entitled to one vote. Q. How can I change my vote or revoke my proxy? A. Shareholder of Record...

  • Page 131
    ... held your shares as of the close of business on March 16, 2009, the record date for the Annual Meeting, you can attend the Annual Meeting. Seating, however, is limited. Attendance at the Annual Meeting will be on a first-come, first-served basis, upon arrival at the Annual Meeting. Photographs may...

  • Page 132
    ... executive offices no later than December 3, 2009. Such proposals must comply with SEC regulations under Rule 14a-8 regarding the inclusion of shareholder proposals in company-sponsored proxy materials. Proposals should be addressed to: Secretary Eastman Kodak Company 343 State Street Rochester, NY...

  • Page 133
    ... printed copies of any of these documents by contacting: Coordinator, Shareholder Services Eastman Kodak Company 343 State Street Rochester, NY 14650-0218 (585) 724-5492 E-mail: [email protected] The address of our principal executive office is: Eastman Kodak Company 343 State Street...

  • Page 134
    ... request, a printed copy of its 2008 Annual Report on Form 10-K. To receive a printed copy of the 2008 Annual Report on Form 10-K, please contact: Coordinator, Shareholder Services Eastman Kodak Company 343 State Street Rochester, NY 14650-0218 (585) 724-5492 E-mail: [email protected] 8

  • Page 135
    ... to attend the Annual Meeting to respond to questions and, if he or she desires, make a statement. As a matter of good corporate governance, the Audit Committee has determined to submit its selection of the independent registered public accounting firm to our shareholders for ratification. In...

  • Page 136
    ...website at www.kodak.com/go/governance. BUSINESS CONDUCT GUIDE AND DIRECTORS' CODE OF CONDUCT All of our employees, including the CEO, the CFO, the Controller, all other senior financial officers and all other Section 16 executive officers, as defined under Section 16 of the Securities Exchange Act...

  • Page 137
    ... family member of another Section 16 Executive Officer or a director of our Company and the related compensation would be reported in our proxy statement if the Section 16 Executive Officer was a "Named Executive Officer" and our Compensation Committee approved (or recommended that the Board...

  • Page 138
    ... solely from the ownership of the Company's common stock and all holders of our common stock received the same benefit on a pro rata basis (e.g., dividends). • Any transaction involving a related party where the rates or charges involved are determined by competitive bids. • Any transaction with...

  • Page 139
    BOARD OF DIRECTORS NOMINEES TO SERVE A ONE-YEAR TERM EXPIRING AT THE 2010 ANNUAL MEETING RICHARD S. BRADDOCK Director since May 1987 Mr. Braddock, 67, is the Chairman & CEO of Fresh Direct. He was named CEO on March 4, 2008 and has been the Chairman since 2005. Mr. Braddock began his business career...

  • Page 140
    ... for Digital Media Solutions and corporate marketing. Prior to that assignment, Mr. Perez served for five years as President and CEO of HP's Inkjet Imaging Business. In his career, Mr. Perez held a variety of positions in research and development, sales, manufacturing, marketing and management both...

  • Page 141
    ...his career in 1968 with New York Telephone and held positions at AT&T and Wisconsin Telephone before becoming Vice President of American Bell Inc. He also served as President and Chief Executive Officer of Applied Data Research Inc. He serves on the board of directors of PNC Financial Services Group...

  • Page 142
    ... Company's key accounting policies with the Controller and Assistant Controllers. Corporate Responsibility and Governance Committee - 6 meetings in 2008 The Corporate Responsibility and Governance Committee assists the Board in: overseeing the Company's corporate governance structure; identifying...

  • Page 143
    ... management programs; performance of sponsored pension plans; and tax policy. A detailed list of the Finance Committee's functions is included in its charter, which can be accessed at www.kodak.com/go/governance. In the past year, the Finance Committee: • Reviewed the Company's capital structure...

  • Page 144
    ... benefit pension plans; • Reviewed the Company's insurance risk management, crisis management and asset protection programs; • Reviewed the Company's tax policy and strategies; and • Conducted and reviewed the results of the Committee self-evaluation. Executive Committee - No meetings in 2008...

  • Page 145
    ... be accessed at www.kodak.com/go/governance. The full Board sets the compensation of the Company's non-employee directors based on the recommendation of the Governance Committee. The Compensation Committee has delegated limited authority to the Company's Chief Human Resources Officer to assist the...

  • Page 146
    ... at www.kodak.com/go/governance. Under this policy, all of our directors are strongly encouraged to attend our annual meeting of shareholders. In 2008, the Board held a total of eight meetings. Each incumbent director attended at least 75% of the meetings of the Board and committees of the Board on...

