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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 
Washington, D.C. 20549
 
 
 
FORM 10-Q
 
 
 
[X]
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
 
 
For the quarterly period ended September 30, 2014
 
or
 
 
[   ]
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
 
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: 585-724-4000
 
 
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 whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months.    Yes [X]     No [  ]
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer
[  ]
Accelerated filer
[  ]
       
Non-accelerated filer
[X]
Smaller reporting company
[  ]
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ]   No [X]
 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
 
Title of each Class
 
 
 
 
Number of Shares Outstanding at
October 31, 2014
 
 
Common Stock, $0.01 par value
41,858,737
 

 
 

 

EASTMAN KODAK COMPANY
 
Form 10-Q
 
September 30, 2014
 
Table of Contents
 
   
 
 
Part I.—Financial Information
  Page
     
Item 1.
Financial Statements
3
 
Consolidated Statement of Operations (Unaudited)
3-4
 
Consolidated Statement of Comprehensive (Loss) Income (Unaudited)
5
 
Consolidated Statement of Financial Position (Unaudited)
6
 
Consolidated Statement of Cash Flows (Unaudited)
7
 
Notes to Financial Statements (Unaudited)
8
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
24
 
Liquidity and Capital Resources
37
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
39
Item 4.
Controls and Procedures
40
 
Part II.—Other Information
     
Item 1.
Legal Proceedings
40
Item 1 A. Risk Factors     41
Item 5.
Other Information
50
Item 6.
Exhibits
50
     
 
Signatures
51
 
Index to Exhibits
52
 

 
 
2

 

 
 
Part I. FINANCIAL INFORMATION
 
Item 1. Financial Statements
 
EASTMAN KODAK COMPANY
CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
 
(in millions, except per share data)
 

   
Successor
   
Predecessor
 
   
Three Months Ended
   
One Month Ended
   
Two Months Ended
 
                    
 
September 30, 2014
   
September 30, 2013
   
August 31, 2013
 
Revenues
                 
Sales
  $ 471     $ 165     $ 296  
Services
    93       33       69  
Total revenues
    564       198       365  
Cost of revenues
                       
        Sales
    339       146       228  
        Services
    69       30       52  
Total cost of revenues
    408       176       280  
   Gross profit
    156       22       85  
Selling, general and administrative expenses
    67       29       64  
Research and development costs
    20       8       16  
Restructuring costs and other
    9       4       3  
Other operating loss, net
    2       -       -  
Earnings (loss) from continuing operations before interest expense, loss on early extinguishment of debt, other charges, net, reorganization items, net and income taxes
    58       (19 )     2  
Interest expense
    15       6       33  
Loss on early extinguishment of debt
    -       -       2  
Other charges, net
    (1 )     -       (2 )
Reorganization items, net
    1       5       (2,217 )
Earnings (loss) from continuing operations before income taxes
    41       (30 )     2,182  
Provision for income taxes
    10       1       97  
Earnings (loss) from continuing operations
    31       (31 )     2,085  
(Loss) earnings from discontinued operations, net of income taxes
    (12 )     10       (78 )
Net earnings (loss)
    19       (21 )     2,007  
  Less: Net income (loss) attributable to noncontrolling interests
    2       (3 )     -  
NET EARNINGS (LOSS) ATTRIBUTABLE TO EASTMAN KODAK COMPANY
  $ 17     $ (18 )   $ 2,007  
Basic net earnings (loss) per share attributable to Eastman Kodak Company common shareholders:
                       
  Continuing operations
  $ 0.70     $ (0.67 )   $ 7.65  
  Discontinued operations
    (0.29 )     0.24       (0.29 )
  Total
  $ 0.41     $ (0.43 )   $ 7.36  
                         
Diluted net earnings (loss) per share attributable to Eastman Kodak Company common shareholders:
                       
  Continuing operations
  $ 0.67     $ (0.67 )   $ 7.65  
  Discontinued operations
    (0.28 )     0.24       (0.29 )
  Total
  $ 0.39     $ (0.43 )   $ 7.36  
                         
                         
Number of common shares used in basic and diluted net earnings (loss) per share
                       
Basic
    41.8       41.7       272.8  
Diluted
    43.3       41.7       272.8  

The accompanying notes are an integral part of these consolidated financial statements.

 
 
3

 
 

EASTMAN KODAK COMPANY
CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
 
(in millions, except per share data)
 

   
Successor
   
Predecessor
 
   
Nine Months Ended
   
One Month Ended
   
Eight Months Ended
 
                    
 
September 30, 2014
   
September 30, 2013
   
August 31, 2013
 
Revenues
                 
Sales
  $ 1,289     $ 165     $ 1,263  
Services
    284       33       279  
Total revenues
    1,573       198       1,542  
Cost of revenues
                       
        Sales
    1,010       146       955  
        Services
    216       30       219  
Total cost of revenues
    1,226       176       1,174  
   Gross profit
    347       22       368  
Selling, general and administrative expenses
    239       29       297  
Research and development costs
    73       8       66  
Restructuring costs and other
    42       4       43  
Other operating loss (income), net
    2       -       (495 )
(Loss) earnings from continuing operations before interest expense, loss on early extinguishment of debt, other charges, net, reorganization items, net and income taxes
    (9 )     (19 )     457  
Interest expense
    47       6       106  
Loss on early extinguishment of debt
    -       -       8  
Other charges, net
    (4 )     -       (13 )
Reorganization items, net
    11       5       (2,026 )
(Loss) earnings from continuing operations before income taxes
    (71 )     (30 )     2,356  
Provision for income taxes
    11       1       155  
(Loss) earnings from continuing operations
    (82 )     (31 )     2,201  
Earnings (loss) from discontinued operations, net of income taxes
    5       10       (135 )
Net (loss) earnings
    (77 )     (21 )     2,066  
  Less: Net income (loss) attributable to noncontrolling interests
    4       (3 )     -  
NET (LOSS) EARNINGS ATTRIBUTABLE TO EASTMAN KODAK COMPANY
  $ (81 )   $ (18 )   $ 2,066  
Basic and diluted net (loss) earnings per share attributable to Eastman Kodak Company common shareholders:
                       
  Continuing operations
  $ (2.06 )   $ (0.67 )   $ 8.08  
  Discontinued operations
    0.12       0.24       (0.50 )
  Total
  $ (1.94 )   $ (0.43 )   $ 7.58  
                         
Number of common shares used in basic and diluted net (loss) earnings per share
    41.7       41.7       272.7  
                         
 
The accompanying notes are an integral part of these consolidated financial statements.
 

