Document Archive for Retirees
Note: These documents are included for background, but information contained in them may have been superseded by more recent changes to benefit plans, programs, and practices.
Update for Retirees
Last month, when the U.S. Bankruptcy Court heard our February 27 motion to modify certain supplemental retiree medical benefits, the Judge instructed that it would be appropriate for a special committee of retirees, known as an 1114 Committee, to be formed in order to have a formal voice in the process of addressing retiree medical and survivor benefits as we work through our business reorganization. In consideration of this guidance, today we filed a motion with the Court to create an 1114 Committee. This Committee will generally consist of retired Eastman Kodak Company employees appointed by the U.S. Trustee. It will serve as the authorized representative of those persons receiving retiree medical and survivor benefits under Eastman Kodak Company plans with respect to any future proposals to modify or terminate such benefits during Chapter 11.
At the same time, we withdrew our earlier motion to eliminate retiree medical coverage for certain Medicare-eligible individuals, and no changes to retiree medical and survivor benefits are being proposed at this time. Once the 1114 Committee is formed, we will take another look at what is the best approach to address our legacy retiree costs. The Company hopes to continue with its current approach of maintaining core retiree medical and survivor benefits while significantly reducing its retiree medical and survivor benefits costs, but recognizes that the delay in initial modifications may accelerate the comprehensive review of existing retiree medical and survivor benefits.
We look forward to a constructive dialogue with the Committee once it is formed.
Key Points about this Motion
- Because the Company has withdrawn the February 27 motion to terminate retiree medical benefits for certain Medicare-eligible individuals, the May 1 effective date proposed in that motion no longer applies.
- 1114 Committee members will be selected by the U.S. Trustee responsible for overseeing Kodak's Chapter 11 process. The U.S. Trustee will solicit retirees to serve on the Committee and aim to form the Committee by April 30, 2012.
- The Company and other sources will provide the U.S. Trustee with lists of potential representatives. The U.S. Trustee will mail a notice and questionnaire to each potential representative to solicit their interest in serving on the Committee. The notice and questionnaire will also be posted on the Kodak Transforms website (www.kodaktransforms.com) when available.
What is Section 1114 of the Bankruptcy Code?
Section 1114 of the Bankruptcy Code sets forth procedures that a company in Chapter 11 must follow before modifying or terminating certain retiree benefits; namely, negotiating proposed changes with an 1114 Committee.
If this restriction exists, why did the Company file the February 27 motion without a 1114 Committee in place?
In its February 27 motion, the Company asked for the Court's authorization to terminate certain non-vested benefits that the Company believes are not subject to the protections of section 1114. The Court did not enter a ruling on this motion, and instead suggested that a retiree committee be formed before the Court considered the motion's merits. As indicated above, the Company has now withdrawn the February 27 motion but reserved its right to resubmit it or another motion similar to it.
What impact will withdrawing the February 27 motion have on the Company's financial position?
The Company hopes to continue with its current approach of maintaining core retiree medical and survivor benefits while significantly reducing its retiree medical and survivor benefits costs, but recognizes that the delay in initial modifications may accelerate the comprehensive review of existing retiree medical and survivor benefits.
Update for Retirees
On Tuesday, March 20, at a regular monthly court hearing on Kodak's Chapter 11 proceeding, the company made progress on all four of its restructuring objectives: bolster our liquidity; monetize our non-strategic intellectual property; right-size our legacy liabilities and create a more competitive cost structure; and focus Kodak on a core set of businesses in which we can most profitably leverage technology and brand strengths. Here is a summary of the court proceedings:
- Kodak reported that it is well ahead of its liquidity projections.
- The Court granted Kodak's motion seeking discovery from Apple, and agreed that Apple must provide additional information to allow Kodak to determine how to resolve Apple's ownership claims, which Kodak believe are baseless. Kodak said it is confident that this additional information will demonstrate that Apple's claims are solely and plainly designed to interfere with Kodak's efforts to monetize its non-core patent portfolio.
- The Court said it would consider in the near future the motion on changes to Kodak's U.S. retiree medical coverage for certain retirees. The company is considering the Court's suggestion that formation of a Retiree Committee would be productive, and is working with its constituents to determine how best, and when, to form such a committee. As a result, the May 1 effective date for the proposed changes set forth in the motion no longer applies.
We are committed to keeping you informed during this process. Affected retirees will be informed of any rulings, and the effective date of any approved changes, as soon as possible following action by the Court. As previously noted, this motion is a necessary first step toward Kodak's objective of preserving a set of core retiree benefits which would be difficult to replace, and to do so within the bounds of affordability for the Kodak that will emerge from Chapter 11. The company hopes to continue with its current approach, but recognizes that delays in implementing the proposed changes may accelerate the comprehensive review of existing retiree benefits.
- Finally, the Court approved several important motions that will enable Kodak to focus on its core businesses, including the bidding procedures for the proposed Kodak Gallery sale.
Letter to Affected Retirees
Dear Kodak Retiree, LTD Recipient or Survivor:
Eastman Kodak Company and its U.S. subsidiaries filed for Chapter 11 reorganization on January 19, 2012 with the following objectives:
- To enhance the Company's liquidity position in order to maintain the confidence of and relationships with our vendors, suppliers, and customers;
- To spur the monetization of the Company's valuable intellectual property and fully enforce our intellectual property rights against industry participants that have infringed our proven and valuable digital imaging patents;
- To fairly apportion our legacy costs for a company of the size we are today; and
- To maximize the value of the Kodak enterprise for all of our stakeholders by reorganizing around our commercial and consumer business units.