  • Page 147
    ... next annual meeting of shareholders (or a statement to the effect that no material interest is known to such shareholder). Our Board may change the process by which shareholders may recommend director candidates to the Governance Committee. Please refer to the Company's website at www.kodak.com/go...

  • Page 148
    ...Performance against the goals is assessed as part of the Board's annual evaluation process. Strategic Role of Board The Board plays a key role in developing, reviewing and overseeing the Company's business strategy. Twice each year, the Board devotes an extended meeting to an update from management...

  • Page 149
    ...shares used to pay the exercise price when exercising an option, they receive as compensation until they own shares equal in market value to at least five times their annual retainer that is paid in cash. Kodak does not pay management directors for Board service in addition to their regular employee...

  • Page 150
    ...-Based Payment" (SFAS 123R). The assumptions used to calculate the value of the stock awards are the same as those used for our stock-based compensation disclosure in Note 20 to our financial statements in our Annual Report on Form 10-K for the year ended December 31, 2008, as filed with the SEC on...

  • Page 151
    ...Yield (%) 1.90 7.42 Grant Date December 11, 2007 December 9, 2008 The following table reports the outstanding option awards held by each of the non-employee directors at the end of fiscal year 2008. Aggregate Stock Options Outstanding at Fiscal Year End Name Richard S. Braddock Timothy M. Donahue...

  • Page 152
    ... stock award into the Directors' Deferred Compensation Plan. The plan has two investment options: an interest-bearing account that pays interest at the prime rate and a Kodak phantom stock account. The value of the Kodak phantom stock account reflects changes in the market price of the common stock...

  • Page 153
    ... 5% of its common stock: Number of Common Shares Beneficially Owned 47,298,653 (1) Percentage of Company's Common Shares Beneficially Owned 17.62% Shareholder's Name and Address Legg Mason Capital Management, Inc. LMM LLC 100 Light St. Baltimore, MD 21202 Brandes Investment Partners, L.P. 11988 El...

  • Page 154
    ...Fund of the Eastman Kodak Employees' Savings and Investment Plan, stated in terms of Kodak shares. (a) The amounts listed for each non-employee director do not include stock units representing fees that non-employee directors have elected to defer under the Directors' Deferred Compensation Plan. The...

  • Page 155
    ...not carry voting rights and may not be redeemed as shares of common stock within 60 days of Mr. Perez's and Mr. Berman's departures from the Company. (d) Mr. Parrett has 2,000 shares that have been pledged as security. (e) Each individual Section 16 Executive Officer and director listed beneficially...

  • Page 156
    ...'s account under Kodak's Employee Stock Ownership Plan or Savings and Investment Plan and any "phantom stock" selected by an executive as an investment option in the Executive Deferred Compensation Plan count toward meeting the executive's share ownership requirement. The Compensation Committee...

  • Page 157
    ... directors and operates under a written charter adopted by the Board, most recently amended on February 17, 2004. A copy of the Audit Committee's charter can be found on our website at www.kodak.com/go/governance. Management is responsible for the Company's internal control over financial reporting...

  • Page 158
    ... Services Pre-Approval Policy, a copy of which is attached to this Proxy Statement as Exhibit IV. William H. Hernandez, Chair Richard S. Braddock Debra L. Lee Delano E. Lewis William G. Parrett Dennis F. Strigl Dated: February 24, 2009 REPORT OF THE CORPORATE RESPONSIBILITY AND GOVERNANCE COMMITTEE...

  • Page 159
    ... 22 of this Proxy Statement. The Committee suggested this action in response to your vote at our 2008 annual meeting on the shareholder proposal on majority voting requirements for director nominees. The Board first addressed this topic in early 2007 when it adopted a majority voting policy for the...

  • Page 160
    ... on attracting, retaining and motivating world-class executive talent critical to the success of the Company's business goals. During 2008, our compensation strategy focused on: • Designing our annual variable pay and long-term incentive plans to be highly performance-based and to ensure a strong...

  • Page 161
    ...outstanding performance. Our executive compensation program consists of the following material elements: 1) base salary; 2) annual variable pay; 3) long-term equity incentives; and 4) benefits, which include retirement, termination and change-in-control arrangements. Our Named Executive Officers are...

  • Page 162
    ...each Named Executive Officer's level of annual target total direct compensation after reviewing market data and factors listed in the prior paragraph. In general, the Committee does not consider awards granted or earned under plans in past years, or the effect of changes in the Company's stock price...