 
4

 

 
EASTMAN KODAK COMPANY
CONSOLIDATED STATEMENT OF COMPREHENSIVE (LOSS) INCOME (Unaudited)
 
(in millions)

   
Successor
   
Predecessor
   
Successor
   
Predecessor
 
   
Three Months Ended
September 30, 2014
   
One Month Ended
September 30, 2013
   
Two Months Ended
August 31, 2013
   
Nine Months Ended September 30, 2014
   
One Month Ended
September 30, 2013
   
Eight Months Ended
August 31, 2013
 
NET EARNINGS (LOSS)
  $ 19     $ (21 )   $ 2,007     $ (77 )   $ (21 )   $ 2,066  
     Less: net income (loss) attributable to noncontrolling interests
    2       (3 )     -       4       (3 )     -  
Net earnings (loss) attributable to Eastman Kodak Company
    17       (18 )     2,007       (81 )     (18 )     2,066  
Other comprehensive (loss) income, net:
                                               
Currency translation adjustments
    (17 )     9       (11 )     (10 )     9       4  
Unrealized (losses) gains from investment, net
    (1 )     -       -       -       -       -  
Pension and other postretirement benefit plan obligation activity, net
    (20 )     -       1,156       (35 )     -       1,604  
Other comprehensive (loss) income, net attributable to Eastman Kodak Company
    (38 )     9       1,145       (45 )     9       1,608  
COMPREHENSIVE (LOSS) INCOME, NET ATTRIBUTABLE TO EASTMAN KODAK COMPANY
  $ (21 )   $ (9 )   $ 3,152     $ (126 )   $ (9 )   $ 3,674  
                                                 

The accompanying notes are an integral part of these consolidated financial statements.
 

 
5

 

 
EASTMAN KODAK COMPANY
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Unaudited)
 
(in millions)
 
   
As of
   
As of
 
                                                                             
 
September 30,
   
December 31,
 
   
2014
   
2013
 
ASSETS
           
Current Assets
           
Cash and cash equivalents
  $ 744     $ 844  
Restricted cash
    13       35  
Receivables, net
    417       571  
Inventories, net
    402       358  
Deferred income taxes
    49       48  
Assets held for sale
    12       95  
Other current assets
    23       20  
Total current assets
    1,660       1,971  
Property, plant and equipment, net of accumulated depreciation of $201 and $67, respectively
    552       684  
Goodwill
    96       88  
Intangible assets, net of accumulated amortization of $27 and $8, respectively
    198       219  
Restricted cash
    39       79  
Deferred income taxes
    28       54  
Other long-term assets
    106       105  
TOTAL ASSETS
 
  $ 2,679     $ 3,200  
LIABILITIES AND EQUITY
               
Current Liabilities
               
Accounts payable, trade
  $ 210     $ 281  
Current portion of long-term debt
    4       4  
Liabilities held for sale
    1       38  
Other current liabilities
    408       562  
Total current liabilities
    623       885  
Long-term debt, net of current portion
    672       674  
Pension and other postretirement liabilities
    498       572  
Other long-term liabilities
    359       421  
Total Liabilities
    2,152       2,552  
                 
Commitments and Contingencies (Note 6)
               
                 
Equity
               
Common stock, $0.01 par value
    -       -  
Additional paid in capital
    618       613  
Treasury stock, at cost
    (4 )     (3 )
Accumulated deficit
    (162 )     (81 )
Accumulated other comprehensive income
    54       99  
Total Eastman Kodak Company shareholders’ equity
    506       628  
Noncontrolling interests
    21       20  
Total equity
    527       648  
TOTAL LIABILITIES AND EQUITY
  $ 2,679     $ 3,200  
                 


The accompanying notes are an integral part of these consolidated financial statements.
 

 
6

 

 
EASTMAN KODAK COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
 
(in millions)

   
Successor
   
Predecessor
 
   
Nine Months Ended
   
One Month Ended
   
Eight Months Ended
 
   
September 30, 2014
   
September 30, 2013
   
August 31, 2013
 
Cash flows from operating activities:
                 
Net (loss) earnings
  $ (77 )   $ (21 )   $ 2,066  
Adjustments to reconcile to net cash used in operating activities:
                       
Depreciation and amortization
    161       20       118  
Net gain on sales of businesses/assets
    (22 )     -       (407 )
Loss on early extinguishment of debt
    -       -       8  
Non-cash restructuring costs, asset impairments and other charges
    2       -       81  
Reorganization items:
                       
Non-cash reorganization gain
    -       -       (1,964 )
Payment of claims
    (2 )     -       (94 )
Fresh start adjustments, net
    -       -       (302 )
Other non-cash reorganization items, net
    (7 )     -       119  
(Benefit) provision for deferred income taxes
    (11 )     6       448  
Decrease (increase) in receivables
    150       (43 )     105  
(Increase) decrease in inventories
    (50 )     37       (27 )
Decrease in liabilities excluding borrowings
    (295 )     (24 )     (450 )
Other items, net
    15       (25 )     (266 )
Total adjustments
    (59 )     (29 )     (2,631 )
Net cash used in operating activities
    (136 )     (50 )     (565 )
Cash flows from investing activities:
                       
Additions to properties
    (22 )     (2 )     (18 )
Proceeds from sales of businesses/assets
    16       -       827  
Release (funding) of restricted cash
    62       21       (134 )
Marketable securities - sales
    -       -       21  
Marketable securities - purchases
    (2 )     -       (17 )
Net cash provided by investing activities
    54       19       679  
Cash flows from financing activities:
                       
Proceeds from emergence credit facilities
    -       -       664  
Repayment of emergence credit facilities
    (3 )     -       -  
Proceeds from DIP Credit Agreements
    -       -       450  
Repayment of term loans under Original Senior DIP Credit Agreement
    -       -       (664 )
Repayment of term loans under Junior DIP Credit Agreement
    -       -       (844 )
Repayment of other borrowings
    -       (41 )     (375 )
Equity transactions of noncontrolling interests
    (3 )     5       -  
Proceeds from Rights Offerings
    -       -       406  
Contingent consideration received with sale of business
    -       -       35  
Net cash used in financing activities
    (6 )     (36 )     (328 )
Effect of exchange rate changes on cash
    (12 )     8       (23 )
Net decrease in cash and cash equivalents
    (100 )     (59 )     (237 )
Cash and cash equivalents, beginning of period
    844       898       1,135  
Cash and cash equivalents, end of period
  $ 744     $ 839     $ 898  
                         
                         

The accompanying notes are an integral part of these consolidated financial statements.
 

