1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
X Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (Fee Required)
For the year ended December 31, 1995 or
Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (No Fee Required)
For the transition period from to
Commission File Number 1-87
EASTMAN KODAK COMPANY
(Exact name of registrant as specified in its charter)
NEW JERSEY 16-0417150
(State of incorporation) (IRS Employer
Identification No.)
343 STATE STREET, ROCHESTER, NEW YORK 14650
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 716-724-4000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock, $2.50 Par Value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. X
At December 31, 1995, 345,889,423 shares of Common Stock of the registrant
were outstanding. The aggregate market value (based upon the closing price
of these shares on the New York Stock Exchange at January 19, 1996) of the
voting stock held by nonaffiliates was approximately $24.0 billion.
2
ITEM 1. BUSINESS
Eastman Kodak Company (the Company) is engaged primarily in developing,
manufacturing, and marketing consumer and commercial imaging products.
Kodak's sales, earnings and identifiable assets by industry segment for the
past three years are shown in Segment Information on page 43.
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CONSUMER IMAGING SEGMENT
Sales of the consumer imaging segment, including intersegment sales, for the
past three years were:
(in millions) 1995 1994 1993
$6,830 $5,919 $5,292
The products of the consumer imaging segment are used for capturing,
recording or displaying a consumer originated image. For example,
traditional amateur photography requires, at a minimum, a camera, film, and
photofinishing. Photofinishing requires equipment and supplies, including
chemicals and paper for prints.
Kodak manufactures and markets various components of imaging systems. For
amateur photography, Kodak supplies films, photographic papers, processing
services, photographic chemicals, cameras and projectors. Recent imaging
products developed by Kodak include new generations of films, cameras,
photographic papers and one-time-use cameras. In early 1996, the Company
announced its line-up of Advanced Photo System (APS) products encompassing
new cameras, films and services. APS is a new amateur film format which
delivers a variety of new consumer features such as drop-in loading and
multiple capture options.
Marketing and Competition. Kodak's consumer imaging products and services
are distributed worldwide through a variety of channels. Individual products
are often used in substantial quantities in more than one market. Most sales
of the consumer imaging segment are made through dealers. Independent retail
outlets selling Kodak amateur products total many thousands. In a few areas
abroad, Kodak products are marketed by independent national distributors.
Kodak's advertising programs actively promote its products and services in
its various markets, and its principal trademarks, trade dress, and corporate
symbol are widely used and recognized.
Kodak's consumer imaging products and services compete with similar products
and services of others. Competition in traditional imaging markets is strong
throughout the world. Many large and small companies offer similar products
and services that compete with Kodak's business. Kodak's products are
continually improved to meet the changing needs and preferences of its
customers.
Raw Materials. The raw materials used by the consumer imaging segment are
many and varied and generally available. Silver is one of the essential
materials in photographic film and paper manufacturing. Digital electronics
are becoming more prevalent in product offerings.
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3
COMMERCIAL IMAGING SEGMENT
Sales of the commercial imaging segment for the past three years were:
(in millions) 1995 1994 1993
$8,184 $7,646 $7,382
The commercial imaging segment consists of businesses that serve the imaging
and information needs of commercial customers. Products in this segment are
used to capture, store, process and display images and information in a
variety of forms.
Kodak products for the commercial imaging segment include films, photographic
papers, photographic plates, chemicals, processing equipment and audiovisual
equipment, as well as copiers, graphic arts films, microfilm products,
applications software, printers and other business equipment, supplies and
service agreements to support these products. These products serve
professional photofinishers, professional photographers, customers in the
health care industry, and customers in motion picture, television, commercial
printing and publishing, office automation and government markets. Recently
introduced commercial imaging products include digital and applied imaging
products which capture, store and print images in an electronic format.
Marketing and Competition. Kodak's commercial imaging products and services
are distributed through a variety of channels. The Company also sells and
leases business equipment directly to users.
Kodak's commercial imaging products and services compete with similar
products and services of other small and large companies. Strong competition
exists throughout the world. Kodak's products are continually improved to
meet the changing needs and preferences of its customers.
Raw Materials. The raw materials used by the commercial imaging segment are
many and varied and generally available. Silver is one of the essential
materials in photographic film and paper manufacturing. Electronic
components represent a significant portion of the cost of the materials used
in the manufacture of business equipment.
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DISCONTINUED OPERATIONS - HEALTH BUSINESSES
In 1994, the Company divested the following non-imaging health businesses for
aggregate gross proceeds of $7,858 million: the pharmaceutical and consumer
health businesses of Sterling Winthrop Inc., the household products and
do-it-yourself products businesses of L&F Products and the Clinical Diagnostics
Division. These businesses are reported as discontinued operations with
results for prior periods restated.
Sales of products of these discontinued health businesses for the two years
ended December 31, 1994 and 1993 were (1994 sales are through sales dates):
(in millions) 1994 1993
$3,175 $3,694
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4
DISCONTINUED OPERATIONS - CHEMICALS SEGMENT
On December 31, 1993, the Company distributed all of the outstanding shares
of common stock of Eastman Chemical Company (Eastman), which represented
substantially all of the Company's worldwide chemical business, as a dividend
to the Company's shareowners (the spin-off) in a ratio of one share of
Eastman common stock for every four shares of Kodak common stock. As a
result of the spin-off, Eastman became an independent publicly held company
listed on the New York Stock Exchange and its operation ceased to be owned by
the Company. In connection with the spin-off, Eastman assumed $1.8 billion
of new borrowings, the proceeds from which were used by the Company to retire
other borrowings. The chemicals segment has been reported as discontinued
operations. Sales of chemicals segment products, including intersegment
sales, for the year ended December 31, 1993 were $3,976 million.
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RESEARCH AND DEVELOPMENT
Through the years, Kodak has engaged in extensive and productive efforts in
research and development. In 1995, $935 million (1994 - $859 million; 1993 -
$864 million) was expended for research and development for continuing
operations. Research and development groups are located principally in the
United States in Rochester, New York. Outside the U.S., research and
development groups are located in Australia, England, France, Japan and
Germany. These groups, in close cooperation with manufacturing units and
marketing organizations, are constantly developing new products and
applications to serve both existing and new markets.
It has been Kodak's general practice to protect its investment in research
and development and its freedom to use its inventions by obtaining patents
where feasible. The ownership of these patents contributes to Kodak's
ability to use its inventions but at the same time is accompanied by
significant patent licensing. While in the aggregate Kodak's patents are
considered to be of material importance in the operation of its business, it
does not consider that the patents relating to any single product or process
are of material significance when judged from the standpoint of its total
business.
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5
ENVIRONMENTAL PROTECTION
Kodak is subject to various laws and governmental regulations concerning
environmental matters. Some of the U.S. federal environmental legislation
having an impact on Kodak includes the Toxic Substances Control Act, the
Resource Conservation and Recovery Act (RCRA), the Clean Air Act, and the
Comprehensive Environmental Response, Compensation and Liability Act (the
Superfund law).
Kodak continues to engage in a program for environmental protection and
control. During 1995, expenditures for pollution prevention and waste
treatment at various manufacturing facilities totaled $106 million. These
costs included $72 million of recurring costs associated with managing
hazardous substances and pollution in on-going operations, $31 million of
capital expenditures to limit or monitor hazardous substances or pollutants,
and $3 million of mandated expenditures to remediate previously contaminated
sites. These expenditures have been accounted for in accordance with the
Company's accounting policy for environmental costs. The Company expects
these recurring and remediation costs to increase and capital to increase
significantly in the near future. While these costs will continue to require
significant cash outflows for the Company, it is not expected that these
costs will have an impact materially different from 1995's environmental
expenditures on the Company's financial position, results of operations, cash
flows or competitive position.
In October 1994, the Company, the Environmental Protection Agency (EPA), and
the U.S. Department of Justice announced the settlement of a civil complaint
alleging noncompliance by the Company with federal environmental regulations
at the Company's Kodak Park manufacturing site in Rochester, New York. The
Company paid a penalty of $5 million. A Consent Decree was signed under
which the Company is subject to a Compliance Schedule by which the Company
will improve its waste characterization procedures, upgrade one of its
incinerators and evaluate and upgrade its industrial sewer system over a
12-year period. The total expenditures that may be required to complete this
program cannot currently be reasonably estimated since upgrade plans have not
been finalized and must be developed on an ongoing basis. Further, most of
the expenditures associated with the program will be capital in nature.
The RCRA Facility Assessment (RFA) pertaining to the Company's Kodak Park
site in Rochester, New York is nearly complete and the Company has completed
a broad-based assessment of the site in response to the RFA. While future
expenditures associated with any remediation activities could be significant,
the Company is currently in the process of completing the RCRA facility
investigation (RFI). Upon completion of the RFI, the Company expects to have
developed estimates of the required remediation costs.
The Company accrues for remediation costs which relate to an existing
condition caused by past operations when it is probable that these costs will
be incurred and can be reasonably estimated. The Company had reserves for
remediation costs of $114 million and $108 million at December 31, 1995 and
1994, respectively.
The Clean Air Act Amendments were enacted in 1990. The Company may be
required to incur significant costs, primarily capital in nature, over a
period of several years to comply with the provisions of this Act. The
expenditures that may be required cannot be reasonably estimated at the
present time since either implementing regulations have not been issued or
compliance plans have not been finalized.
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EMPLOYMENT
At the end of 1995, the Company employed 96,600 people, of whom 54,400 were
employed in the U.S.
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Financial information by geographic areas for the past three years is shown
in Segment Information on page 42.
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ITEM 2. PROPERTIES
The consumer imaging segment of Kodak's business in the United States is
centered in and near Rochester, New York, where photographic goods are
manufactured. Another manufacturing facility near Windsor, Colorado, also
produces sensitized photographic goods. Regional distribution centers are
located in various places within the United States.
Consumer imaging manufacturing facilities outside the United States are
located in Australia, Brazil, Canada, France, Mexico and the United Kingdom.
Kodak maintains marketing and distribution facilities in many parts of the
world. The Company also owns processing laboratories in numerous locations
worldwide.
Products in the commercial imaging segment are manufactured primarily in
Rochester, New York and Windsor, Colorado. Manufacturing facilities outside
the United States are located in Germany, Mexico and the United Kingdom.
The Company owns or leases administrative, manufacturing, marketing, and
processing facilities in various parts of the world. The leases are for
various periods and are generally renewable.
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ITEM 3. LEGAL PROCEEDINGS
In April 1987, the Company was sued in federal district court in San
Francisco by a number of independent service organizations who alleged
violations of Sections 1 and 2 of the Sherman Act and of various state
statutes in the sale by the Company of repair parts for its copier and
micrographics equipment (Image Technical Service, Inc. (ITS), et al v.
Eastman Kodak Company). The complaint sought unspecified compensatory and
punitive damages. Trial began on June 19, 1995 and concluded on September
18, 1995 with a jury verdict for plaintiffs of $23,948,300, before trebling.
The Company intends to appeal the jury's verdict and otherwise to continue to
defend this action vigorously.
Two cases that raise essentially the same antitrust issues as ITS are pending
in federal district court in San Francisco (Nationwide, et al v. Eastman
Kodak Company, filed March 10, 1995, and A-1 Copy Center, et al v. Eastman
Kodak Company, filed December 13, 1993, the latter a consolidated class
action). The complaints in Nationwide and A-1 seek unspecified compensatory
and punitive damages. Stays in both these cases have been lifted effective
March 1, 1996, so the Company expects that activity will now accelerate, with
the possibility of trials within the next two years. As is the case in ITS,
the Company is defending both of these matters vigorously.
The Company is participating in the Environmental Protection Agency's (EPA)
Toxic Substances Control Act (TSCA) Section 8 (e) Compliance Audit Program.
As a participant, the Company has agreed to audit its files for materials
which under current EPA guidelines would be subject to notification under
Section 8 (e) of TSCA and to pay stipulated penalties for each report
submitted under this program. The Company anticipates that its liability
under the Program will be $1,000,000.
In addition to the foregoing environmental action, the Company has been
designated as a potentially responsible party (PRP) under the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended
(the Superfund law), or under similar state laws, for environmental
assessment and cleanup costs as the result of the Company's alleged
arrangements for disposal of hazardous substances at approximately
twenty-five Superfund sites. With respect to each of these sites, the
Company's actual or potential allocated share of responsibility is small.
Furthermore, numerous other PRPs have similarly been designated at these
sites and, although the law imposes joint and several liability on PRPs, as a
practical matter, costs are shared with other PRPs. Settlements and costs
paid by the Company in Superfund matters to date have not been material.
Future costs are also not expected to be material to the Company's financial
condition or results of operations.
The Company and its subsidiary companies are involved in lawsuits, claims,
investigations, and proceedings, including product liability, commercial,
environmental, and health and safety matters, which are being handled and
defended in the ordinary course of business. There are no such matters
pending that the Company and its General Counsel expect to be material in
relation to the Company's business, financial condition, or results of
operations.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
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7
Executive Officers of the Registrant
(as of December 31, 1995)
Date First Elected
an to
Executive Present
Name Age Positions Held Officer Office
George M. C. Fisher 55 Chairman of the Board,
President, Chief
Executive Officer and
Chief Operating Officer 1993 1995
Michael P. Benard 48 Vice President 1994 1994
David P. Biehn 52 Senior Vice President 1995 1995
Richard T. Bourns 61 Senior Vice President 1988 1990
Daniel A. Carp 47 Executive Vice President and
Assistant Chief Operating
Officer 1995 1995
David J. FitzPatrick 41 Controller 1995 1995
Carl E. Gustin, Jr. 44 Senior Vice President 1995 1995
Harry L. Kavetas 58 Executive Vice President
and Chief Financial Officer 1994 1994
Carl F. Kohrt 52 Executive Vice President and
Assistant Chief Operating
Officer 1995 1995
James W. Meyer 52 Senior Vice President 1994 1994
Michael P. Morley 52 Senior Vice President 1994 1994
Wilbur J. Prezzano 55 Executive Vice President,
Director 1980 1994
Leo J. Thomas 59 Executive Vice President,
Director 1977 1994
Gary P. Van Graafeiland 49 Senior Vice President
and General Counsel 1992 1992
Executive officers are elected annually in February.
All of the executive officers have been employed by Kodak in various
executive and managerial positions for more than five years, except Mr.
Fisher, who joined the Company on December 1, 1993; Mr. Kavetas, who joined
the Company on February 11, 1994; Mr. FitzPatrick, who joined the Company on
March 27, 1995; and Mr. Gustin, who joined the Company on August 15, 1994.
Prior to joining Kodak, Mr. Fisher held executive positions with Motorola,
Inc., most recently as Chairman and Chief Executive Officer. Prior to
joining Kodak, Mr. Kavetas held executive positions with International
Business Machines (IBM) Corporation, most recently as President, Chief
Executive Officer and a director of IBM Credit Corporation. Prior to joining
Kodak, Mr. Gustin held executive positions with Digital Equipment
Corporation, which he joined in 1994, and Apple Computer. Prior to joining
Kodak, Mr. FitzPatrick held executive positions with General Motors
Corporation, most recently as finance director of the Cadillac/Luxury Car
Division.
There have been no events under any bankruptcy act, no criminal proceedings,
and no judgments or injunctions material to the evaluation of the ability and
integrity of any executive officer during the past five years.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Eastman Kodak Company common stock is principally traded on the New York
Stock Exchange. There were 143,574 shareholders of record of common stock as
of December 31, 1995. See Liquidity and Capital Resources on page 15 and
Market Price Data shown below.
MARKET PRICE DATA
1995 1994
4th Qtr 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr
Price per share:
High $70-3/8 $64-1/2 $63-3/8 $54-5/8 $52-1/4 $54 $49 $46-7/8
Low 55-5/8 56 51-3/8 47-1/4 44-3/8 47-1/8 40-3/4 41
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8
SELECTED FINANCIAL DATA
Eastman Kodak Company and Subsidiary Companies
Selected Consolidated Financial Data
For the Year Ended December 31,
(amounts in millions, 1995 1994 (1) 1993 (2) 1992 (3) 1991 (4)
except per share data)
Sales from continuing
operations $14,980 $13,557 $12,670 $12,992 $12,427
Earnings from
continuing operations
before extraordinary
items and cumulative
effect of changes in
accounting principle 1,252 554 644 845 12
Earnings (loss) from
discontinued operations
before cumulative effect
of changes in accounting
principle - (81) 23 149 5
Gain on sale of
discontinued operations - 350 - - -
------- ------- ------- ------- -------
Earnings before
extraordinary items
and cumulative effect
of changes in
accounting principle 1,252 823 667 994 17
Extraordinary items - (266) (14) - -
------- ------- ------- ------- -------
Earnings before cumulative
effect of changes in
accounting principle 1,252 557 653 994 17
------- ------- ------- ------- -------
Cumulative effect of
changes in accounting
principle:
Continuing operations - - (1,649) 100 -
Discontinued operations - - (519) 52 -
------- ------- ------- ------- -------
Total cumulative effect of
changes in accounting
principle - - (2,168) 152 -
- ------- ------- ------- ------- -------
Net earnings (loss) $ 1,252 $ 557 $(1,515) $ 1,146 $ 17
======= ======= ======= ======= =======
9
SELECTED FINANCIAL DATA (continued)
Eastman Kodak Company and Subsidiary Companies
Selected Consolidated Financial Data
For the Year Ended December 31,
1995 1994 (1) 1993 (2) 1992 (3) 1991 (4)
Primary earnings per
share from continuing
operations before
extraordinary items and
cumulative effect of
changes in accounting
principle $ 3.67 $ 1.65 $ 1.95 $ 2.60 $ .04
Primary earnings (loss) per
share from discontinued
operations before
cumulative effect of
changes in accounting
principle - (.25) .07 .46 .01
Primary earnings per
share from gain on sale
of discontinued
operations - 1.05 - - -
------- ------- ------- ------- -------
Primary earnings per share
before extraordinary items
and cumulative effect
of changes in accounting
principle 3.67 2.45 2.02 3.06 .05
Extraordinary items - (.79) (.04) - -
------- ------- ------- ------- -------
Primary earnings per share
before cumulative effect
of changes in accounting
principle 3.67 1.66 1.98 3.06 .05
------- ------- ------- ------- -------
Cumulative effect of
changes in accounting
principle:
Continuing operations - - (5.02) .31 -
Discontinued operations - - (1.58) .16 -
------- ------- ------- ------- -------
Total cumulative effect of
changes in accounting
principle - - (6.60) .47 -
------- ------- ------- ------- -------
Primary earnings (loss)
per share $ 3.67 $ 1.66 $ (4.62) $ 3.53 $ .05
======= ======= ======= ======= =======
10
SELECTED FINANCIAL DATA (continued)
Eastman Kodak Company and Subsidiary Companies
Selected Consolidated Financial Data
For the Year Ended December 31,
1995 1994 (1) 1993 (2) 1992 (3) 1991 (4)
Fully diluted earnings
per share from continuing
operations before extra-
ordinary items and cumu-
lative effect of changes
in accounting principle $ 3.58 $ 1.63 $ 1.95 $ 2.56 $ .04
Fully diluted earnings (loss)
per share from discontinued
operations before
cumulative effect of
changes in accounting
principle - (.25) .07 .42 .01
Fully diluted earnings per
share from gain on sale of
discontinued operations - 1.04 - - -
------- ------- ------- ------- -------
Fully diluted earnings
per share before extra-
ordinary items and cumu-
lative effect of changes
in accounting principle 3.58 2.42 2.02 2.98 .05
Extraordinary items - (.79) (.04) - -
------- ------- ------- ------- -------
Fully diluted earnings
per share before cumu-
lative effect of changes
in accounting principle 3.58 1.63 1.98 2.98 .05
------- ------- ------- ------- -------
Cumulative effect of
changes in accounting
principle:
Continuing operations - - (5.02) .28 -
Discontinued operations - - (1.58) .15 -
------- ------- ------- ------- -------
Total cumulative effect of
changes in accounting
principle - - (6.60) .43 -
------- ------- ------- ------- -------
Fully diluted earnings
(loss) per share $ 3.58 $ 1.63 $ (4.62) $ 3.41 $ .05
======= ======= ======= ======= =======
Cash dividends declared
per common share (5) $ 1.60 $ 1.60 $ 2.00 $ 2.00 $ 2.00
Total assets 14,477 14,968 18,810 19,038 19,952
Long-term borrowings 665 660 6,727 5,259 5,648
(1) After deducting $340 million of restructuring costs from continuing operations which
reduced net earnings by $254 million and a $110 million loss on the extinguishment of
certain financial instruments, which reduced net earnings by $80 million.
(2) After deducting $495 million of restructuring costs from continuing operations which
reduced net earnings by $353 million and $55 million of restructuring costs from
discontinued operations which reduced net earnings by $34 million. The net loss for 1993
was due to an after-tax charge of $2.17 billion from the cumulative effect of adopting
Statement of Financial Accounting Standards (SFAS) No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions," and SFAS No. 112, "Employers' Accounting
for Postemployment Benefits."
(3) After deducting $219 million of restructuring costs from continuing operations which
reduced net earnings by $140 million and $1 million of restructuring costs from
discontinued operations which reduced net earnings by less than $1 million. Net earnings
for 1992 benefited by $152 million from the cumulative effect of adopting SFAS No. 109,
"Accounting for Income Taxes."
(4) After deducting $1,448 million of restructuring costs from continuing operations which
reduced net earnings by $934 million and $157 million of restructuring costs from
discontinued operations which reduced net earnings by $98 million.
(5) The lower dividends in 1995 and 1994 were due to the spin-off of the Eastman Chemical
Company operations at year-end 1993. As a result of the spin-off, the Company's
shareowners received one share of Eastman Chemical Company stock for every four shares of
Kodak common stock.
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11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SUMMARY
(in millions, except earnings per share) 1995 Change 1994 Change 1993
Sales from continuing operations $14,980 +10% $13,557 +7% $12,670
Earnings (loss) from operations before
extraordinary items and
cumulative effect of changes in
accounting principle:
Continuing 1,252 554 644
Discontinued - Health - 269 (169)
Discontinued - Chemicals - - 192
Net earnings (loss) 1,252 557 (1,515)
Primary earnings (loss) per share 3.67 1.66 (4.62)
1995
Sales for 1995 were $14,980 million. Net earnings of $1,252 million ($3.67
per share) included charges of $54 million for write-offs of intangible
assets principally associated with the Health Imaging business.
On January 18, 1996, the Company announced it is developing alternatives to
strengthen and reposition its Office Imaging business. The Office Imaging
business is involved primarily with the development, production, sale and
service of office reprographics, document processing and reproduction
equipment. The Company is exploring a variety of strategic options and
structural alternatives, which include expanding its use of strategic
alliances, the formation of joint ventures, and potential divestiture.
In connection with the divestiture of the non-imaging health businesses
discussed below, the Company sold its research and development facility to
SmithKline Beecham for $120 million in early 1995. The proceeds from this
sale did not differ materially from the recorded value for this facility.
1994
In 1994, the Company divested the pharmaceutical and consumer health
businesses of Sterling Winthrop Inc., the household products and
do-it-yourself products businesses of L&F Products and the Clinical Diagnostics
Division for aggregate proceeds of $7.9 billion. These businesses were
reported as discontinued operations for 1994 with prior periods restated.
The Company used proceeds from the divestiture, short-term borrowings and
cash from operations to extinguish $6,598 million (net carrying amount) of
borrowings, $7,800 million (notional amount) of financial instruments, a
$292 million master lease program and a $200 million receivable financing
program.
Sales from continuing operations in 1994 were $13,557 million. Earnings from
continuing operations were $554 million ($1.65 per share) for 1994. Earnings
from continuing operations in 1994 included $340 million of pre-tax
restructuring costs ($254 million or $.75 per share after-tax), incremental
charges associated with the review of the carrying value of assets of $65
million and a $110 million pre-tax loss associated with the extinguishment of
certain financial instruments. An extraordinary loss of $266 million
after-tax ($.79 per share) was also recognized in connection with the
reduction of debt and other financial instruments. Earnings from
discontinued operations were $269 million ($.80 per share) which was comprised
of a net after-tax gain of $350 million realized from the sale of the
non-imaging health businesses less an after-tax loss from operations prior to
measurement date of $81 million. Net earnings were $557 million ($1.66 per
share).
1993
On December 31, 1993, the Company distributed to its shareowners all of the
outstanding shares of common stock of its worldwide chemicals business (the
spin-off), which consisted of Eastman Chemical Company operations. Results
for Eastman Chemical Company operations are reported as discontinued
operations for 1993 and include allocations of interest and taxes to the
Chemicals segment and transaction costs associated with the spin-off.
12
Sales from continuing operations in 1993 were $12,670 million. Earnings from
continuing operations of $644 million ($1.95 per share) were impacted by
restructuring costs from continuing operations of $495 million ($353 million
after-tax or $1.08 per share). Earnings from discontinued operations were
$23 million ($.07 per share) which represented net earnings from the
discontinued Chemicals business of $192 million offset by a net loss of
$169 million for the discontinued non-imaging health businesses. Net
earnings for 1993 were also impacted by an extraordinary charge of $14 million
after-tax ($.04 per share) related to the early extinguishment of debt. The
net loss of $1.51 billion ($4.62 per share) recorded in 1993 was due to an
after-tax charge of $2.17 billion ($6.60 per share) associated with the
adoption of Statement of Financial Accounting Standards (SFAS) No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions" and
SFAS No. 112, "Employers' Accounting for Postemployment Benefits" effective
as of January 1, 1993.
DETAILED RESULTS OF OPERATIONS
Sales by Industry Segment 1995 Change 1994 Change 1993
(in millions)
Sales from Continuing Operations:
Consumer Imaging
Inside the U.S. $ 2,854 +18% $ 2,428 +15% $ 2,114
Outside the U.S. 3,976 +14 3,491 +10 3,178
------- --- ------- --- -------
Total Consumer Imaging 6,830 +15 5,919 +12 5,292
------- --- ------- --- -------
Commercial Imaging
Inside the U.S. 4,066 +3 3,948 +1 3,892
Outside the U.S. 4,118 +11 3,698 +6 3,490
------- --- ------- --- -------
Total Commercial Imaging 8,184 +7 7,646 +4 7,382
------- --- ------- --- -------
Deduct: Intersegment Sales (34) (8) (4)
------- --- ------- --- -------
Total Sales from Continuing
Operations $14,980 +10% $13,557 +7% $12,670
======= === ======= === =======
Earnings from Operations by Industry Segment
(in millions)
1995 Change 1994 Change 1993
Earnings from Operations
from Continuing Operations:
Consumer Imaging $ 1,282 +46% $ 878 -6% $ 931
Percent of segment sales 18.8% 14.8% 17.6%
Commercial Imaging $ 659 +53% $ 431 +36% $ 317
Percent of segment sales 8.1% 5.6% 4.3%
------- --- ------- --- -------
Total Earnings from Operations
from Continuing Operations $ 1,941 +48% $ 1,309 +5% $ 1,248
======= === ======= === =======
Earnings from operations for 1994 are shown after deducting restructuring
costs of $190 million for Consumer Imaging and $150 million for Commercial
Imaging. Earnings from operations for 1993 are shown after deducting
restructuring costs of $141 million for Consumer Imaging and $354 million for
Commercial Imaging.
