Kodak 2011 Annual Report Download - page 95

2009 Activity
On December 17, 2008, the Company committed to a plan to implement a targeted cost reduction program (the 2009 Program) to more
appropriately size the organization as a result of economic conditions. The program involved rationalizing selling, administrative, research
and development, supply chain and other business resources in certain areas and consolidating certain facilities.
The Company recorded $258 million of charges, including $22 million of charges for accelerated depreciation and $10 million of charges for
inventory write-downs, which were reported in Cost of sales in the accompanying Consolidated Statement of Operations for the year ended December
31, 2009. The remaining costs incurred of $226 million were reported as Restructuring costs, rationalization and other in the accompanying
Consolidated Statement of Operations for the year ended December 31, 2009. The severance and exit costs reserves require the outlay of cash, while
long-lived asset impairments, accelerated depreciation and inventory write-downs represent non-cash items.
The severance costs related to the elimination of approximately 3,225 positions, including approximately 1,475 manufacturing, 750 research and
development, and 1,000 administrative positions. The geographic composition of the positions eliminated includes approximately 1,950 in the United
States and Canada, and 1,275 throughout the rest of the world.
The charges of $258 million recorded in 2009 included $69 million applicable to the FPEG segment, $34 million applicable to the CDG segment,
$112 million applicable to the GCG segment, and $43 million that was applicable to manufacturing, research and development, and administrative
functions, which are shared across all segments.
As a result of these initiatives, severance payments will be paid during periods through 2010 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. In addition, certain exit costs, such as long-term
lease payments, will be paid over periods throughout 2010 and beyond.
2010 Activity
The $78 million of charges for the year 2010 includes $6 million of charges for accelerated depreciation and $2 million for inventory write-
downs, which were reported in Cost of sales in the accompanying Consolidated Statement of Operations. The remaining costs incurred of
$70 million, including $49 million of severance costs, $14 million of exit costs, and $7 million of long-lived asset impairments, were
reported as Restructuring costs, rationalization and other in the accompanying Consolidated Statement of Operations. The severance and
exit costs reserves require the outlay of cash, while long-lived asset impairments, accelerated depreciation and inventory write-downs
represent non-cash items.
The 2010 severance costs related to the elimination of approximately 800 positions, including approximately 550 manufacturing/service,
225 administrative, and 25 research and development positions. The geographic composition of these positions includes approximately 475
in the United States and Canada, and 325 throughout the rest of the world.
The charges of $78 million recorded in 2010 included $38 million applicable to FPEG, $15 million applicable to GCG, $3 million
applicable to CDG, and $22 million that was applicable to manufacturing/service, research and development, and administrative functions,
which are shared across all segments.
As a result of these initiatives, severance payments will be paid during periods through 2011 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. In addition, certain exit costs,
such as long-term lease payments, will be paid over periods throughout 2011 and beyond.
(9) Includes $32 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, offset by $1 million of
foreign currency translation adjustments.
(10)
The Company expects to utilize the majority of the December 31, 2011 accrual balance in 2012.
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