 
7

 
 
 
EASTMAN KODAK COMPANY
NOTES TO FINANCIAL STATEMENTS (Unaudited)
 
NOTE 1: BASIS OF PRESENTATION AND RECENT ACCOUNTING PRONOUNCEMENTS
 
BASIS OF PRESENTATION

The consolidated interim financial statements are unaudited, and certain information and footnote disclosures related thereto normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been omitted in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. In the opinion of management, the accompanying unaudited consolidated interim financial statements reflect all adjustments (consisting of normal recurring adjustments) necessary to present fairly the results of operations, financial position and cash flows of Eastman Kodak Company (“EKC” or the “Company”) and all companies directly or indirectly controlled, either through majority ownership or otherwise (collectively, “Kodak”). The results of operations for the interim periods are not necessarily indicative of the results for the entire fiscal year. These consolidated interim financial statements should be read in conjunction with Kodak’s Annual Report on Form 10-K for the year ended December 31, 2013.
 
Effective August 31, 2013, Kodak sold certain utilities and related facilities and entered into utilities supply and servicing arrangements with RED-Rochester, LLC (“RED”), a variable interest entity (“VIE”). Kodak determined that it was the primary beneficiary of the VIE. Therefore, Kodak consolidates RED’s assets, liabilities and results of operations.  Consolidated assets and liabilities of RED are $79 million and $7 million, respectively, as of September 30, 2014 and $85 million and $3 million, respectively, as of December 31, 2013.  RED’s equity in those net assets as of September 30, 2014 and December 31, 2013 is $20 million and $18 million, respectively.  The results of operations and cash flows of RED are immaterial to Kodak.  RED’s results of operations are reflected in net income attributable to noncontrolling interest in the accompanying Consolidated Statement of Operations.
 
On January 19, 2012 (the “Petition Date”), the Company and its U.S. subsidiaries (collectively, the “Debtors”) filed voluntary petitions for relief (the “Bankruptcy Filing”) under chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”). The cases (the “Chapter 11 Cases”) were jointly administered as Case No. 12-10202 (ALG) under the caption “In re Eastman Kodak Company.”  The Debtors operated their businesses as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of chapter 11 of the Bankruptcy Code and the orders of the Bankruptcy Court until their emergence from bankruptcy. The Company’s foreign subsidiaries (collectively, the “Non-Filing Entities”) were not part of the Chapter 11 Cases, and continued to operate in the ordinary course of business.
 
Upon emergence from bankruptcy on September 3, 2013, Kodak applied the provisions of fresh start accounting which resulted in Kodak becoming a new entity for financial reporting purposes.  Kodak applied fresh start accounting as of September 1, 2013.  Accordingly, the consolidated financial statements on or after September 1, 2013 are not comparable to the consolidated financial statements prior to that date. References to “Successor” or “Successor Company” relate to the reorganized Kodak subsequent to September 3, 2013.  References to “Predecessor” or “Predecessor Company” relate to Kodak prior to September 3, 2013.
 
Reclassifications and Adjustments
Certain amounts for prior periods have been reclassified to conform to the current period classification.  In the first quarter of 2014, Kodak increased the value of goodwill determined as part of fresh start accounting by $8 million to correct for a liability that should have been recorded at emergence.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
 
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 (“ASU 2014-09”), “Revenue from Contracts with Customers (Topic 606).”  ASU 2014-09 supersedes the revenue recognition requirements in Topic 605, “Revenue Recognition” and most industry-specific guidance.  The core principle of ASU 2014-09 is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services.  ASU 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016 (January 1, 2017 for Kodak) and allows either a full retrospective adoption to all periods presented or a modified retrospective adoption approach with the cumulative effect of initial application of the revised guidance recognized at the date of initial application.  Kodak is currently evaluating the impact of this ASU.
 
In April 2014, the FASB issued ASU No. 2014-08 (“ASU 2014-08”), “Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360).”  ASU 2014-08 defines a discontinued operation as a disposal of a component (or group of components) of an entity that was disposed of or is classified as held for sale and represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results. A business activity that, upon acquisition, qualifies as held for sale will also be a discontinued operation.  Presentation as a discontinued operation will no longer be precluded if there are operations and cash flows of the component that have not been eliminated from ongoing operations or if there is significant continuing involvement with the component.  ASU 2014-08 introduces several new disclosures including disclosing cash flow information of discontinued operations either in the statement of cash flows or in a note, expanded disclosure when an entity retains a significant continuing involvement with a discontinued operation as well as for disposals of individually material components that do not qualify as discontinued operations.  The amendments in the update are effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2014 (January 1, 2015 for Kodak) to new disposals and new classifications of disposal groups as held for sale after the effective date. Early adoption is permitted, but only for disposals (or classifications as held for sale) that have not been reported in financial statements previously issued. Kodak does not expect the adoption of this guidance to have a material impact on its Consolidated Financial Statements.
 

