Note 19: Restructuring And Rationalization Liabilities

12 Months Ended

Dec. 31, 2012

Restructuring and Related Activities Disclosure [Text Block]

NOTE 19:  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 and ongoing rationalization initiatives are recorded in the period in which Kodak commits to a formalized restructuring or ongoing rationalization plan, or executes the specific actions contemplated by the plans and all criteria for liability recognition under the applicable accounting guidance have been met.

Restructuring Reserve Activity

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, 2012 were as follows:

(in millions)	Severance Reserve			Exit Costs Reserve			Long-lived Asset Impairments and Inventory Write-downs			Accelerated Depreciation			Total
Balance at December 31, 2009	$	68		$	27		$	-		$	-		$	95
2010 charges - continuing operations (1)		48			14			9			6			77
2010 charges - discontinued operations (1)		1			-			-			-			1
2010 cash payments/utilization		(67	)		(21	)		(9	)		(6	)		(103	)
2010 other adjustments & reclasses (2)		(28	)		-			-			-			(28	)
Balance at December 31, 2010		22			20			-			-			42
2011 charges - continuing operations (3)		102			15			3			10			130
2011 charges - discontinued operations (3)		3			-			-			-			3
2011 cash payments/utilization		(58	)		(13	)		(3	)		(10	)		(84	)
2011 other adjustments & reclasses (4)		(31	)		-			-			-			(31	)
Balance at December 31, 2011		38			22			-			-			60
2012 charges - continuing operations (5)		167			35			30			13			245
2012 charges - discontinued operations (5)		20			2			4			-			26
2012 cash payments/utilization		(86	)		(13	)		(34	)		(13	)		(146	)
2012 other adjustments & reclasses (6)		(101	)		(1	)		-			-			(102	)
Balance at December 31, 2012 (7)	$	38		$	45		$	-		$	-		$	83

(1) Severance reserve activity includes termination benefit charges of $49 million.

(2) Includes $28 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.

(3) Severance reserve activity includes termination benefit charges of $101 million, and net curtailment and settlement losses related to these actions of $4 million.

(4) 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.

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

(6) Includes $100 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, and $2 million for amounts reclassified as Liabilities subject to compromise.

(7) Kodak expects to utilize the majority of the December 31, 2012 accrual balance in 2013.

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, and $1 million which was reported in discontinued operations.  The remaining costs incurred of $69 million, including $48 million of severance costs, $14 million of exit costs, and $7 million of long-lived asset impairments, were reported as Restructuring costs 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 $9 million applicable to the Graphics, Entertainment and Commercial Films Segment, $1 million applicable to the Digital Printing and Enterprise Segment, $7 million applicable to the Personalized and Document Imaging Segment, and $60 million that was applicable to manufacturing/service, research and development, and administrative functions, which are shared across all segments.  The remaining $1 million was applicable to discontinued operations.

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.

2011 Activity

The $133 million of charges for the year 2011 includes $10 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, and $3 million which was reported in discontinued operations.  The remaining costs incurred of $118 million, including $102 million of severance costs, $15 million of exit costs, and $1 million of long-lived asset impairments, were reported as Restructuring costs 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 2011 severance costs related to the elimination of approximately 1,225 positions, including approximately 575 manufacturing/service, 550 administrative and 100 research and development positions.  The geographic composition of these positions includes approximately 725 in the United States and Canada, and 500 throughout the rest of the world.

The charges of $133 million recorded in 2011 included $23 million applicable to the Graphics, Entertainment and Commercial Films Segment, $6 million applicable to the Digital Printing and Enterprise Segment, $6 million applicable to the Personalized and Document Imaging Segment, and $95 million that was applicable to manufacturing/service, research and development, and administrative functions, which are shared across all segments.  The remaining $3 million was applicable to discontinued operations.

As a result of these initiatives, severance payments will be paid during periods through 2012 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 2012 and beyond.

2012 Activity

Restructuring actions taken in 2012 were initiated to reduce Kodak’s cost structure as part of its commitment to drive sustainable profitability.  Actions included the winding down of sales of consumer inkjet printers, the digital capture and devices business exit, traditional product manufacturing capacity reductions in the U.S. and Mexico, workforce reductions triggered by the Kodak Gallery wind-down, consolidation of thermal media manufacturing in the U.S. and various targeted reductions in research and development, sales, service, and other administrative functions.

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 sales in the accompanying Consolidated Statement of Operations, and $26 million which was reported as discontinued operations.  The remaining costs incurred of $228 million, including $167 million of severance costs, $35 million of exit costs, and $26 million of long-lived asset impairments, were reported as Restructuring costs 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 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.

The charges of $271 million recorded in 2012 included $20 million applicable to the Graphics, Entertainment and Commercial Films Segment, $93 million applicable to the Digital Printing and Enterprise Segment, $24 million applicable to the Personalized and Document Imaging Segment, and $108 million that was applicable to manufacturing/service, research and development, and administrative functions, which are shared across all segments.  The remaining $26 million was applicable to discontinued operations.

As a result of these initiatives, severance payments will be paid during periods through 2013 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 2013 and beyond.