Kodak 2013 Annual Report Download - page 97

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Table of Contents
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, 2013 was not
significant to Kodak.
In the event of a default under the Company’s Term Credit Agreements, the ABL 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. At December 31, 2013, Kodak had open derivative contracts in liability positions
with a total fair value of $3 million.
The location and amounts of gains and losses related to derivatives reported in the Consolidated Statement of Operations are shown in the
following tables:
Derivatives in Cash Flow Hedging Relationships, Commodity Contracts
(in millions)
Derivatives Not Designated as Hedging Instruments, Foreign Exchange Contracts
(in millions)
Foreign Currency Forward Contracts
Kodak’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 re-measured through net (loss) earnings (both in Other income (charges), net in the Consolidated Statement of Operations). The
notional amount of such contracts open at December 31, 2013 was approximately $536 million. The majority of the contracts of this type held
by Kodak are denominated in euros.
Silver Forward Contracts
Kodak may enter into silver forward contracts that are designated as cash flow hedges of commodity price risk related to forecasted purchases
of silver. Kodak had no open hedges as of December 31, 2013 or 2012.
PAGE 91
Successor
Predecessor
Four Months
Ended
Eight Months
Ended
Year Ended December 31,
December 31, 2013
August 31, 2013
2012
2011
Gain Recognized in OCI on Derivative (Effective
Portion)
$
—
$
—
$
1
$
5
(Loss) Gain Reclassified from Accumulated OCI
Into Cost of Goods Sold (Effective Portion)
$
—
$
—
$
6
)
$
14
Gain (Loss) Recognized in Income on Derivative
(Ineffective Portion and Amount Excluded
from Effectiveness Testing)
$
—
$
—
$
—
$
—
Location of Gain or (Loss) Recognized in
Income on Derivative
Gain (Loss) Recognized in Income on Derivative
Successor
Predecessor
Four Months
Ended
Eight Months
Ended
Year Ended December 31,
December 31, 2013
August 31, 2013
2012
2011
Other income (charges), net
$
(14
)
$
2
$
—
$
11