Document Archive for Former Employees
To Former Kodak Employees:
On January 19, 2012, Kodak and its U.S. subsidiaries filed petitions for voluntary reorganization under Chapter 11 of the U.S. Bankruptcy Code. During the reorganization process, Kodak intends to operate its business as usual. However, your benefits may be impacted as described below.
U.S. Bankruptcy Court approved the motion to terminate retiree benefits
On November 7, 2012, the U.S. Bankruptcy Court entered an order approving the Settlement Agreement between the company and the Official Committee of Retired Employees (the 1114 Committee) to terminate U.S. retiree health care and survivor benefits on December 31, 2012. This agreement, which also has the support of our Official Committee of Unsecured Creditors and the Ad Hoc Committee of Second Lien Holders, will significantly reduce one of the company's most substantial legacy liabilities, marking another major step toward Kodak's successful emergence from Chapter 11. Kodak understands and appreciates the contributions of our current and future retirees, acknowledges the difficult and hard work of the 1114 Committee, and recognizes that this action will pose challenges. However, this agreement is one of the many necessary and critical steps on the company's path to emerge as a profitable, sustainable company.
All impacted individuals will receive more details in the coming weeks.
Kodak Retirement Income Plan Benefits
If you are receiving monthly annuities under the Kodak Retirement Income Plan (KRIP), these benefits are not expected to be affected by the Chapter 11 filing. The KRIP is a U.S. tax- qualified plan, its assets are held in a separate trust, and U.S. Federal law protects the assets of the KRIP from the claims of Kodak's creditors.
If you have not yet received a distribution from KRIP and you are eligible for a lump sum payment, your payment options may be impacted. You can receive your benefit as an annuity subject to the normal rules, but under the law, while Kodak is in bankruptcy, KRIP cannot pay lump sums for Traditional, Cash Balance, or STP benefits to anyone who leaves or has a payment effective date after the bankruptcy filing date, until the Plan's actuary certifies that KRIP meets certain funding standards. The actuary will not have sufficient information to assess KRIP's funding status for several months, and the law prevents KRIP from paying lump sums during that time.
KRIP has a distribution option that allows you to start your benefit as an annuity and then re-elect to have the remainder paid as a lump sum if and when KRIP is allowed to do so.
Supplemental Pension Benefits
If you were classified as highly compensated under the Tax Code during your employment with Kodak, you also may be receiving supplemental pension benefits under the Kodak Excess Retirement Income Plan (KERIP) or the Kodak Unfunded Retirement Income Plan (KURIP). These are unfunded plans which are paid out of company assets.
Payments under the KERIP and KURIP have been discontinued as of the Chapter 11 filing date. At this time, we are not legally permitted to make any payments from the KERIP or KURIP for service before the filing date. Kodak sincerely regrets the hardship that this will cause.
Benefits owed to former employees under these plans will become an unsecured claim in the Chapter 11 proceedings. You will receive instructions on how to file a claim at an appropriate time.
Additional Resources
We encourage you to review the Frequently Asked Questions below that respond to questions you may have about the Chapter 11 filing and/or your pension benefits. We are committed to keeping you informed through this process. If you have additional questions now or throughout this process, please call our information hotline toll-free at (888) 249-2721 or (310) 751-2604.
All benefits information in this document is subject to applicable law and the terms of the relevant plan document, which will govern if there are any differences. The Company reserves the right to amend or terminate any benefit plan at any time.
Frequently Asked Questions
General
What is Chapter 11?
"Chapter 11" refers to the section of the U.S. Bankruptcy Code that provides a company with the opportunity to restructure under court supervision while continuing normal day-to-day business operations. The goal is to emerge from Chapter 11 as an ongoing business enterprise that is assured of long-term viability. To be clear, Kodak is not going out of business. Kodak is not liquidating.
Why did Kodak file for Chapter 11? Why now?
Kodak and its U.S.-based subsidiaries have filed for Chapter 11 reorganization to bolster liquidity in the U.S. and abroad, monetize non-strategic intellectual property, fairly resolve our legacy costs, and enable the Company to focus on our most valuable business lines. Our non-U.S. subsidiaries are not included in the filing and continue to operate as usual.
Kodak has undergone a major transformation in recent years, but needs additional time and flexibility to undertake the remaining initiatives to move the Company forward and emerge as a more competitive and sustainable global enterprise.
How does Chapter 11 reorganization work? How does it differ from Chapter 7?
Chapter 11 of the Bankruptcy Code allows companies to restructure under court supervision while continuing to operate. Companies that file under Chapter 11 have the goal of coming out of Chapter 11 stronger and more efficient. In contrast, companies that file under Chapter 7 of the Bankruptcy Code have realized that they cannot restructure their debt in a way that will allow them to continue to operate, and instead have decided to liquidate all of their assets and go out of business. To be clear, Kodak is not going out of business. Kodak is not liquidating.
Is Kodak continuing to do business?
