Kodak 2014 Annual Report Download - page 76

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Fair Value
Fair values of marketable securities are determined using quoted prices in active markets for identical assets (Level 1 fair value measurements). Fair values of Kodak’s
forward contracts are determined using observable inputs (Level 2 fair value measurements), and are based on the present value of expected future cash flows (an income
approach valuation technique) considering the risks involved and using discount rates appropriate for the duration of the contracts. Transfers between levels of the fair value
hierarchy are recognized based on the actual date of the event or change in circumstances that caused the transfer. There were no transfers between levels of the fair value
hierarchy during the year ended December 31, 2014.
Fair values of long-
term borrowings are determined by reference to quoted market prices, if available, or by pricing models based on the value of related cash flows discounted
at current market interest rates. The carrying values of cash and cash equivalents and restricted cash (which are not shown in the table above) approximate their fair values.
Foreign Exchange
Foreign exchange gains and losses arising from transactions denominated in a currency other than the functional currency of the entity involved are included in Other
(charges) income, net in the accompanying Consolidated Statement of Operations. The net effects of foreign currency transactions, including changes in the fair value of
foreign exchange contracts, are shown below:
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. 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, 2014 was not significant to Kodak.
(in millions)
Successor
Predecessor
For the Year
Ended
December 31,
2014
For the Four
Months Ended
December 31,
2013
For the Eight
Months Ended
August 31,
2013
For Year Ended
December 31,
2012
Net loss
$
(22
)
$
(5
)
$
(7
)
$
(14
)
73