Kodak 2008 Annual Report Download - page 81

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Foreign Currency Forward Contracts
The Company does not apply hedge accounting to the foreign currency forward contracts used to offset currency-related changes in
the fair value of foreign currency denominated assets and liabilities. These contracts are marked to market through net (loss)
earnings at the same time that the exposed assets and liabilities are remeasured through net (loss) earnings (both in Other income
(charges), net). The majority of the contracts of this type held by the Company are denominated in euros.
Silver Forward Contracts
The Company has entered into silver forward contracts that are designated as cash flow hedges of price risk related to forecasted
worldwide silver purchases. The fair values of silver forward contracts are reported in Other current assets and/or Accounts payable
and current liabilities, and the effective portion of the gain or loss on the derivative is recorded in Accumulated other comprehensive
income (loss). Hedge gains and losses are reclassified into Cost of goods sold as the related silver-containing products are sold to
third parties. These gains (losses) transferred to Cost of goods sold are generally offset by increased (decreased) costs of silver
purchased in the open market. As of December 31, 2008, the fair value of open silver forward contracts was an unrealized net loss
of $3 million, which is included in Accumulated other comprehensive income (loss). If this amount were to be realized, all of it would
be reclassified into Cost of goods sold during the next twelve months. Additionally, realized losses of $3 million (pre-tax), related to
closed silver contracts, have been deferred in Accumulated other comprehensive income (loss). These gains will be reclassified into
Cost of goods sold as the related silver-containing products are sold, all within the next twelve months. During 2008, realized gains
of $8 million (pre-tax) were reclassified from Accumulated other comprehensive income (loss) to Cost of goods sold. Hedge
ineffectiveness was insignificant.
NOTE 13: OTHER OPERATING EXPENSES (INCOME), NET
For the Year Ended December 31,
(in millions) 2008 2007 2006
Expenses (income):
Goodwill impairment (1) $ 785 $ - $ -
Long-lived asset impairments (1) 4 56 11
Gains related to the sales of assets and businesses (25) (158) (70)
Other 2 6 -
Total $ 766 $ (96) $ (59)
(1) Refer to Note 5, “Goodwill and Other Intangible Assets.”
NOTE 14: OTHER INCOME (CHARGES), NET
For the Year Ended December 31,
(in millions) 2008 2007 2006
Income (charges):
Interest income $ 71 $ 95 $ 59
Gain (loss) on foreign exchange transactions 7 2 (1)
Support for an educational institution (10) - -
Loss on early extinguishment of debt - - (9)
MUTEC equity method investment impairment (4) (5) -
Other (9) (5) 16
Total $ 55 $ 87 $ 65