Among the legacy costs that must be addressed as part of our reorganization are retiree health care costs that are not borne by many of the companies we compete against in the marketplace. As we have changed these benefits over time, we have always tried to balance the needs of our retirees with the needs of the Company. It is now clearer than ever that in order to remain a participant in the market tomorrow, we must put Kodak on a sustainable financial path today.
You are receiving the enclosed legal motion because there is an important hearing scheduled on March 20, 2012, at which time the U.S. Bankruptcy Court will consider a planned change in Kodak retiree medical coverage that we believe will affect you. This letter summarizes the proposed change, which we believe represents a necessary step in Kodak's efforts to become a competitive and sustainable enterprise during and after its Chapter 11 reorganization process. We urge you to read the entire legal motion enclosed with this letter and to consult an attorney with any questions you may have.
The motion filed by the Company would discontinue retiree benefits under Kodak's medical plan (defined in the motion as "Medicare Enhanced Benefits") for the following individuals who have attained age 65 (regardless of Medicare eligibility) or are under age 65 and Medicare eligible:
- Former employees who retired on or after October 1, 1991;
- Former employees who became eligible for long-term disability benefits on or after October 1, 1991;
- Current employees who are retirement eligible when they leave the Company; and
- Survivors and dependents of these individuals.
A hearing to consider the motion is scheduled to occur in the United States Bankruptcy Court for the Southern District of New York (located at One Bowling Green, New York, New York 10004) on March 20, 2012. Pending approval of the Bankruptcy Court, this change will become effective on May 1, 2012.
Our ultimate objective is to preserve a set of retiree benefits that are most critical to our retiree population and which would be difficult to replace. Preserving these most critical benefits must be accomplished within the bounds of affordability for the Kodak that will emerge from Chapter 11. As such, this proposed change to retiree medical benefits represents one important step in an ongoing process to address Kodak's legacy costs and enable the Company to move toward a more sustainable path.
We understand that this change will be difficult. However, individuals affected by this change who have Medicare coverage will continue to be covered by Medicare, and will typically have access to a variety of other insurance options available in their community to supplement their Medicare coverage. In some cases, the costs associated with these options may be lower than what you are now paying under the Kodak plan. All affected individuals will also have the opportunity to elect COBRA continuation coverage under the Kodak plan. More details on COBRA coverage will be provided at a later date.
We are committed to keeping you informed throughout this process. To help us deliver timely communications to you, we need your help. If you would like to receive such communications electronically, please go to the retiree tab of the Kodak Transforms website at www.kodaktransforms.com and look for instructions for how to subscribe to future e-mail notifications.
We encourage you to review the Question & Answers included with this letter. If you have additional questions now or in the future, please call the retiree information hotline toll-free at (888) 249-2721, or visit www.kodaktransforms.com.
Sincerely,
Patrick M. Sheller
Senior Vice President, General Counsel,
Secretary & Chief Administrative Officer
Eastman Kodak Company
Enc.
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.
Letter to Unaffected Retirees
Subject: Retiree Benefits Update
In the coming days, you may hear from family, friends or neighbors about a planned change in Kodak retiree medical coverage that will affect certain former employees who retired or who became eligible for long-term disability benefits on or after October 1, 1991, or their survivors. Those individuals have been sent a letter describing the proposed change and a copy of the legal motion the Company filed with the U.S. Bankruptcy Court to effect this change.
The planned change represents a necessary step in Kodak's efforts to become a competitive, sustainable enterprise under its Chapter 11 reorganization process. Please be advised that this change would apply only to the above-mentioned individuals, and, as such, WILL NOT apply to you. However, Kodak continues to review its retiree medical, dental and survivor benefits and may in the future request court authority to modify or terminate additional benefits. We will notify you of any requests that will affect you.
If you would like to get a copy of the current legal motion, it can be obtained for free from Kurtzman Carson Consultants (either at its website at http://www.kccllc.net/kodak, by clicking on the "Court Documents" link, by writing to kodakinfo@kccllc.com, or by calling (888) 249-2721) or for a fee via PACER at https://ecf.nysb.uscourts.gov/.
Thank you for your understanding and continued support of Kodak.
Sincerely,
Patrick M. Sheller
Senior Vice President, General Counsel,
Secretary & Chief Administrative Officer
Eastman Kodak Company
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.
Letter to Retirees
Dear Kodak Retiree,
Today 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.
Retiree Post-Employment Benefits
You may be receiving health care, dental, life insurance or survivor income benefits from Kodak. While we do not expect any immediate changes to these plans as a result of the filing today, Kodak needs to ensure that our legacy cost structure — including these retiree benefits — is fairly apportioned and scaled for a company of the size we are today. Therefore, we want to advise you that the Company will be examining these costs and, as necessary, will seek to adjust them. Any changes in benefits will be addressed under the supervision of the Court, and we will inform you as additional information becomes available.
Kodak Retirement Income Plan Benefits
If you also 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.
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 Question & Answer document that has been provided to respond to questions you may have about this letter 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 retiree information hotline toll-free at (888) 249-2721 or (310) 751-2604, or visit www.kodaktransforms.com
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.
Supplemental Pension Benefits
What will happen to Kodak's non-qualified pension plans?
Some of Kodak's retirees 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.
Will there be any impact on monthly disability or survivor benefits as a result of the Chapter 11 filing?
The Chapter 11 filing will not by itself affect monthly disability or survivor benefits. Kodak has filed a motion with the court seeking the authority to continue these benefits, and it is customary for the court to grant that request promptly. Please keep in mind, however, that as we move through the Chapter 11 reorganization process, changes to these benefits may be determined, because these benefits are paid out of the company's assets.
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.