  • Page 163
    ...market data provided by the Consultant as a reference when the Committee considered base salary, long-term equity incentive awards and the annual variable pay plan target opportunity for Named Executive Officers. The 2008 market review indicated that: 1) base salaries of our Named Executive Officers...

  • Page 164
    ...-term equity mix for 2009 as described on page 42 of this Proxy Statement. Mr. Berman is the only Named Executive Officer for whom Tally Sheets were not prepared or reviewed in 2008, because he was not a Named Executive Officer in 2007. Use of the CEO Evaluation Process The Presiding Director and...

  • Page 165
    ... the corporate award pool and the amount allocated to each Named Executive Officer. These metrics reflect the key strategic and operational imperatives for the year in support of the Company's business strategy. The Committee selects these metrics in part to ensure that the primary EXCEL performance...

  • Page 166
    ...direct compensation, the Committee annually reviews survey data to determine the position of each Named Executive Officer's target opportunity relative to the market. Committee Decision and Analysis For 2008, the target EXCEL opportunities as a percent of base salary for our Named Executive Officers...

  • Page 167
    ... matrix resulted in a corporate funding pool of 0%, and because the Committee did not factor in the baseline metric results, none of our Named Executive Officers earned an EXCEL award for 2008. Long-Term Equity Incentive Compensation Our Named Executive Officers receive an annual grant of long-term...

  • Page 168
    ... of equity compensation used for 2009, the Committee also used other awards, as discussed below, to ensure balance in the overall program and to mitigate the impact that uncontrollable market volatility may have on the pay realized by the Named Executive Officers. • Retention and stock ownership...

  • Page 169
    ... in the 2008 Executive Compensation determination timeline table on page 36, this Proxy Statement addresses the equity decisions made in 2008. For Committee Decision and Analysis for 2008 Leadership Stock grants, determined in December 2007, see the Company's Notice of 2008 Annual Meeting and Proxy...

  • Page 170
    ... the Committee established. By "delivered compensation," we mean the compensation that was actually delivered to our Named Executive Officers for 2008 (i.e., delivered compensation = 2008 base salary + the actual 2008 annual variable pay (EXCEL) award earned + the actual 2008 Leadership Stock award...

  • Page 171
    ..., the Committee may also grant one-time, ad hoc stock option awards to reward an executive for superior individual performance. There were no ad hoc awards granted to any Named Executive Officers in 2008. Former Executive: James T. Langley Mr. Langley's last day of employment with the Company was...

  • Page 172
    ...The Committee plans to revisit the terms of the Share Ownership Program during 2009. Equity Award Policy All equity awards granted to Named Executive Officers in 2008 were granted in accordance with our Board of Directors Policy on Equity Awards approved by the Board effective as of January 1, 2007...

  • Page 173
    ... its executives, known as the Eastman Kodak Company 1982 Executive Deferred Compensation Plan (EDCP). The plan permits the Company's executives to defer a portion of their base salary and annual bonus awards. Each fall, the Company's executives may elect to defer base salary for the following year...

  • Page 174
    ... Committee focuses on the severance triggers relative to each executive's position and responsibilities. Our severance arrangements with our Named Executive Officers also provide for the treatment of other compensation provided under the Company's annual bonus plan, equity plans and retirement plans...

  • Page 175
    ...2006 Executive Performance Share Program (EPSP) shares) during each year reported. The value disclosed represents the annual aggregate expense for stock awards granted in 2008 and in prior years as compensation cost is recognized for financial reporting purposes over the period in which the employee...

  • Page 176
    ...each Named Executive Officer depending on the outcome of performance. For a description of the performance criteria, see "2008 EXCEL Plan Design and Performance Results - Performance Metrics" under the Compensation Discussion and Analysis. In accordance with EXCEL and our share ownership program, Mr...

  • Page 177
    in 2007 in the form of fully-vested shares of common stock, which were settled on March 27, 2008. Named Executive Officers did not receive any non-equity incentive compensation in 2006 and 2008 because no EXCEL awards were earned for those years. (5) This column reports the aggregate change in the ...

  • Page 178
    ...by the Compensation Committee on February 27, 2007. One-half of the discretionary bonus was paid in cash, which is reported in this column. The remainder of the bonus was paid in shares of restricted stock each with a grant date fair value of $24.24 based on the closing market price of our shares of...

  • Page 179
    ... the closing market price of our common stock on the grant date. One-third of these shares will vest on each of the first three anniversaries of the grant date. The number of restricted shares awarded is shown in the Grants of Plan-Based Awards in the Company's 2008 Proxy Statement. EMPLOYMENT AND...

