Kodak 2010 Annual Report Download - page 73

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Foreign Currency Forward Contracts
Certain of the Company’s foreign currency forward contracts used to mitigate currency risk related to existing foreign currency
denominated assets and liabilities are not designated as hedges, and 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
notional amount of such contracts open at December 31, 2010 was approximately $1,281 million. The majority of the contracts of
this type held by the Company are denominated in euros, British pounds and Hong Kong dollars.
A subsidiary of the Company entered into intercompany foreign currency forward contracts that were designated as cash flow
hedges of exchange rate risk related to forecasted foreign currency denominated intercompany sales. By December 31, 2010, all
such contracts had been dedesignated as hedges according to the hedge strategy and there were no related amounts remaining in
accumulated other comprehensive (loss) income. During 2010, a gain of $1 million was reclassified into cost of sales. Hedge
ineffectiveness was insignificant. The fair value of the remaining open contracts as of December 31, 2010 was a net gain of less than
$1 million and the notional amount was $3 million.
A subsidiary of the Company entered into intercompany foreign currency forward contracts that were designated as cash flow
hedges of exchange rate risk related to forecasted foreign currency denominated purchases. By December 31, 2010, all such
contracts had been dedesignated as hedges according to the hedge strategy and there were no related amounts remaining in
accumulated other comprehensive (loss) income. During 2010, a loss of $3 million was reclassified into cost of sales. Hedge
ineffectiveness was insignificant. The fair value of the remaining open contracts as of December 31, 2010 was a net loss of less than
$1 million and the notional amount was $6 million.
Silver Forward Contracts
The Company enters into silver forward contracts that are designated as cash flow hedges of commodity price risk related to
forecasted purchases of silver. The value of the notional amounts of such contracts open at December 31, 2010 was $7 million.
Hedge gains and losses related to these silver forward contracts are reclassified into cost of sales as the related silver-containing
products are sold to third parties. These gains or losses transferred to cost of sales are generally offset by increased or decreased
costs of silver purchased in the open market. The amount of existing gains and losses at December 31, 2010 to be reclassified into
earnings within the next 12 months is a net gain of $2 million. At December 31, 2010, the Company had hedges of forecasted
purchases through March 2011.
NOTE 13: OTHER OPERATING EXPENSES (INCOME), NET
For the Year Ended December 31,
(in millions)
2010
2009
2008
Expenses (income):
Goodwill impairments (1)
$ 626
$ -
$ 785
Long-lived asset impairments
-
8
4
Gains related to the sales of assets and businesses (2)
(8)
(100)
(25)
Other
1
4
2
Total
$ 619
$ (88)
$ 766
(1) Refer to Note 5, “Goodwill and Other Intangible Assets,” in the Notes to Financial Statements.
(2) In November 2009, the Company agreed to terminate its patent infringement litigation with LG Electronics, Inc., LG Electronics
USA, Inc., and LG Electronics Mobilecomm USA, Inc., entered into a technology cross license agreement with LG Electronics,
Inc. and agreed to sell assets of its OLED group to Global OLED Technology LLC, an entity established by LG Electronics,
Inc., LG Display Co., Ltd. and LG Chem, Ltd. As the transactions were entered into in contemplation of one another, in order to
reflect the asset sale separately from the licensing transaction, the total consideration was allocated between the asset sale
and the licensing transaction based on the estimated fair value of the assets sold. Fair value of the assets sold was estimated
using other competitive bids received by the Company. Accordingly, $100 million of the proceeds was allocated to the asset
sale. The remaining gross proceeds of $414 million were allocated to the licensing transaction and reported in net sales of the
CDG segment.