Segment information is reported on pages 41 through 43, Notes to Financial
Statements.
13
1995 COMPARED WITH 1994
Worldwide 1995 sales from continuing operations increased 10% compared with
1994, primarily due to higher unit volumes. Excluding sales of the Company's
Qualex subsidiary, acquired in August 1994, sales increased 8%, primarily due
to higher unit volumes and the effects of foreign exchange. Currency changes
against the dollar favorably affected sales by $453 million in 1995 and $135
million in 1994. Sales for the Consumer Imaging segment increased
significantly, while the Commercial Imaging segment showed a moderate sales
increase. Consumer Imaging sales to customers in the U.S. increased
substantially over 1994 due to higher volumes and the inclusion of Qualex
revenues, whose sales are included in the consolidated totals from August
1994. Prior to August 1994, Qualex's results were recorded using the equity
method of accounting. Sales to customers in the U.S., excluding Qualex
sales, increased slightly. Sales to customers outside the U.S. increased
significantly from 1994, as good volume gains and the favorable effects of
foreign currency rate changes were only partially offset by lower effective
selling prices. Worldwide volume increases were led by Ektacolor papers,
Kodacolor 35mm films and one-time-use cameras. Commercial Imaging sales to
customers in the U.S. increased 3%, as volume increases were slightly offset
by lower effective selling prices. Commercial Imaging sales to customers
outside the U.S. increased significantly from 1994, as good volume gains and
the favorable effects of foreign currency rate changes were slightly offset
by lower effective selling prices. Motion Picture and Television Imaging and
Digital and Applied Imaging led the worldwide sales increases.
Operating earnings from continuing operations increased 48% from 1994.
Excluding 1994 restructuring costs of $340 million, operating earnings from
continuing operations increased 18%. Consumer Imaging operating earnings
increased 46% (20% excluding 1994 restructuring costs). Consumer Imaging
operating earnings benefited from increased unit volumes, productivity gains
and the favorable effects of foreign currency rate changes, but were
adversely affected by cost escalation, higher levels of marketing and
administrative activity and lower effective selling prices.
Commercial Imaging operating earnings increased 53% (13% excluding 1994
restructuring costs). Commercial Imaging operating earnings benefited from
increased unit volumes, productivity gains and the favorable effects of
foreign currency rate changes, but were adversely affected by cost
escalation, lower effective selling prices, and $54 million of intangible
asset write-offs principally associated with the Health Imaging business.
Research and development expenditures were $935 million in 1995 and $859
million in 1994. Goodwill charges were $109 million in 1995 and $67 million
in 1994. The increase was attributed to intangible asset write-offs,
principally associated with the Health Imaging business, and the inclusion of
a full year of Qualex goodwill amortization. Advertising and sales promotion
expenses totaled $840 million in 1995 and $744 million in 1994. Other
marketing and administrative expenses totaled $3,318 million in 1995 and
$2,967 million in 1994. Increases in selling, general and administrative
expenses in 1995 resulted from the unfavorable effects of foreign currency
rate changes, higher activity levels and the inclusion of a full year of
Qualex activity.
Earnings from equity interests and other revenues were $289 million in 1995
compared with $130 million in 1994. The increase in 1995 was primarily due
to higher interest income and gains from the sales of capital assets.
Interest expense of $78 million in 1995 decreased from $142 million in 1994
due to lower debt levels. Other costs of $210 million in 1995 are
essentially level with 1994 after excluding $110 million of 1994 charges
associated with the extinguishment of certain financial instruments.
The effective tax rates were 35% in 1995 and 39% in 1994, excluding
restructuring costs. The lower effective tax rate principally results from
the utilization of certain foreign tax loss carryforwards.
14
1994 COMPARED WITH 1993
Worldwide sales from continuing operations in 1994 were up 7% when compared
with 1993 primarily due to higher unit volumes. Sales for the Consumer
Imaging segment increased significantly, while Commercial Imaging segment
sales were up slightly. In the Consumer Imaging segment, 1994 sales to
customers inside the U.S. were up significantly over 1993 due to volume gains
and the inclusion of revenues from Qualex, which became a consolidated
subsidiary in August 1994 and whose sales are included in the consolidated
totals from August 1994. Excluding sales of Qualex, sales to customers in
the U.S. posted a moderate increase. Sales to customers outside the U.S. in
1994 recorded good increases over 1993 as significant volume gains and the
favorable effects of foreign currency rate changes were partially offset by
lower effective selling prices. Worldwide volume increases were led by
Ektacolor papers, Kodacolor 35mm films and one-time-use cameras. In the
Commercial Imaging segment, 1994 sales to customers in the U.S. were up 1%
over 1993 as volume increases were partially offset by lower effective
selling prices. Sales to customers outside the U.S. in 1994 increased
moderately over the previous year as moderate volume gains and the favorable
effects of foreign currency rate changes were partially offset by lower
effective selling prices. Worldwide sales increases were led by Printing and
Professional Imaging, Motion Picture and Television Imaging, and Health
Imaging products.
Operating earnings from continuing operations were adversely affected by
restructuring costs of $340 million in 1994 and $495 million in 1993. The 1994
restructuring costs represented severance and other termination benefits for
approximately 4,350 personnel and exit costs related to the realignment of
Kodak's worldwide manufacturing, marketing, administrative and photofinishing
operations. The 1993 restructuring costs represented the cost of separation
benefits for a worldwide program expected to reduce employment by
approximately 9,000 personnel and the cost of closing a facility in Germany
associated with the Company's ink jet printing business. Consumer Imaging
operating earnings were adversely affected by restructuring costs of
$190 million in 1994 compared with $141 million in 1993. Before deducting
restructuring costs in both years, operating earnings in 1994 were
essentially level with 1993. Consumer Imaging operating earnings for 1994
benefited from higher volumes and manufacturing productivity, but were
adversely affected by higher levels of marketing and administrative activity,
cost escalation and lower effective selling prices. Consumer Imaging
operating earnings in 1994 were reduced by premium costs associated with
strategic currency hedges, while 1993 operating earnings benefited from gains
on strategic currency hedges. Commercial Imaging operating earnings were
adversely affected by restructuring costs of $150 million in 1994 and
$354 million in 1993. Operating earnings for Commercial Imaging were lower
in 1994 compared to 1993 before the deduction of restructuring costs in both
years. Benefits from manufacturing productivity, higher volumes and lower
research and development activity were more than offset by cost escalation
and lower effective selling prices. Commercial Imaging operating earnings in
1994 were reduced by premium costs associated with strategic currency hedges,
while 1993 operating earnings benefited from gains on strategic currency
hedges.
Research and development expenditures for continuing operations were
$859 million in 1994 and $864 million in 1993. Amortization of goodwill for
continuing operations in 1994 was $67 million, while $29 million was recorded
in 1993. This increase was primarily due to the acquisition of Qualex.
Advertising and sales promotion expenses for continuing operations totaled
$744 million in 1994 and $646 million in 1993. Other marketing and
administrative expenses for continuing operations totaled $2,967 million in
1994 and $2,774 million in 1993. Increases in advertising and sales promotion
and other marketing and administrative expenses in 1994 resulted from cost
escalation, higher activity levels, the unfavorable effects of foreign
currency rate changes and the acquisition of Qualex.
Earnings from equity interests and other revenues were $130 million in 1994
compared with $203 million in 1993. The amount reported in 1993 was higher
than 1994 due to larger gains from the sale of investments and other items in
1993. Interest expense of $142 million in 1994 was lower than the $175 million
incurred in 1993 primarily due to lower levels of borrowings. Interest
expense of approximately $390 million in 1994 and $586 million in 1993, and
capitalized interest of approximately $7 million in 1994 and $51 million in
1993 were allocated to discontinued operations. The increase in other costs
in 1994 when compared with 1993 is primarily due to the inclusion in 1994 of
$110 million of charges associated with the extinguishment of certain
financial instruments.
15
In 1994 and 1993, the Company used foreign currency option contracts to hedge
its exposure to changes in foreign currency exchange rates for anticipated
sales and purchases for certain foreign affiliates and possible anticipated
export sales. Currency changes against the U.S. dollar favorably affected
1994 sales from continuing operations by $135 million and unfavorably affected
1993 sales from continuing operations by $490 million. These effects were
partially offset by premium costs of $86 million and gains of $73 million from
strategic currency hedges in 1994 and 1993, respectively. The Company also
entered into foreign currency contracts to hedge a portion of its
transactions in foreign currency
denominated receivables and payables. The effect of these hedges and the net
gains and losses on transaction exposures was a loss of $46 million in 1994
and a loss of $44 million in 1993.
The effective tax rates for continuing operations, excluding restructuring
costs, were 39% in 1994 and 37% in 1993. The rates reflect the impact of
operating losses in jurisdictions outside the U.S. for which tax benefits
cannot be claimed.
LIQUIDITY AND CAPITAL RESOURCES
During the fourth quarter of 1995, the Company commenced a program to
repurchase $1 billion of its outstanding common stock and completed the
contribution of $500 million in stock to its U.S. pension plan. The stock
repurchase is being made from available cash reserves and cash from
operations. At year end, $300 million has been repurchased, with the
$700 million remaining to be repurchased on an ongoing basis.
Cash flow from operations in 1995 was $2,630 million, primarily due to net
earnings of $1,252 million which included non-cash expenses for depreciation
and amortization of $916 million. Net cash outflow from investing activities
was $2,380 million in 1995, due to capital expenditures of $1,034 million and
$1,411 million of cash payments, principally for taxes related to the sales
of the non-imaging health businesses. Net cash outflow from financing
activities in 1995 of $512 million was primarily due to $547 million of
dividend payments.
Total cash dividends (paid on a quarterly basis) of approximately $547 million
($1.60 per share), $537 million ($1.60 per share) and $657 million ($2.00 per
share) were declared in 1995, 1994 and 1993, respectively. The lower 1995
and 1994 dividends reflect the spin-off of Eastman Chemical Company
operations at year-end 1993. As a result of the spin-off, the Company's
shareowners received one share of Eastman Chemical Company stock for every
four shares of Kodak common stock.
Cash, cash equivalents and marketable securities at year-end 1995 were
$1,811 million, a $257 million decrease from the year-end 1994 total of
$2,068 million. Included in cash and cash equivalents at year-end 1994 was a
$1,550 million note received on December 31, 1994 when the Company completed
the sale of its household products business of L&F Products. This note was
paid in cash to the Company on January 3, 1995. Net working capital at
year-end 1995 increased to $2,666 million from $1,948 million at year-end
1994. The net change was caused primarily by increases in accounts
receivable and inventory as a result of increased sales volume.
Total short-term and long-term borrowings totaled $1,251 million at year-end
1995 and $1,031 million at year-end 1994. During 1994, the Company used a
portion of the proceeds received from the sale of the non-imaging health
businesses to extinguish $6,598 million (net carrying amount) of borrowings.
The Company has access to a $2.5 billion revolving credit facility expiring in
May 1999. The Company also has a shelf registration statement for debt
securities with an available balance of $2.2 billion.
Capital additions for the Consumer Imaging segment were $240 million and $303
million in 1995 and 1994, respectively, and $794 million and $850 million for
the Commercial Imaging segment.
16
OTHER
Kodak is subject to various laws and governmental regulations concerning
environmental matters. See discussion in Note 9 of Financial Statements.
At year-end 1995 remaining reserves for the Company's outstanding
restructuring programs were $234 million. At year-end 1994 these outstanding
reserves totaled $538 million. Refer to Note 12 - Restructuring Costs for a
more detailed breakdown of the composition of these reserves.
- ------------------------------------------------------------------------
SUMMARY OF OPERATING DATA
A summary of operating data for 1995 and for the four years prior is shown on
page 45.
- --------------------------------------------------------------------------
17
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS
Management is responsible for the preparation and integrity of the
consolidated financial statements and related notes which appear on pages 18
through 44. These financial statements have been prepared in accordance with
generally accepted accounting principles and include certain amounts that are
based on management's best estimates and judgments.
The Company's accounting systems include extensive internal controls
designed to provide reasonable assurance of the reliability of its financial
records and the proper safeguarding and use of its assets. Such controls are
based on established policies and procedures, are implemented by trained,
skilled personnel with an appropriate segregation of duties, and are
monitored through a comprehensive internal audit program. The Company's
policies and procedures prescribe that the Company and all employees are to
maintain the highest ethical standards and that its business practices
throughout the world are to be conducted in a manner which is above reproach.
The consolidated financial statements have been audited by Price Waterhouse
LLP, independent accountants, who were responsible for conducting their
audits in accordance with generally accepted auditing standards. Their
resulting report is shown below.
The Board of Directors exercises its responsibility for these financial
statements through its Audit Committee, which consists entirely of
non-management Board members. The independent accountants and internal
auditors have full and free access to the Audit Committee. The Audit
Committee meets periodically with the independent accountants and the
Director of Corporate Auditing, both privately and with management present,
to discuss accounting, auditing and financial reporting matters.
George M. C. Fisher Harry L. Kavetas
Chairman of the Board, President, Executive Vice President
Chief Financial Officer and Chief and Chief Executive Officer
Opertaing Officer January 17, 1996
January 17, 1996
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareowners of
Eastman Kodak Company
In our opinion, the accompanying consolidated financial statements listed in
the index appearing under Item 14(a)(1) and (2) on page 46 of this Annual
Report on Form 10-K present fairly, in all material respects, the financial
position of Eastman Kodak Company and subsidiary companies at December 31,
1995 and 1994, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 1995, in conformity
with generally accepted accounting principles. These financial statements
are the responsibility of the Company's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
As discussed in Note 14, the Company changed its method of accounting for
certain postretirement benefits and other postemployment benefits in 1993.
PRICE WATERHOUSE LLP
New York, New York
January 17, 1996
18
Eastman Kodak Company and Subsidiary Companies
CONSOLIDATED STATEMENT OF EARNINGS
For the Year Ended December 31,
1995 1994 1993
(in millions)
REVENUES
Sales $14,980 $13,557 $12,670
Earnings from equity interests and
other revenues 289 130 203
------- ------- -------
TOTAL REVENUES 15,269 13,687 12,873
------- ------- -------
COSTS
Cost of goods sold 7,962 7,325 6,654
Selling, general and administrative expenses 4,158 3,711 3,420
Research and development costs 935 859 864
Interest expense 78 142 175
Restructuring costs - 340 495
Other costs 210 308 188
------- ------- -------
TOTAL COSTS 13,343 12,685 11,796
------- ------- -------
Earnings from continuing operations
before income taxes 1,926 1,002 1,077
Provision for income taxes from
continuing operations 674 448 433
------- ------- -------
Earnings from continuing operations
before extraordinary items and cumulative
effect of changes in accounting principle 1,252 554 644
Earnings (loss) from discontinued operations
before cumulative effect of changes in
accounting principle - (81) 23
Gain on sale of discontinued operations - 350 -
------- ------- -------
Earnings before extraordinary items and
cumulative effect of changes in
accounting principle 1,252 823 667
Extraordinary items - (266) (14)
------- ------- -------
Earnings before cumulative effect of changes
in accounting principle 1,252 557 653
------- ------- -------
Cumulative effect of changes in accounting
principle:
Continuing operations - - (1,649)
Discontinued operations - - (519)
------- ------- -------
Total cumulative effect of changes in
accounting principle - - (2,168)
------- ------- -------
NET EARNINGS (LOSS) $ 1,252 $ 557 $(1,515)
======= ======= =======
19
Eastman Kodak Company and Subsidiary Companies
CONSOLIDATED STATEMENT OF EARNINGS (continued)
For the Year Ended December 31,
1995 1994 1993
Primary earnings per share from
continuing operations before extraordinary
items and cumulative effect of changes
in accounting principle $ 3.67 $ 1.65 $ 1.95
Primary earnings (loss) per share from discontinued
operations before cumulative effect of changes
in accounting principle - (.25) .07
Primary earnings per share from gain on sale of
discontinued operations - 1.05 -
------- ------- -------
Primary earnings per share before extraordinary
items and cumulative effect of changes in
accounting principle 3.67 2.45 2.02
Extraordinary items - (.79) (.04)
- ------- ------- -------
Primary earnings per share before cumulative
effect of changes in accounting principle 3.67 1.66 1.98
------- ------- -------
Cumulative effect of changes in accounting
principle:
Continuing operations - - (5.02)
Discontinued operations - - (1.58)
------- ------- -------
Total cumulative effect of changes in
accounting principle - - (6.60)
------- ------- -------
Primary earnings (loss) per share $ 3.67 $ 1.66 $ (4.62)
======= ======= =======
The number of common shares used to compute
earnings per share amounts was as follows:
(in millions)
Primary 341.5 335.7 328.3
The notes on pages 24 through 44 are an integral part of these financial statements.
20
Eastman Kodak Company and Subsidiary Companies
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(in millions) At December 31,
1995 1994
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,764 $ 2,020
Marketable securities 47 48
Receivables 3,145 3,064
Inventories 1,660 1,480
Deferred income tax charges 520 711
Other 173 360
------- -------
Total current assets 7,309 7,683
------- -------
PROPERTIES
Land, buildings and equipment 12,652 12,299
Accumulated depreciation 7,275 7,007
------- -------
Net properties 5,377 5,292
OTHER ASSETS
Goodwill (net of accumulated
amortization of $346 and $246) 536 616
Long-term receivables and other noncurrent assets 911 872
Deferred income tax charges 344 505
------- -------
TOTAL ASSETS $14,477 $14,968
======= =======
LIABILITIES AND SHAREOWNERS' EQUITY
CURRENT LIABILITIES
Payables $ 3,327 $ 3,398
Short-term borrowings 586 371
Taxes-income and other 567 1,701
Dividends payable 137 136
Deferred income tax credits 26 129
------- -------
Total current liabilities 4,643 5,735
OTHER LIABILITIES
Long-term borrowings 665 660
Postemployment liabilities 3,247 3,671
Other long-term liabilities 704 790
Deferred income tax credits 97 95
------- -------
Total liabilities 9,356 10,951
------- -------
SHAREOWNERS' EQUITY
Common stock, par value $2.50 per share
950,000,000 shares authorized; issued
389,574,619 in 1995 and 386,343,903 in 1994 974 966
Additional capital paid in or transferred
from retained earnings 803 515
Retained earnings 5,184 4,485
Accumulated translation adjustment 93 8
------- -------
7,054 5,974
Treasury stock, at cost
43,685,196 shares in 1995 and 46,587,211
shares in 1994 1,933 1,957
------- -------
Total shareowners' equity 5,121 4,017
------- -------
TOTAL LIABILITIES AND SHAREOWNERS' EQUITY $14,477 $14,968
======= =======
The notes on pages 24 through 44 are an integral part of these financial statements.
21
Eastman Kodak Company and Subsidiary Companies
CONSOLIDATED STATEMENT OF SHAREOWNERS' EQUITY
(in millions, except for number of shares)
Trans-
Additional lation
Common Capital Retained Adjust- Treasury
Stock* Paid In Earnings ments Stock Total
Shareowners' Equity,
December 31, 1992 $936 $ 26 $ 7,721 $ (85) $(2,041) $ 6,557
Net loss - - (1,515) - - (1,515)
Cash dividends declared - - (657) - - (657)
Eastman Chemical Company spin-off - - (1,080) - - (1,080)
Common stock issued under employee
plans (4,170,000 shares) 11 163 - - - 174
Common stock issued for debt
conversions (430,000 shares) 1 21 - - - 22
Treasury stock issued for debt
conversions (50,000 shares) - - - - 2 2
Tax reductions - employee plans - 3 - - - 3
Translation adjustments - - - (150) - (150)
---- ------- ------- ----- ------- -------
Shareowners' Equity,
December 31, 1993 948 213 4,469 (235) (2,039) 3,356
Net earnings - - 557 - - 557
Cash dividends declared - - (537) - - (537)
Retained earnings - other changes - - (4) - - (4)
Common stock issued under
employee plans (954,000 shares) 2 32 - - - 34
Treasury stock issued under
employee plans (30,000 shares) - - - - 1 1
Common stock issued for debt
conversions (6,310,000 shares) 16 252 - - - 268
Treasury stock issued for debt
conversions (1,954,000 shares) - 4 - - 81 85
Tax reductions - employee plans - 14 - - - 14
Translation adjustments:
Continuing operations - - - 186 - 186
Discontinued health businesses - - - 57 - 57
---- ------- ------- ----- ------- -------
Shareowners' Equity,
December 31, 1994 966 515 4,485 8 (1,957) 4,017
Net earnings - - 1,252 - - 1,252
Cash dividends declared - - (547) - - (547)
Retained earnings - other changes - - (6) - - (6)
Common stock issued under
employee plans (3,231,000
shares) 8 110 - - - 118
Treasury stock contribution
to U.S. pension plan (7,354,000
shares) - 178 - - 322 500
Treasury stock repurchase
(4,503,000 shares) - - - - (300) (300)
Treasury stock issued under
employee plans (12,000 shares) - - - - 1 1
Charitable contribution
(23,000 shares) - - - - 1 1
Translation adjustments - - - 85 - 85
---- ------- ------- ----- ------- -------
Shareowners' Equity,
December 31, 1995 $974 $ 803 $ 5,184 $ 93 $(1,933) $ 5,121
==== ======= ======= ===== ======= =======
* There are 100 million shares of $10 par value preferred stock authorized, none of which
have been issued.
The notes on pages 24 through 44 are an integral part of these financial statements.
22
Eastman Kodak Company and Subsidiary Companies
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Year Ended December 31,
1995 1994 1993
(in millions)
Cash flows from operating activities
Earnings from continuing operations
before extraordinary items and cumulative
effect of changes in accounting principle $ 1,252 $ 554 $ 644
Adjustments to reconcile to net cash provided
by operating activities, net of effects of
initial consolidation of Qualex
Depreciation and amortization 916 903 846
Provision (benefit) for deferred
income taxes 283 (126) (143)
Loss on sale/retirement of properties 82 145 195
(Increase) decrease in receivables (42) 169 (75)
(Increase) decrease in inventories (148) 151 257
Increase (decrease) in liabilities
excluding borrowings 450 (66) 304
Repurchase of receivables program - (200) -
Other items, net (163) 112 326
------- ------- -------
Total adjustments 1,378 1,088 1,710
------- ------- -------
Net cash provided by operating activities 2,630 1,642 2,354
------- ------- -------
Cash flows from investing activities
Additions to properties (1,034) (1,153) (817)
Proceeds from sale of investments and
properties 121 93 56
Cash flows related to sales of non-imaging
health businesses (1,411) 7,644 -
Sales of marketable securities 48 249 245
Purchases of marketable securities (4) (43) (391)
Purchases of shares of Qualex,
net of cash acquired (100) (48) -
------- ------- -------
Net cash (used in) provided by
investing activities (2,380) 6,742 (907)
------- ------- -------
Cash flows from financing activities
Net (decrease) increase in borrowings with
original maturity of 90 days or less (106) 124 (1,436)
Proceeds of borrowings assumed by
discontinued operations - - 1,800
Proceeds from other borrowings 766 52 522
Repayment of other borrowings and certain
financial instruments (440) (7,650) (573)
Dividends (547) (566) (657)
Exercise of employee stock options 115 34 174
Stock repurchase program (300) - -
Other - - 2
------- ------- -------
Net cash used in financing activities (512) (8,006) (168)
------- ------- -------
Effect of exchange rate changes on cash 6 7 (5)
------- ------- -------
Net (decrease) increase in cash and cash
equivalents (256) 385 1,274
Cash and cash equivalents, beginning
of year 2,020 1,635 361
------- ------- -------
Cash and cash equivalents, end of year $ 1,764 $ 2,020 $ 1,635
======= ======= =======
23
Eastman Kodak Company and Subsidiary Companies
CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest and income taxes for continuing operations was:
(in millions) 1995 1994 1993
Interest, net of portion capitalized of $30,
$28 and $35 $ 97 $342 $217
Income taxes 343 309 435
The following transactions are not reflected in the Consolidated Statement of Cash Flows: a
$500 million stock contribution to the Company's U.S. pension plan, certain assets acquired
and liabilities assumed as a result of the Qualex acquisition and the debentures and notes
called by the Company resulting in the Company's common stock being issued. Except for
$157 million of cash transferred with the Eastman Chemical Company spin-off in 1993, the
spin-off was a non-cash transaction and is also not reflected in the Consolidated Statement
of Cash Flows.
The notes on pages 24 through 44 are an integral part of these financial statements.
24
Eastman Kodak Company and Subsidiary Companies
NOTES TO FINANCIAL STATEMENTS
NOTE 1
SIGNIFICANT ACCOUNTING POLICIES
COMPANY OPERATIONS
Eastman Kodak Company (the Company) is engaged primarily in developing,
manufacturing, and marketing consumer and commercial imaging products. The
Company's products are manufactured in a number of countries in North and
South America, Europe, Australia and Asia. The Company's products are
marketed and sold in many countries throughout the world.
BASIS OF CONSOLIDATION
The consolidated financial statements include the accounts of Eastman Kodak
Company and its majority owned subsidiary companies. Intercompany
transactions are eliminated and net earnings are reduced by the portion of
the earnings of subsidiaries applicable to minority interests.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at year end and the reported amounts of
revenues and expenses during the reporting period. Certain significant
estimates are disclosed throughout this report.
FOREIGN CURRENCY
For most subsidiaries and branches outside the U.S., the local currency is
the functional currency and translation adjustments are accumulated in a
separate component of shareowners' equity.
For subsidiaries and branches that operate in U.S. dollars or whose economic
environment is highly inflationary, the U.S. dollar is the functional
currency and gains and losses that result from translation are included in
earnings. The effect from foreign currency translation was a gain of $14
million in 1995, a loss of $7 million in 1994 and a loss of $10 million in
1993. The effect from foreign currency transactions was a loss of $76
million in 1995, a loss of $46 million in 1994 and a loss of $44 million in
1993.