 
8

 

NOTE 2: REORGANIZATION ITEMS, NET
 
A summary of reorganization items, net is presented in the following table:
   
Successor
   
Predecessor
   
Successor
   
Predecessor
 
(in millions)
 
Three Months Ended
September 30, 2014
   
One Month Ended
September 30, 2013
   
Two Months Ended
August 31, 2013
   
Nine Months Ended September 30, 2014
   
One Month Ended
September 30, 2013
   
Eight Months Ended
August 31, 2013
 
Professional fees
  $ 1     $ 5     $ 15     $ 9     $ 5     $ 114  
Provision for expected allowed claims
    -       -       33       (1 )     -       133  
Net gain on reorganization adjustments
    -       -       (1,957 )     -       -       (1,957 )
Net gain on fresh start adjustments
    -       -       (302 )     -       -       (302 )
Other items, net
    -       -       (6 )     3       -       (14 )
Reorganization items, net
  $ 1     $ 5     $ (2,217 )   $ 11     $ 5     $ (2,026 )
Cash payments for reorganization items
  $ 2     $ 9     $ 109     $ 20     $ 9     $ 210  
                                                 

Costs directly attributable to the implementation of the plan of reorganization are reported as Reorganization items, net.
 

 
9

 

 
NOTE 3: RECEIVABLES, NET
   
As of
 
   
September 30,
   
December 31,
 
 (in millions)                                                        
 
2014
   
2013
 
Trade receivables
  $ 344     $ 473  
Miscellaneous receivables
    73       98  
Total (net of allowances of $9 and $6 as of September 30, 2014 and December 31, 2013, respectively)
  $ 417     $ 571  
 
               
 
Approximately $31 million and $39 million of the total trade receivable amounts as of September 30, 2014 and December 31, 2013, respectively, will potentially be settled through customer deductions in lieu of cash payments. Such deductions represent rebates owed to customers and are included in Other current liabilities in the accompanying Consolidated Statement of Financial Position.
 
NOTE 4: INVENTORIES, NET
   
As of
 
   
September 30,
   
December 31,
 
(in millions)
 
2014
   
2013
 
Finished goods
  $ 226     $ 185  
Work in process
    85       94  
Raw materials
    91       79  
           Total
  $ 402     $ 358  
                 

NOTE 5: OTHER CURRENT LIABILITIES
   
As of
 
   
September 30,
   
December 31,
 
(in millions)
 
2014
   
2013
 
Accrued employment-related liabilities
  $ 136     $ 189  
Deferred revenue
    46       48  
Accrued customer rebates
    36       52  
Accrued restructuring liabilities
    31       34  
Deferred consideration on disposed businesses
    11       62  
Other
    148       177  
Total
  $ 408     $ 562  
                 
 


 
10

 

 
NOTE 6: COMMITMENTS AND CONTINGENCIES
 
Environmental
 
Kodak’s undiscounted accrued liabilities for future environmental investigation, remediation and monitoring costs are composed of the following items:
   
As of
 
   
September 30,
   
December 31,
 
(in millions)
 
2014
   
2013
 
Eastman Business Park site, Rochester, NY
  $ -     $ 49  
Other current operating sites
    8       8  
Sites associated with former operations
    10       13  
Sites associated with the non-imaging health businesses sold in 1994
    11       12  
           Total
  $ 29     $ 82  
                 

These amounts are reported in Other long-term liabilities in the accompanying Consolidated Statement of Financial Position.
 
Cash expenditures for investigation, remediation and monitoring activities are expected to be incurred over the next thirty years for most of the sites. For these known environmental liabilities, the accrual reflects Kodak’s best estimate of the amount it will incur under the agreed-upon or proposed work plans. Kodak’s cost estimates were determined using the ASTM Standard E 2137-06, “Standard Guide for Estimating Monetary Costs and Liabilities for Environmental Matters,” and have not been reduced by possible recoveries from third parties. The overall method includes the use of a probabilistic model, which forecasts a range of cost estimates and a single most probable cost estimate for the remediation required at individual sites. For the purposes of establishing company-level environmental reserves, the single most probable cost estimate for each site is used. All projects are closely monitored and the models are reviewed at least once a year and as significant events occur. Kodak’s estimate includes investigations, equipment and operating costs for remediation and long-term monitoring of the sites.
 
On June 17, 2013, the Company, the New York State Department of Environmental Conservation and the New York State Urban Development Corporation, d/b/a Empire State Development entered into a settlement agreement, subsequently amended on August 6, 2013 (the “Amended EBP Settlement Agreement”).  The Amended EBP Settlement Agreement was subject to the satisfaction or waiver of certain conditions including a covenant not to sue from the U.S. Environmental Protection Agency (“EPA”).  On May 13, 2014, the Bankruptcy Court approved the U.S. Environmental Settlement, which contained the EPA covenant not to sue, and on May 20, 2014 the Amended EBP Settlement Agreement was implemented and became effective. The Amended EBP Settlement Agreement included a settlement of certain of the Company’s historical environmental liabilities at Eastman Business Park (“EBP”) through the establishment of the EBP Trust as follows:  (i) the EBP Trust is responsible for investigation and remediation at EBP arising from the Company’s historical subsurface environmental liabilities in existence prior to the effective date of the Amended EBP Settlement Agreement, (ii) the Company funded the EBP Trust on the effective date with a $49 million cash payment and transferred certain equipment and fixtures used for remediation at EBP and (iii) in the event the historical liabilities exceed $99 million, the Company will become liable for 50% of the portion above $99 million.  Prior to the implementation of the Amended EBP Settlement Agreement, $49 million was already held in a separate trust and escrow account.
 
Estimates of the amount and timing of future costs of environmental remediation requirements are by their nature imprecise because of the continuing evolution of environmental laws and regulatory requirements, the availability and application of technology, the identification of presently unknown remediation sites and the allocation of costs among the potentially responsible parties. Based on information presently available, Kodak does not believe that losses for known exposures could reasonably be expected to exceed current accruals by material amounts, although costs could be material to a particular quarter or year.
 

 
11

 

 
Other Commitments and Contingencies
 
As of September 30, 2014, the Company had outstanding letters of credit of $118 million issued under the Asset Based Revolving Credit Agreement (the “ABL Credit Agreement”), as well as bank guarantees and letters of credit of $7 million, surety bonds in the amount of $21 million, deposits and restricted cash of $58 million, primarily to ensure the payment of possible casualty and workers’ compensation claims, legal contingencies, rental payments, foreign exchange contracts and to support various customs, tax and trade activities. The deposits are recorded within Other long-term assets in the Consolidated Statement of Financial Position.
 