  • Page 180
    ... Executive: James T. Langley Mr. Langley's last day of employment with the Company was March 14, 2008. In connection with Mr. Langley's planned separation from service with the Company, Mr. Langley received certain severance payments and other benefits under the terms of his August 12, 2003 and...

  • Page 181
    ...non-equity incentive bonus plan in which a Named Executive Officer participated. Estimated Future Payouts Under Estimated Future Payouts Non-Equity Incentive Plan Awards Under Equity Incentive Plan All Other (1) Awards (2) Stock All Other Awards Option ThreshThreshold Target Max. Or Units Awards old...

  • Page 182
    ... for our Named Executive Officers and performance under the plan for 2008, see the discussion in the "Compensation Discussion and Analysis" under the heading "Annual Variable Pay." In 2008, the Compensation Committee selected Net Cash Generation and Combined Consumer Digital Imaging Group (CDG) and...

  • Page 183
    ...three years after termination of employment. The exercise price of the stock options granted to the Named Executive Officers on December 9, 2008 is $7.41, the mean between the high and low price at which the Kodak shares traded on the NYSE on the grant date. All options are granted under the Company...

  • Page 184
    ....28 7.41 Option Expiration Date 4/1/2013 11/18/2010 12/9/2011 5/31/2012 12/6/2012 12/11/2013 12/10/2014 12/8/2015 Equity Incentive Plan Awards: Number of Number of Market Value Unearned Shares or of Shares or Shares, Units or Other Units of Units of Rights that Stock Held Stock that Have Not that...

  • Page 185
    ... Equity Incentive Plan Awards: Number of Number of Market Value Unearned Shares or of Shares or Shares, Units Units of Units of or Other Stock Held Stock that Rights that that Have Not Have Not Option Have Not Vested (2) Expiration Vested (4) Vested (3) Date 3/11/2009 3/31/2009 5/2/2009 3/29/2010...

  • Page 186
    ...Equity Incentive Plan Awards: Number of Number of Market Value Unearned Shares or of Shares or Shares, Units Units of Units of or Other Stock Held Stock that Rights that that Have Not Have Not Option Have Not Vested (2) Expiration Vested (4) Vested (3) Date 3/11/2009 11/15/2011 3/29/2010 3/31/2009...

  • Page 187
    ...by our Named Executive Officers. (3) The market value of shares, units or other rights that have not vested was calculated using a stock price of $6.58 (closing price of Kodak stock on December 31, 2008, the last trading day of the year). (4) There are no unearned Leadership Stock awards outstanding...

  • Page 188
    ...termination of employment with approved reason from the Company on March 14, 2008 (the value at vesting is calculated using a stock price of $17.39, Kodak's closing stock price on March 14, 2008): • 3,453 unvested shares of a restricted stock award that was granted on February 27, 2007; and • 14...

  • Page 189
    ...value as of December 31, 2008 of the accumulated benefits payable to each of our Named Executive Officers, including the number of years of service credited to each Named Executive Officer, under KRIP, KURIP and, when applicable, their supplemental individual retirement arrangements. The methods and...

  • Page 190
    ... of the Named Executive Officers, is base salary and any EXCEL award, including allowances in lieu of salary for authorized periods of absence, such as illness, vacation or holidays. For an employee with up to 35 years of accrued service, the annual normal retirement income benefit is calculated by...

  • Page 191
    ... Mr. Langley was employed by the Company for four full years, the account was credited with $400,000. Mr. Langley's August 12, 2003 letter agreement was amended by a letter agreement dated February 28, 2007 to provide for a lump-sum payment of his supplemental retirement benefits. In addition, under...

  • Page 192
    ... is also reported in the Summary Compensation Table for fiscal 2008. (11) Includes the aggregate value of net dividends on the earned and deferred 2004 - 2005 Leadership Stock award; also reflects earnings attributable to changes in Kodak's stock price during fiscal 2008 (i.e., the closing price of...

  • Page 193
    ... rate, compounded annually, until they are distributed. Distributions from the account are subject to the same distribution rules as those in effect under our EDCP described previously. Deferral of Stock Awards Under the Company's prior equity award programs, Named Executive Officers were at times...

  • Page 194
    ... payable include the executive's base salary, the Company's stock price and the executive's age and service with the Company. At the time of separation of a Named Executive Officer, the Committee may approve severance terms that vary from those provided in the Named Executive Officer's pre-existing...

