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Note 13 - Restructuring Liabilities
 6 Months Ended
Jun. 30, 2013
Restructuring and Related Activities [Abstract]  
Restructuring and Related Activities Disclosure [Text Block]

NOTE 13:  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 six months of 2013 were initiated to reduce Kodak’s cost structure as part of its commitment to drive sustainable profitability.  Year to date 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, a workforce reduction in France, 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 and six months ended June 30, 2013 were as follows:


(in millions)

 

Severance

Reserve

   

Exit

Costs

Reserve

   

Long-lived Asset

Impairments and

Inventory

Write-downs

   

Accelerated

Depreciation

   

Total

 
                                         

Balance as of December 31, 2012

  $ 38     $ 45     $ -     $ -       83  
                                         

Q1 2013 charges - continuing operations

    9       1       2       1       13  

Q1 2013 charges - discontinued operations

    1       -       -       -       1  

Q1 2013 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  
                                         
                                         

Q2 2013 charges - continuing operations

  $ 28     $ 1     $ 1     $ 3     $ 33  

Q2 2013 charges - discontinued operations

    1       -       -       -       1  

Q2 2013 utilization/cash payments

    (18

)

    (9

)

    (1

)

    (3

)

    (31

)

Q2 2013 other adjustments & reclasses (2)

    (5

)

    -       -       -       (5

)

Balance as of June 30, 2013

  $ 34     $ 14     $ -     $ -     $ 48  

 

(1)

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


 

(2)

The $(5) million represents severance-related charges for pension plan curtailments, which are reflected in Pension and other postretirement liabilities in the Consolidated Statement of Financial Position.


For the three months ended June 30, 2013, the $34 million of charges include $3 million for accelerated depreciation and $1 million for inventory write-downs, which were reported in Cost of sales, and $1 million which was reported as Discontinued operations in the accompanying Consolidated Statement of Operations.  The remaining costs incurred of $29 million were reported as Restructuring costs and other in the accompanying Consolidated Statement of Operations for the three months ended June 30, 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 second quarter 2013 severance costs related to the elimination of approximately 325 positions, including approximately 200 manufacturing/service positions, 100 administrative positions, and 25 research and development positions.  The geographic composition of these positions includes approximately 200 in the United States and Canada, and 125 throughout the rest of the world.


The charges of $34 million recorded in the second quarter of 2013 included $16 million applicable to the Graphics, Entertainment and Commercial Films Segment and $17 million that was applicable to manufacturing, research and development, and administrative functions, which are shared across all segments.  The remaining $1 million was applicable to discontinued operations.


For the six months ended June 30, 2013, the $48 million of charges include $4 million for accelerated depreciation and $2 million for inventory write-downs, which were reported in Cost of sales, and $2 million which was reported as Discontinued operations in the accompanying Consolidated Statement of Operations.  The remaining costs incurred of $40 million were reported as Restructuring costs and other in the accompanying Consolidated Statement of Operations for the six months ended June 30, 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 severance costs for the six months ended June 30, 2013 related to the elimination of approximately 550 positions, including approximately 350 manufacturing/service positions, 175 administrative positions, and 25 research and development positions.  The geographic composition of these positions includes approximately 300 in the United States and Canada, and 250 throughout the rest of the world.


The charges of $48 million for the six months ended June 30, 2013 included $5 million applicable to the Digital Printing and Enterprise Segment, $21 million applicable to the Graphics, Entertainment and Commercial Films Segment, and $20 million that was applicable to manufacturing, research and development, and administrative functions, which are shared across all segments.  The remaining $2 million was applicable to discontinued operations.


As a result of these initiatives, the majority of the severance will be paid during periods through the end 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.