Kodak’s Brazilian operations are involved in governmental assessments of indirect and other taxes in various stages of litigation, primarily related to federal and state value-added taxes. Kodak is disputing these matters and intends to vigorously defend its position. Kodak routinely assesses all these matters as to the probability of ultimately incurring a liability in its Brazilian operations and records its best estimate of the ultimate loss in situations where it assesses the likelihood of loss as probable. As of September 30, 2014, the unreserved portion of these contingencies, inclusive of any related interest and penalties, for which there was at least a reasonable possibility that a loss may be incurred, amounted to approximately $38 million.
 
In connection with assessments in Brazil, local regulations may require Kodak to post security for a portion of the amounts in dispute. As of September 30, 2014, Kodak has posted security composed of $8 million of pledged cash reported within long-term Restricted cash in the Consolidated Statement of Financial Position and liens on certain Brazilian assets with a net book value of approximately $101 million.  Generally, any encumbrances on the Brazilian assets would be removed to the extent the matter is resolved in Kodak's favor.
 
Kodak is involved in various lawsuits, claims, investigations and proceedings, including commercial, customs, employment, environmental, and health and safety matters, which are being handled and defended in the ordinary course of business.  Kodak is also subject, from time to time, to various assertions, claims, proceedings and requests for indemnification concerning intellectual property, including patent infringement suits involving technologies that are incorporated in a broad spectrum of Kodak’s products.  These matters are in various stages of investigation and litigation, and are being vigorously defended. Kodak is in the process of resolving any remaining litigation that was stayed as a result of the chapter 11 filing, in accordance with the Bankruptcy Code and the orders of the Bankruptcy Court. Kodak does not believe that it is probable that the outcome in any of these matters, individually or collectively, will have a material adverse effect on its financial condition or results of operations, although litigation is inherently unpredictable.  Therefore, judgments could be rendered or settlements entered that could adversely affect Kodak’s operating results or cash flows in a particular period.  Kodak routinely assesses all of its litigation and threatened litigation as to the probability of ultimately incurring a liability, and records its best estimate of the ultimate loss in situations where it assesses the likelihood of loss as probable.
 
 NOTE 7: GUARANTEES
 
Kodak guarantees debt and other obligations of certain customers. The debt and other obligations are primarily due to banks and leasing companies in connection with financing of customers’ purchases of equipment and product from Kodak. At September 30, 2014, the maximum potential amount of future payments (undiscounted) that Kodak could be required to make under these customer-related guarantees was $6 million.  At September 30, 2014, the carrying amount of any liability related to these customer guarantees was not material.
 
The customer financing agreements and related guarantees, which mature between 2014 and 2017, typically have a term of 90 days for product and short-term equipment financing arrangements, and up to five years for long-term equipment financing arrangements.  These guarantees would require payment from Kodak only in the event of default on payment by the respective customer.  In some cases, particularly for guarantees related to equipment financing, Kodak has collateral or recourse provisions to recover and sell the equipment to reduce any losses that might be incurred in connection with the guarantees.  However, any proceeds received from the liquidation of these assets may not cover the maximum potential loss under these guarantees.
 
EKC also guarantees obligations to third parties for some of its consolidated subsidiaries. The maximum amount guaranteed is $55 million and the outstanding amount for those guarantees is $21 million.
 
In connection with the settlement of certain of the Company’s historical environmental liabilities at EBP and in accordance with the terms of the Amended EBP Settlement Agreement, in the event the historical liabilities exceed $99 million, the Company will become liable for 50% of the portion above $99 million with no limitation to the maximum potential future payments.  There is no liability recorded for this guarantee.
 
 
 
12

 
 
 
Warranty Costs
 
Kodak has warranty obligations in connection with the sale of its products. The original warranty period is generally one year or less. The costs incurred to provide for these warranty obligations are estimated and recorded as an accrued liability at the time of sale. Kodak estimates its warranty cost at the point of sale for a given product based on historical failure rates and related costs to repair.
 
The change in Kodak’s accrued warranty obligations balance, which is reflected in Other current liabilities in the accompanying Consolidated Statement of Financial Position, was as follows:
 
(in millions)
 
Accrued warranty obligations as of December 31, 2013
  $ 13  
Actual warranty experience during 2014
    (13 )
2014 warranty provisions
    6  
Accrued warranty obligations as of September 30, 2014
  $ 6  
         

Kodak also offers its customers extended warranty arrangements that are generally one year, but may range from three months to five years after the original warranty period. Kodak provides repair services and routine maintenance under these arrangements. Kodak has not separated the extended warranty revenues and costs from the routine maintenance service revenues and costs, as it is not practicable to do so. Therefore, these revenues and costs have been aggregated in the discussion that follows. The change in Kodak’s deferred revenue balance in relation to these extended warranty and maintenance arrangements from December 31, 2013 to September 30, 2014, which is reflected in Other current liabilities in the accompanying Consolidated Statement of Financial Position, was as follows:
 
(in millions)

Deferred revenue on extended warranties as of December 31, 2013
  $ 30  
New extended warranty and maintenance arrangements in 2014
    146  
Recognition of extended warranty and maintenance arrangement revenue in 2014
    (149 )
Deferred revenue on extended warranties as of September 30, 2014
  $ 27  
         


 
13

 


NOTE 8: OTHER OPERATING LOSS (INCOME), NET
             
             
   
Successor
   
Predecessor
   
Successor
   
Predecessor
 
(in millions)
 
Three Months Ended
September 30, 2014
   
One Month Ended
September 30, 2013
   
Two Months Ended
August 31, 2013
   
Nine Months Ended September 30, 2014
   
One Month Ended
September 30, 2013
   
Eight Months Ended
August 31, 2013
 
Expenses (income)
                                   
Gain on sale of digital imaging patent portfolio
  $ -     $ -     $ -     $ -     $ -     $ (535 )
Goodwill impairment (1)
    -       -       -       -       -       77  
Gain on sale of property in Mexico (2)
    -       -       -       -       -       (34 )
Other
    2       -       -       2       -       (3 )
   Total
  $ 2     $ -     $ -     $ 2     $ -     $ (495 )
                                                 
 
(1)  
Kodak recorded an impairment charge of $77 million related to the Intellectual Property and Brand Licensing reporting unit related to the sale of its digital imaging patents during the first quarter of 2013.
 
