Note 12 - Restructuring Liabilities

3 Months Ended

Mar. 31, 2013

Restructuring and Related Activities Disclosure [Text Block]

NOTE 12:  RESTRUCTURING LIABILITIES

Charges for restructuring activities are recorded in the period in which Kodak commits to a formalized restructuring plan, or executes the specific actions contemplated by the plan, and all criteria for liability recognition under the applicable accounting guidance have been met.  Restructuring actions taken in the first three months of 2013 were initiated to reduce Kodak’s cost structure as part of its commitment to drive sustainable profitability.  First quarter actions included traditional product manufacturing capacity reductions in the U.S. and the U.K., the continued wind down of the consumer inkjet printer business, and various targeted reductions in service, sales, and other administrative functions.

Restructuring Reserve Activity

The activity in the accrued balances and the non-cash charges and credits incurred in relation to restructuring activities for the three months ended March 31, 2013 were as follows:

							Long-lived Asset
				Exit			Impairments and
	Severance			Costs			Inventory			Accelerated
(in millions)	Reserve			Reserve			Write-downs			Depreciation			Total
Balance as of December 31, 2012	$	38		$	45		$	-		$	-			83
Q1 2013 charges - continuing operations		10			1			2			1			14
Q1 utilization/cash payments		(20	)		(18	)		(2	)		(1	)		(41	)
Q1 2013 other adjustments & reclasses  (1)		-			(6	)		-			-			(6	)
Balance as of March 31, 2013	$	28		$	22		$	-		$	-		$	50

 (1) The $(6) million includes $(5) million for amounts reclassified as Liabilities subject to compromise, and $(1) million of foreign currency translation adjustments.

For the three months ended March 31, 2013, the $14 million of charges include $1 million for accelerated depreciation and $1 million for inventory write-downs, which were reported in Cost of sales in the accompanying Consolidated Statement of Operations.  The remaining costs incurred of $12 million were reported as Restructuring costs and other in the accompanying Consolidated Statement of Operations for the three months ended March 31, 2013.  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 first quarter 2013 severance costs related to the elimination of approximately 225 positions, including approximately 150 manufacturing/service positions and 75 administrative positions.  The geographic composition of these positions includes approximately 100 in the United States and Canada, and 125 throughout the rest of the world.

The charges of $14 million recorded in the first quarter of 2013 included $5 million applicable to the Digital Printing and Enterprise Segment, $5 million applicable to the Graphics, Entertainment and Commercial Films Segment, $(1) million applicable to the Personalized and Document Imaging Segment, and $5 million that was applicable to manufacturing, research and development, and administrative functions, which are shared across all segments.

As a result of these initiatives, the majority of the severance will be paid during periods through the first half of 2013.  However, in some 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 2013 and beyond.