Note 15 - Restructuring Costs and Other

12 Months Ended

Dec. 31, 2014

Restructuring and Related Activities [Abstract]

Restructuring and Related Activities Disclosure [Text Block]

NOTE 15:  RESTRUCTURING COSTS AND OTHER

Kodak recognizes the need to continually rationalize its workforce and streamline its operations in the face of ongoing business and economic changes.  Charges for restructuring initiatives 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.

The activity in the accrued balances and the non-cash charges and credits incurred in relation to restructuring programs during the three years ended December 31, 2014 were as follows:

(in millions)	Severance Reserve (6)			Exit Costs Reserve (6)			Long-lived Asset Impairments and Inventory Write-downs (6)			Accelerated Depreciation (6)			Total
Balance as of December 31, 2011 (Predecessor):	$	38		$	22		$	-		$	-		$	60
2012 charges - continuing operations (1)		158			35			26			13			232
2012 charges - discontinued operations (1)		29			2			8			-			39
2012 utilization/cash payments		(86	)		(13	)		(34	)		(13	)		(146	)
2012 other adjustments & reclasses (2)		(101	)		(1	)		-			-			(102	)
Balance as of December 31, 2012 (Predecessor):		38			45			-			-			83
Eight months charges - continuing operations		38			3			4			4			49
Eight months charges - discontinued operations		3			-			-			-			3
Eight months utilization/cash payments		(48	)		(32	)		(4	)		(4	)		(88	)
Eight months other adjustments & reclasses (3)		(3	)		(9	)		-			-			(12	)
Balance as of August 31, 2013 (Predecessor):	$	28		$	7		$	-		$	-		$	35
Four months charges - continuing operations	$	13		$	3		$	1		$	-		$	17
Four months charges - discontinued operations		-			-			-			-			-
Four months utilization/cash payments		(15	)		(3	)		(1	)		-			(19	)
Four months other adjustments & reclasses (4)		-			1			-			-			1
Balance as of December 31, 2013 (Successor):		26			8			-			-			34
2014 charges - continuing operations		54			2			3			2			61
2014 utilization/cash payments		(47	)		(5	)		(3	)		(2	)		(57	)
2014 other adjustments & reclasses (5)		(11	)		-			-			-			(11	)
Balance as of December 31, 2014 (Successor):	$	22		$	5		$	-		$	-		$	27

(1)   Severance reserve activity includes termination benefit charges of $186 million, and net curtailment and settlement losses related to these actions of $1 million.  

(2)   Includes $(100) million of severance related charges for pension plan curtailments, settlements, and special termination benefits, which were reclassified to Pension and other postretirement liabilities and Other long-term assets and $(2) million for amounts reclassified as Liabilities subject to compromise.

(3)   The $(12) million includes $(5) million for amounts reclassified as Liabilities subject to compromise, $(4) million of severance-related charges for pension plan curtailments, which were reclassified to Pension and other postretirement liabilities and $(3) million of reserve adjustments due to the application of fresh start accounting, which were recorded in Reorganization items.

(4)   The $1 million represents foreign currency translation adjustments.

(5)   The $(11) million includes $(8) million of severance related charges for pension plan special termination benefits, which were reclassified to Pension and other postretirement liabilities and $(3) million of foreign currency translation adjustments.

(6)   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.

2012 Activity

The $271 million of charges for the year 2012 includes $13 million of charges for accelerated depreciation and $4 million for inventory write-downs, which were reported in Cost of revenues in the accompanying Consolidated Statement of Operations, and $39 million which was reported as Earnings (loss) from discontinued operations.  The remaining costs incurred of $215 million, including $158 million of severance costs, $35 million of exit costs, and $22 million of long-lived asset impairments, were reported as Restructuring costs and other in the accompanying Consolidated Statement of Operations.

The 2012 severance costs related to the elimination of approximately 3,225 positions, including approximately 1,775 manufacturing/service, 1,050 administrative and 400 research and development positions.  The geographic composition of these positions includes approximately 1,925 in the United States and Canada, and 1,300 throughout the rest of the world.

As a result of these initiatives, severance payments were paid during periods through 2014 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 continue beyond 2014.

2013 Activity

The $17 million of charges for the four months ended December 31, 2013 were reported as Restructuring costs and other in the accompanying Consolidated Statement of Operations.  The $52 million of charges for the eight months ended August 31, 2013 includes $4 million for accelerated depreciation and $2 million for inventory write-downs which were reported in Cost of revenues, $43 million reported as Restructuring costs and other and $3 million which were reported as Earnings (loss) from discontinued operations in the accompanying Consolidated Statement of Operations.

The 2013 severance costs related to the elimination of approximately 825 positions, including approximately 500 manufacturing/service, 300 administrative and 25 research and development positions.  The geographic composition of these positions included approximately 375 in the U.S. and Canada, and 450 throughout the rest of the world.

As a result of these initiatives, severance payments were paid during periods through 2014 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 continue beyond 2014.

2014 Activity

Restructuring actions taken in 2014 included steps toward exiting a plate manufacturing facility in the U.K., as described in further detail below. In addition, actions were initiated to reduce Kodak’s cost structure as part of its commitment to drive sustainable profitability and included a workforce reduction in France, manufacturing capacity reductions in the U.S., a research and development site consolidation in the U.S., and various targeted reductions in service, sales, research and development and other administrative functions.

As a result of these actions, for the year ended December 31, 2014 Kodak recorded $61 million of charges, including $2 million for accelerated depreciation which was reported in Cost of sales and $59 million which was reported as Restructuring costs and other in the accompanying Consolidated Statement of Operations.

The 2014 severance costs related to the elimination of approximately 775 positions, including approximately 325 manufacturing/service, 350 administrative and 100 research and development positions.  The geographic composition of these positions included approximately 425 in the U.S. and Canada, and 350 throughout the rest of the world.

As a result of these initiatives, severance payments will be paid during periods through 2015 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 2015 and beyond.

Leeds Plate Manufacturing Facility Exit

On March 3, 2014, Kodak announced a plan to exit its prepress plate manufacturing facility located in Leeds, England.  This decision was pursuant to Kodak’s initiative to consolidate manufacturing operations globally, and is expected to result in a more efficient delivery of its products and solutions.  Kodak began the exit of the facility in the second quarter of 2014, and expects to phase out production at the site from mid to late 2015 and to complete the exit of the facility by the second quarter of 2016.

As a result of the decision, Kodak originally expected to incur total charges of $30 to $40 million, including $8 to $10 million of charges related to separation benefits, $20 to $25 million of non-cash related charges for accelerated depreciation and asset write-offs and $2 to $5 million in other cash related charges associated with this action.  Based on refinements in estimates, Kodak now expects to incur total charges of $20 to $30 million, including $10 to $15 million of non-cash related charges for accelerated depreciation and asset write-offs.  The estimates for separation benefits and other cash related charges remain unchanged.

Kodak implemented certain actions under this program during 2014.  As a result of these actions, Kodak recorded severance charges of $3 million, long-lived asset impairment charges of $2 million, and accelerated depreciation charges of $2 million.