CASH EQUIVALENTS
All highly liquid investments with an original maturity of three months or
less at date of purchase are considered to be cash equivalents. At December
31, 1994, included in "cash and cash equivalents" is a $1,550 million note
received in connection with the sale of the household products business which
had a maturity of four days.
INVENTORIES
Inventories are valued at cost, which is not in excess of market. The cost
of most inventories in the U.S. is determined by the "last-in, first-out"
(LIFO) method. The cost of other inventories is determined by the "first-in,
first-out" (FIFO) or average cost method.
PROPERTIES
Properties are recorded at cost reduced by accumulated depreciation.
Depreciation expense is provided based on historical cost and estimated
useful lives ranging from approximately 5 years to 50 years for buildings and
building equipment and 5 years to 20 years for machinery and equipment. The
Company generally uses the straight-line method for calculating the provision
for depreciation.
MARKETABLE SECURITIES AND NONCURRENT INVESTMENTS
Investments included in marketable securities of $42 million and $21 million
and in long-term receivables and other noncurrent assets of $60 million and
$103 million at December 31, 1995 and 1994, respectively, are considered held
to maturity. Investments included in marketable securities of $5 million and
$27 million and in long-term receivables and other noncurrent assets of $35
million and $44 million at December 31, 1995 and 1994, respectively, are
considered available for sale. The fair value of all securities approximates
cost. The maturities of long-term receivables range from 1997 to 2004.
Proceeds from the sale of securities were $48 million in 1995 and $249 million
in 1994. No gain or loss was realized from the sale of these securities in
1995 while a loss of $8 million was realized in 1994. Specific
identification was used to determine the cost of securities sold.
25
GOODWILL
Goodwill is charged to earnings on a straight-line basis over the period
estimated to be benefited, not exceeding fifteen years for continuing
operations. The Company reviews the carrying value of goodwill on an ongoing
basis. While management believes that the current carrying value of goodwill
is appropriate, that carrying value is based upon profitability and cash flow
forecasts of the related entities.
REVENUE
Revenue is recognized from the sale of film, paper, supplies and equipment
(including sales-type leases for equipment) when the product is shipped; from
maintenance and service contracts over the contractual period, or as the
services are performed; from rentals under operating leases in the month in
which they are earned; and from financing transactions at level rates of
return over the term of the lease or receivable.
ADVERTISING
Advertising costs are expensed as incurred and included in "selling, general
and administrative expenses." Advertising expenses amounted to $840 million,
$744 million and $646 million in 1995, 1994 and 1993, respectively.
ENVIRONMENTAL COSTS
Environmental expenditures that relate to current operations are expensed or
capitalized, as appropriate. Remediation costs that relate to an existing
condition caused by past operations are accrued when it is probable that
these costs will be incurred and can be reasonably estimated.
INCOME TAXES
Income tax expense is based on reported earnings before income taxes.
Deferred income taxes reflect the impact of temporary differences between the
amounts of assets and liabilities recognized for financial reporting purposes
and such amounts recognized for tax purposes.
EARNINGS PER SHARE
Primary earnings per share, where such calculation is not anti-dilutive, is
computed on the basis of the weighted average number of common shares
outstanding.
NEW ACCOUNTING STANDARDS
Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of," must be adopted in 1996. The standard requires that impairment losses
be recognized when the carrying value of an asset exceeds its fair value.
The Company regularly assesses all of its long-lived assets for impairment
and, therefore, does not believe the adoption of the standard will have a
material effect on its financial position or results of operations.
SFAS No. 123, "Accounting for Stock-Based Compensation," must be adopted in
1996. This standard encourages, but does not require, recognition of
compensation expense based on the fair value of equity instruments granted to
employees. The Company does not plan to record compensation for equity
instruments granted to employees and therefore the adoption of this standard
will have no impact on its financial position or results of operations.
RECLASSIFICATIONS
Certain reclassifications of 1994 and 1993 financial statement and related
footnote amounts have been made to conform with the 1995 presentation.
- ------------------------------------------------------------------------------
26
NOTE 2
DISCONTINUED OPERATIONS
In 1994, the Company sold the pharmaceutical and consumer health businesses
of Sterling Winthrop Inc., the household products and do-it-yourself products
businesses of L&F Products and the Clinical Diagnostics Division. The Company
received $7,858 million in proceeds from the sale of these businesses. For
1994 and prior periods, the results of these businesses were reported as
discontinued operations. Summarized results of the discontinued non-imaging
health businesses, including allocations of interest expense were: 1994 -
sales of $3,175 million, a loss from the measurement date to the disposal
date of $77 million ($86 million pre-tax), a gain on the sale of businesses
of $1,933 million before income taxes of $1,506 million and an after-tax loss
prior to measurement date of $81 million ($84 million pre-tax); 1993 - sales
of $3,694 million, a loss from operations of $221 million before benefit for
income taxes of $52 million.
In computing the net gain from discontinued operations, the Company recorded
amounts for environmental exposures, product liabilities, buyer
indemnifications, purchase price adjustments, taxes and other significant
items based on the best estimates available at the time the transactions
occurred. While the balances included in these reserves are believed to be
appropriate based on management's current judgments, changes could occur as
final negotiations of these sales and audits related to these transactions
are completed.
In December 1993, the Company spun off its Eastman Chemical Company
operations. Summarized results of the chemicals segment for 1993, including
allocations of interest expense were: sales of $3,695 million, earnings from
operations of $267 million before income taxes of $75 million.
27
- -----------------------------------------------------------------------------
NOTE 3
RECEIVABLES
(in millions)
1995 1994
Trade receivables $2,722 $2,644
Miscellaneous receivables 423 420
------ ------
Total (net of allowances of
$104 and $120) $3,145 $3,064
====== ======
The Company sells to customers in a variety of industries, markets and
geographies around the world. Receivables arising from these sales are
generally not collateralized. Adequate provisions have been recorded for
uncollectible receivables. There are no significant concentrations of credit
risk.
- ----------------------------------------------------------------------------
28
NOTE 4
INVENTORIES
in millions) 1995 1994
At FIFO or average cost (approximates current cost)
Finished goods $1,193 $1,071
Work in process 592 539
Raw materials and supplies 519 528
------ ------
2,304 2,138
Reduction to LIFO value (644) (658)
------ ------
$1,660 $1,480
====== ======
Inventories valued on the LIFO method are about 60 percent of total inventories in each
of the years.
- --------------------------------------------------------------------
NOTE 5
PROPERTIES
(in millions) 1995 1994
Land $ 208 $ 225
Buildings and building equipment 2,798 2,712
Machinery and equipment 9,294 9,053
Construction in progress 352 309
------- -------
12,652 12,299
Accumulated depreciation (7,275) (7,007)
------- -------
Net properties $ 5,377 $ 5,292
======= =======
- ---------------------------------------------------------------------------------------
29
NOTE 6
PAYABLES AND SHORT-TERM BORROWINGS
(in millions) 1995 1994
Trade creditors $ 799 $ 703
Accrued payrolls 238 203
Accrued vacation 313 269
Wage dividend and Company payments under
Employees' Savings and Investment Plan 180 144
Restructuring programs 213 397
Liabilities related to sale of non-imaging
health businesses 201 296
Other 1,383 1,386
------ ------
Total $3,327 $3,398
====== ======
Short-term bank borrowings by subsidiaries outside the U.S. totaled $586 million at
year-end 1995 and $371 million at year-end 1994. The weighted average interest rate was
4.7% in 1995 and 4.6% in 1994.
- ------------------------------------------------------------------------------------
30
NOTE 7
LONG-TERM BORROWINGS
(in millions)
Maturity At December 31,
Description Dates 1995 1994
Notes:
7.25% - 8.55% 1997 - 2003 $433 $433
9.38% - 9.5% 2003 - 2008 178 178
Debentures:
9.2% - 9.95% 2018 - 2021 13 13
Other Various 41 36
---- ----
Total $665 $660
==== ====
Annual maturities (in millions) of long-term borrowings outstanding at
December 31, 1995 are as follows: 1996: $2; 1997: $250; 1998: $11; 1999:
$79; 2000: $1; and 2001 and beyond: $322.
In 1994, the Company tendered, defeased and called a total of $6,043 million
(net carrying amount) of long-term borrowings and extinguished approximately
$7,800 million (notional amount) of derivatives. An extraordinary loss of
$266 million after-tax ($367 million pre-tax) was recorded on the early
extinguishment of debt. In addition to the extraordinary loss, a $110
million pre-tax loss was recorded in "other costs" for certain financial
instruments related to other programs.
The in-substance defeasance was achieved by purchasing investment instruments
under an arrangement consistent with the provisions of SFAS No. 76,
"Extinguishment of Debt." The Company believes that the investments placed
in the defeasance trust will be sufficient to satisfy all future debt service
requirements for the defeased debt instruments. The total cash paid for the
investments placed in the defeasance trust, including transaction costs,
amounted to $1,692 million.
The Company has a $2,500 million unused revolving credit facility established
in 1994 and expiring in May 1999 which is available to support the Company's
commercial paper borrowings. The credit facility is subject to a number of
covenants including certain financial covenants related to interest expense
coverage. The Company believes that it is in full compliance with all
covenants pertaining to the credit facility. If unused, it has a commitment
fee of $2.5 million per year. Interest on amounts borrowed under this
facility is calculated at rates based on spreads above certain reference
rates. The Company also has a shelf registration statement for debt
securities with an available balance of $2.2 billion.
- -----------------------------------------------------------------------------
31
NOTE 8
OTHER LONG-TERM LIABILITIES
(in millions)
1995 1994
Deferred compensation $124 $ 93
Liabilities related to sale
of non-imaging health businesses 259 311
Other 321 386
---- ----
Total $704 $790
==== ====
- ---------------------------------------------------------------------------
NOTE 9
COMMITMENTS AND CONTINGENCIES
Expenditures for pollution prevention and waste treatment for continuing
operations at various manufacturing facilities totaled $106 million,
$122 million and $134 million in 1995, 1994 and 1993, respectively. These
expenditures included the following elements:
(in millions) 1995 1994 1993
Recurring costs for managing
hazardous substances and
pollution $ 72 $ 83 $100
Capital expenditures to limit
or monitor hazardous substances
and pollutants 31 36 32
Site remediation costs 3 3 2
---- ---- ----
Total $106 $122 $134
==== ==== ====
At December 31, 1995 and 1994, the Company's accrued liabilities for
environmental remediation costs amounted to $114 million and $108 million,
respectively.
In October 1994, the Company, the Environmental Protection Agency (EPA), and
the U.S. Department of Justice announced the settlement of a civil complaint
alleging noncompliance by the Company with federal environmental regulations
at the Company's Kodak Park manufacturing site in Rochester, New York. The
Company paid a penalty of $5 million. A Consent Decree was signed under
which the Company is subject to a Compliance Schedule by which the Company
will improve its waste characterization procedures, upgrade one of its
incinerators, and evaluate and upgrade its industrial sewer system over a
12-year period. The expenditures that may be required to complete this
program cannot currently be reasonably estimated since upgrade plans must be
developed on an ongoing basis. Further, most costs associated with the
program will be for capital expenditures.
The Company has been designated as a potentially responsible party (PRP)
under the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, as amended (the Superfund law), or under similar state laws, for
environmental assessment and cleanup costs as the result of the Company's
alleged arrangements for disposal of hazardous substances at approximately
twenty-five Superfund sites. With respect to each of these sites, the
Company's actual or potential allocated share of responsibility is small.
Furthermore, numerous other PRPs have similarly been designated at these
sites and, although the law imposes joint and several liability on PRPs, as a
practical matter, costs are shared with other PRPs. Settlements and costs
paid by the Company in Superfund matters to date have not been material.
Future costs are also not expected to be material to the Company's financial
condition or results of operations.
In addition to the foregoing environmental actions, the Resource Conservation
and Recovery Act (RCRA) Facility Assessment (RFA) pertaining to the Kodak
Park site in Rochester, N.Y. is nearly complete and the Company has completed
a broad-based assessment of the site in response to the RFA. While future
expenditures associated with any remediation activities could be significant,
the Company is currently in the process of completing the RCRA facility
investigation (RFI). Upon completion of the RFI, the Company expects to have
developed estimates of the required remediation costs.
32
The Clean Air Act Amendments were enacted in 1990. The Company may be
required to incur significant costs, primarily capital in nature, over a
period of several years to comply with the provisions of this Act. The
expenditures that may be required cannot currently be reasonably estimated
since either implementing regulations have not been issued or compliance
plans have not been finalized.
The Company has retained certain obligations for environmental remediation
matters related to the non-imaging health businesses sold in 1994. Actions
to fulfill these obligations are not expected to be completed in the near
term and costs related to the obligations are included in remediation
accruals recorded at December 31, 1995.
The Company has entered into agreements with several companies to provide the
Company with products and services to be used in its normal operations. The
minimum payments for these agreements are approximately $102 million in 1996,
$96 million in 1997, $93 million in 1998, $91 million in 1999, $28 million in
2000 and $50 million in 2001 and thereafter.
The Company has also guaranteed debt and other obligations under agreements
with certain affiliated companies and customers. At December 31, 1995, these
guarantees totaled approximately $232 million. The Company does not expect
that these guarantees will have a material impact on the Company's future
financial position or results of operations.
The Company has issued letters of credit in lieu of making security deposits
to insure the payment of possible Workers' Compensation claims.
Gross rentals amounted to $189 million in both 1995 and 1994, and $174
million in 1993. The approximate amounts of noncancelable lease commitments
with terms of more than one year, principally for the rental of real
property, are $97 million in 1996, $74 million in 1997, $51 million in 1998,
$40 million in 1999, $32 million in 2000 and $51 million in 2001 and
thereafter.
The Company and its subsidiary companies are involved in lawsuits, claims,
investigations and proceedings, including product liability, commercial,
environmental, and health and safety matters, which are being handled and
defended in the ordinary course of business. There are no such matters
pending that the Company and its General Counsel expect to be material in
relation to the Company's business, financial condition or results of
operations.
- -----------------------------------------------------------------------------
NOTE 10
FINANCIAL INSTRUMENTS
The following table presents the carrying amounts and the estimated fair
values of financial instruments at December 31, 1995 and 1994; ( ) denotes
liabilities:
1995 1994
(in millions)
Carrying Fair Carrying Fair
Amount Value Amount Value
Marketable securities:
Current $ 47 $ 47 $ 48 $ 48
Long-term 60 60 103 99
Other investments 96 96 67 68
Long-term borrowings (665) (716) (660) (672)
Foreign currency swaps held (66) (66) (74) (74)
Foreign currency options
held and forwards held - - 31 (19)
The fair values of long-term borrowings were determined by reference to
quoted market prices or by obtaining quotes from dealers. Marketable
securities and other investments are valued at quoted market prices, except
for $74 million and $66 million of equity investments included in other
investments at December 31, 1995 and 1994, respectively, which are reflected
at their carrying value because it is not practical to estimate fair value as
quoted market prices do not exist. The fair values for the remaining
financial instruments in the above table are based on dealer quotes and
reflect the estimated amounts the Company would pay or receive to terminate
the contracts. The carrying value of cash and cash equivalents, receivables,
short-term borrowings, and payables approximate their fair values.
33
The Company, as a result of its global operating and financial activities, is
exposed to changes in interest rates and foreign currency exchange rates
which may adversely affect its results of operations and financial position.
In seeking to minimize the risks and/or costs associated with such
activities, the Company manages exposure to changes in interest rates and
foreign currency exchange rates through its regular operating and financing
activities. During 1995, the Company elected to no longer manage these
exposures through the use of financial instruments.
In connection with a long-term intercompany loan to a Japanese affiliate, the
Company has entered into a currency swap contract to purchase Japanese yen
with a contract value of $135 million to be settled in April 1997.
The table below summarizes by major currency the notional amounts of foreign
currency forward and option contracts in U.S. dollars. At December 31, 1995,
the Company was not a party to any such forward or option contracts. Foreign
currency amounts are translated at rates current at the reporting date. The
"buy" amounts represent the U.S. dollar equivalent of commitments to purchase
foreign currencies, and the "sell" amounts represent the U.S. dollar
equivalent of commitments to sell foreign currencies.
1994
(in millions)
Buy Sell
German marks $117 $133
French francs 112 -
British pounds - 99
Japanese yen 411 228
Others 39 240
---- ----
$679 $700
==== ====
The Company's financial instrument counterparties are high quality investment
or commercial banks with significant experience with such instruments. The
Company manages exposure to counterparty credit risk through specific minimum
credit standards and diversification of counterparties. The Company has
procedures to monitor the credit exposure amounts.
- ---------------------------------------------------------------------------
34
NOTE 11
INCOME TAXES
The components of earnings from continuing operations before income taxes and
the related provision (benefit) for U.S. and other income taxes were as
follows:
(in millions) 1995 1994 1993
Earnings before income taxes
U.S. $1,262 $ 740 $ 894
Outside the U.S. 664 262 183
------ ------ ------
Total $1,926 $1,002 $1,077
====== ====== ======
U.S. income taxes
Current provision $ 167 $ 339 $ 338
Deferred provision (benefit) 224 (116) (85)
Income taxes outside the U.S.
Current provision 200 170 194
Deferred provision (benefit) 30 (2) (52)
State and other income taxes
Current provision 24 65 44
Deferred provision (benefit) 29 (8) (6)
------ ------ ------
Total $ 674 $ 448 $ 433
====== ====== ======
The components of earnings (loss) from consolidated operations before income
taxes and the related provision (benefit) for U.S. and other income taxes
were as follows:
(in millions) 1995 1994 1993
Earnings (loss) before income taxes
U.S. $1,262 $1,787 $(2,762)
Outside the U.S. 664 623 389
------ ------ -------
Total $1,926 $2,410 $(2,373)
====== ====== =======
U.S. income taxes
Current provision $ 167 $1,430 $ 288
Deferred provision (benefit) 224 (293) (1,190)
Income taxes outside the U.S.
Current provision 200 369 237
Deferred provision (benefit) 30 (3) (51)
State and other income taxes
Current provision 24 358 53
Deferred provision (benefit) 29 (8) (195)
------ ------ -------
Total $ 674 $1,853 $ (858)
====== ====== =======
The components of consolidated income
taxes were as follows:
Continuing operations $ 674 $ 448 $ 433
Discontinued operations - 1,506 23
Extraordinary items - (101) (8)
Cumulative effect of changes
in accounting principle - - (1,306)
------ ------ -------
Total income taxes (benefit) $ 674 $1,853 $ (858)
====== ====== =======
35
The differences between the provision for income taxes and income taxes
computed using the U.S. federal income tax rate for continuing operations
were as follows:
(in millions) 1995 1994 1993
Amount computed using the statutory rate $674 $351 $377
Increase (reduction) in taxes resulting from:
State and other income taxes 34 37 25
Goodwill amortization 38 26 10
Export sales and manufacturing credits (37) (22) (17)
Operations outside the U.S. (34) 43 75
Other, net (1) 13 (37)
---- ---- ----
Provision for income taxes $674 $448 $433
==== ==== ====
The significant components of deferred tax assets and liabilities were as
follows:
(in millions)
1995 1994
Deferred tax assets
Postemployment obligations $1,208 $1,182
Restructuring costs and
separation programs 542 556
Inventories 93 88
Tax loss carryforwards 185 222
Other 675 669
------ ------
2,703 2,717
Valuation allowance (185) (222)
------ ------
Total $2,518 $2,495
====== ======
Deferred tax liabilities
Depreciation $ 662 $ 538
U.S. pension income 386 214
Leasing 385 406
Other 344 345
------ ------
Total $1,777 $1,503
====== ======
The valuation allowance is primarily attributable to certain net operating
loss carryforwards outside the U.S. A majority of the net operating loss
carryforwards are available indefinitely.
Retained earnings of subsidiary companies outside the U.S. were approximately
$1,924 million and $1,810 million at December 31, 1995 and 1994, respectively.
Retained earnings at December 31, 1995 are considered to be reinvested
indefinitely. If remitted, they would be substantially free of additional
tax. It is not practicable to determine the deferred tax liability for
temporary differences related to these retained earnings.
- --------------------------------------------------------------------------
36
NOTE 12
RESTRUCTURING COSTS
1994 Restructuring Program
In December 1994, the Company committed to implement a restructuring program
and recorded a pre-tax provision of $340 million for severance and other
termination benefits and exit costs related to the realignment of the
Company's worldwide manufacturing, marketing, administrative and
photofinishing operations.
Severance actions included in the restructuring provision resulted from
capacity reductions in manufacturing facilities and the consolidation of
photofinishing operations and marketing and administrative functions in
various locations of the Company's worldwide operations. Most of the
terminations were completed by the end of 1995; the remaining terminations
are expected to be completed by June 30, 1996.
The following table summarizes the Company's restructuring activities
relating to the 1994 program:
(dollar amounts in millions)
Number Severance Bus.Exits/ Non-
of & Related Plant Asset Cancelable
People Costs Closures Write-downs Leases Total
Initial Reserve 4,350 (A) $ 160 (B) $101 $89 $40 $390
Utilized in 1994 115 7 - 23 - 30
----- ----- ---- --- --- ----
Balance 12/31/94 4,235 153 101 66 40 360
Utilized in 1995 3,056 113 84 54 9 260
----- ----- ---- --- --- ----
Balance 12/31/95 1,179 $ 40 $ 17 $12 $31 $100
===== ===== ==== === === ====
(A) Terminations by functional area are as follows: Photofinishing
consolidation - 2,300 people; capacity reductions - 850 people; and
marketing and administrative consolidations - 1,200 people.
(B) Includes $50 million of 1993 severance reserves determined to be excess.
1993 Restructuring Program
The Company recorded restructuring costs in 1993 for continuing operations of
$495 million. Approximately $350 million was provided for severance and
termination benefit costs related to a cost reduction program to reduce
worldwide employment by approximately 9,000 personnel. At December 31, 1995,
substantially all of the personnel had been terminated with approximately
$11 million and $120 million being paid in 1995 and 1994, respectively. The
remaining 1993 restructuring provision related primarily to severance and
exit costs associated with the closure of a German manufacturing facility.
The costs charged to the remaining reserve in 1995 and 1994 amounted to
$11 million and $47 million, respectively. The remaining accrual balance at
December 31, 1995, in the amount of $134 million will primarily provide for
severance and termination payments to former employees.
- ------------------------------------------------------------------------------
37
NOTE 13
RETIREMENT PLANS
Substantially all U.S. employees are covered by a noncontributory plan, the
Kodak Retirement Income Plan (KRIP), which is funded by Company contributions
to an irrevocable trust fund. Assets in the fund are held for the sole
benefit of retired employees. The Company made a $500 million contribution
of its common stock to the trust fund in 1995. Retirement benefits earned by
employees prior to January 1, 1996, are based on a point system. Retirement
benefits earned by employees subsequent to December 31, 1995, will be based
on age and years of service. The benefit formula used to calculate the
actual benefit dollars paid to an individual once retired will not change as
a result of these new plan provisions. Retirement benefits generally become
vested upon the completion of five years of service. The assets of the trust
fund are comprised of corporate equity and debt securities, U.S. government
securities, partnership and joint venture investments, interests in pooled
funds, and various types of interest rate and foreign currency financial
instruments.
The benefit obligations for KRIP include amounts for employees who retired
from Eastman Chemical Company (ECC) on or before December 31, 1993, the date
ECC was spun off from the Company. Benefit obligations of all other ECC
employees were transferred to ECC as part of the spin-off agreement. The
benefit obligation of KRIP excludes amounts for all employees (both retired
and active) of the non-imaging health businesses sold in 1994 because those
obligations were transferred to the buyers of the non-imaging health
businesses. The market value of assets of KRIP reflect the Company's
estimates of the assets held for employees in continuing operations only.
The transfer of assets from the KRIP trust fund to ECC and the buyers of the
non-imaging health businesses was not completed as of December 31, 1995. The
Company anticipates the transfer of assets will not be completed for several
years to ensure compliance with agreements and applicable government
regulations.
Most other subsidiaries and branches operating outside the U.S. have
retirement plans covering substantially all employees. Contributions by the
Company for these plans are typically deposited under government or other
fiduciary-type arrangements. Retirement benefits are generally based on
contractual agreements that provide for benefit formulas using years of
service and/or compensation prior to retirement. The actuarial assumptions
used for these plans reflect the diverse economic environments within the
various countries in which the Company operates. The following information
includes data for significant plans outside the U.S.
Total pension expense for all plans included the following:
(in millions)
1995 1994 1993
Non- Non- Non-
U.S. U.S. U.S. U.S. U.S. U.S.
Major Plans:
Service cost - benefits earned
during the year $ 110 $ 21 $ 120 $ 19 $ 105 $ 15
Interest cost on projected
benefit obligation 480 81 470 77 475 71
Actual return on plan assets (834) (153) 50 (46) (944) (223)
Net deferral and amortization 288 76 (590) (24) 364 152
------ ------ ------ ------ ------ -----
Net pension expense 44 25 50 26 0 15
Other U.S. and non-U.S. plans 6 71 0 57 0 51
------ ------ ------ ------ ------ -----
Total pension expense $ 50 $ 96 $ 50 $ 83 $ 0 $ 66
====== ====== ====== ====== ====== =====
38
The funded status of Major Plans was as follows:
(in millions)
At December 31,
1995 1994
Non- Non-
U.S. U.S. U.S. U.S.
Actuarial present value of benefit obligations
Vested benefits $5,238 $ 962 $4,861 $ 747
====== ====== ====== ======
Accumulated benefits $5,522 $ 985 $5,077 $ 769
====== ====== ====== ======
Projected benefits $6,586 $1,066 $5,879 $ 915
Market value of assets 6,070 992 5,263 851
------ ------ ------ ------
Projected benefits in excess of plan assets 516 74 616 64
Unrecognized net loss (828) (102) (524) (82)
Unrecognized net transition asset 464 58 531 66
Unrecognized prior service cost (163) (57) (178) (63)
------ ------ ------ ------
(Prepaid) accrued pension expense $ (11) $ (27) $ 445 $ (15)
====== ====== ====== ======
The annual cost of postretirement employee benefits is based on assumed
discount rates. These rates are set relative to the general level of
interest rates in the economy. As a result, significant year-to-year changes
in interest rates can cause material year-to-year changes in assumed discount
rates and employee benefit liabilities and costs based on those rates.
The weighted assumptions used to compute pension amounts for Major Plans were
as follows:
December 31,
1995 1994
Non- Non-
U.S. U.S. U.S. U.S.