(2)  
In March 2012, Kodak sold a property in Mexico for approximately $41 million and leased back the property for a one-year term.  The pre-tax gain on the property sale of approximately $34 million was deferred due to Kodak’s continuing involvement in the property for the remainder of the lease term.  In March 2013, the deferred gain was recognized as the lease term expired.
 

 
 
14

 

 
NOTE 9: INCOME TAXES
 
Kodak’s income tax provision (benefit) and effective tax rate were as follows:

   
Successor
   
Predecessor
   
Successor
   
Predecessor
 
(in millions)
 
Three Months Ended
September 30, 2014
   
One Month Ended
September 30, 2013
   
Two Months Ended
August 31, 2013
   
Nine Months Ended September 30, 2014
   
One Month Ended
September 30, 2013
   
Eight Months Ended
August 31, 2013
 
Earnings (loss) from continuing operations before income taxes
  $ 41     $ (30 )   $ 2,182     $ (71 )   $ (30 )   $ 2,356  
Effective tax rate
    24.4 %     (3.3 )%     4.4 %     (15.5 )%     (3.3 )%     6.6 %
Provision for income taxes
    10       1       97       11       1       155  
Provision (benefit) for income taxes @ 35%
    14       (11 )     764       (25 )     (11 )     825  
Difference between tax at effective vs. statutory rate
  $ (4 )   $ 12     $ (667 )   $ 36     $ 12     $ (670 )
                                                 

For the three months ended September 30, 2014, the difference between the Company’s recorded provision and the provision that would result from applying the U.S. statutory rate of 35.0% is primarily attributable to: (1) income generated within the U.S. for which no provision was recognized, offset by losses in certain jurisdictions outside the U.S. for which no benefit was recognized due to management’s conclusion that it was more likely than not that the tax benefits would not be realized, (2) a benefit associated with foreign withholding taxes on undistributed earnings, and (3) changes in audit reserves.
 
For the nine months ended September 30, 2014, the difference between the Company’s recorded provision and the benefit that would result from applying the U.S. statutory rate of 35.0% is primarily attributable to: (1) losses generated within the U.S. and certain jurisdictions outside the U.S. for which no benefit was recognized due to management’s conclusion that it was more likely than not that the tax benefits would not be realized, (2) a benefit as a result of Kodak reaching a settlement with a taxing authority in a location outside the U.S. related to withholding taxes, (3) a benefit associated with foreign withholding taxes on undistributed earnings, and (4) changes in audit reserves.
 
For the one month ended September 30, 2013, the difference between Kodak’s recorded provision and the benefit that would result from applying the U.S. statutory rate of 35.0% was primarily attributable to losses generated within certain jurisdictions outside the U.S. for which no benefit was recognized due to management’s conclusion that it was more likely than not that the tax benefits would not be realized.
 
For the two months ended August 31, 2013, the difference between Kodak’s recorded provision and the provision that would result from applying the U.S. statutory rate of 35.0% was primarily attributable to: (1) losses generated within certain jurisdictions outside the U.S. for which no benefit was recognized due to management’s conclusion that it was more likely than not that the tax benefits would not be realized, (2) a benefit associated with foreign withholding taxes on undistributed earnings, (3) tax accounting impacts related to items reported in Accumulated other comprehensive loss in the Consolidated Statement of Financial Position, and (4) a provision associated with the establishment of a deferred tax asset valuation allowance in certain jurisdictions outside the U.S.
 
During the two months ended August 31, 2013, Kodak determined that it was more likely than not that a portion of its deferred tax assets outside the U.S. would not be realized due to changes in the business resulting from the sale of Kodak’s Personalized Imaging and Document Imaging businesses.  As a result, Kodak recorded a tax provision of $100 million associated with the establishment of a valuation allowance on those deferred tax assets.
 
For the eight months ended August 31, 2013, the difference between the Company’s recorded provision and the provision that would result from applying the U.S. statutory rate of 35.0% was primarily attributable to: (1) losses generated within certain jurisdictions outside the U.S. for which no benefit was recognized due to management’s conclusion that it was more likely than not that the tax benefits would not be realized, (2) a provision associated with withholding taxes on the sale of intellectual property, (3) a benefit associated with the tax impact of the goodwill impairment recognized during the quarter, (4) a provision associated with withholding taxes on foreign dividends paid, (5) a benefit associated with foreign withholding taxes on undistributed earnings, (6) a provision associated with the establishment of a deferred tax asset valuation allowance outside the U.S., (7) tax accounting impacts related to items reported in Accumulated other comprehensive loss in the Consolidated Statement of Financial Position, and (8) changes in audit reserves.

 
15

 

 
NOTE 10: RESTRUCTURING LIABILITIES
 
Charges for restructuring activities are recorded in the period in which Kodak commits to a formalized restructuring plan, or executes the specific actions contemplated by the plan, and all criteria for liability recognition under the applicable accounting guidance have been met. Restructuring actions taken in the first nine months of 2014 included steps toward exiting a plate manufacturing facility in the UK.  In addition, actions were initiated to reduce Kodak’s cost structure as part of its commitment to drive sustainable profitability and included a workforce reduction in France, manufacturing capacity reductions in the U.S., a research and development site consolidation in the U.S., and various targeted reductions in service, sales, research and development and other administrative functions.
 