Yes. Our intention is to continue to serve and meet the needs of our customers, both consumer and commercial, pay our employees for time worked, and ensure that our vendors, suppliers and other business partners will be paid in full for goods and services they provide us during this process.
What happens next?
While operating the business as usual, Kodak will work with its key stakeholders to become a profitable and sustainable enterprise. At the end of that process, the Court will be asked to approve a final plan of reorganization which will enable Kodak to emerge from Chapter 11 as a reorganized company.
Kodak Retirement Income Plan Benefits
What will happen to my Kodak Retirement Income Plan (KRIP) benefit?
Currently it is expected that there will be no impact on the amount of KRIP benefits or the payment of monthly annuities, given that the Plan is well funded and neither Kodak nor its creditors have access to KRIP's assets.
Are the assets of the KRIP protected from creditors' claims in the Chapter 11 proceedings?
Yes. Assets in Kodak's qualified pension plans, including the KRIP, are held in a separate trust and are not part of Kodak's assets. U.S. federal law protects qualified pension plan assets from the claims of Kodak's creditors and a federal agency, the Pension Benefit Guaranty Corporation, insures payments up to a certain level.
Will the Pension Benefit Guarantee Corporation (PBGC) take over KRIP, and if it does what will happen?
Generally the PBGC, a government agency, will take control of KRIP only if Kodak goes out of business or cannot make required contributions to the Plan, neither of which is currently anticipated. If the PBGC takes over, it will terminate the Plan, but will pay your benefits earned prior to the termination, although they will have to be paid as an annuity and may be reduced depending on the Plan's funding. You can get more information from the PBGC's website: www.pbgc.gov.
How could I find out what my pension benefit might be if the PBGC takes over KRIP? Is there a way to calculate that now?
The level of current plan assets, your age, your accrued benefit and the timing of a PBGC takeover could all impact your actual benefit. You can access information by going online to www.PBGC.gov, or by writing to their Consumer Information Center, Dept. YGP, Pueblo, Colorado 81009.
KRIP Distributions
Note: It is important to understand that the federal rules regarding restricted pension plan payments are new, with little guidance available. The Q&As with respect to KRIP Traditional, Cash Balance and STP benefits below reflect the general structure of how the process should work if restrictions are lifted, although adjustments may be made as the process unfolds.
Can my KRIP benefits be paid in a lump sum?
You can receive your benefit as an annuity subject to the normal rules, but under the law, while Kodak is in bankruptcy, KRIP cannot pay lump sums for Traditional, Cash Balance, or STP benefits to anyone who leaves or has a payment effective date after the bankruptcy filing date, until the Plan's actuary certifies that KRIP meets certain funding standards. The actuary will not have sufficient information to assess KRIP's funding status for several months, and the law prevents KRIP from paying lump sums during that time.
For those otherwise eligible for lump sums, KRIP has a distribution option that allows you to start your benefit as an annuity and then have the remainder paid as a lump sum if and when KRIP is allowed to do so.
How close is KRIP to satisfying the funding standard that would allow it to pay lump sums?
There are many factors that affect the calculation, and we will not speculate as to the outcome. The last time the funding standard was tested, which was as of December 31, 2010, the plan's funding would have met the lump sum standard. Of course, that does not give any assurance of what the outcome will be when the calculation is done for 2012.
What should I do if I already submitted my pension distribution election forms?
You must complete new election forms for pension payments beginning after 1/1/2012. Those new forms will be sent to you shortly.
What should I do if I received my pension distribution election forms but have not yet submitted them?
Please discard them – you will be sent new forms shortly.
What will happen if the distribution restrictions are lifted and eligible participants can again receive lump sum payments?
After the distribution restrictions are lifted, participants who made a payment election while the restriction was in effect will have the opportunity to elect a previously restricted form of payment, such as a lump sum. New pension distribution election forms will be sent as soon as administratively possible.
I understand that I can't elect a lump sum payment. What are my other payment options?
You will be able to elect a variety of annuity payment options or defer the start of your benefit. The annuity payment options are described in the KRIP and Termination Benefits chapters of the You & Kodak Handbook, a copy of which is located in the myBenefits website at http://benefits.kodak.com. These chapters also describe the payment processing rules.
What interest rate and other assumptions will be used to determine lump sums if they are permitted again?
Generally, if you elect to receive an annuity during the restricted period, then your lump sum will be determined as of your original payment effective date using the assumptions in effect at that time, and the adjusted primarily to reflect any annuity payments received. If instead you elect to defer all payments to a later time, then your lump sum will be determined using the assumptions in effect when you eventually elect to receive payment. In all cases, lump sums will be calculated under the normal KRIP rules, except that they will be adjusted to reflect any annuity payments received during the restriction period.
If I can't elect a lump sum payment now, is there a way that my lump sum can go to my survivors if I die before the restrictions are lifted?
Yes. If you elect a joint and survivor annuity, then your designated survivor will receive survivor annuity payments while the restrictions remain in effect, and the balance of your benefit will be paid as a lump sum if he or she is alive on the effective date of payment after restrictions are lifted.