Discount rate 7.25% 8.2% 8.5% 9.0%
Salary increase rate 4.5% 5.4% 5.0% 5.4%
Long-term rate of return on plan assets 9.5% 9.6% 9.5% 9.6%
The Company also sponsors an unfunded plan for certain U.S. employees
(primarily executives). The benefits of this plan are obtained by applying
KRIP provisions to all compensation, including compensation currently being
deferred, and without regard to the legislated qualified plan maximums,
reduced by benefits under KRIP. At December 31, 1995 and 1994, the projected
benefit obligations of this plan amounted to $159 million and $140 million,
respectively. The Company had recorded long-term liabilities at those dates
of $143 million and $124 million, respectively. Pension expense recorded in
1995, 1994 and 1993 related to this plan was $17 million, $17 million and $15
million, respectively.
- ------------------------------------------------------------------------------
39
NOTE 14
NONPENSION POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS
The Company provides health care, dental and life insurance benefits to
eligible retirees and eligible survivors of retirees. In general, these
benefits are provided to U.S. retirees that are covered by the provisions of
the Company's principal pension plan. Nonpension postretirement expense for
1995, 1994 and 1993 was $148 million, $183 million and $255 million,
respectively. A few of the Company's subsidiaries and branches operating
outside the U.S. offer health care benefits; however, the cost of such
benefits is insignificant to the Company.
The Company adopted SFAS No. 106 on January 1, 1993. The obligation for
continuing operations owed to current and retired employees, as of January 1,
1993, was recognized on that date as a cumulative effect of a change in
accounting principle of $1,557 million after-tax. The Company plans to
continue to fund these benefit costs on a "pay-as-you-go" basis and,
consequently, the adoption of SFAS No. 106 will not significantly affect the
Company's cash flows.
The net postretirement benefit cost includes the following components:
(in millions)
1995 1994 1993
Service cost $ 23 $ 26 $ 25
Interest cost 183 192 230
Net amortization (58) (35) -
----- ----- -----
Net postretirement
benefit cost $ 148 $ 183 $ 255
===== ===== =====
The total obligation and amount recognized in the Consolidated Statement of
Financial Position at December 31, 1995 and 1994, were as follows:
(in millions)
1995 1994
Accumulated postretirement
benefit obligation
Retirees $1,994 $1,765
Fully eligible active plan
participants 38 23
Other active plan participants 566 366
------ ------
Total obligation 2,598 2,154
Unrecognized net loss (465) (90)
Unrecognized negative plan
amendment 781 839
------ ------
Accrued postretirement
benefit cost $2,914 $2,903
====== ======
To estimate this obligation, health care costs were assumed to increase 9% in
1996 with the rate of increase declining ratably to 5% by 2002 and
thereafter. The discount rates utilized to measure the obligation at
December 31, 1995 and 1994, were 7.25% and 8.5%, respectively. The annual
costs of employee benefits related to postemployment and postretirement are
based on assumed discount rates set relative to the general level of interest
rates in the economy. As a result, significant year-to-year changes in
interest rates can cause material year-to-year changes in assumed discount
rates and employee benefit liabilities and costs based on these rates. If
the health care cost trend rates were increased by one percentage point, the
accumulated postretirement benefit obligation, as of December 31, 1995, would
increase by approximately $98 million while the net postretirement benefit
cost for the year then ended would increase by approximately $8 million.
Effective January 1, 1993, the Company adopted SFAS No. 112. The obligation
for continuing operations as of January 1, 1993 was recognized as a
cumulative effect of a change in accounting principle of $92 million
after-tax. Adoption of SFAS No. 112 did not have a material effect on the
Company's earnings before cumulative effect of changes in accounting
principle.
- ---------------------------------------------------------------------------
40
NOTE 15
STOCK OPTION AND COMPENSATION PLANS
The 1995 and 1990 Omnibus Long-Term Compensation Plans provide for a variety
of awards to employees. Some of these awards are based upon performance
criteria relating to the Company established by the Executive Compensation
and Development Committee of the Board of Directors.
The 1995 Omnibus Long-Term Compensation Plan provides that options can be
granted through December 31, 1999, to employees for the purchase of up to
16,000,000 shares of the Company's common stock at an option price not less
than 100 percent of the per share fair market value on the date of the stock
option's grant. The 1995 Plan also provides for the granting of Stock
Appreciation Rights (SARs) either in tandem with options or freestanding.
SARs allow optionees to receive a payment equal to the appreciation in market
value of a stated number of shares of the Company's common stock from the
SAR's exercise price to the market value on the date of its exercise.
Exercise of a tandem SAR requires the optionee to surrender the related
option. At December 31, 1995, there were 163,061 freestanding SARs
outstanding at the option price of $56.31.
The 1990 Omnibus Long-Term Compensation Plan provides that options can be
granted through January 31, 1995, to key employees for the purchase of up to
16,000,000 shares of the Company's common stock at an option price not less
than 50 percent of the per share fair market value on the date of the stock
option's grant. No options below fair market value have been granted to
date. Options with dividend equivalents were awarded during 1994, 1993 and
1992 under the 1990 Omnibus Long-Term Compensation Plan. Provisions under
this plan amounted to $4 million in 1995, $6 million in 1994 and $5 million in
1993. The 1990 Plan also provides for the granting of SARs either in tandem
with options or freestanding. At December 31, 1995, there were 167,915
tandem SARs and 397,414 freestanding SARs outstanding at option prices
ranging from $31.45 to $44.50.
The 1985 Stock Option Plan provided that options could be granted through
1989 to key employees for the purchase of up to 6,000,000 (prior to giving
effect to the 3-for-2 partial stock split in 1987) shares of the Company's
common stock at an option price not less than the per share fair market value
at the time the option was granted. Options granted have maximum durations
of 7 or 10 years from the date of grant but may expire sooner if the
optionee's employment terminates. The 1985 Plan also provided for the
granting of SARs either in tandem with options or freestanding. At December
31, 1995, there were 410,954 tandem SARs and 47,847 freestanding SARs
outstanding at option prices ranging from $33.79 to $39.53.
Summarized option data as of December 31, 1995 are as follows:
Shares Range of Price
Under Option Per Share
------------ ---------------
Options Outstanding December 31, 1994 21,798,374 $30.25 - $50.47
Options Granted 2,710,657 $49.31 - $69.50
Options Exercised 3,212,232 $30.25 - $49.44
Options Canceled 6,817 $44.50 - $56.31
Options Surrendered 91,236 $31.45 - $39.53
---------- ---------------
Options Outstanding December 31, 1995 21,198,746 $30.25 - $69.50
========== ===============
At December 31, 1995, 16,380,039 of the options outstanding were exercisable.
- ------------------------------------------------------------------------
41
NOTE 16
ACQUISITION OF REMAINING SHARES OF QUALEX
In August 1994, the Company acquired the remaining shares of Qualex, a
photofinisher operating primarily in the U.S., for $150 million with a
combination of cash and a note. Prior to August 12, 1994, the Company had an
investment in Qualex of approximately fifty percent of its outstanding common
shares, which was accounted for under the equity method.
- -----------------------------------------------------------------------------
NOTE 17
SEGMENT INFORMATION
The Company's business consists of two segments: Consumer Imaging and
Commercial Imaging. The Consumer Imaging segment includes amateur films,
photographic papers, chemicals and equipment for photographic imaging and
photofinishing operations. The Commercial Imaging segment includes x-ray,
motion picture, professional and graphic arts films, microfilms, copiers,
printers and other equipment for information management. Sales between
segments are made on a basis intended to reflect the market value of the
products.
Sales are reported in the geographic area where they originate. Transfers
among geographic areas are made on a basis intended to reflect the market
value of the products, recognizing prevailing market prices and distributor
discounts.
The parent company's equity in the net assets of subsidiaries outside the
U.S. was as follows:
(in millions) 1995 1994 1993
Net assets $2,980 $3,057 $2,912
====== ====== ======
42
SEGMENT INFORMATION (continued)
Financial information by geographic areas is as follows:
Canada
and Asia,
United Latin Africa, Elimi- Consoli-
(in millions) States America Europe Australia nations dated
1995
Sales to customers $ 6,978 $1,325 $4,195 $2,482 $14,980
Transfers among geographic areas 2,725 555 324 59 $(3,663) -
------- ------ ------ ------ ------- -------
Total sales $ 9,703 $1,880 $4,519 $2,541 $(3,663) $14,980
======= ====== ====== ====== ======= =======
Earnings from operations $ 1,153 $ 137 $ 482 $ 169 - $ 1,941
======= ====== ====== ====== ======= =======
Assets by geographic areas $ 9,266 $1,354 $2,982 $1,722 $ (847) $14,477
======= ====== ====== ====== ======= =======
1994
Sales to customers from
continuing operations $ 6,434 $1,266 $3,670 $2,187 $13,557
Transfers among geographic areas 2,547 456 340 58 $(3,401) -
------- ------ ------ ------ ------- -------
Total sales $ 8,981 $1,722 $4,010 $2,245 $(3,401) $13,557
======= ====== ====== ====== ======= =======
Earnings (loss) from operations
from continuing operations $ 884 $ 130 $ 315 $ (17) $ (3) $ 1,309
======= ====== ====== ====== ======= =======
Assets by geographic areas $10,131 $1,342 $2,853 $1,692 $(1,050) $14,968
======= ====== ====== ====== ======= =======
1993
Sales to customers from
continuing operations $ 6,038 $1,178 $3,529 $1,925 $12,670
Transfers among geographic areas 2,063 414 307 46 $(2,830) -
------- ------ ------ ------ ------- -------
Total sales $ 8,101 $1,592 $3,836 $1,971 $(2,830) $12,670
======= ====== ====== ====== ======= =======
Earnings (loss) from operations
from continuing operations $ 1,007 $ 191 $ (6) $ 63 $ (7) $ 1,248
======= ====== ====== ====== ======= =======
Assets by geographic areas $ 8,952 $1,320 $2,615 $1,446 $ 4,477(1) $18,810
======= ====== ====== ====== ======= =======
(1) Includes net assets of discontinued operations.
43
SEGMENT INFORMATION (continued)
(in millions) 1995 1994 1993
Sales from continuing operations,
including intersegment sales
Consumer Imaging $ 6,830 $ 5,919 $ 5,292
Commercial Imaging 8,184 7,646 7,382
Intersegment sales (34) (8) (4)
------- ------- -------
Total sales from continuing operations $14,980 $13,557 $12,670
======= ======= =======
Earnings from operations from
continuing operations (1)
Consumer Imaging $ 1,282 $ 878 $ 931
Commercial Imaging 659 431 317
------- ------- -------
Total earnings from operations
from continuing operations 1,941 1,309 1,248
Other revenues and charges
Consumer Imaging 3 (31) 2
Commercial Imaging (5) (7) 9
Corporate 65 (127) (7)
Interest expense 78 142 175
------- ------- -------
Earnings before income taxes $ 1,926 $ 1,002 $ 1,077
======= ======= =======
Assets
Consumer Imaging $ 5,114 $ 4,805 $ 4,154
Commercial Imaging 7,575 7,950 7,334
Net assets of discontinued operations - - 5,349
Corporate 1,788 2,213 1,973
------- ------- -------
Total assets at year end $14,477 $14,968 $18,810
======= ======= =======
Depreciation expense
Consumer Imaging $ 186 $ 217 $ 286
Commercial Imaging 621 619 531
------- ------- -------
Total depreciation expense $ 807 $ 836 $ 817
======= ======= =======
Amortization of goodwill
Consumer Imaging $ 43 $ 25 $ 6
Commercial Imaging 66 42 23
------- ------- -------
Total amortization of goodwill $ 109 $ 67 $ 29
======= ======= =======
Capital additions
Consumer Imaging $ 240 $ 303 $ 282
Commercial Imaging 794 850 535
------- ------- -------
Total capital additions $ 1,034 $ 1,153 $ 817
======= ======= =======
(1) Earnings from operations are shown after deducting restructuring costs of:
1995 1994 1993
Consumer Imaging - $190 $141
Commercial Imaging - 150 354
- ----------------------------------------------------------------------------------------
44
NOTE 18
QUARTERLY SALES AND EARNINGS DATA - UNAUDITED
4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
(in millions, except per share data)
1995
Sales $4,092 $3,813 $3,938 $3,137
Gross profit 1,760 1,826 1,908 1,524
Net earnings 275 338 377 262
Primary earnings per share .80 .99 1.11 .77
1994
Sales from continuing operations $3,848 $3,529 $3,425 $2,755
Gross profit from continuing
operations 1,742 1,562 1,643 1,285
Earnings (loss) from continuing
operations before extraordinary
items (79)(1) 193 295 145
Earnings (loss) from discontinued
operations 350 - (30) (51)
Extraordinary items (253) - (1) (12)
Net earnings 18 (1) 193 264 82
Primary earnings (loss) per share from
continuing operations before
extraordinary items (2) (.23) .57 .88 .44
Primary earnings (loss) per share
from discontinued operations (2) 1.03 - (.09) (.15)
Extraordinary items (.75) - - (.04)
Primary earnings per share .05 .57 .79 .25
(1) After deducting $340 million of restructuring costs, which reduced net earnings
by $254 million, and a $110 million loss on the extinguishment of certain
financial instruments, which reduced net earnings by $80 million.
(2) Each quarter is calculated as a discrete period and the sum of the four quarters
does not equal the full year amount.
- --------------------------------------------------------------------------------------
45
SUMMARY OF OPERATING DATA
Eastman Kodak Company and Subsidiary Companies
(Dollar amounts and shares in millions, except per share data)
1995 1994 1993 1992 1991
Sales from continuing operations $14,980 $13,557 $12,670 $12,992 $12,427
Earnings from operations before
extraordinary items and cumulative effect
of changes in accounting principle:
Continuing 1,252 554(1) 644 (2) 845(4) 12(6)
Discontinued - 269 23 (2) 149(4) 5(6)
Net earnings (loss) 1,252 557(1) (1,515)(2) 1,146(4) 17(6)
(3) (5)
EARNINGS AND DIVIDENDS
Net earnings - percent of sales 8.4% 4.1% (12.0%) 8.8% 0.1%
- percent return on average
shareowners' equity 27.4% 15.1% (30.6%) 18.1% 0.3%
Primary earnings (loss) per share (7) 3.67 1.66 (4.62) 3.53 .05
Cash dividends declared
- on common shares (8) 547 537 657 650 649
- per common share (8) 1.60 1.60 2.00 2.00 2.00
Common shares outstanding at year end 345.9 339.8 330.6 325.9 324.9
Shareowners at year end 143,574 151,349 157,797 166,532 169,164
STATEMENT OF FINANCIAL POSITION DATA
Working capital $ 2,666 $ 1,948 $ 2,696 $ 545 $ 681
Properties - net 5,377 5,292 5,027 5,520 5,515
Total assets 14,477 14,968 18,810 19,038 19,952
Long-term borrowings 665 660 6,727 5,259 5,648
Total shareowners' equity 5,121 4,017 3,356 6,557 6,104
SUPPLEMENTAL INFORMATION
Sales - Consumer Imaging $ 6,830 $ 5,919 $ 5,292 $ 5,414 $ 5,135
- Commercial Imaging 8,184 7,646 7,382 7,592 7,301
Research and development costs 935 859 864 988 971
Depreciation 807 836 817 936 874
Taxes (excludes payroll, sales, and excise
taxes) 796 567 545 584 (183)
Wages, salaries, and employee benefits 5,025 4,690 4,679 4,653 4,533
Employees at year end
- in the U.S. 54,400 54,300(9) 49,100 50,900 51,600
- worldwide 96,600 96,300(9) 91,800 95,200 96,700
(1) After deducting $340 million of restructuring costs from continuing operations, which
reduced net earnings by $254 million, and a $110 million loss on the extinguishment of
certain financial instruments, which reduced net earnings by $80 million. Net earnings
were also reduced by $266 million of extraordinary losses related to the early
extinguishment of debt.
(2) After deducting $495 million of restructuring costs from continuing operations, which
reduced net earnings by $353 million, and $55 million of restructuring costs from
discontinued operations, which reduced net earnings by $34 million.
(3) The net loss for 1993 was due to an after-tax charge of $2.17 billion from the cumulative
effect of adopting SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other
Than Pensions," and SFAS No. 112, "Employers' Accounting for Postemployment Benefits."
(4) After deducting $219 million of restructuring costs from continuing operations, which
reduced net earnings by $140 million, and $1 million of restructuring costs from
discontinued operations, which reduced net earnings by less than $1 million.
(5) Net earnings for 1992 benefited by $152 million from the cumulative effect of adopting
SFAS No. 109, "Accounting for Income Taxes."
(6) After deducting $1,448 million of restructuring costs from continuing operations, which
reduced net earnings by $934 million, and $157 million of restructuring costs from
discontinued operations, which reduced net earnings by $98 million.
(7) Based on average number of shares outstanding.
(8) The lower dividends in 1994 and 1995 were due to the spin-off of the Eastman Chemical
Company operations at year-end 1993. As a result of the spin-off, the Company's
shareowners received one share of Eastman Chemical Company stock for every four shares of
Kodak common stock.
(9) The acquisition of Qualex during 1994 added approximately 7,600 people to the Company's
U.S. employment. Acquisitions outside the U.S. during 1994 added approximately 1,200
people to the Company's employment levels. Approximately 5,100 personnel left the Company
during 1994 under restructuring programs.
46
PART III
ITEMS 10, 11, AND 12. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
EXECUTIVE COMPENSATION
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Responses to the above items, as contained in the Notice of 1996 Annual
Meeting and Proxy Statement, which will be filed within 120 days of the
Company's fiscal year end, are hereby incorporated by reference in this
Annual Report on Form 10-K.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None to report.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
Page No.
(a) 1. Consolidated financial statements:
Report of independent accountants 17
Consolidated statement of earnings 18-19
Consolidated statement of financial position 20
Consolidated statement of shareowners' equity 21
Consolidated statement of cash flows 22-23
Notes to financial statements 24-44
2. Financial statement schedules:
II - Valuation and qualifying accounts 49
All other schedules have been omitted because they are not applicable
or the information required is shown in the financial statements or
notes thereto.
3. Additional data required to be furnished:
Exhibits required as part of this report are listed in the index
appearing on pages 50 through 52. The management contracts and
compensatory plans and arrangements required to be filed as exhibits
to this form pursuant to Item 14(c) of this report are listed on
pages 50 through 52, Exhibit Numbers (10)A - (10)S.
(b) Report on Form 8-K.
No reports on Form 8-K were filed or required to be filed during the
quarter ended December 31, 1995.
47
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
EASTMAN KODAK COMPANY
(Registrant)
By: By:
George M. C. Fisher, Chairman of Harry L. Kavetas,
the Board, President, Chief Executive Executive Vice
Officer and Chief Operating Officer President and Chief
Financial Officer
David J. FitzPatrick,
Vice President and
Controller
Date: March 12, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
Richard S. Braddock, Director Paul E. Gray, Director
Martha Layne Collins, Director Karlheinz Kaske, Director
Alice F. Emerson, Director John J. Phelan, Jr., Director
George M. C. Fisher, Director Wilber J. Prezzano, Director
Roberto C. Goizueta, Director Leo J. Thomas, Director
Richard A. Zimmerman, Director
Date: March 12, 1996
48
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectuses
constituting part of the Registration Statements on Form S-3 (No. 33-48258,
No. 33-49285, and No. 33-64453), Form S-4 (No. 33-48891), and Form S-8
(No. 33-5803, No. 33-35214, No. 33-56499, No. 33-65033, and No. 33-65035) of
Eastman Kodak Company of our report dated January 17, 1996, appearing on page
17 of this Annual Report on Form 10-K.
PRICE WATERHOUSE LLP
New York, New York
March 12, 1996
49
Schedule II
Eastman Kodak Company and Subsidiary Companies
Valuation and Qualifying Accounts
(in millions)
Balance at Additions Deductions Balance
Beginning Charged to Amounts at End of
of Period Earnings Written Off Period
Year ended December 31, 1995
Deducted in the Statement of
Financial Position:
From Current Receivables
Reserve for doubtful accounts $105 $57 $77 $ 85
Reserve for loss on returns
and allowances 15 13 9 19
---- --- --- ----
TOTAL $120 $70 $86 $104
==== === === ====
From Long-Term Receivables and
Other Noncurrent Assets;
Reserve for doubtful accounts $ 18 $10 $14 $ 14
==== === === ====
Year ended December 31, 1994
Deducted in the Statement of
Financial Position:
From Current Receivables
Reserve for doubtful accounts $ 82 $80 $57 $105
Reserve for loss on returns
and allowances 10 5 - 15
---- --- --- ----
TOTAL $ 92 $85 $57 $120
==== === === ====
From Long-Term Receivables and
Other Noncurrent Assets;
Reserve for doubtful accounts $ 20 $ 8 $10 $ 18
==== === === ====
Year ended December 31, 1993
Deducted in the Statement of
Financial Position:
From Current Receivables
Reserve for doubtful accounts $ 89 $49 $56 $ 82
Reserve for loss on returns
and allowances 9 1 - 10
---- --- --- ----
TOTAL $ 98 $50 $56 $ 92
==== === === ====
From Long-Term Receivables and
Other Noncurrent Assets;
Reserve for doubtful accounts $ 24 $ 6 $10 $ 20
==== === === ====
50
Eastman Kodak Company and Subsidiary Companies
Index to Exhibits
Exhibit
Number
Page
(3) A. Certificate of Incorporation.
(Incorporated by reference to the Eastman Kodak Company
Annual Report on Form 10-K for the fiscal year ended December
25, 1988, Exhibit 3.)
B. By-laws, as amended through September 11, 1992.
(Incorporated by reference to the Eastman Kodak Company
Annual Report on Form 10-K for the fiscal year ended December
31, 1992, Exhibit 3.)
(4) A. Indenture dated as of June 15, 1986 between Eastman Kodak
Company as issuer of 8.55% Notes due 1997 and The Bank of New
York as Trustee. (Incorporated by reference to the Eastman
Kodak Company Annual Report on Form 10-K for the fiscal year
ended December 28, 1986,
Exhibit 4.)
B. Indenture dated as of January 1, 1988 between Eastman Kodak
Company as issuer of (i) 9 3/8% Notes Due 2003, (ii) 9.95%
Debentures Due 2018, (iii) 9 1/2% Notes Due 2008, (iv) 9.20%
Debentures Due 2021, and (v) 7 1/4% Notes Due 1999, and The
Bank of New York as Trustee. (Incorporated by reference to
the Eastman Kodak Company Annual Report on Form 10-K for the
fiscal year ended December 25, 1988,
Exhibit 4.)
C. First Supplemental Indenture dated as of September 6, 1991
and Second Supplemental Indenture dated as of September 20,
1991, each between Eastman Kodak Company and The Bank of New
York as Trustee, supplementing the Indenture described in B.
(Incorporated by reference to the Eastman Kodak Company
Annual Report on Form 10-K for the fiscal year ended December
31, 1991, Exhibit 4.)
D. Third Supplemental Indenture dated as of January 26, 1993,
between Eastman Kodak Company and The Bank of New York as
Trustee, supplementing the Indenture described in B.
(Incorporated by reference to the Eastman Kodak Company
Annual Report on Form 10-K for the fiscal year ended December
31, 1992, Exhibit 4.)
E. Fourth Supplemental Indenture dated as of March 1, 1993,
between Eastman Kodak Company and The Bank of New York as
Trustee, supplementing the Indenture described in B.
(Incorporated by reference to the Eastman Kodak Company
Annual Report on Form 10-K for the fiscal year ended December
31, 1993.)
Eastman Kodak Company and certain subsidiaries are parties to
instruments defining the rights of holders of long-term debt
that was not registered under the Securities Act of 1933.
Eastman Kodak Company has undertaken to furnish a copy of these
instruments to the Securities and Exchange Commission upon
request.
(10) A. Eastman Kodak Company Retirement Plan for Directors, as
amended effective January 1, 1996. 53
B. Eastman Kodak Company 1985 Long-Term Performance Award Plan,
as amended effective December 31, 1993.
C. 1982 Eastman Kodak Company Executive Deferred Compensation
Plan, as amended effective October 15, 1995. 57
D. Kodak Unfunded Retirement Income Plan, amended effective
January 1, 1995. 74
51
Eastman Kodak Company and Subsidiary Companies
Index to Exhibits (continued)
Exhibit Number Page
E. Eastman Kodak Company Management Variable Compensation Plan,
effective as of January 1, 1995.
F. Eastman Kodak Company Insurance Plan for Directors.
(Incorporated by reference to the Eastman Kodak Company
Annual Report on Form 10-K for the fiscal year ended December
29, 1988, Exhibit 10.)
G. Eastman Kodak Company Deferred Compensation Plan for
Directors, as amended effective January 1, 1995.
H. Eastman Kodak Company 1985 Stock Option Plan, as amended
effective December 31, 1993.
I. Kodak Supplementary Group Life Insurance Plan, as amended
effective December 29, 1995. 80
J. Eastman Kodak Company 1990 Omnibus Long-Term Compensation
Plan, as amended effective March 10, 1994.
K. Eastman Kodak Company 1995 Omnibus Long-Term Compensation
Plan, effective as of February 1, 1995.
L. Kodak Excess Retirement Income Plan, as amended effective
January 1, 1995. 99
M. Kodak Executive Financial Counseling Program.
(Incorporated by reference to the Eastman Kodak Company
Annual Report on Form 10-K for the fiscal year ended December
31, 1992, Exhibit 10.)
N. Personal Umbrella Liability Insurance Coverage.
Eastman Kodak Company provides $5,000,000 personal umbrella
liability insurance coverage to its directors and
approximately 150 key executives. The coverage, which is
insured through The Mayflower Insurance Company, Ltd.,
supplements participants' personal coverage.
The Company pays the cost of this insurance. Income is
imputed to participants. 104
O. Kodak Executive Health Management Plan, as amended effective
January 1, 1995. 107
P. Wilbur J. Prezzano Retention Agreement dated September 3,
1993.
Q. Wilbur J. Prezzano Amendment to Retention Agreement dated
January 3, 1995.
R. George M. C. Fisher Employment Agreement dated October 27,
1993.
$4,000,000 Promissory Note dated November 2, 1993.
$4,284,400 Promissory Note dated November 2, 1993.
Notice of Award of Restricted Stock dated November 11, 1993.
Notice of Award of Incentive Stock Options dated November 11,
1993.
Notice of Award of Non-Qualified Stock Options dated November
11, 1993.