Restructuring Reserve Activity
 
The activity in the accrued balances and the non-cash charges and credits incurred in relation to restructuring activities for the three and nine months ended September 30, 2014 were as follows:
               
Long-lived Asset
       
         
Exit
   
Impairments and
       
   
Severance
   
Costs
   
Inventory
       
(in millions)
 
Reserve
   
Reserve
   
Write-downs
   
Total
 
Balance as of December 31, 2013
  $ 26     $ 8     $ -     $ 34  
                                 
Q1 2014 charges
    11       1       1       13  
Q1 utilization/cash payments
    (11 )     (3 )     (1 )     (15 )
Balance as of March 31, 2014
  $ 26     $ 6     $ -     $ 32  
                                 
Q2 2014 charges
    19       1       -       20  
Q2 utilization/cash payments
    (9 )     (1 )     -       (10 )
Balance as of June 30, 2014
  $ 36     $ 6     $ -     $ 42  
                                 
Q3 2014 charges
    9       -       -       9  
Q3 utilization/cash payments
    (15 )     -       -       (15 )
Q3 2014 other adjustments & reclasses  (1)
    (5 )     -       -       (5 )
Balance as of September 30, 2014
  $ 25     $ 6     $ -     $ 31  
                                 
                                 
(1) The $5 million reserve reduction includes $3 million for special termination benefits, which are reflected in Pension and other postretirement liabilities in the Consolidated Statement of Financial Position. The remaining $2 million reflects foreign currency translation adjustments.
 
 
For the three and nine months ended September 30, 2014, the $9 million and $42 million, respectively of charges were reported as Restructuring costs and other in the accompanying Consolidated Statement of Operations. The severance and exit costs reserves require the outlay of cash while long-lived asset impairments and inventory write-downs represent non-cash items.
 
The severance costs for the three months ended September 30, 2014 related to the elimination of approximately 125 positions, including approximately 50 manufacturing/service positions, 25 research and development positions and 50 administrative positions. The geographic composition of these positions includes approximately 75 in the United States and Canada and 50 throughout the rest of the world.
 
The severance costs for the nine months ended September 30, 2014 related to the elimination of approximately 525 positions, including approximately 275 manufacturing/service positions, 75 research and development positions and 175 administrative positions. The geographic composition of these positions includes approximately 275 in the United States and Canada and 250 throughout the rest of the world.
 
As a result of these initiatives, the majority of the severance will be paid during periods through the end of 2014. However, in some instances, the employees whose positions were eliminated can elect or are required to receive their payments over an extended period of time. In addition, certain exit costs, such as long-term lease payments, will be paid over periods throughout 2014 and beyond.

 
16

 

NOTE 11: RETIREMENT PLANS AND OTHER POSTRETIREMENT BENEFITS
 
Components of the net periodic benefit cost for all major U.S. and Non-U.S. defined benefit plans are as follows:
 
   
Successor
   
Predecessor
   
Successor
   
Predecessor
 
   
Three Months 
Ended September 30, 2014
   
One Month
Ended September 30, 2013
   
Two Months
Ended August 31, 2013
   
Nine Months
Ended September 30, 2014
   
One Month
Ended September 30, 2013
   
Eight Months
Ended August 31, 2013
 
(in millions)
   
U.S.
   
Non-U.S.
   
U.S.
   
Non-U.S.
   
U.S.
   
Non-U.S.
   
U.S.
   
Non-U.S.
   
U.S.
   
Non-U.S.
   
U.S.
   
Non-U.S.
 
Major defined benefit plans:
                                                                       
Service cost
  $ 4     $ 1     $ 1     $ 1     $ 4     $ 1     $ 13     $ 4     $ 1     $ 1     $ 20     $ 6  
Interest cost
    42       7       17       3       34       24       136       23       17       3       120       95  
Expected return on plan assets
    (72 )     (9 )     (30 )     (4 )     (63 )     (27 )     (226 )     (29 )     (30 )     (4 )     (236 )     (107 )
Amortization of:
                                                                                               
Prior service (credit) cost
    (1 )     -       -       -       1       -       (1 )     -       -       -       1       1  
Net actuarial loss
    -       -       -       -       25       14       -       -       -       -       124       56  
Pension (income) expense before special termination benefits, curtailments and settlements
    (27 )     (1 )     (12 )     -       1       12       (78 )     (2 )     (12 )     -       29       51  
Special termination benefits
    3       -       -       -       -       -       3       -       -       -       -       -  
Curtailment (gain) loss
    -       -       -       -       (1 )     -       -       -       -       -       -       13  
Settlement loss
    -       -       -       -       -       114       -       -       -       -       -       114  
Net pension (income) expense
    (24 )     (1 )     (12 )     -       -       126       (75 )     (2 )     (12 )     -       29       178  
Other plans including unfunded plans
    -       3       -       1       -       (1 )     -       6       -       1       -       7  
Total net pension (income) expense
  $ (24 )   $ 2     $ (12 )   $ 1     $ -     $ 125     $ (75 )   $ 4     $ (12 )   $ 1     $ 29     $ 185  
                                                                                                 
 
For the three and nine months ended September 30, 2014, the special termination benefits charges of $3 million were incurred as a result of Kodak’s restructuring actions.
 
Kodak made contributions (funded plans) or paid benefits (unfunded plans) totaling approximately $8 million relating to its major U.S. and non-U.S. defined benefit pension plans for the nine months ended September 30, 2014.  Kodak forecasts its contribution (funded plans) and benefit payment (unfunded plans) requirements for its major U.S. and non-U.S. defined benefit pension plans for the balance of 2014 to be approximately $8 million.
 
The Kodak Retirement Income Plan (“KRIP”) was remeasured during the quarter ended September 30, 2014 due to a plan amendment.  As a result of the remeasurement, KRIP’s underfunded status increased by $19 million, as a newly established prior service credit of $61 million related to the amendment was offset by an $80 million actuarial loss, primarily driven by a change in the discount rate assumption to 3.75% from the 4.50% assumption used in the previous remeasurement.  Additionally, the expected rate of return on plan assets assumption was changed at the time of the remeasurement to 7.4% from the previous 7.8%.
 
The pension (income) expense before special termination benefits, curtailments and settlements reported above for the one month ended September 30, 2013 (Successor) and the two and eight months ended August 31, 2013 (Predecessor) includes $0, $9 million and $38 million, respectively, which was reported as Discontinued operations.
 
The $114 million of settlement losses for the two months ended August 31, 2013 were incurred as a result of the sale of Kodak’s Personalized Imaging and Document Imaging businesses (see Note 16, “Discontinued Operations” for more information on the sale) and have been included in Discontinued operations in the Consolidated Statement of Operations.