Also, for Cash Balance and STP benefits, if you elect to defer your payments, your survivor will be eligible for benefits under the normal rules.
If you elect a straight life annuity, your survivors will not be eligible for any benefits in the event of your death.
How do I know if I am subject to the distribution restrictions?
You are not subject to the restrictions if you both:
–terminated employment prior to January 1, 2012 and
–submitted your properly completed distribution election forms in time for a January 1, 2012 payment effective date.
If you meet these requirements, then the restrictions do not apply.
What happens if the actuaries certify that KRIP does not satisfy the applicable funding standard to enable lump sum distributions?
Your election for the restricted period will remain in effect until either the actuary certifies that the lump sum funding standard has been met, or Kodak emerges from bankruptcy. (It should be noted that, as periodically communicated, the Pension Protection Act of 2006 imposed funding standards for lump sum payments even if a company is not in bankruptcy, but KRIP is currently funded well above those.) It is expected that the actuary will be able to certify whether or not KRIP is sufficiently funded in the next several months.
If KRIP is certified as meeting the lump sum standard during 2012, and if the Company remains in Chapter 11 during 2013, will a new actuarial certification be required to enable lump sum payments in 2013?
Yes. Under those conditions, lump sums would be available through 12/1/2012, after which time a new certification would be required.
If the actuarial certification concludes that KRIP does not meet the lump sum standard, when will be the next opportunity to make this assessment?
The next opportunity to make this assessment will be sometime in 2013.
Can the Company change my KRIP benefits or payment options (e.g., eliminate the lump sum option)?
Other than with respect to the restrictions on lump sum payments that we have previously described, KRIP benefits that have already been earned and the payment options with respect to those benefits currently cannot be limited. KRIP benefits yet to be earned and payment options with respect to those benefits can be changed prospectively. As always, any benefits under KRIP are subject to changes in applicable law which may, in the future, require or authorize different limits.
Supplemental Pension Benefits
What will happen to Kodak's non-qualified pension plans?
Some of Kodak's retirees and former employees participate in supplemental, "non-qualified" pension plans. These are individuals who were categorized as "highly compensated" by the IRS, and who received these benefits in addition to KRIP. Non-qualified plans are "unfunded" – instead, they are paid directly out of the assets of the company.
Payments provided to former employees under Kodak's non-qualified pension plans, including the Kodak Excess Retirement Income Plan (KERIP) and the Kodak Unfunded Retirement Income Plan (KURIP), have been discontinued as of the Chapter 11 filing date. At this time, we are not legally permitted to make any payments from the KERIP or KURIP for service before the filing date.
Benefits owed to former employees under these plans will become an unsecured claim in the Chapter 11 proceedings. You will receive instructions on how to file a claim at an appropriate time. Kodak sincerely regrets the hardship that this may cause.
401(k) Benefits
What will happen to Kodak's 401(k) plans?
Assets in Kodak's 401(k) plans, including the Savings and Investment Plan (SIP), are held in a separate trust and are not part of Kodak's assets. U.S. federal law protects qualified pension plan assets from the claims of Kodak's creditors. The PBGC is not involved with and does not guarantee 401(k) plans. While Kodak may make changes to its 401(k) plans during the Chapter 11 reorganization proceedings, these changes will only affect future company contributions to the plan, not past contributions. Like any other company, all investments in your individual 401(k) account are subject to market risk.
What will happen to my SIP account?
The bankruptcy will not impact your SIP account. The normal SIP rules continue to apply with regard to all aspects of the Plan, like investment changes, loans and distributions. Also, neither Kodak nor its creditors have access to SIP's assets.
Can any third parties, like those associated with the Fixed Income Fund or SIP's record keeper, T. Rowe Price, freeze our accounts or otherwise prevent us from doing anything we normally could under SIP?
No. Third parties cannot interfere with your rights under SIP.
Now that Kodak has filed for Chapter 11, can retirees withdraw their 401(k) account funds?
Retirees can continue to receive installment payments or make lump sum withdrawals as allowed under the terms of the Plan.
What happens to the Kodak common stock that's in my 401(k)?
It is not possible to predict the ultimate value of Kodak's common stock. In general, shareholders of a company in Chapter 11 recover value only if the claims of the secured and unsecured creditors are fully satisfied. Please contact your professional investment advisor for further information and guidance.
Is the recent change to the Fixed Income Fund a result of Kodak's Chapter 11 filing?
No. This change was due to changes in market conditions and was unrelated to the Chapter 11 filing. The "wrap agreements" that helped protect participant's principal and accrued interest became substantially more expensive and difficult to obtain. As a consequence, some firms that currently provide wrap agreement services to the Fixed Income Fund have notified SIP that they will no longer offer this service. As a result, SIP had to make a change to the structure of the fund.
All benefits information in this document is subject to applicable law and the terms of the relevant plan document, which will govern if there are any differences. The Company reserves the right to amend or terminate any benefit plan at any time.