First Amendment to Notice of Award of Non-Qualified Stock
Options dated November 11, 1993.
Amendment No. 1 to Employment Agreement dated as of April 4,
1994.
52
Eastman Kodak Company and Subsidiary Companies
Index to Exhibits (continued)
Exhibit Number Page
S. Harry L. Kavetas Employment Agreement dated as of February
11, 1994, Notice of Award of Non-Qualified Stock Options
dated February 15, 1994, Notice of Award of Incentive Stock
Options dated February 15, 1994, and Notice of Award of
Restricted Stock dated February 15, 1994.
Exhibits (10) B, H, P, and R are incorporated by reference to the
Eastman Kodak Company Annual Report on Form 10-K for the fiscal year
ended December 31, 1993, Exhibit 10.
Exhibits (10) G, J, Q, and S are incorporated by reference to the
Eastman Kodak Company Annual Report on Form 10-K for the fiscal year
ended December 31, 1994, Exhibit 10.
Exhibits (10) E and K are incorporated by reference to the Eastman
Kodak Company Quarterly Report on Form 10-Q for the quarterly period
ended June 30, 1995, Exhibit 10.
(11) Statement Re Computation of Earnings Per Common Share. 119
(12) Statement Re Computation of Ratio of Earnings to Fixed Charges. 120
(21) Subsidiaries of Eastman Kodak Company. 121
(23) Consent of Independent Accountants. 48
(27) Financial Data Schedule - Submitted with the EDGAR filing as a
second document to this Form 10-K.
(99) Eastman Kodak Employees' Savings and Investment Plan Annual
Report on Form 11-K for the fiscal year ended December 30, 1995
(to be filed by amendment).
53
Exhibit (10)
A.
As Amended effective January 1, 1996
EASTMAN KODAK COMPANY
RETIREMENT PLAN FOR DIRECTORS
1. Name and Purpose
This plan shall be known as the Eastman Kodak Company
Retirement Plan for Directors (the "Plan"). Its
purpose is to provide retirement income benefits for
certain Directors of Eastman Kodak Company (the
"Company") upon completion of their service as
Directors of the Company.
2. Eligibility
Each Director of the Company who is not in the regular
employ of the Company (including those who may have
been so employed previously by the Company) shall be
eligible to participate in this Plan.
3. Effective Date
This Plan shall become effective June 1, 1984.
4. Annual Retainer
When used in this Plan, "Annual Retainer" shall mean
the total annual retainer whether in cash, stock or
restricted stock received or deferred by a Director for
service as a member of the Board. For purposes of this
Plan all shares of common stock paid as retainer shall
be valued as of the date on which such shares were
granted.
5. Benefit
a) Amount of Benefit. On January 1 and July 1 of each
year, commencing with the first such date following (i)
termination of service as a Director or (ii) such
participant's 65th birthday, whichever occurs later, a
semi-annual payment shall be paid to each eligible
participant. That payment shall be equal to one-half
of the Annual Retainer multiplied by a fraction the
numerator of which shall be the number of months during
which such participant served as a Director not in the
regular employ of the Company, but in no event greater
than sixty (60) and the denominator of which shall be
sixty (60). Service will be measured from the
effective date of election to membership on the Board
of Directors of Eastman Kodak Company (the "Board") to
the date of termination of such membership except that
the service of a Director who had previously been in
the regular employ of the Company shall be deemed to
have commenced on the date such employment terminated.
Service for any portion of a month shall be deemed to
be service for a full month. Payments commenced
hereunder will be suspended if and when the participant
is reelected as a Director and recomputed and
recommenced upon subsequent termination of service as a
Director.
54
b) Pre-1/1/96 Directors. The terms of this paragraph
5 (b) shall apply only to those participants whose
service as a Director commenced prior to January 1,
1996.
i) Term of Benefit. The semi-annual benefit
computed under paragraph 5 (a) above shall
continue to be paid to the participant until
the date of his or her death.
ii) Adjustments to Annual Retainer. Whenever
the Annual Retainer to Directors of the
Company who are not in the regular employ of
the Company is changed, the Annual Retainer
used to compute the participant's payment
under paragraph 5 (a) above shall be adjusted
by a like amount. The adjustment shall be
effective for all payments made on or after
the effective date of such change in the
Annual Retainer.
c) Post-12/31/95 Directors. The terms of this
paragraph 5 (c) shall apply only to those
participants whose service as a Director commenced
on or after January 1, 1996.
i) Term of Benefit. The semi-annual benefit
computed under paragraph 5 (a) above shall
continue to be paid to the participant until
the earlier of: (A) his or her "Benefit
Termination Date"; or (B) the date of his or
her death. For purposes of this paragraph
5(c)(i), a participant's "Benefit Termination
Date" shall mean the date upon which the
participant receives in the aggregate that
number of payments equal to the number
obtained by dividing the number of months
during which such participant served as a
Director not in the employ of the Company by
six (6). For purposes of this calculation,
service shall be measured in accordance with
the terms of paragraph 5 (a) above. To the
extent this calculation produces other than a
whole number, any decimal equal to or in
excess of .5 (five tenths) shall be rounded to
the next nearest whole number and any decimal
less than .5 (five tenths) shall be ignored.
ii) Annual Retainer. The Annual Retainer that
shall be used to compute the participant's
payment under paragraph 5 (a) shall be the
Annual Retainer in effect on the date of the
participant's termination of service as a
Director.
55
6. Amendment and Termination
This Plan may be amended or terminated by the Board at
any time for any reason.
7. Miscellaneous
a) Nothing contained in this Plan shall be construed
as a contract of employment between the Company and a
Director.
b) The benefits payable under this Plan shall not be
assigned, transferred, pledged or encumbered or be
subject in any manner to alienation or anticipation.
c) Notwithstanding anything to the contrary herein,
any Director who is removed from the Board for cause,
shall not be entitled to any benefit hereunder.
8. Change in Control
a) For purposes of this Plan, "Change In Control"
means a change in control of the Company of a nature
that would be required to be reported (assuming such
event has not been "previously reported") in response
to Item 1(a) of the Current Report on Form 8-K, as in
effect on March 1, 1990, pursuant to Section 13 or
15(d) of the Exchange Act; provided that, without
limitation, a Change In Control shall be deemed to have
occurred at such time as (i) any "person" within the
meaning of Section 14(d) of the Exchange Act, other than
the Company, a subsidiary of the Company, or any
employee benefit plan(s) sponsored by the Company or any
subsidiary of the Company, is or has become the
"beneficial owner," as defined in Rule 13d-3 under the
Exchange Act, directly or indirectly, of 25% or more of
the combined voting power of the outstanding securities
of the Company ordinarily having the right to vote at
the election of directors, or (ii) individuals who
constitute the Board of Directors on March 1, 1990 (the
"Incumbent Board") have ceased for any reason to
constitute at least a majority thereof, provided that
any person becoming a director subsequent to March 1,
1990 whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at
least three-quarters (3/4) of the directors comprising
the Incumbent Board (either by a specific vote or by
approval of the proxy statement of the Company in which
such person is named as a nominee for director without
objection to such nomination) shall be, for purposes of
this Plan, considered as though such person were a
member of the Incumbent Board.
56
b) Background. Upon a Change In Control: (i) the
terms of this paragraph 8 shall immediately become
operative, without further action or consent by any
person or entity; (ii) all terms, conditions,
restrictions, and limitations in effect on any
participant's benefit accrued as of the date of the
Change In Control, regardless of whether payments have
commenced to such participant ("Accrued Benefit"),
shall immediately lapse as of the date of such event;
(iii) no other terms, conditions, restrictions, and/or
limitations shall be imposed upon any Accrued Benefit
on or after such date, and in no circumstance shall an
Accrued Benefit be forfeited on or after such date;
(iv) all Accrued Benefits shall automatically become
one hundred percent (100%) vested immediately.
c) Valuation of Benefit. Upon a Change In Control, a
participant's benefit shall be determined using the
annual retainer in effect on the date the Change In
Control occurs.
d) Payment of Benefit. Upon a Change In Control, any
participant, whether or not he/she is still a director
of the Company, shall be paid his/her Accrued Benefit
in a single lump-sum cash payment equal to the present
value of the Accrued Benefit. If a participant is
receiving payment of his/her Accrued Benefit at the time
of the Change In Control, the remaining portion of such
Accrued Benefit shall be paid in a single lump-sum cash
payment equal to the present value of the remaining
benefit. Payment of the Accrued Benefit shall be made
as soon as practical but in no event later than 90 days
after the Change In Control. Present value
calculations shall be made by an independent actuary
selected by the Company.
e) Miscellaneous. Upon a Change In Control, no
action, including, but not by way of limitation, the
amendment, suspension, or termination of the Plan,
shall be taken which would affect the rights of any
participant or the operation of the Plan with respect
to any Accrued Benefit to which the participant may
have become entitled hereunder on or prior to the date
of such action or as a result of such Change In
Control.
57
Exhibit (10) C.
1982 EASTMAN KODAK COMPANY
EXECUTIVE DEFERRED COMPENSATION PLAN
Amended and Restated
Effective as of October 15, 1995
58
1982 Eastman Kodak Company
Executive Deferred Compensation Plan
Table of Contents
Section Page
Preamble 60
Section 1. Definitions 60
Section 2. Compensation Level 62
Section 3. Deferral of Compensation 62
Section 4. Time of Election Deferral 63
Section 4.1 In General 63
Section 4.2 Newly Eligible Employees 63
Section 5. Hypothetical Investments 63
Section 5.1 Deferred Compensation Account 63
Section 5.2 Stock Account 63
Section 6. Manner of Electing Deferral 64
Section 7. Elections to Defer for A Fixed
Period During Employment 64
Section 8. Investment in the Stock Account 65
Section 8.1 Elections 65
Section 8.2 Election into the Stock Account 65
Section 8.3 Election out of the Stock Account 65
Section 8.4 Dividend Equivalents 65
Section 8.5 Stock Dividends 66
Section 8.6 Recapitalization 66
Section 8.7 Distributions 66
Section 8.8 Liquidation of Stock Account 67
Section 9. Payment of Deferred Compensation 67
Section 9.1 Background 67
Section 9.2 Manner of Payment 67
Section 9.3 Timing of Payments 67
Section 9.4 Valuation 67
Section 9.5 Termination of Employment 68
59
1982 Eastman Kodak Company
Executive Deferred Compensation Plan
Table of Contents Continued
Section Page
Section 10. Payment of Deferred Compensation After Death 68
Section 10.1 Stock Account 68
Section 10.2 Distribution 68
Section 11. Acceleration of Payment for Hardship 69
Section 12. Non-Competition Provision 69
Section 13. Participant's Rights Unsecured 69
Section 14. No Right to Continued Employment 69
Section 15. Statement of Account 69
Section 16. Assignability 70
Section 17. Deductions 70
Section 18. Administration 70
Section 18.1 Responsibility 70
Section 18.2 Authority of the Compensation Committee 70
Section 18.3 Discretionary Authority 70
Section 18.4 Delegation of Authority 70
Section 19. Amendment 70
Section 20. Governing Law 71
Section 21. Diconix Deferred Compensation 71
Section 22. Change in Control 71
Section 22.1 Background 71
Section 22.2 Acceleration of Payment Upon Change In Control 71
Section 22.3 Amendment On or After Change In Control 71
Section 23. Severance Payments 71
Section 24. Compliance With Securities Laws 72
Schedule A 73
60
1982 EASTMAN KODAK COMPANY
EXECUTIVE DEFERRED COMPENSATION PLAN
Preamble. The 1982 Eastman Kodak Company Executive Deferred
Compensation Plan is an unfunded non-qualified deferred
compensation arrangement for eligible executives of Eastman
Kodak Company and certain of its subsidiaries effective for
compensation earned in 1982 and later years. Under the
Plan, each Eligible Employee is annually given an
opportunity to elect to defer payment of part of his or her
compensation earned during the year following his or her
election.
Section 1. Definitions.
Section 1.1. "Account" means the Deferred Compensation
Account or the Stock Account.
Section 1.2. "Board" means Board of Directors of
Kodak.
Section 1.3. "Change in Control" means a change in
control of Kodak of a nature that would be required to
be reported (assuming such event has not been
"previously reported") in response to Item 1(a) of the
Current Report of Form 8-K, as in effect on August 1,
1989, pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act");
provided that, without limitation, a Change in Control
shall be deemed to have occurred at such time as (i)
any "person" within the meaning of Section 14(d) of the
Exchange Act is or has become the "beneficial owner" as
defined in Rule 13d-3 under the Exchange Act, directly
or indirectly, of 25% or more of the combined voting
power of the outstanding securities of Kodak ordinarily
having the right to vote at the election of directors
("Voting Securities"), or (ii) individuals who
constitute the Board of Directors of Kodak on August 1,
1989 (the "Incumbent Board") have ceased for any reason
to constitute at least a majority thereof, provided
that any person becoming a director subsequent to
August 1, 1989 whose election, or nomination for
election by Kodak's stockholders, was approved by a
vote of at least three-quarters (3/4) of the directors
comprising the Incumbent Board (either by a specific
vote or by approval of the proxy statement of the
Company in which such person is named as a nominee for
director without objection to such nomination) shall
be, for purposes of this clause (ii), considered as
though such person were a member of the Incumbent
Board.
Section 1.4. "Common Stock" means the common stock of
Kodak.
Section 1.5. "Company" means Kodak and its United
States subsidiaries listed on Schedule A.
61
Section 1.6. "Compensation Committee" shall mean the
Executive Compensation and Development Committee of the
Board.
Section 1.7. "Deferrable Amount" means an amount equal
to the excess of the Eligible Employee's individual
annual salary rate as of August 1 of any year over the
minimum compensation level established by the
Compensation Committee of the Board.
Section 1.8. "Deferred Compensation Account" means the
account established by the Company for each Participant
for compensation deferred pursuant to this Plan. The
maintenance of individual Deferred Compensation
Accounts is for bookkeeping purposes only.
Section 1.9. "Eligible Employee" means an employee of
the Company employed in the United States whose
individual annual salary rate as of August 1 is equal
to or greater than the eligibility compensation level
established by the Compensation Committee. Eligible
Employee shall also include an employee of Kodak or any
subsidiary of Kodak selected annually by the
Compensation Committee whose individual annual salary
rate as of August 1 is equal to or greater than the
eligibility compensation level established by the
Compensation Committee. However, in no event shall a
non-resident alien be eligible to participate in this
Plan. Any employee who becomes eligible to participate
in this Plan and in a future year does not qualify as
an Eligible Employee solely because his or her
individual annual salary rate as of August 1 is less
than the eligibility compensation level, shall
nevertheless be eligible to participate in such year.
Section 1.10. "Enrollment Period" means the period
designated by the Compensation Committee each year,
provided however, that such period shall not commence
prior to August 1 and shall end on or before the last
business day before the last Sunday in December of each
year.
Section 1.11. "Interest Rate" means the base rate, as
reported in the "Money Rates" section of the Wall
Street Journal, on corporate loans posted by at least
75% of the nation's 30 largest banks (known as the
"Prime Rate").
Section 1.12. "Kodak" means Eastman Kodak Company.
Section 1.13. "Market Value" means the mean between
the high and low at which the Common Stock trades on
the New York Stock Exchange as quoted in the New York
Stock Exchange Composite Transactions as published in
the Wall Street Journal on the day for which the
determination is to be made, or if such day is not a
trading day, the immediately preceding day.
Section 1.14. "Plan" means the 1982 Eastman Kodak
Company Executive Deferred Compensation Plan as adopted
by the Board and amended.
62
Section 1.15. "Participant" means an Eligible Employee
who elects for one or more years to defer compensation
pursuant to this Plan. All SOG Participants are
Participants.
Section 1.16. "SOG Participant" means a Participant
who is, or was formerly, subject to the Guidelines for
Senior Management Ownership of Eastman Kodak Company
Stock as approved by the Compensation Committee.
Section 1.17. "Stock Account" means the account
established by the Company for each SOG Participant, the
performance of which shall be measured by reference to
the Market Value of Common Stock. The maintenance of
individual Stock Accounts is for bookkeeping purposes
only.
Section 1.18. "Valuation Date" means, with regards to a
Participant's Deferred Compensation Account, the last
business day of each calendar month and, with regards
to a SOG Participant's Stock Account, the last business
day of each calendar month.
Section 2. Compensation Level. Each year the
Compensation Committee shall select an eligibility
compensation level and a minimum compensation level
prior to the commencement of the Enrollment Period.
Section 3. Deferral of Compensation. An Eligible
Employee may elect, in accordance with the time
requirements established under Section 4 below, to defer
receipt of one or more of the following to his or her
Deferred Compensation Account:
1) all or any portion of his or her Deferrable
Amount to be earned during the immediately
succeeding calendar year;
2) all or any portion of his or her Award, if any,
under the Wage Dividend Plan payable in the
immediately succeeding calendar year; and
3) all or any portion of any other compensation
identified by the Compensation Committee.
An Eligible Employee may not defer the receipt of any
amounts to his or her Stock Account.
A Participant in this Plan need not participate in the
Eastman Kodak Employees' Savings and Investment Plan. No
deferral shall be made of any compensation payable after
termination of employment.
63
Section 4. Time of Election of Deferral.
Section 4.1. In General. Except as set forth in
Section 4.2, an Eligible Employee who wishes to
defer compensation must irrevocably elect to do so
during the Enrollment Period immediately preceding
the calendar year during which such compensation
is paid. Elections made during the Enrollment
Period shall be effective the first day of the
calendar year immediately following the Enrollment
Period. Elections shall be made annually.
Section 4.2. Newly Eligible Employees. An
Eligible Employee who is hired by the Company
during a calendar year may elect to defer
compensation earned during the remainder of such
year by filing an election in accordance with the
terms of this Section 4.2. Such election must be
filed by the Eligible Employee with the
Compensation Committee within ten business days of
the first day of the Eligible Employee's
employment with the Company. Notwithstanding any
provision of this Plan to the contrary, such
election shall only be effective with respect to
the Eligible Employee's: (i) base salary,
beginning with the first pay period following the
pay period in which the election is filed with the
Compensation Committee; and (ii) any award to
which he or she may be entitled under the
Management Variable Compensation Plan, or any
successor plan thereto, for services performed
during the calendar year of his or her hire. By
way of an administrative rule, the Compensation
Committee may impose such additional requirements
upon a newly Eligible Employee's election,
including, but not limited to, a minimum level of
deferral, as it determines in the exercise of its
sole and absolute discretion.
Section 5. Hypothetical Investments.
Section 5.1. Deferred Compensation Account. Amounts
in a Participant's Deferred Compensation Account are
hypothetically invested in an interest bearing account
which bears interest computed at the Interest Rate,
compounded monthly.
Section 5.2. Stock Account. Amounts in a SOG
Participant's Stock Account are hypothetically invested
in units of Common Stock. Amounts transferred to a
Stock Account are recorded as units of Common Stock,
and fractions thereof, with one unit equating to a
single share of Common Stock. Thus, the value of one
unit shall be the Market Value of a single share of Common
Stock. The use of units is merely a bookkeeping
convenience; the units are not actual shares of Common
Stock. The Company will not reserve or otherwise set
aside any Common Stock for or to any Stock Account.
64
Section 6. Manner of Electing Deferral. An Eligible
Employee may elect to defer compensation by executing
and returning to the Compensation Committee a deferred
compensation form provided by Kodak. The form shall
indicate: (1) the amount of the Deferrable Amount to be
deferred; (2) whether the deferral is to be at the same
rate throughout the year, or at one rate for part of the
year and at a second rate for the remainder of the year;
(3) whether or not the wage dividend eligible to be
deferred is to be deferred; and (4) the portion of any
other compensation identified by the Compensation
Committee to be deferred.
Amounts to be deferred shall be credited to the
Participant's Deferred Compensation Account as follows:
1) Deferrable Amount shall be credited
each pay period on the date such amount
is otherwise payable;
2) wage dividend shall be credited on
the date such amount is otherwise
payable;
and
3) any other compensation shall be
credited on the date such amount is
otherwise payable.
Section 7. Elections to Defer For a Fixed Period During
Employment. A Participant may elect to defer receipt of his
or her compensation for a fixed number of years, no less
than 5, provided he or she continues as an employee of the
Company during the period of deferral. Any such election
shall be made during the Enrollment Period on the deferred
compensation form referenced in Section 6 above. If such
Participant ceases to be an employee of the Company prior to
the end of the fixed period, Section 9 shall govern the
payment of his or her Accounts.
If a Participant has elected to defer receipt of his or her
compensation for a fixed number of years, payment of such
amount shall be made in cash in a single lump-sum on the
fifth business day in March in the year following the
termination of the deferral period. The amount of the lump-
sum due the Participant shall be valued as of the Valuation
Date in February in the year following the termination of
the deferral period.
65
Section 8. Investment in the Stock Account.
Section 8.1. Elections. A SOG Participant may direct
that all or any portion, designated as a whole dollar
amount, of the existing balance of one of his or her
Accounts be transferred to his or her other Account,
effective as of the close of business on the last day
of any calendar month (hereinafter the election's
"Effective Date"), by filing a written election with
the Compensation Committee on or prior to such date.
Notwithstanding the preceding sentence of this Section
8.1, a SOG Participant may not transfer to his or her
Stock Account any amount subject to an election to
defer for a fixed number of years pursuant to Section
7, nor may he or she transfer to his or her Stock
Account any interest that has accrued on such amount.
Section 8.2. Election into the Stock Account. If a
SOG Participant elects pursuant to Section 8.1 to
transfer an amount from his or her Deferred
Compensation Account to his or her Stock Account,
effective as of the election's Effective Date, (i) his
or her Stock Account shall be credited with that number
of units of Common Stock, and fractions thereof,
obtained by dividing the dollar amount elected to be
transferred by the Market Value of the Common Stock on
the Valuation Date immediately preceding the election's
Effective Date; and (ii) his or her Deferred
Compensation Account shall be reduced by the amount
elected to be transferred.
Section 8.3. Election out of the Stock Account. If a
SOG Participant elects pursuant to Section 8.1 to
transfer an amount from his or her Stock Account to his
or her Deferred Compensation Account, effective as of
the election's Effective Date, (i) his or her Deferred
Compensation Account shall be credited with a dollar
amount equal to the amount obtained by multiplying the
number of units to be transferred by the Market Value
of the Common Stock on the Valuation Date immediately
preceding the election's Effective Date; and (ii) his
or her Stock account shall be reduced by the number of
units elected to be transferred.
Section 8.4. Dividend Equivalents. Effective as of
the payment date for each cash dividend on the Common
Stock, additional units of Common Stock shall be
credited to the Stock Account of each SOG Participant
who had a balance in his or her Stock Account on the
record date for such dividend. The number of units
that shall be credited to the Stock Account of such a
SOG Participant shall be computed by multiplying the
dollar value of the dividend paid upon a single share
of Common Stock by the number of units of Common Stock
held in the SOG Participant's Stock Account on the
record date for such dividend and dividing the product
thereof by the Market Value of the Common Stock on the
payment date for such dividend.
66
Section 8.5. Stock Dividends. Effective as of the
payment date for each stock dividend (as defined in
Section 305 of the Internal Revenue Code of 1986) on the
Common Stock, additional units of Common Stock shall be
credited to the Stock Account of each SOG Participant
who had a balance in his or her Stock Account on the
record date for such dividend. The number of units that
shall be credited to the Stock Account of such a SOG
Participant shall equal the number of shares of Common
Stock which the SOG Participant would have received as
stock dividends had he or she been the owner on the
record date for such stock dividend of the number of
shares of Common Stock equal to the number of units
credited to his or her Stock Account on such record
date. To the extent the SOG Participant would have also
received cash, in lieu of fractional shares of Common
Stock, had he or she been the record owner of such
shares for such stock dividend, then his or her Stock
Account shall also be credited with that number of
units, or fractions thereof, equal to such cash amount
divided by the Market Value of the Common Stock on the
payment date for such dividend.
Section 8.6. Recapitalization. If Kodak undergoes a
reorganization as defined in Section 368 (a) of the
Internal Revenue Code of 1986, the Compensation
Committee may, in its sole and absolute discretion, take
whatever action it deems necessary, advisable or
appropriate with respect to the Stock Accounts in order
to reflect such transaction, including, but not limited
to, adjusting the number of units credited to a SOG
Participant's Stock Account.
Section 8.7. Distributions. Amounts in respect of
units of Common Stock shall be distributed in cash in
accordance with Sections 7, 9, 10, 11 and 22. For
purposes of a distribution pursuant to Section 7, 9,
10, 11 or 22, the number of units to be distributed
from a SOG Participant's Stock Account shall be valued
by multiplying the number of such units by the Market
Value of the Common Stock as of the Valuation Date
immediately preceding the date such distribution is to
occur. Pending the complete distribution under Section
9.2 or liquidation under Section 8.8 of the Stock
Account of a SOG Participant who has terminated his or
her employment with the Company, the SOG Participant
shall continue to be able to make elections pursuant to
Sections 8.2 and 8.3 and his or her Stock Account shall
continue to be credited with additional units of Common
Stock pursuant to Sections 8.4, 8.5, and 8.6.
67
Section 8.8. Liquidation of Stock Account. The
provisions of this Section 8.8 shall be applicable if
on the second anniversary of the SOG Participant's
retirement or, if earlier, termination of employment
from the Company, the SOG Participant has a balance
remaining in his or her Stock Account. In such case,
effective as of the first day of the first calendar
month immediately following the date of such second
anniversary, the entire balance of the SOG
Participant's Stock Account shall automatically be
transferred to his or her Deferred Compensation Account
and, he or she shall thereafter be ineligible to
transfer any amounts to his or her Stock Account. For
purposes of valuing the units of Common Stock subject
to such a transfer, the method described in Section 8.3
shall be used.
Section 9. Payment of Deferred Compensation.
Section 9.1. Background. No withdrawal may be made
from a Participant's Accounts except as provided in
this Section 9 and Sections 7, 10, 11, and 22.
Section 9.2. Manner of Payment. Payment of a
Participant's Accounts shall be made at the sole
discretion of the Committee in a single sum or in
annual installments. The maximum number of
installments is ten. All payments from the Plan shall
be made in cash.
Section 9.3. Timing of Payments. Payments shall be
made on the fifth business day in March and shall
commence in any year designated by the Compensation
Committee up through the tenth year following the year
in which the Participant retires, becomes disabled, or
for any other reason, ceases to be an employee of Kodak
or any subsidiary of Kodak, but in no event later than
the year the Participant reaches age 71.