 
17

 

Postretirement benefit costs for the Company’s U.S., Canada and U.K. postretirement benefit plans, which represent the Company’s major postretirement plans, include:
 
   
Successor
   
Predecessor
   
Successor
   
Predecessor
 
(in millions)
 
Three Months Ended
September 30, 2014
   
One Month Ended
September 30, 2013
   
Two Months Ended
August 31, 2013
   
Nine Months Ended September 30, 2014
   
One Month Ended
September 30, 2013
   
Eight Months Ended
August 31, 2013
 
Service cost
  $ -     $ -     $ -     $ -     $ -     $ -  
Interest cost
    1       -       1       3       -       3  
Amortization of:
                                               
Prior service credit
    -       -       (18 )     -       -       (75 )
Net actuarial loss
    -       -       -       -       -       3  
Total net postretirement benefit expense (income)
  $ 1     $ -     $ (17 )   $ 3     $ -     $ (69 )
                                                 
 
Kodak paid benefits, net of participant contributions, totaling $6 million relating to its major postretirement benefit plans for the nine months ended September 30, 2014. Kodak expects to pay benefits, net of participant contributions, of approximately $3 million for these postretirement plans for the remainder of 2014.
 
 NOTE 12: EARNINGS PER SHARE
 
Basic earnings per share are calculated using the weighted-average number of shares of common stock outstanding during the period.  Diluted earnings per share calculations include any dilutive effect of potential common shares.  In periods with a net loss from continuing operations, diluted earnings per share are calculated using weighted-average basic shares for that period, as utilizing diluted shares would be anti-dilutive to loss per share.
 
Weighted-average basic shares outstanding for the three months ended September 30, 2014, one month ended September 30, 2013, two months ended August 31, 2013, nine months ended September 30, 2014 and eight months ended August 31, 2013 were 41.8 million, 41.7 million, 272.8 million, 41.7 million and 272.7 million, respectively.
 
Weighted-average diluted shares outstanding for the three months ended September 30, 2014 were 43.3 million and included the dilutive effect of the following potential shares of common stock:
 
(in millions of shares)
 
Three Months Ended
 
   
September 30, 2014
 
Unvested share-based awards
    0.2  
Warrants to purchase common shares
    1.3  
   Total
    1.5  
         
As a result of the net loss from continuing operations for the one month ended September 30, 2013 and nine months ended September 30, 2014, Kodak calculated diluted earnings per share using weighted-average basic shares outstanding for those periods.  If Kodak had reported earnings from continuing operations for the one month ended September 30, 2013 and nine months ended September 30, 2014, the following potential shares of its common stock would have been dilutive in the computation of diluted earnings per share:
 
(in millions of shares)
 
One Month Ended
   
Nine Months Ended
 
   
September 30, 2013
   
September 30, 2014
 
Unvested share-based awards
    -       0.3  
Warrants to purchase common shares
    1.4       1.7  
   Total
    1.4       2.0  
                 
The computation of diluted earnings per share for the three months ended September 30, 2014 and the nine months ended September 30, 2014 also excluded 0.4 million shares associated with the assumed conversion of outstanding employee stock options because the effects would have been anti-dilutive.  There were no employee stock options outstanding for the one month ended September 30, 2013.
 
The Predecessor Company reported earnings from continuing operations for the two months and eight months ended August 31, 2013.  However, no additional shares of Kodak’s common stock related to the assumed conversion of (1) unvested share-based awards, (2) approximately 7 million outstanding employee stock options, (3) approximately 40 million outstanding detachable warrants to purchase common shares, and (4) approximately $400 million of convertible senior notes due 2017 were included in the computation of diluted earnings per share as they were all anti-dilutive.
 
 
18

 
 
NOTE 13: SHAREHOLDERS’ EQUITY
 
Kodak has 560 million shares of authorized stock, consisting of: (i) 500 million shares of common stock, par value $0.01 per share and (ii) 60 million shares of preferred stock, no par value, issuable in one or more series. As of September 30, 2014 and December 31, 2013, there were 42.1 million and 41.8 million shares of common stock and no shares of preferred stock issued, respectively. Treasury stock consisted of approximately 0.2 million shares at both September 30, 2014 and December 31, 2013.
 
NOTE 14: OTHER COMPREHENSIVE (LOSS) INCOME
 
The changes in Other comprehensive (loss) income, by component, were as follows:

     
Successor
   
Predecessor
   
Successor
   
Predecessor
 
     
Three Months Ended September 30, 2014
   
One Month Ended
September 30, 2013
   
Two Months Ended
August 31, 2013
   
Nine Months Ended September 30, 2014
   
One Month Ended
September 30, 2013
   
Eight Months Ended
August 31, 2013
 
Currency translation adjustments
    $ (17 )   $ 9     $ (11 )   $ (10 )   $ 9     $ 4  
                                                   
Unrealized (losses) gains from investment, before tax
      (1 )     -       -       -       -       -  
Tax provision
      -       -       -       -       -       -  
Unrealized (losses) gains from investment, net of  tax
      (1 )     -       -       -       -       -  
                                                   
Pension and other postretirement benefit plan changes
                                                 
Newly established prior service credit
      61       -       -       61       -       -  
Newly established net actuarial (loss) gain
      (80 )     -       21       (96 )     -       393  
Tax provision (benefit)
      -       -       5       (1 )     -       14  
Newly established prior service credit and net actuarial (loss) gain, net of tax
      (19 )     -       16       (34 )     -       379  
Reclassification adjustments:
                                                 
Amortization of prior-service credit
(a)
    (1 )     -       (20 )     (1 )     -       (75 )
Amortization of actuarial losses
(a)
    -       -       41       -       -       185  
Recognition of losses due to settlements and curtailments
(a)
    -       -       1,546       -       -       1,563  
Total reclassification adjustments
      (1 )     -       1,567       (1 )     -       1,673  
Tax provision
      -       -       427       -       -       448  
Reclassification adjustments, net of tax
      (1 )     -       1,140