Kodak 2012 Annual Report Download - page 88
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Table of Contents
Derivative Financial Instruments
Kodak, as a result of its global operating and financing activities, is exposed to changes in foreign currency exchange rates, commodity prices,
and interest rates, which may adversely affect its results of operations and financial position. Kodak manages such exposures, in part, with
derivative financial instruments.
Foreign currency forward contracts are used to mitigate currency risk related to foreign currency denominated assets and liabilities. Silver
forward contracts are used to mitigate Kodak’s risk to fluctuating silver prices. Kodak’s exposure to changes in interest rates results from its
investing and borrowing activities used to meet its liquidity needs.
Kodak’s financial instrument counterparties are high-quality investment or commercial banks with significant experience with such instruments.
Kodak manages exposure to counterparty credit risk by requiring specific minimum credit standards and diversification of counterparties. Kodak
has procedures to monitor the credit exposure amounts. The maximum credit exposure at December 31, 2012 was not significant to Kodak.
In the event of a default under the Company’s DIP Credit Agreement, or a default under any derivative contract or similar obligation of Kodak,
subject to certain minimum thresholds, the derivative counterparties would have the right, although not the obligation, to require immediate
settlement of some or all open derivative contracts at their then-current fair value, but with liability positions netted against asset positions with
the same counterparty. In addition, the Company has provided credit support through letters of credit or as part of secured arrangements under
the DIP Credit Agreement for its derivative contract obligations. At December 31, 2012, Kodak had open derivative contracts in liability
positions with a total fair value of $1 million.
84
For the Year Ended
December 31,
(in millions)
2012
2011
2010
Net loss
$
(16
)
$
(14
)
$
(5
)