Section 9.4. Valuation. The amount of each payment
shall be equal to the value, as of the immediately
preceding Valuation Date, of the Participant's
Accounts, divided by the number of installments
remaining to be paid. If payment of a Participant's
Accounts is determined by the Compensation Committee to
be paid in installments and the Participant has a
balance in his or her Stock Account at the time of the
payment of an installment, the amount that shall be
distributed from his or her Stock Account shall be the
amount obtained by multiplying the total amount of the
installment determined in accordance with the
immediately preceding sentence by the percentage
obtained by dividing the balance in the Stock Account
as of the immediately preceding Valuation Date by the
total value of the Participant's Accounts as of such
date. Similarly, in such case, the amount that shall
be distributed from the Participant's Deferred
Compensation Account shall be the amount obtained by
multiplying the total amount of the installment
determined in accordance with the first sentence of this
Section 9.4 by the percentage obtained by dividing the
balance in the Deferred Compensation Account as of the
immediately preceding Valuation Date by the total value
of the Participant's Accounts as of such date.
68
Section 9.5. Termination of Employment. Anything
herein to the contrary notwithstanding, Participants
who cease to be employed by Kodak or any Subsidiary of
Kodak and are employed by Eastman Chemical Company or
one of its subsidiaries in connection with the
distribution of the common stock of Eastman Chemical
Company to the shareholders of Kodak, shall not be
deemed to have terminated employment for purposes of
this Plan.
Section 10. Payment of Deferred Compensation After Death.
If a Participant dies prior to complete payment of his or her
Accounts, the provisions of this Section 10 shall become
operative.
Section 10.1. Stock Account. Effective as of the date
of a SOG Participant's death, the entire balance of his
or her Stock Account shall be transferred to his or her
Deferred Compensation Account. For purposes of valuing
the units of Common Stock subject to such a transfer,
the deceased SOG Participant's Deferred Compensation
Account shall be credited with a dollar amount equal to
the amount obtained by multiplying the number of units
in the deceased SOG Participant's Stock Account at the
time of his or her death by the Market Value of the
Common Stock on the date of his or her death.
Thereafter, no amounts in the deceased SOG
Participant's Deferred Compensation Account shall be
eligible for transfer to the deceased SOG Participant's
Stock Account by any person, including, but not by way
of limitation, the deceased SOG Participant's
beneficiary or legal representative.
Section 10.2. Distribution. The balance of the
Participant's Accounts, valued as of the Valuation Date
immediately preceding the date payment is made, shall
be paid in a single, lump-sum payment to: (1) the
beneficiary or contingent beneficiary designated by the
Participant on forms supplied by the Compensation
Committee; or, in the absence of a valid designation of
a beneficiary or contingent beneficiary, (2) the
Participant's estate within 30 days after appointment
of a legal representative of the deceased Participant.
69
Section 11. Acceleration of Payment for Hardship. Upon
written approval from Kodak's Chairman of the Board (the
Compensation Committee, in the case of a request from the
Chairman of the Board) a Participant, whether or not he or
she is still employed by Kodak or any subsidiary of Kodak,
may be permitted to receive all or part of his or her
Accounts if the Chairman of the Board (or the Compensation
Committee, when applicable) determines that an emergency
event beyond the Participant's control exists which would
cause such Participant severe financial hardship if the
payment of his or her Accounts were not approved. Any such
distribution for hardship shall be limited to the amount
needed to meet such emergency. If such a distribution
occurs while the Participant is employed by Kodak or any
subsidiary of Kodak, any election to defer compensation for
the year in which the Participant receives a hardship
withdrawal shall be ineffective as to compensation earned for
the pay period following the pay period during which the
withdrawal is made and thereafter for the remainder of such
year and shall be ineffective as to any wage dividend or any
other compensation elected to be deferred for such year.
Section 12. Non-Competition Provision. If a Participant,
without the written consent of Kodak, engages either
directly or indirectly, in any manner or capacity, as
principal, agent, partner, officer, director, employee, or
otherwise, in any business or activity competitive with the
business conducted by Kodak or any subsidiary of Kodak,
while a balance remains credited to his or her Account, the
Company may, in its sole discretion, pay to the Participant
the balance credited to his or her Deferred Compensation
Account and/or Stock Account.
Section 13. Participant's Rights Unsecured. The amounts
payable under the Plan shall be unfunded, and the right of
any Participant or his or her estate to receive any payment
under the Plan shall be an unsecured claim against the
general assets of the Company. No Participant shall have
the right to exercise any of the rights or privileges of a
shareholder with respect to the units credited to his or her
Stock Account.
Section 14. No Right to Continued Employment.
Participation in the Plan shall not give any employee any
right to remain in the employ of the Company. The Company
reserves the right to terminate any Participant at any
time.
Section 15. Statement of Account. Statements will be
sent no less frequently than annually to each Participant or
his or her estate showing the value of the Participant's
Accounts.
70
Section 16. Assignability. Neither the Participant nor
the Company shall have the right to assign any rights or
obligations under the Plan. However, the Plan shall inure
to the benefit of and be binding upon the successors of the
Company.
Section 17. Deductions. The Company will withhold to the
extent required by law all applicable income and employment
taxes from amounts paid under the Plan.
Section 18. Administration.
Section 18.1. Responsibility. The Compensation
Committee shall have total and exclusive responsibility
to control, operate, manage and administer the plan in
accordance with its terms.
Section 18.2. Authority of the Compensation Committee.
The Compensation Committee shall have all the authority
that may be necessary or helpful to enable it to
discharge its responsibilities with respect to the
Plan. Without limiting the generality of the preceding
sentence, the Compensation Committee shall have the
exclusive right: to interpret the Plan, to determine
eligibility for participation in the Plan, to decide
all question concerning eligibility for and the amount
of benefits payable under the Plan, to construe any
ambiguous provision of the Plan, to correct any
default, to supply any omission, to reconcile any
inconsistency, and to decide any and all questions
arising in the administration, interpretation, and
application of the Plan.
Section 18.3. Discretionary Authority. The
Compensation Committee shall have full discretionary
authority in all matters related to the discharge of
its responsibilities and the exercise of its authority
under the Plan including, without limitation, its
construction of the terms of the Plan and its
determination of eligibility for participation and
benefits under the Plan. It is the intent of Plan that
the decisions of the Compensation Committee and its
action with respect to the Plan shall be final and
binding upon all persons having or claiming to have any
right or interest in or under the Plan and that no such
decision or action shall be modified upon judicial
review unless such decision or action is proven to be
arbitrary or capricious.
Section 18.4. Delegation of Authority. The
Compensation Committee may delegate some or all of its
authority under the Plan to any person or persons
provided that any such delegation be in writing.
Section 19. Amendment. The Plan may at any time or from
time to time be amended, modified, or terminated by the
Board or by the Benefit Plans Committee of Kodak. However,
no amendment, modification, or termination shall, without
the consent of a Participant, adversely affect such
Participant's accruals in his or her Accounts.
71
Section 20. Governing Law. The Plan shall be
construed, governed and enforced in accordance with the
law of New York State, except as such laws are preempted by
applicable federal law.
Section 21. Diconix Deferred Compensation. The deferred
compensation accounts maintained by Research Boulevard
Realty Co., Inc. (formerly Diconix, Inc.) pursuant to the
Diconix, Inc. Deferred Compensation Plan shall be treated as
Deferred Compensation Accounts under this Plan and shall be
subject to all the terms and conditions of this Plan.
Section 22. Change in Control.
Section 22.1. Background. The terms of this Section
22 shall immediately become operative, without further
action or consent by any person or entity, upon a
Change in Control, and once operative shall supersede
and control over any other provisions of this Plan.
Section 22.2. Acceleration of Payment Upon Change In
Control. Upon the occurrence of a Change in Control,
each Participant, whether or not he or she is still
employed by Kodak or any subsidiary of Kodak, shall be
paid in a single, lump-sum cash payment the balance of
his or her Accounts as of the Valuation Date
immediately preceding the date payment is made. Such
payment shall be made as soon as practicable, but in no
event later than 90 days after the date of the Change
in Control.
Section 22.3. Amendment On or After Change In Control.
On or after a Change in Control, no action, including,
but not by way of limitation, the amendment, suspension
or termination of the Plan, shall be taken which would
affect the rights of any Participant or the operation
of this Plan with respect to the balance in the
Participant's Accounts.
Section 23. Severance Payments.
With the exception of Sections 1, 13, 14, 16, 17, 18, 19 and
20 hereof, the provisions of this Section 23 shall operate
independent of any other Sections of this Plan.
Subject to the terms and conditions established in this
Section 23, the Chief Executive Officer of the Company may
award severance payments under the Plan to certain Eligible
Employees who terminate their employment from the Company.
The classification of Eligible Employees who are eligible
for such severance payments shall be limited to those
Eligible Employees who are officers of the Company. The
amount of any such severance payment shall be determined by
the Chief Executive Officer with reference to the Eligible
Employee's base salary at the time of his or her termination
of employment. The Chief Executive Officer shall have the
sole discretion to determine the timing, manner of payment
(e.g., lump-sum or installments) and terms, conditions and
limitations of any such severance payment, except that all
such payments shall be made in cash. Any award made by the
Chief Executive Officer pursuant to the provisions of this
paragraph shall be evidenced by a written agreement signed
by the Chief Executive Officer.
72
Section 24. Compliance with Securities Laws. The
Compensation Committee may, from time to time, impose
additional, or modify or eliminate existing, Plan
restrictions and requirements, including, but not by way
of limitation, the restrictions regarding a SOG
Participant's ability to elect into and out of his or her
Stock Account under Sections 8.2 and 8.3 or the requirement
of an automatic transfer pursuant to Section 10.1, as it
deems necessary, advisable or appropriate in order to comply
with applicable federal and state securities laws. All such
restrictions shall be accomplished by way of written
administrative guidelines adopted by the Compensation
Committee.
73
Schedule A
Eastman Chemical Products, Inc.
Eastman Chemical International Ltd.
Eastman Gelatine Corporation
Eastman Kodak International Capital Company, Inc.
Holston Defense Corporation
Kodak Processing Laboratory, Inc.
74
Exhibit (10) D.
KODAK UNFUNDED RETIREMENT INCOME PLAN
Approved July 27, 1990; Effective September 1, 1990
Amended December 13, 1990; Effective January 1, 1991
Amended December 20, 1991; Effective December 1, 1991
Amended December 20, 1991; Effective January 1, 1992
Amended December 29, 1995; Effective September 1, 1990
Amended December 29, 1995; Effective October 1, 1994
Amended December 29, 1995; Effective January 1, 1995
75
KODAK UNFUNDED RETIREMENT INCOME PLAN
TABLE OF CONTENTS
PAGE
ARTICLE ONE Purpose of Plan 76
ARTICLE TWO Definitions 76
ARTICLE THREE Eligibility 77
ARTICLE FOUR Benefits 77
ARTICLE FIVE Administration 78
ARTICLE SIX Amendment and Termination 79
ARTICLE SEVEN Miscellaneous 79
76
KODAK UNFUNDED RETIREMENT INCOME PLAN
ARTICLE ONE
Purpose of Plan
1.1 This Plan implements the intent of providing retirement
benefits by means of both a funded and an unfunded
plan. This Plan is maintained primarily for the purpose
of providing deferred compensation for a select group of
management or highly compensated employees as described
in section 201(2) of the Employee Retirement Income
Security Act of 1974 and is designed to provide
retirement benefits payable out of the general assets
of the Company where benefits cannot be paid under the
Funded Plan because of Code section 401(a)(17) and the
provisions of the Funded Plan which implement such
section and/or because deferred compensation is ignored
in defining compensation for purposes of calculating
benefits under the Funded Plan.
ARTICLE TWO
Definitions
2.1 "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
2.2 "Company" shall mean Eastman Kodak Company, which
effective October 1, 1994 shall include the Nano
Systems division, and any subsidiary and/or affiliated
corporation which is a participating employer under the
Funded Plan other than those covered by Appendix I of
the Funded Plan, except where a specific reference is
made to a particular corporation.
2.3 "Effective Date" shall mean September 1, 1990.
2.4 "Employee" shall mean a participant in the Funded Plan.
2.5 "Funded Plan" shall mean the Kodak Retirement Income
Plan.
2.6 "KRIPCO" shall mean the Kodak Retirement Income Plan
Committee as described in the Funded Plan document.
2.7 "Plan" shall mean this Kodak Unfunded Retirement Income
Plan.
77
ARTICLE THREE
Eligibility
3.1 All Employees eligible to receive a benefit from the Funded
Plan shall be eligible to receive a benefit under this Plan if they
have deferred any portion of their compensation pursuant to a duly
authorized and executed deferred compensation agreement or plan and/or
their benefit cannot be fully provided by the Funded Plan due to the
compensation limitations imposed by Code section 401(a)(17).
ARTICLE FOUR
Benefits
4.1 Benefits due under this Plan shall be paid at such time or
times following the Employee's termination of employment or death as
the Company's Director of Compensation and Benefits, or his designee,
or in the absence or personal involvement of such Director or
designee, the Senior Vice President of Human Resources, may select, in
his sole discretion, from among the options available under the Funded
Plan.
4.2 The benefit payable under this Plan shall be the amount of the
retirement income benefit to which an Employee
would otherwise be entitled under the Funded Plan,
(i) if deferred compensation were included in the Funded
Plan's definitions of "Participating Compensation" and
"Retirement Annual Salary Rate";
(ii) if the provisions of section 401(a)(17) of the Code, as
expressed in the Funded Plan, were disregarded; and
(iii) if a minimum award at the target award ("C" level) under
the Eastman Kodak Company Management Annual Performance
Plan ("MAPP") is deemed included in the 1992
"Participating Compensation" of any such Employee who -
(a) is a part of the "Transition Workforce" under the
Kodak Resource Redeployment and Retirement Program,
(b) retires on or after May 1, 1992, and
(c) receives an actual award under the MAPP in 1992,
which is lower than the target award ("C" level);
78
less the combined amounts of the retirement income
benefit to which the Employee is entitled under the
Funded Plan and the retirement income benefit to which
such Employee is entitled under the Kodak Excess
Retirement Income Plan.
The "retirement income benefit to which the Employee is
entitled under the Funded Plan" generally means the
benefits actually payable to an Employee under the
Funded Plan; provided, however, that where the benefits
actually payable to an Employee under the Funded Plan
are reduced on account of a payment of all or a portion
of an Employee's benefits to a third party on behalf of
or with respect to an Employee (pursuant, for example,
to a domestic relations order), the "retirement income
benefit to which the Employee is entitled under the
Funded Plan" shall be deemed to mean the benefit that
would have been actually payable but for such payment
to a third party.
4.3 If an Employee's benefit from the Funded Plan is
subject to an actuarial reduction because of the time
when payment commences, his benefit from this Plan
shall also be actuarially reduced.
4.4 The benefits payable under this Plan shall be paid by
the Company each year out of its general assets and
shall not be otherwise funded.
4.5 If a Participant's benefit under the Funded Plan is
greater than it would otherwise be because of the
provisions of Section 5.06(d), the Participant's benefit
under this Plan shall be reduced by the amount of
such excess.
ARTICLE FIVE
Administration
5.1 This Plan shall be administered by KRIPCO in accordance
with its terms and purposes.
5.2 KRIPCO shall have full discretionary authority to
determine eligibility, to construe and interpret the
terms of the Plan, including the power to remedy
possible ambiguities, inconsistencies or omissions, or
to determine the benefits due each Employee from this
and the Funded Plan and shall cause them to be paid
accordingly.
79
5.3 The decisions made by and the actions taken by KRIPCO
in the administration of the Plan shall be final and
conclusive on all persons, and the members of KRIPCO
shall not be subject to individual liability with
respect to this Plan.
ARTICLE SIX
Amendment and Termination
6.1 While the Company intends to maintain this Plan in
conjunction with the Funded Plan for as long as
necessary, the Company reserves the right to amend
and/or terminate it at any time for whatever reasons it
may deem advisable.
6.2 Notwithstanding the preceding Section, however, the
Company hereby makes a contractual commitment to pay
the benefits accrued under this Plan to the extent it
is financially capable of meeting such obligation.
ARTICLE SEVEN
Miscellaneous
7.1 Nothing contained in this Plan shall be construed as a
contract of employment between the Company and an
Employee, or as a right of any Employee to be continued
in the employment of the Company, or as a limitation of
the right of the Company to discharge any of its
Employees, with or without cause.
7.2 The benefits payable under this Plan are nonassignable.
7.3 This Plan shall be governed by the laws of the State of
New York except where preempted by the Employee Retirement
Income Security Act of 1974.
80
Exhibit (10) I.
BENEFIT PLAN 1I.03
Effective Date: January 1, 1994
Restated and Amended: November 1, 1995
Supplementary Group Life Insurance Plan
Article Page
1. Introduction ............................................. 81
2. Definitions .............................................. 81
3. Eligibility .............................................. 87
4. Amount of Coverage and Cost .............................. 88
5. Beneficiaries ............................................ 90
6. Irrevocable Assignment ................................... 91
7. Contributions ............................................ 92
8. Claims and Payment of Benefits ........................... 93
9. Maximum Benefits ........................................ 93
10. Coverage--Continuation, Termination, Conversion, On
Return to Work .......................................... 93
11. Administration and General Provisions ................... 98
81
1. INTRODUCTION
The SGLI Plan is designed to help Kodak men and women meet burial
and other last expenses (including bills unpaid at time of death)
and to help provide for the financial security of their surviving
dependents.
2. DEFINITIONS
2.1 Adjusted Employment Date
"Adjusted Employment Date" means an employment date which has been
adjusted by the Company, e.g., to reflect reinstatement of prior
Service upon return to active employment following the termination
of employment. When no termination of employment has occurred,
Adjusted Employment Date is generally the same as Current
Employment Date.
2.2 Current Employment Date
"Current Employment Date" means the first day of work in the latest
period of Continuous Service.
2.3 Average Weekly Hours
"Average Weekly Hours" means a weekly average obtained by dividing
all hours worked plus all paid absence hours in the previous 52
weeks by weeks out of the last 52 weeks where work was performed
or a paid absence occurred.
2.4 College Cooperative Intern
"College Cooperative Intern" is a college student pursuing studies
of interest to Kodak and who generally works a full-time schedule
on an alternate work/school block basis.
2.5 Company
"Company" is Eastman Kodak Company and the following subsidiaries:
Eastman Gelatine Corporation; Eastman Kodak International Capital
Company, Inc.; and Kodak Caribbean, Limited.
2.6 Disabled Person
"Disabled Person" is any person who is approved for benefits under
the Kodak Long Term Disability Plan or the predecessor Total and
Permanent Disability Plan.
82
2.7 Employee
"Employee" means any person employed by the Company in the
United States and compensated for services in the form of an
hourly wage or salary. The term "Employee" also includes
certain persons employed outside the United States as
determined by the Plan Administrator.
An Employee shall continue to be treated as an Employee for
all purposes under the Plan while the Employee is receiving
short-term disability or workers' compensation benefits, or
on Leave of Absence other than educational Leave of Absence,
subject to any special rules set forth in the Plan.
For purposes of clarification only, and not to limit the
generality of the foregoing definition, the term "Employee" does
not include, among other persons: Limited Service Employee,
independent contractors, leased employees (within the meaning of
Section 414(n) of the Internal Revenue Code of 1986, or persons
whose employment has terminated on account of retirement, long-
term disability or educational Leave of Absence.
2.8 Family Protection Program (FPP)
"Family Protection Program" (or "FPP") means the Family Protection
Program (Benefit Plan No. 1I.04) which provides various employee
and dependent life insurances and postretirement survivor income
benefits to certain employees, retirees and LTD Recipients.
2.9 Insurance Annual Salary Rate
"IASR" or "Insurance Annual Salary Rate" means:
(a) An Employee's individual (hourly) rate in effect on a
particular day, plus the average shift allowance in effect
on the same day, multiplied by:
(1) 2,080 hours for:
(A) Regular Full-Time Employees
(B) Full-Time Supplementary Employees
(C) Full-Time Special Program Employees
(2) Moving average weekly hours in effect on that day (or
normal scheduled weekly hours up to 40 if the Employee had
not been employed for the full year immediately preceding
that day) multiplied by 52 for:
(A) Nonexempt Regular Part-Time Employees
(B) Nonexempt Part-Time Supplementary Employees
(C) Nonexempt Part-Time Special Program Employees
83
(3) Normal scheduled weekly hours in effect on that day
multiplied by 52 for:
(A) Exempt Regular Part-Time Employees
(B) Exempt Part-Time Supplementary Employees
(C) Exempt Part-Time Special Program Employees
(4) 1,040 hours for:
(A) College Cooperative Interns
(B) All Employees, other than regular part-time
physicians, whose moving average weekly hours or
normal scheduled hours is less than 20.
(b) An Employee's IASR is rounded to the nearest $100.
(c) When an Employee's employment classification changes
from a part-time class to a full-time class described
above, or from a full-time class to a part-time class
described above, the hours component of IASR is adjusted
as of the date of such reclassification for determining
benefits and premiums.
(d) Because the individual rate for certain commission-
eligible employees is reduced below the normal rate for
their applicable salary grade, IASR is adjusted by
multiplying the individual rate times the commission
calculating factor for the appropriate commission plan
specified in Kodak Commission Compensation Plan
(Compensation Plan No. 2C1).
(e) Because the base salary rate for each Employee eligible
for certain management performance incentives is reduced
below the normal rate for his applicable salary grade,
IASR is adjusted to reflect what the normal rate would
be in the absence of the reduction under the management
performance incentive arrangement.
2.10 Insurance Company
"Insurance Company" is Metropolitan Life Insurance Company, One
Madison Avenue, New York, New York 10010, and any other
Insurance Company which may issue one or more group policies to
Eastman Kodak Company for coverage under the SGLI Plan.
84
2.11 Key Employee
"Key Employee" is any Employee who meets the criteria of Key
Employee set forth in Section 416(i)(1)(A) of the Internal Revenue
Code.
2.12 Leave of Absence
"Leave of Absence" means a period of absence from work approved by
the Company under a leave of absence plan of the Company.
2.13 Limited Service Employee
"Limited Service Employee" is a person who is hired by the Company
for the specified purpose of meeting short-term needs of 900 hours
or less in any consecutive 12-month period and who is designated
as a Limited Service Employee when hired.
2.14 LTD Recipient
"LTD Recipient" means a person who is receiving benefits (or would
be entitled to receive benefits except for offsets) under the
Kodak Pre-Flex Long-Term Disability Plan (Benefit Plan 1D.02) or
the Kodak Long-Term Disability Plan (Benefit Plan 1D.04). LTD
Recipients who retire under a Pension Plan shall be treated as
Retirees (and not as LTD Recipients) for all purposes of the Plan.
2.15 Normal Retirement Age
"Normal Retirement Age" is 65 (60, in the case of Employees
employed as aircraft pilots on their 60th birthdays).
2.16 Normal Retirement Date
"Normal Retirement Date" is the first day of the calendar month
immediately following an Employee's or Disabled Person's 65th
birthday (60th birthday, in the case of an Employee employed as an
aircraft pilot).
2.17 Plan
"Plan" means this Supplementary Group Life Insurance.
2.18 Plan Administrator
"Plan Administrator" is the person authorized to control and
manage the operation and administration of the SGLI Plan. The
current Plan Administrator, who is also the "named fiduciary" as
defined in the Employee Retirement Income Security Act (ERISA), is
the Director, Employee Benefits, Eastman Kodak Company.
85
2.19 Regular Full-Time Employee
"Regular Full-Time Employee" is an Employee who does not fall into
another employment classification and who works a schedule of:
- 40 or more hours per week (shorter time periods pursuant
to local custom, where required by law, by Company needs,
or by the Employee's health); or
- Alternative work schedules such as alternating 36 and 48
hour workweeks comprised of 12-hour days.
2.20 Regular Part-Time Employee
"Regular Part-Time Employee" is an Employee who does not fall into
another employment classification and who works a regular schedule
of less than 40 hours per week.
2.21 Retiree
"Retiree" means a former employee who, at the time of his
termination of employment with the Company qualifies for an early
or normal retirement benefit under a pension plan of the Company,
whether or not he elects to receive such benefits, except that an
LTD Recipient is not a Retiree. The term "pension plan of the
Company" as used in the previous sentence means the Kodak
Retirement Income Plan (Benefit Plan No. 1R.01) or other
retirement plan of the Company that is a defined-benefit pension
plan intended to be qualified under Section 401 of the Internal
Revenue Code.
2.22 Service, Continuous Service, Adjusted Service
"Service," as used in this Plan, means the elapsed days, months,
and years since the Employee's Adjusted Employment Date.
"Continuous Service" is the period of elapsed days, months, and
years of Service which has not been interrupted since the
Employee's Current Employment Date, including but not limited to
Service with an Affiliate recognized by Kodak. The resumption of
employment immediately following a Leave of Absence, military
service, or the College Cooperative Intern program means that
Continuous Service has not been interrupted.
"Adjusted Service" is the aggregate of days, months, and years of
Service credit resulting from the linkage of the current span of
employment with one or more spans of prior Service which have
qualified for reinstatement. (Thirty days equate to one month;
twelve months equate to one year.) The qualification for Service
reinstatement is established by the leaving reason assigned to
the prior Service span. Within the controlled group of Kodak
corporations, Adjusted Service includes any service recognized by
any affiliated company unless preempted by contractual
agreements.
86
Furthermore, Service of certain Employees will be adjusted as
indicated in Appendix A.
Note that each Employee who was an active employee of Wilson & Geo. Meyer
& Co. on the day before the date he or she became an Employee, will be
credited with Service as though such person had been an Employee
during the entire period of his or her employment with Wilson & Geo. Meyer
& Co.
2.23 Special Program Employee
"Special Program Employee" includes the following:
1) High School Co-op. A "High School Co-op" is a high
school senior working a part-time schedule (normally 20
hours per week, but more hours may be worked during
vacation or school breaks, following graduation, or
where school conditions permit). A High School Co-op is
limited to 9 months of employment (a school year) except
where 12 months is needed in special situations.
2) High School Intern. A "High School Intern" is a high
school student working a full-time schedule during
summer vacations (including the summer immediately
following graduation), and is generally limited to 8
weeks of employment.
3) General Summer Employee. A "General Summer Employee" is
a person hired on a full-time or part-time basis for the
summer following the completion of at least one year of
college. Employment of any individual as a General
Summer Employee is limited to two summers.
4) EK Scholar. An "EK Scholar" is a two-year or four-year
college student employed on a full-time basis during the
summer or a school break whose tuition, housing, and
miscellaneous expenses may be paid for by Kodak.