  • Page 195
    ...EXCEL plan payable in a single installment on the normal payment date when awards are paid to other executives; • Any earned, but unpaid, EXCEL award for the prior performance year; • Waiver of the forfeiture provisions of any restricted stock award (other than unvested restricted shares granted...

  • Page 196
    ... option award and all outstanding stock options will remain exercisable by his estate or transferee for the remainder of the original term; • Services under Kodak's financial counseling program for the two-year period immediately following his death; and • A survivor benefit calculated by using...

  • Page 197
    ... with applicable employee benefit and compensation plans for U.S. employees. Former Executive: James T. Langley Mr. Langley's last day of employment with the Company was March 14, 2008. Under the terms of his leaving arrangement approved by the Compensation Committee on September 21, 2007, Mr...

  • Page 198
    ... if the Named Executive Officer's employment was terminated as of December 31, 2008, using the closing price of our common stock as of December 31, 2008, which was $6.58. A.M. Perez Cash Severance (3) Intrinsic Value of Stock Options (4) Restricted Stock (5) Leadership Stock (6) Benefits/Perquisites...

  • Page 199
    ..., as if the Named Executive Officer's employment was terminated as of December 31, 2008, using the closing price of our common stock as of December 31, 2008, which was $6.58. A.M. Perez Cash Severance (3) Intrinsic Value of Stock Restricted Stock (5) Leadership Stock (6) Benefits/Perquisites Pension...

  • Page 200
    ..., as if the Named Executive Officer's employment was terminated as of December 31, 2008, using the closing price of our common stock as of December 31, 2008, which was $6.58. A.M. Perez Cash Severance Intrinsic Value of Stock Options Restricted Stock (4) Leadership Stock (5) Benefits/Perquisites...

  • Page 201
    ..., as if the Named Executive Officer's employment was terminated as of December 31, 2008, using the closing price of our common stock as of December 31, 2008, which was $6.58. A.M. Perez Cash Severance (4) Intrinsic Value of Stock Options Restricted Stock (6) Leadership Stock (7) Benefits/Perquisites...

  • Page 202
    ... within two years following a change-in-control, each of the Named Executive Officers will receive a lump-sum severance payment equal to 1) three times their base salary and target EXCEL bonus and 2) continued participation in the Company's medical, dental, disability and life insurance plans for 12...

  • Page 203
    ... entitled to be paid any earned but unpaid award and a pro rata target award for the year in which their employment is terminated. If, upon a change-in-control, Kodak's common stock ceases to be actively traded on the NYSE, then each Named Executive Officer will be entitled to receive any earned but...

  • Page 204
    ...a termination of employment by the Company in connection with a change-in-control, as if the Named Executive Officer's employment was terminated as of December 31, 2008 using the closing price of our common stock as of December 31, 2008, which was $6.58. A.M. Perez Cash Severance (3) Intrinsic Value...

  • Page 205
    ... covering our 2008 fiscal year, due to a clerical error on the part of the Company, one SEC Form 4 filed on the behalf of William Parrett was not filed timely. By Order of the Board of Directors Laurence L. Hickey Secretary and Assistant General Counsel Eastman Kodak Company April 2, 2009 79

  • Page 206
    ... years employed as an executive officer of another company where any of the Company's present executive officers serve or served on that company's compensation committee; or The director is a current employee, or an immediate family member of the director is a current executive officer of, a company...

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    ... meetings of the Board and its committees. Directors should be actively involved in the Board and its decision making. Skills. Directors should be selected so that the Board has an appropriate mix of skills in core areas such as accounting and finance, technology, management, marketing, crisis...

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    ... for orientation sessions for newly elected directors, including briefings by senior managers, to familiarize new Directors with the Company's overall business and operations, strategic plans and goals, financial statements and key policies and practices, including corporate governance matters. 82

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    ... classified as "audit services," assistance with understanding and implementing new accounting and financial reporting guidance from rulemaking authorities, financial audits of employee benefit plans, agreed-upon or expanded audit procedures performed at the request of management and assistance with...

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    ... authorized to pre-approve specific engagements or changes to engagements when it is not practical to bring the matter before the Committee as a whole. Attachment 1 Prohibited Non-Audit Services • Bookkeeping or other services related to the accounting records or financial statements of the audit...

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    ... Valet only. Shareholders attending the Annual Meeting will be charged a discounted rate of $9.00 for Valet parking for the Annual Meeting. In order to receive the discounted parking rate, shareholders must notify the Valet attendant that you are attending the Annual Meeting before checking in your...

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