5) PRIS2M. A "PRIS2M" is a third- or fourth-year high
school student with a mathematics and science major, who
generally works a part-time schedule (usually for 8
weeks).
6) Summer (College) Intern. A "Summer (College) Intern" is
a college student pursuing studies of interest to Kodak,
who generally works a full-time schedule during the
summer.
87
7) Teacher Intern. A "Teacher Intern" is a high school or
college teacher hired on a full-time basis, generally
for a minimum of 10 weeks up to the length of the summer
break.
8) DP2 Intern. A "DP2 Intern" is a disabled person working
full time in a 10-week training program.
2.24 Spouse
"Spouse" means that person who is married to the Subscriber under
the applicable law of the State in which the Subscriber resides.
2.25 Subscriber
"Subscriber" is an Employee or former Employee who is covered under
the SGLI Plan.
2.26 Supplementary Employee
"Supplementary Employee" is an Employee who is classified as a
Supplementary Employee by an agreement and works a full-time or
part-time schedule. The duration of employment with the Company is
expected to last no more than 2 years, at which time the individual
may be reclassified as a regular employee or terminated. The
termination date originally specified in the agreement may be
extended by the Company for a short duration for business reasons.
2.27 Supplementary Group Life Insurance (or "SGLI")
"Supplementary Group Life Insurance" (or "SGLI") means this Kodak
Supplementary Group Life Insurance Plan (Benefit Plan No. 1I.03),
as it may be amended.
3. ELIGIBILITY
The groups indicated below are eligible to participate in the SGLI
Plan:
a) Employees. Employees who:
- were employed by the Company on December 31, 1983;
- were age 55 or older on January 1, 1984;
- enrolled in SGLI before January 1, 1987; and
- had an annual salary at the time of enrollment
which equaled or exceeded the minimum amount
identified on the SGLI eligibility schedule issued
by the Plan Administrator.
88
b) LTD Recipients. LTD Recipients who were covered
under the SGLI Plan on the effective date of their
disability and have been covered on a continuous
basis since that date.
c) Retirees. Retirees who were covered under the SGLI
Plan on a continuous basis since the date which they
first became eligible for coverage through their
effective date of retirement. However, anyone who
was a Key Employee on or after January 1, 1984, and
who was not age 55 or older on that date may not
participate in the SGLI Plan after December 31,
1986.
4. AMOUNT OF COVERAGE AND COST
4.1 Coverage for Employees and LTD Recipients
The amount of SGLI for a covered Employee is 2.0 times his
IASR. The amount of coverage for any covered Employee will
never be reduced except in the case of a decrease in IASR
because of a general wage decrease.
If a covered Employee becomes an LTD Recipient, the amount of
coverage in force immediately before the effective date of
disability will be continued for the duration of the
disability.
4.2 Coverage for Retirees
If a Subscriber becomes a Retiree prior to age 65 following the
completion of 10 or more years of service, SGLI coverage will
be continued in full through age 65. The coverage in effect at
age 65 will be reduced in five equal decrements on the first of
the month following each of the Retiree's 66th through 70th
birthdays.
The amount of the reduction varies according to the Retiree's
years of service. The level of coverage at age 70 and later is
expressed as a percentage of the coverage in effect at age 65
as shown in the following table:
Coverage at Age 70
as a Percentage of
Years of Service Coverage at Age 65*
10 25%
11 27 1/2%
12 30%
13 32 1/2%
14 35%
15 37 1/2%
16 40%
17 42 1/2%
18 45%
19 47 1/2%
20 or more 50%
*Coverage in retirement will be based on the higher of:
(1) the amount of coverage at age 65, or
(2) the amount of coverage at retirement.
89
The higher of these two amounts will be multiplied by the
appropriate percentage from this column (the percentage used
is that corresponding to the Subscriber's years of service,
prorated for partial years).
If retirement occurs at or before age 65 following the completion
of 10 or more years of Service, beginning at age 66 the SGLI
coverage will be reduced each year in five equal decrements so
that coverage at age 70 will be as described in the above table.
If retirement occurs after age 65 following the completion of at
least 10 but less than 20 years of Service, effective as of the
date of retirement the SGLI coverage will be reduced to the level
which would then have been in effect had retirement occurred at
age 65.
For a retirement occurring after age 65 with the completion of 20
or more years of Service, the coverage in effect at retirement
will be reduced on the first of the month following each of the
Retiree's birthdays through age 70 in accordance with the
following table:
Ages Level Available
66 1.80 Times IASR
67 1.60 " "
68 1.40 " "
69 1.20 " "
70 & Over 1.00 " "
A Retiree with at least 5 but fewer than 10 years of Service as of
the date of retirement, the coverage will be reduced to $1,000
upon retirement; for those with fewer than 5 years of Service, the
coverage will be reduced to $500 upon retirement.
Coverage will end upon retirement if it has not been maintained
continuously since the date on which the Subscriber first became
eligible for coverage as an Employee.
4.3 Cost
SGLI is noncontributory for Retirees, LTD Recipients and, in some
cases, for eligible Employees as specified in Section 10.1.
90
4.4 Contribution Rate for Employees
For Subscriber/Employees (other than those specified in Section
10.1) who are age 60 or older, and for covered Subscriber/Key
Employees, regardless of age, the monthly cost of SGLI is 60 cents
per $1,000 of coverage. For other covered Employees under age 60,
the monthly cost of SGLI is 38 cents per $1,000 of coverage.
Contributions for a year are based on the Employee's IASR as of
July 1 of the prior year. (January 1 of the current year for
Caribbean Employees), and age as of January 1 of the current year.
4.5 IASR Used to Calculate Benefit
IASR used to calculate the benefit shall be the greater of:
a) IASR calculated as of the date of death; or
b) the applicable of the following:
(1) IASR calculated as of the later of: (A) July 1
immediately prior to the start of the Plan Year in
which death occurs, or (B) the date the Subscriber
becomes eligible for the coverage.
(2) in the case of a Subscriber who is on educational
Leave of Absence, IASR used to calculate total
Company and Subscriber contributions for the
coverage in effect as of the day immediately
preceding the first day of the educational Leave of
Absence.
(3) in the case of a Subscriber who is a Retiree or LTD
Recipient, the greater of: (A) IASR as of the date
such person became a Retiree or LTD Recipient
(whichever is applicable), or (B) IASR as of July 1
immediately prior to the commencement of the Plan
Year in which such date occurs.
5. BENEFICIARIES
5.1 Beneficiaries
A Subscriber may name beneficiaries for Plan benefits. Unless the
Subscriber designates otherwise, beneficiaries under the applicable
company-sponsored life insurance plan named below will also be the
designated beneficiaries under this Plan: Kodak Life Insurance
Plan (Benefit Plan No. 1I.06); Family Protection Program (Benefit
Plan 1I.01) (basic life insurance benefit); and, Kodak Group Life
Insurance Plan (Benefit Plan No. 1I.04).
The Subscriber can name one or more primary beneficiaries plus one
or more contingent beneficiaries. If a beneficiary dies before the
Subscriber dies, the rights and interest of that beneficiary
automatically terminate.
All beneficiary designations must be made on proper Company forms.
91
5.2 Changing a Beneficiary
A Subscriber can change his SGLI beneficiaries at any time without
the consent of those beneficiaries. All notices of beneficiary
change must be made on proper Company forms. When the notice of
change is received by the Company, it will take effect on the date
the notice was signed, whether or not the Subscriber is living at
the time such notice is received. If the notice is not dated, it
will take effect as of the date received by the Company. However,
both the Company and the Insurance Company are discharged from
liability if a previously named beneficiary is paid before the
Company receives a change-of-beneficiary form.
5.3 If No Beneficiary is Named
(a) Where There is No Assignment Under This Plan. Where a
Subscriber has not made an assignment in accordance with
Section 6, if there is no beneficiary, whether because
there is no valid beneficiary designation in effect or
because no designated beneficiary is living at the time
of the Subscriber's death, payment of the benefit will
be made:
(1) To the Subscriber's surviving Spouse;
(2) If no surviving Spouse, to the Subscriber's
surviving children in equal shares;
(3) If no surviving child, to the Subscriber's surviving
parents in equal shares; and
(4) If no surviving parent, to the Subscriber's estate.
(b) Where There Is An Assignment Under This Plan. Where a
Subscriber has made an assignment in accordance with
Section 6, if there is no beneficiary, whether because
there is no valid beneficiary designation in effect or
because no designated beneficiary is living at the time
of the Subscriber's death, payment of the benefit will
be made to the assignee.
6. IRREVOCABLE ASSIGNMENT
The Subscriber's rights of ownership in the SGLI coverage may be
assigned to a natural person or a trust for any purpose except as
security for a loan. An assignment must encompass all of the
Subscriber's rights under the Plan with respect to the benefits
assigned in a manner similar to assignment of an individual life
insurance policy. The assignment must be irrevocable. The
assignment will take effect when made on an approved form, properly
completed and submitted to and approved by the Insurance Company.
92
An assignee shall have all the rights under the Plan with respect
to the coverage assigned that were possessed by the Subscriber,
including, without limitation, the right to make and change a
beneficiary designation and the right to elect a benefit payment
option. Although an assignee shall not have the right to increase
assigned coverage, in the event coverage is increased, (e.g., as a
result of an increase in the Subscriber's IASR), that increased
coverage will be deemed to have been assigned.
7. CONTRIBUTIONS
7.1 First and Last Contribution
Subscriber contributions required for SGLI are taken from the
first full week of coverage through the end of the month in which
coverage terminates or, where coverage changes from contributory
to noncontributory, through the end of the final month of
contributory coverage.
7.2 Contribution Changes: IASR Initiated
a) Caribbean Employees. For Subscribers who are Employees
of Kodak Caribbean, Limited, a change in IASR effective
on January 1 of a Plan Year will result in an immediate
corresponding change in required contributions for
Supplementary Group Life Insurance coverage. A change
in IASR effective on any date after January 1 of a Plan
Year will result in a corresponding change in required
contributions for SGLI as of January 1 of the following
Plan Year.
b) Non-Caribbean Employees. For Subscribers who are
Employees other than Employees of Kodak Caribbean,
Limited, a change in IASR effective on July 1 will
result in a change in required contributions for
coverage effective January 1 of the following Plan
Year. A change in IASR effective on any date after
July 1 of a Plan Year will result in a corresponding
change in required contributions for SGLI as of January
1 of the second following Plan Year.
c) Change in Employment Classification. Notwithstanding
the foregoing, a change in IASR of any Subscriber
incident to a change in employment classification from
part-time to full-time or from full-time to part-time
will result in an immediate change in the required
contributions for SGLI.
93
8. CLAIMS AND PAYMENT OF BENEFITS
A claim must be filed on forms provided by the Insurance Company
and be accompanied by a certified copy of a death certificate.
Payment of Supplementary Group Life Insurance benefits shall be
made to the beneficiary in the form of a lump-sum or such other
form as may be made available by the Insurance Company provided
however, that life insurance benefits under $10,000.00 shall be
paid in lump-sum only. Any benefits payable to a minor shall be
paid to the legal guardian of the minor's property.
9. MAXIMUM BENEFITS
For subscribers to the Group Life Insurance/Survivor Benefit
Insurance Plans, the combined maximum benefit payable under the
Group Life Insurance Plan (Benefit Plan No. 1I.04), the Survivor
Benefit Insurance Plan (Benefit Plan No. 1I.05), and SGLI is
$1,000,000 with SGLI being limited to $500,000. If this combined
maximum is reached, coverage is reduced in the following
sequence:
a) Survivor Benefit Insurance
b) SGLI
c) Group Life Insurance
For subscribers to the Family Protection Program (FPP), the
combined maximum benefit payable for FPP's basic and optional
life insurance and SGLI is $3,000,000. If this combined maximum
is reached, coverage is reduced in the following sequence:
a) FPP's optional life insurance
b) SGLI
c) FPP's basic life insurance
10. COVERAGE -- CONTINUATION, TERMINATION, CONVERSION, ON
RETURN TO WORK
10.1 Coverage Continuation
a) Leave of Absence. Except in the case of an
educational Leave of Absence, where a Leave of Absence
is scheduled to last 6 months or less, the
Subscriber's contributions will be paid by the Company
and accumulated in arrears. That arrearage will be
recouped when the Subscriber returns to work through
increased withholdings at that time. The increase
will not exceed 100% of the regular Subscriber
contributions for the coverage. A Subscriber who does
not return to the Company at the end of the Leave of
Absence must reimburse the Company for any outstanding
arrearage. If reimbursement is not made in a timely
manner, the Company may exercise all the rights and
remedies it has as a creditor.
94
For an educational Leave of Absence of any
length, and for any other Leave of Absence
scheduled to last more than 6 months or which
actually lasts beyond 6 months, the Subscriber
shall be required to make direct periodic
contributions to continue contributory coverage
during the Leave of Absence. Where a Leave of
Absence scheduled for less than 6 months
extends beyond 6 months, the Subscriber shall
be required to commence direct periodic
contributions as of the earlier of (i) the date
the Leave of Absence is rescheduled to exceed 6
months, or (ii) the date the Leave of Absence
actually extends beyond 6 months. The direct
Subscriber contributions shall be made at such
times and in such manner as the Plan
Administrator shall determine.
The amount of contributions will change if SGLI
contribution rates or Subscriber coverage
levels (age-related) change during the Leave of
Absence. Also, maximum levels of coverage will
change on an age-related basis.
If a Subscriber who carried SGLI coverage
during a Leave of Absence fails to return to
work when the Leave of Absence expires,
coverage ends on the last day of the month in
which the Leave of Absence expires. If, before
the Leave of Absence expires, the Company
receives notification that the Subscriber does
not intend to return to work, coverage ends on
the last day of the month in which such
notification is received.
b) Layoff. SGLI coverage continues, on a
noncontributory basis, for four months after
the end of the month of layoff, provided that
the Subscriber is then eligible to receive
benefits payable under the Termination
Allowance Plan (Benefit Plan No. 1T.01).
Coverage shall be at the level in effect as of
the last day of the Subscriber's employment.
If a Subscriber receiving SGLI coverage on a
noncontributory basis following a layoff
returns to work as a Supplementary Employee,
the SGLI coverage will be continued on a
noncontributory basis while the Subscriber is
working as a Supplementary Employee but only
for the period of time that such coverage would
otherwise have been paid for by the Company had
the Subscriber continued on layoff. If the
Subscriber is otherwise reemployed by the
Company, he shall forfeit continuation of
coverage under this Section.
95
c) Short-Term Disability. Where the employment of
a Subscriber terminates upon the exhaustion of
benefits payable under the Kodak Short-Term
Disability Plan (Benefit Plan No. 1D.01) and the
Subscriber does not qualify for benefits under
the Kodak Long-Term Disability Plan (Benefit
Plan No. 1D.04), SGLI coverage continues on a
noncontributory basis until: (i) the last day of
the calendar month in which the Subscriber is
advised that long-term disability benefits are
denied, or if the Subscriber is not so advised,
(ii) the last day of the second calendar month
following the month in which employment
terminates. If the Subscriber is reemployed by
the Company, he shall forfeit continuation of
coverage under this Section.
d) Retirement or Long-Term Disability. If a person
was a Subscriber immediately before becoming a
Retiree or an LTD Recipient, coverage continues
as provided in Sections 4.1 and 4.2.
e) Termination Under Special Separation Plans. The
Company may, at its option, extend coverage on a
noncontributory basis for eligible Employees
whose employment terminates under any special
separation plan, special early retirement plan,
or special early retirement supplement plan. If
a Subscriber receiving SGLI coverage on a
noncontributory basis following termination
under a special separation plan returns to work
as a Supplementary Employee, the SGLI coverage
will be continued on a noncontributory basis
while the Subscriber is working as a
Supplementary Employee but only for the period
of time that such coverage would otherwise have
been paid for by the Company under the terms of
the special separation plan. If the Subscriber
is otherwise reemployed by the Company, he shall
forfeit continuation of coverage under this
Section.
f) Divestiture. Where the employment of a
Subscriber is terminated by his or her Company
due to a "divestiture," as defined in the
Termination Allowance Plan (Benefit Plan No.
1T.01), as it may be amended, (or "TAP") by such
Company and the Subscriber is not offered a
"comparable position," as defined in TAP, in the
same geographic area by the acquirer, purchaser
or other transferee of the division, business,
function, facility, unit or group of assets sold
or otherwise disposed of by way of the
"divestiture," the SGLI coverage continues on a
noncontributory basis for the two (2) months
following the month in which employment
terminates.
g) Completion of Supplementary or Special Program
Employment. SGLI coverage continues, on a
noncontributory basis, until the end of the
month in which employment of a Supplementary
Employee or Special Program Employee terminates.
However, if a Subscriber other than a
Supplementary Employee or Special Program
Employee accepts a transfer to a position as a
Supplementary Employee or Special Program
Employee in lieu of layoff or termination under
a special separation plan, he will have SGLI
coverage on a noncontributory basis at the end
of such employment for the period of time that
such coverage would have been available had he
been laid off or terminated under a special
separation plan.
96
10.2 When Coverage Ends
SGLI coverage ends at midnight on the last day of the month in
which the earliest of the following events occurs:
a) The Company receives request from the Subscriber to
discontinue SGLI coverage, or, if later, the date
specified in such written, signed request.
b) Employment is terminated, except as specified in
Section 10.1.
c) The date on which the group policy is discontinued.
d) The Subscriber fails to make a required monthly
contribution for contributory coverages.
e) The Employee-Subscriber who has not maintained
continuous coverage under SGLI becomes a Retiree.
10.3 Conversion Privilege
A conversion privilege is available for Supplementary Group
Life Insurance when coverage ceases or is reduced under the
circumstances described below.
a) Employment is Terminated. If employment terminates
for any reason, coverage may be continued under an
individual life insurance policy, without disability
or accidental death benefits. The policy may be in
any form customarily issued by the Insurance
Company, except term insurance. A Subscriber may,
however, elect a term insurance policy for a period
of up to one year at which time the term insurance
must be converted to another form customarily issued
by the Insurance Company. The amount of such
individual policy will be equal to (or at the
Subscriber's option, less than) the amount of his
coverage in effect on his employment termination
date.
b) The Group Policy or Eligibility is Terminated. If
the group policy is terminated, or if the Subscriber
is no longer a member of a classification that is
eligible for such coverage, then a Subscriber may
obtain an individual policy of life insurance from
the Insurance Company, subject to the same terms and
conditions as upon cessation of such coverage due to
termination of employment. However, the amount of
such individual policy will not exceed the amount of
the coverage under the group policy on the date of
cessation of such coverage, reduced by any amount of
coverage for which he may be or may become eligible
under any group policy issued or reinstated by the
Insurance Company or any other insurer within 45
days after such cessation.
97
c) Attainment of Certain Ages. If the amount of
Subscriber's coverage is reduced, for any reason
upon attainment of age 65 or later, by at least
twenty percent (20%), the life insurance conversion
privilege described above will be available to him
on the date of the reduction. The twenty percent
(20%) may be the result of one reduction or a series
of smaller reductions. For any subsequent reduction
in the amount of his coverage which is at least
twenty percent (20%), the conversion privilege will
again be available. The amount of any individual
policy issued, as a result of any reduction, will
not be more than the amount of the reduction.
However, in the event that the Subscriber does not
apply for that amount during the conversion period
described below, he will not be able to apply for
that amount during a later conversion period which
may be available to him.
"Conversion periods" begin on the first day following the day
on which coverage terminates or is reduced by at least twenty
percent (20%) and end 31 days thereafter. If the Subscriber
should die during a conversion period, the amount of his
coverage will be payable to his beneficiary whether or not he
applied for an individual policy.
If a Subscriber is not given written notice at least 15 days
before or after the first day of the conversion period of the
right to obtain an individual life insurance policy, he will
have additional time in which to apply for such a policy. If
such notice is given more than 15 days but less than 90 days
after the first day of the conversion period, he will then have
45 days from the date notice is given in which to apply for an
individual policy. In no event may a Subscriber apply later
than the 90th day after the first day of the conversion period.
In any of the cases described above, to obtain an individual
policy, a Subscriber must apply to the Insurance Company in
writing and must pay the applicable premium no later than the
last day of the conversion period. The individual policy will
become effective when the group coverage terminates.
10.4 Coverage on Return to Work After Termination or Leave of
Absence
Continued participation in SGLI on reemployment, reinstatement
(including return from retirement or Long-Term Disability), or
return from leave of absence is based on the following
provisions:
a) If a person was covered under the Plan continuously
from the date of leaving to the date of return and
meets the requirements of Article 3 at the time of
returning, such coverage is continued upon return.
b) If the person returns from a Leave of Absence which
qualifies as protected leave under the Family and
Medical Leave Act of 1993 before the protected term
of such leave has expired, upon return to work
without a termination of employment, the coverage
shall be restored to the level that existed at the
time the Leave of Absence began (subject to maximums
set out in Article 4).
c) In all other cases, this coverage is not available
upon return to work.
98
10.5 Divestiture
Except to the extent expressly provided in Section 10.1(f), a
Subscriber whose employment by his or her Company is terminated
due to a "divestiture," as defined in the Termination Allowance
Plan (Benefit Plan No. 1I.01) by such Company is no longer
eligible for SGLI coverage and, therefore, his or her coverage(s)
shall end as specified in Section 10.2.
11. ADMINISTRATION AND GENERAL PROVISIONS
Whenever a covered Employee or covered Disabled Person retires,
insurance certificates are provided describing the provisions that
apply specifically to him.
11.1 Plan Amendment, Suspension, or Termination
Eastman Kodak Company may amend, suspend, or terminate the Plan in
whole or in part at any time, for any reason. For purposes of
ERISA Section 402(b)(3), the procedure for amending, suspending
and terminating the Plan is the adoption of a resolution by the
Board or Benefit Plans Committee to such effect. A resolution is
considered adopted when a majority of the members of the Board or
Benefit Plans Committee approve of the resolution by voice or
written vote at a Board or Committee meeting, whichever is
applicable, or if no meeting is held, the resolution is in writing
and signed by all of the members of the Board or Benefit Plans
Committee.
11.2 Claims and Appeal Procedures
The claims and appeal procedures are described in the General
Administration section of You and Kodak.
11.3 Governing Law
This document shall be construed in accordance with the laws of New
York State, except where the law of some other jurisdiction must be
applied in respect of individual Subscribers or those claiming
under or through them, and except as such laws are preempted by
ERISA.
11.4 Gender and Number
Throughout this document, the masculine includes the feminine and
the singular includes the plural unless the context indicates
otherwise.
99
Exhibit (10) L.
KODAK EXCESS RETIREMENT INCOME PLAN
Approved November 20, 1975; Effective January 1, 1976
Amended September 12, 1980; Effective October 1, 1980
As Amended and Restated in its Entirety December 18, 1981;
Effective January 1, 1981
As Amended and Restated in its Entirety December 11, 1987;
Effective January 1, 1988
As Amended and Restated in its Entirety March 28, 1989;
Effective January 1, 1989
As Amended and Restated in its Entirety July 27, 1990;
Effective September 1, 1990
Amended December 13, 1990; Effective January 1, 1989
Amended December 13, 1990; Effective January 1, 1991
Amended December 20, 1991; Effective December 1, 1991
Amended December 29, 1995; Effective January 1, 1989
Amended December 29, 1995; Effective October 1, 1994
Amended December 29, 1995; Effective January 1, 1995
100
KODAK EXCESS RETIREMENT INCOME PLAN
TABLE OF CONTENTS
PAGE
ARTICLE ONE Purpose of Plan 101
ARTICLE TWO Definitions 101
ARTICLE THREE Eligibility 101
ARTICLE FOUR Benefits 102
ARTICLE FIVE Administration 103
ARTICLE SIX Amendment and Termination 103
ARTICLE SEVEN Miscellaneous 103
101
KODAK EXCESS RETIREMENT INCOME PLAN
ARTICLE ONE
Purpose of Plan
1.1 This Plan implements the intent of providing retirement
benefits by means of both a funded and an unfunded
plan. This Plan is an excess benefit plan as defined
in section 3(36) of the Employee Retirement Income
Security Act of 1974 and is designed to provide
retirement benefits payable out of the general assets
of the Company where benefits cannot be paid under the
Funded Plan because of Code section 415 and the
provisions of the Funded Plan which implement such
section.
ARTICLE TWO
Definitions
2.1 "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
2.2 "Company" shall mean Eastman Kodak Company, which
effective October 1, 1994 shall include the Nano
Systems division, and any subsidiary and/or affiliated
corporation which is a participating employer under the
Funded Plan other than those covered by Appendix I of
the Funded Plan, except where a specific reference is
made to a particular corporation
2.3 "Effective Date" shall mean January 1, 1976.
2.4 "Employee" shall mean a participant in the Funded Plan.
2.5 "Funded Plan" shall mean the Kodak Retirement Income
Plan.
2.6 "KRIPCO" shall mean the Kodak Retirement Income Plan
Committee as described in the Funded Plan document.
2.7 "Plan" shall mean this Kodak Excess Retirement Income
Plan.
ARTICLE THREE
Eligibility
3.1 All Employees eligible to receive a benefit from the
Funded Plan shall be eligible to receive a benefit
under this Plan if their benefits cannot be fully
provided by the Funded Plan due to the benefit
limitations imposed by Code section 415.
102
ARTICLE FOUR
Benefits
4.1 Benefits due under this Plan shall be paid at such time
or times following the Employee's termination of
employment or death as the Company's Director of
Compensation and Benefits, or his designee,or in his
absence or personal involvement of such Director or
designee, the Senior Vice President of Human Resources,
may select, in his sole discretion, from among the
options available under the Funded Plan.
4.2 The benefit payable under this Plan shall be the amount
of the retirement income benefit to which an Employee
would otherwise be entitled under the Funded Plan if
the provisions of Code Section 415 as expressed in
Article 9 of the Funded Plan were disregarded, less the
amount of the retirement income benefit to which the
Employee is entitled under the Funded Plan.
The "retirement income benefit to which the Employee is
entitled under the Funded Plan" generally means the
benefits actually payable to an Employee under the
Funded Plan; provided, however, that where the benefits
actually payable to an Employee under the Funded Plan
are reduced on account of a payment of all or a portion
of an Employee's benefits to a third party on behalf of
or with respect to an Employee (pursuant, for example,
to a domestic relations order), the "retirement income
benefit to which the Employee is entitled under the
Funded Plan" shall be deemed to mean the benefit that
would have been actually payable but for such payment
to a third party.
4.3 If an Employee's benefit from the Funded Plan is
subject to an actuarial reduction because of the time
when payment commences, his benefit from this Plan
shall also be actuarially reduced.
4.4 The benefits payable under this Plan shall be paid by
the Company each year out of its general assets and
shall not be otherwise funded.
4.5 If a Participant's benefit under this Plan is paid in a
lump-sum and his benefit under the Funded Plan is paid in a
form other than a lump-sum, the lump-sum benefit payable
under this Plan shall be actuarially reduced to reflect the
fact that the periodic benefit payable under the Funded Plan
will be increased after the Annuity Starting Date to reflect
postretirement cost-of-living increases made in accordance
with Code section 415(d) and section 1.415(c)(2)(iii) of the
Income Tax Regulations.
103
ARTICLE FIVE
Administration
5.1 This Plan shall be administered by KRIPCO in accordance
with its terms and purposes.
5.2 KRIPCO shall have full discretionary authority to
determine eligibility, to construe and interpret the
terms of the Plan, including the power to remedy
possible ambiguities, inconsistencies or omissions, or
to determine the benefits due each Employee from this
and the Funded Plan and shall cause them to be paid
accordingly.
5.3 The decisions made by and the actions taken by KRIPCO
in the administration of the Plan shall be final and
conclusive on all persons, and the members of KRIPCO
shall not be subject to individual liability with
respect to this Plan.
ARTICLE SIX
Amendment and Termination
6.1 While the Company intends to maintain this Plan in
conjunction with the Funded Plan for as long as
necessary, the Company reserves the right to amend
and/or terminate it at any time for whatever reasons it
may deem advisable.
6.2 Notwithstanding the preceding Section, however, the
Company hereby makes a contractual commitment to pay
the benefits accrued under this Plan to the extent it
is financially capable of meeting such obligation.
ARTICLE SEVEN
Miscellaneous
7.1 Nothing contained in this Plan shall be construed as a
contract of employment between the Company and an
Employee, or as a right of any Employee to be continued
in the employment of the Company, or as a limitation of
the right of the Company to discharge any of its
Employees, with or without cause.
7.2 The benefits payable under this Plan are nonassignable.
7.3 This Plan shall be governed by the laws of the State of
New York.
104
Exhibit (10) N.
CONTINENTAL INSURANCE
Group Excess Liability
Certificate of Insurance
COVERAGE CERTIFICATION
We have issued a Group Excess Liability Policy to your Sponsoring
Organization. The name of your Sponsoring Organization and Policy Number
are shown in your Coverage Declarations. Subject to the terms, conditions
and provisions of the Policy, we will provide the insurance described in
this form.
REQUIRED PRIMARY INSURANCE
The coverage described in this form is excess over any other collectible
insurance. For some of the coverages in this form you must maintain
primary insurance in force in order to be fully covered. This is your
Required Underlying Limit.
If you fail to maintain the Required Underlying Limit for primary
insurance, and there is an occurrence that would have been covered by such
insurance, your coverage will be limited as follows:
(1) for liability exposures that are specifically excluded unless
covered by Required Underlying Limits, no coverage will apply.
(2) for all other covered liability exposures, you will be responsible
for the amount of damages up to the applicable Minimum Required
Underlying Limit of your required primary insurance. We will
only pay amounts in excess of your required underlying limits and any
other collectible insurance.
The types of insurance and minimum limits required are described in the
Schedule of Required Underlying Limits below:
The Named Insured agrees to maintain during the term of the policy, at
least the following underlying coverages and minimum required underlying
limits for: Automobile Liability (Cars or Recreational Vehicles) and
Comprehensive Personal Liability. If exposure exists, the Named Insured
further agrees to maintain at least the following Minimum Required
Underlying Limits for Watercraft and Employers Liability.
105
SCHEDULE OF REQUIRED UNDERLYING LIMITS
Exposures Coverages Minimum Required U/L Limit
Automobile Bodily Injury $250,000 Per Person,
$500,000 Per Occurrence
(Cars and Property Damage $ 50,000 Per Occurrence
Recreational -or- $300,000 Per Occurrence
Vehicles except Combined Single Limit ($325,000 in Texas)
snowmobiles)
Combined Single Limit $100,000 Per Occurrence
Homeowners (Required for all
Personal Liability property owned or
rented)
Bodily Injury/Property $100,000 Per Occurrence
Watercraft Damage or Combined
Liability Single Limit
Employers Liability Combined Single Limit $100,000 Per Occurrence
Snowmobile Bodily Injury $100,000 Per Person,
Liability $300,000 Per Occurrence
Property Damage or $ 25,000 Per Occurrence
Combined Single Limit $300,000 Per Occurrence
UM/UIM only when Bodily Injury $250,000 Per Person,
coverage is $500,000 Per Occurrence
provided under Property Damage $ 50,000 Per Occurrence
the policy -or- $300,000 Per Occurrence
Combined Single Limit ($325,000 in Texas)
106
CONTINENTAL INSURANCE
GROUP EXCESS LIABILITY
CERTIFICATE OF INSURANCE
COVERAGE DECLARATIONS
Company Symbol Policy Number
THE MAYFLOWER INSURANCE GPE 002257
COMPANY, LTD.
Home Office: 111 Congressional Blvd., Carmel, IN 46032
Administrative Office: 180 Maiden Lane
New York, NY 10038
Named Insured
Sponsoring Organization (Name and Address)
Eastman Kodak Company
343 State Street
Rochester, NY 14650
Coverage Period
From: January 1, 1996 to: January 1, 1997
12:01 a.m. Standard Time at the Address of the Sponsoring
Organization as stated herein.
Limit of Liability
$5,000,000
Note: COVERAGE IS PROVIDED UNDER THIS POLICY FOR
UNINSURED/UNDERINSURED MOTORISTS PROTECTION
(This is not a Policy)
Issue Date: November 28, 1995
Authorized Signature /s/
107
Exhibit (10) O.
KODAK EXECUTIVE HEALTH MANAGEMENT PLAN
EASTMAN KODAK COMPANY
Effective April 1, 1990 Amended
Effective December 7, 1990 Amended
Effective January 1, 1995
108
KODAK EXECUTIVE HEALTH MANAGEMENT PLAN January 1, 1995
TABLE OF CONTENTS
Article Title Page
1 General 109
2 Definitions 109
3 Operation of the Plan 111
4 Benefit 112
5 Claims 112
6 Funding 112
7 Taxation 113
8 Continuation Coverage for Participants 113
9 Miscellaneous 115
Exhibit A Authorization to Release Medical
Information 117
109
ARTICLE 1. GENERAL
1.01 Name
The name of the Plan is the Kodak Executive Health
Management Plan.
1.02 Purpose
The purpose of the Plan is to promote health risk
identification, management, and modification among Senior
Management Level Employees of the Company and its
Subsidiaries by enabling certain members of them to obtain a
medical evaluation and participate in a health education
program from time to time for the benefit of the Company.
1.03 Effective Date
The effective date of the Plan is April 1, 1990.
ARTICLE 2. DEFINITIONS
2.01 Benefit
"Benefit" means the following medical benefits which shall
be provided to a Participant as a result of a contract
entered into between the Company and the Provider: a
comprehensive health evaluation performed by one of the
Provider's senior board certified physicians, a medical
evaluation report describing the results of such
examination, a written assessment of health needs, a
follow-up visit with the Provider to determine a
Participant's progress with respect to the issues addressed
in such written assessment, and a progress report describing
the results of such follow-up visit. Any other medical care
or service furnished to a Participant by the Provider shall
be at the Participant's sole cost and expense.
2.02 Company
"Company" means Eastman Kodak Company.
2.03 Corporate Medical Director
"Corporate Medical Director" means the Corporate Medical
Director of the Company.
2.04 Employee
"Employee" is any person who is employed by the Company or a
Subsidiary and is compensated for services in the form of a
salary.
110
2.05 Participant
"Participant" means any Senior Management Level Employee
designated by the Corporate Medical Director pursuant to
Section 3.01 hereof.
2.06 Plan
"Plan" means the Kodak Executive Health Management Plan.
2.07 Plan Administrator
"Plan Administrator" means the person authorized to control
and manage the operation and administration of the Plan.
The Plan Administrator, who is also the named fiduciary as
defined in the Employee Retirement Income Security Act of
1974 (ERISA), is the Director, Corporate Compensation and
Benefits, of the Company.
2.08 Plan Sponsor
"Plan Sponsor" means Eastman Kodak Company.
2.09 Plan Year
"Plan Year" means the calendar year, except that the 1990
Plan Year is April 1, 1990 to December 31, 1990.
2.10 Provider
"Provider" means the health care provider selected and
contracted with by the Company for the purpose of providing
the Benefit to a Participant.
2.11 Selection Period
"Selection Period" means a succession of days, as determined
by the Plan Administrator, during which the Corporate
Medical Director shall determine which Senior Management
Level Employees shall be Participants for the Plan Year
immediately following such Selection Period.
2.12 Senior Management Level Employee
"Senior Management Level Employee" means any Employee who
has a wage grade of 56 or above or the equivalent thereof
and/or is a corporate officer of the Company.
2.13 Subsidiary
"Subsidiary" means any corporation designated by the Plan
Administrator which is a U.S. corporation operating in the
United States in which the Company, directly or indirectly,
has an ownership interest of 80 percent or more.
111
ARTICLE 3. OPERATION OF THE PLAN
3.01 Participation
During the Selection Period for a given Plan Year, the
Corporate Medical Director shall select those Senior
Management Level Employees who, in the opinion of the
Corporate Medical Director, should participate in the Plan
for such Plan Year. Upon the close of such Selection
Period, but prior to the start of the Plan Year, the
Corporate Medical Director shall submit a list of those
Senior Management Level Employees who have been selected to
participate in the Plan for such Plan Year to the Plan
Administrator and notify each such Employee of his selection
to participate in the Plan. However, any Senior Management
Level Employee who is so selected to participate in the
Plan, but terminates employment before the start of the Plan
Year in which he is to participate, shall be ineligible to
participate in the Plan. Furthermore, any Employee who is
promoted to the status of a Senior Management Level Employee
during or after the Selection Period for a given Plan Year
shall not be selected to participate in the Plan for such
Plan Year.
3.02 Duration
Coverage is effective on the first day of the Plan Year.
Subject to Article 8 hereof, a Participant remains a
Participant under the Plan until the earliest of:
(a) the last day of the Plan Year; or
(b) Termination of the Plan.
112
ARTICLE 4. BENEFIT
4.01 Plan Benefits
Subject to the fulfillment of the requirements specified in
Section 4.02 hereof, any Participant of the Plan during a
given Plan Year shall be entitled to receive the Plan's
Benefits during such Plan Year. Plan Benefits, however,
may also be carried over from one Plan Year to the
immediately following Plan Year.
4.02 Authorization to Release Medical Information
As a precondition to receiving any Benefit under the Plan, a
Participant shall be required to execute and deliver to the
Company's Medical Department a written release in a form
substantially similar to the one annexed hereto as
Exhibit "A." Such release shall authorize the Provider to
disclose and release to the Company's Medical Department and
to the Participant's personal physician certain medical
records and reports prepared by the Provider as a result of
the Participant's receipt of the Plan's Benefits.
ARTICLE 5. CLAIMS
5.01 Claims Procedure
Claims for Benefits under the Plan should be made by
contacting the Corporate Medical Director. Once the
Corporate Medical Director is so contacted, he will make
arrangements to ensure that the Benefits are provided at
times which are mutually convenient for both the Participant
and the Provider. The Plan's appeal procedure is described
in the General Information Section of You And Kodak.
ARTICLE 6. FUNDING
6.01 Funding of Plan
Benefits under the Plan are to be funded out of general
assets of the Company.
113
ARTICLE 7. TAXATION
7.01 Tax Treatment of Participants
The cost of providing the Benefit to a Participant during a
Plan Year shall be included in the Participant's taxable
income for such Plan Year and be subject to all applicable
federal, state, and local payroll taxes.
ARTICLE 8. CONTINUATION COVERAGE FOR PARTICIPANTS
8.01 Background
If a Participant terminates employment for any reason
(including retirement) other than by reason of his gross
misconduct, he may elect to continue to be covered under the
Plan for a period of up to 18 months following the date of
his termination of employment (the "Continuation Period"),
provided the requirements of this Article 8 are met.
8.02 Eligibility and Effective Dates
(a) A Participant is eligible to continue coverage under
the Plan provided all of the following requirements
are satisfied:
(i) The Participant has terminated his employment
other than by reason of his gross misconduct;
(ii) The Participant returns to the Plan
Administrator a written election form within 60
days after receipt of the election form or
within 60 days after termination of employment,
whichever is later; and
(iii) The Participant pays the cost determined by the
Company, within 45 days of his election to
continue coverage.
(b) If the conditions of subparagraph (a) above are
satisfied, the Participant's continuation of coverage
is effective as of the date of his termination of
employment. If a Participant declines continuation
coverage, he may not elect coverage at a later time.
114
8.03 Termination of Continuation Coverage
A Participant's continuation coverage terminates on the earliest of
the following events:
(a) Failure to pay the cost of the coverage;
(b) Obtaining coverage under any other group health plan which
does not contain any exclusion or limitation with respect to
any pre-existing condition of the Participant;
(c) Expiration of the "Continuation Period"; or
(d) Termination of the Plan.
8.04 Extension of Continuation Period
(a) Notwithstanding anything contained in this Article 8 to the
contrary, in case a Participant is determined, under Title
II or XVI of the Social Security Act to have been disabled
at the time of his termination of employment, he may elect
to continue to be covered under the Plan for a period of up
to 29 months following the date of his termination of
employment, provided the following requirements, in addition
to those specified in Section 8.02 hereof, are satisfied:
(i) The Participant notifies the Plan Administrator of the
determination with regard to his disability under
Title II or XVI of the Social Security Act within 60
days after the date of such determination, but in no
event later than 18 months following the date of his
termination of employment;
(ii) The Participant notifies the Plan Administrator within
30 days of the date of any final determination under
such title or titles that he is no longer disabled;
and
(iii) The Participant pays the additional cost determined by
the Company of providing the extension of such
continuation coverage.
(b) Coverage extended pursuant to subparagraph (a) above shall
terminate in accordance with Section 8.03 hereof, except
that the event specified in Section 8.03(c) shall be
replaced by the following: the earlier of (i) expiration of
the 29-month period commencing from the date of the
Participant's termination of employment, and (ii) the later
of (A) expiration of the "Continuation Period" and (B) the
first day of the month that begins more than 30 days after
the date of the final determination under Title II or XVI of
the Social Security Act that the Participant is no longer
disabled.
115
ARTICLE 9. MISCELLANEOUS
9.01 Plan Amendment, Suspension, or Termination
The Company intends to continue the Plan indefinitely, but
it assumes no contractual obligation to do so. Accordingly,
the Company may amend, suspend, or terminate the Plan in
whole or in part at any time.
9.02 Benefits are Not Assignable
The Benefits provided under the Plan are personal to the
Participant and, therefore, may not be assigned or
alienated. All attempted assignments or alienations of
Benefits shall be null and void.
9.03 Plan Document Prevails
This document contains all of the operative provisions of
the Plan. Any conflict between the provisions of this
document and any other Company or Subsidiary document
purporting to explain the rights, benefits, or obligations
of the parties hereunder shall be resolved in favor of this
Plan document.
9.04 Headings
The headings in the Plan are inserted for convenience of
reference only and are not to be considered in construction
of the provisions hereof.
9.05 Gender and Number
Throughout this Plan, the masculine gender shall include the
feminine, and the single shall include the plural.
9.06 Governing Law
This document shall be construed in accordance with the laws
of the State of New York, except as such laws are preempted
by ERISA.
116
9.07 Plan Administration
The Plan Administrator shall administer the Plan in
accordance with its terms and shall have all powers
necessary to carry out the provisions of the Plan, except
such powers as are specifically reserved to the Benefit
Plans Committee or the Board of Directors of the Company.
The Plan Administrator's powers include the power to make,
publish, and apply those rules and regulations which he
deems necessary, advisable, or appropriate to carry out the
provisions of the Plan. The Plan Administrator may construe
any ambiguous provisions of the Plan, correct any defect,
supply any omission, or reconcile any inconsistency, in such
manner and to such extent as the Plan Administrator, in his
discretion, may determine; any such action by the Plan
Administrator shall be binding and conclusive upon all
Employees. The Plan Administrator may exercise discretion
to the extent reasonably necessary to determine whether the
Plan's requirements and conditions of participation,
coverage, and benefits have been satisfied.
9.08 General Information
The Plan is sponsored and maintained on an uninsured basis
by the Company, whose address is 343 State Street,
Rochester, New York 14650. The Company's employer
identification number, assigned by the Internal Revenue
Service, is 16-0417150, and the Plan number, assigned by the
Company, is 521. By law, the Plan is classified as a
welfare benefit plan.
The Plan Administrator, who is located at 343 State Street,
Rochester, New York 14650, telephone (716) 724-4800, is the
agent for service of legal process.
117
EXHIBIT "A"
AUTHORIZATION TO RELEASE MEDICAL INFORMATION
TO: UNIVERSITY OF ROCHESTER
601 Elmwood Avenue
Rochester, New York 14642
Employee Data:
Name:
Insurance No.:
Physician's Name:
(hereinafter the "Physician")
Physician's Address:
1. I hereby irrevocably authorize the University of Rochester (hereinafter
the "University") to disclose and release copies of the information
specified below under the paragraph entitled "Information Requested" to
the Medical Department of Eastman Kodak Company (hereinafter the "Medical
Department") and, if so named above, my Physician. Disclosure of such
information may be made by the University from time to time if and when
the Medical Department or my Physician requests such information.
2. I also hereby irrevocably authorize the University to discuss with the
Medical Department and, if so named above, my Physician, any or all of
the information specified below under the paragraph entitled "Information
Requested".
3. In addition, I hereby irrevocably authorize the University to permit the
Medical Department and, if so named above, my Physician, to inspect and
copy any or all of the information specified below under the paragraph
entitled "Information Requested".
Information Requested
1. All records relating to the medical evaluation performed by the
University (hereinafter the "Medical Evaluation") under the terms of an
Agreement between the University and Eastman Kodak Company dated
, 1990 (hereinafter the "Agreement"). The term Medical Evaluation as
used herein shall include the "Entry Evaluation", the "Planned Health
Promotion Program", and the "Follow-Up Visit" as those terms are used
under the Agreement.
2. The results of all tests, evaluations, procedures, and examinations
performed in connection with the Medical Evaluation.
3. All medical reports prepared in connection with or as a result of the
Medical Evaluation.
4. An itemized statement detailing the services, tests, and procedures
provided by the University during the Medical Evaluation and the costs
thereof.
I understand that all the information specified under the paragraph entitled
"Information Requested" which is disclosed by the Univesity to the Medical
Department under this Authorization to Release Medical Information
(hereinafter called the "Authorization") will be handled by the Medical
Department confidentially and included in my Kodak medical records.
118
I have read the entire contents of the Authorization and consent to each
of the authorizations made herein. I certify that such authorizations
have been made voluntarily and acknowledge that they are irrevocable. I
further understand that the effect of these authorizations is to waive on
behalf of myself and any persons who may have an interest in this matter
provisions of law relating to the disclosure of confidential medical
information.
I understand that a copy of this Authorization will be given to me if I
request it.
Employee's Signature Witness's Signature
Date: Date:
119
Exhibit (11)
Eastman Kodak Company and Subsidiary Companies
Computation of Earnings Per Common Share
1995 1994 1993
(in millions, except
per share data)
PRIMARY:
Earnings from continuing operations
before income taxes $1,926 $1,002 $ 1,077
Provision for income taxes from
continuing operations 674 448 433
------ ------ ------
Earnings from continuing operations
before extraordinary items and cumulative
effect of changes in accounting principle 1,252 554 644
Earnings (loss) from discontinued operations
before cumulative effect of changes in
accounting principle - (81) 23
Gain on sale of discontinued operations - 350 -
------ ------ ------
Earnings before extraordinary items and
cumulative effect of changes in accounting
principle 1,252 823 667
Extraordinary items - (266) (14)
------ ------ ------
Earnings before cumulative effect of changes
in accounting principle 1,252 557 653
------ ------ ------
Cumulative effect of changes in accounting
principle:
Continuing operations - - (1,649)
Discontinued operations - - (519)
------ ------ ------
Total cumulative effect of changes in
accounting principle - - (2,168)
------ ------ ------
NET EARNINGS (LOSS) $1,252 $ 557 $(1,515)
====== ====== ======
Average number of common shares
outstanding 341.5 335.7 328.3
------ ------ ------
Primary earnings per share from
continuing operations before extraordinary
items and cumulative effect of changes
in accounting principle $3.67 $1.65 $ 1.95
Primary earnings (loss) per share from
discontinued operations before cumulative
effect of changes in accounting principle - (.25) .07
Primary earnings per share from gain on sale
of discontinued operations - 1.05 -
----- ----- -----
Primary earnings per share before extraordinary
items and cumulative effect of changes in
accounting principle 3.67 2.45 2.02
Extraordinary items - (.79) (.04)
----- ----- -----
Primary earnings per share before cumulative
effect of changes in accounting principle 3.67 1.66 1.98
----- ----- -----
Cumulative effect of changes in accounting
principle:
Continuing operations - - (5.02)
Discontinued operations - - (1.58)
----- ----- -----
Total cumulative effect of changes in
accounting principle - - (6.60)
----- ----- -----
Primary earnings (loss) per share $3.67 $1.66 $(4.62)
===== ===== =====
120
Exhibit (12)
Eastman Kodak Company and Subsidiary Companies
Computation of Ratio of Earnings to Fixed Charges
(in millions, except for ratios)
Year Ended December 31,
1995 1994 1993 1992 1991
Earnings (loss) from
continuing operations
before provision for
income taxes $1,926 $1,002 $1,077 $1,379 $ (151)
Add:
Interest expense 78 535 753 825 848
Interest component of
rental expense (1) 63 66 80 76 80
Amortization of
capitalized interest 22 25 40 37 38
------ ------ ------ ------ ------
Earnings as adjusted $2,089 $1,628 $1,950 $2,317 $ 815
====== ====== ====== ====== ======
Fixed charges
Interest expense $ 78 $ 535 $ 753 $ 825 $ 848
Interest component of
rental expense (1) 63 66 80 76 80
Capitalized interest 30 35 87 95 112
------ ------ ------ ------ ------
Total fixed charges $ 171 $ 636 $ 920 $ 996 $1,040
====== ====== ====== ====== ======
Ratio of earnings to
fixed charges 12.2x 2.6x (2) 2.1x (3) 2.3x (4) - (5)
(1) Interest component of rental expense is estimated to equal 1/3 of such expense, which is
considered a reasonable approximation of the interest factor.
(2) The ratio is 3.1x before deducting restructuring costs of $340 million.
(3) The ratio is 2.6x before deducting restructuring costs of $495 million.
(4) The ratio is 2.5x before deducting restructuring costs of $219 million.
(5) Earnings are insufficient to cover fixed charges by $225 million due to the restructuring
costs of $1,448 million. The ratio is 2.2x before deducting the restructuring
costs.
121
Exhibit (21)
Subsidiaries of Eastman Kodak Company
Organized
Companies Consolidated Under Laws of
Eastman Kodak Company New Jersey
Eastman Kodak International
Finance B.V. Netherlands
Eastman Kodak International
Sales Corporation Barbados
Torrey Pines Realty Company, Inc. Delaware
The Image Bank, Inc. New York
Cinesite, Inc. Delaware
FPC Inc. California
Qualex Inc. Delaware
Jamieson Film Company Delaware
Eastman Gelatine Corporation Massachusetts
Eastman Canada Inc. Canada
Kodak Canada Inc. Canada
Kodak (Export Sales) Ltd. Hong Kong
Kodak Argentina S.A.I.C. Argentina
Kodak Brasileira C.I.L. Brazil
Kodak Chilena S.A.F. Chile
Kodak Colombiana, Ltd. New York
Kodak Panama, Ltd. New York
Kodak Peruana, Ltd. New York
Kodak Caribbean, Limited New York
Kodak Uruguaya, Ltd. New York
Kodak Venezuela, S.A. Venezuela
Kodak (Near East), Inc. New York
Kodak (Singapore) Pte. Limited Singapore
Kodak Philippines, Ltd. New York
Kodak Limited England
Cinesite (Europe) Limited England
Kodak AO Russia
Kodak India Limited India
Kodak Ireland Limited Ireland
Kodak-Pathe SA France
Kodak A.G. Germany
Kodak Korea Limited South Korea
Kodak Far East Purchasing, Inc. New York
Kodak New Zealand Limited New Zealand
Kodak (Australasia) Pty. Ltd. Australia
Kodak (Kenya) Limited Kenya
Kodak (Egypt) S.A.E. Egypt
Kodak (Malaysia) S.B. Malaysia
Kodak Taiwan Limited Taiwan
Eastman Kodak International Capital
Company, Inc. Delaware
Kodak de Mexico S.A. de C.V. Mexico
N.V. Kodak S.A. Belgium
Kodak a.s. Denmark
Kodak Norge A/S Norway
Kodak SA Switzerland
Kodak (Far East) Limited Hong Kong
Kodak (Thailand) Limited Thailand
Eastman Kodak de Mexico, S.A. de C.V. Mexico
Kodak Mexicana S.A. de C.V. Mexico
Industria Mexicana de Foto Copiadoras,
S.A. de C.V. Mexico
Kodak G.m.b.H. Austria
Kodak Kft. Hungary
Kodak Oy Finland
Kodak Nederland B.V. Netherlands
122
Exhibit (21)
(Continued)
Organized
Companies Consolidated Under Laws of
Kodak S.p.A. Italy
Kodak Portuguesa Limited New York
Kodak S.A. Spain
Kodak AB Sweden
Eastman Kodak (Japan) Ltd. Japan
K.K. Kodak Information Systems Japan
Kodak Japan Ltd. Japan
Kodak Imagica K.K. Japan
Kodak Japan Industries Ltd. Japan
Note: Subsidiary Company names are indented under the name of the parent
company.
5
0000031235
EASTMAN KODAK COMPANY
1,000,000
U.S. DOLLARS
YEAR
DEC-31-1995
JAN-01-1995
DEC-31-1995
1.0
1764
47
3145
104
1660
7309
12652
7275
14477
4643
665
0
0
974
4147
14477
14980
15269
7962
7962
5303
80
78
1926
674
1252
0
0
0
1252
3.67
0
