☒Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

☐Transition report pursuant toSection 13 or 15(d) of the Securities Exchange Act of 1934

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.

See the definitions of “large accelerated filer,” “accelerated filer” “smaller reporting company” and “emerging growth company in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~August~~May 3, ~~2020,~~2021, the registrant had ~~75,684,110~~78,503,476 shares of common stock, par value $0.01 per share, outstanding.

	Three Months Ended						Six Months Ended						Three Months Ended
	June 30,						June 30,						March 31,
	2020			2019			2020			2019			2021			2020
Revenues
Sales	$	163		$	240		$	373		$	464		$	209		$	210
Services		50			67			107			134			56			57
Total revenues		213			307			480			598			265			267
Cost of revenues
Sales		159			218			350			423			185			191
Services		33			47			73			93			40			40
Total cost of revenues		192			265			423			516			225			231
Gross profit		21			42			57			82			40			36
Selling, general and administrative expenses		34			54			82			113			46			48
Research and development costs		8			11			17			22			8			9
Restructuring costs and other		1			2			8			4			1			7
Other operating income, net		(3	)		—			(10	)		—			(1	)		(7	)
Loss from continuing operations before interest expense, pension income excluding service cost component, other charges (income), net and income taxes		(19	)		(25	)		(40	)		(57	)
Loss from operations before interest expense, pension income excluding service cost component, other income, net and income taxes														(14	)		(21	)
Interest expense		4			5			8			8			4			4
Pension income excluding service cost component		(27	)		(26	)		(53	)		(53	)		(25	)		(26	)
Other charges (income), net		8			—			(45	)		1
(Loss) income from continuing operations before income taxes		(4	)		(4	)		50			(13	)
Other income, net														—			(53	)
Earnings from operations before income taxes														7			54
Provision for income taxes		1			2			166			5			1			165
Loss from continuing operations		(5	)		(6	)		(116	)		(18	)
Income from discontinued operations, net of income taxes		—			207			—			201
Net (loss) income	$	(5	)	$	201		$	(116	)	$	183
Net income (loss)													$	6		$	(111	)

Basic and diluted (loss) income per share attributable to Eastman Kodak Company common shareholders:
Continuing operations	$	(0.23	)	$	(0.25	)	$	(2.88	)	$	(0.65	)
Discontinued operations		—			4.81			—			4.67
Total	$	(0.23	)	$	4.56		$	(2.88	)	$	4.02
Basic net income (loss) per share attributable to Eastman Kodak Company common shareholders													$	0.17		$	(2.66	)
Diluted net income (loss) per share attributable to Eastman Kodak Company common shareholders													$	0.16		$	(2.66	)

Number of common shares used in basic and diluted net loss per share		43.7			43.0			43.7			43.0
Number of common shares used in basic and diluted net income (loss) per share
Basic														77.8			43.6
Diluted														80.6			43.6

The accompanying notes are an integral part of these consolidated financial statements.

	June 30,			December 31,			March 31,			December 31,
(in millions)	2020			2019			2021			2020
ASSETS
Cash and cash equivalents	$	180		$	233		$	401		$	196
Trade receivables, net of allowances of $12 and $8, respectively		140			208
Trade receivables, net of allowances of $9 and $10, respectively								165			177
Inventories, net		228			215			224			206
Restricted cash - current portion		7			12
Other current assets		32			36			42			46
Current assets held for sale		2			2			2			2
Total current assets		589			706			834			627
Property, plant and equipment, net of accumulated depreciation of $418 and $423, respectively		157			181
Property, plant and equipment, net of accumulated depreciation of $431 and $430, respectively								143			152
Goodwill		12			12			12			12
Intangible assets, net		41			47			38			39
Operating lease right-of-use assets		51			49			47			48
Restricted cash		25			45			69			53
Deferred income taxes		—			147
Other long-term assets		285			228			346			317
TOTAL ASSETS	$	1,160		$	1,415		$	1,489		$	1,248

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND EQUITY (DEFICIT)
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND EQUITY
Accounts payable, trade	$	101		$	153		$	141		$	118
Short-term borrowings and current portion of long-term debt		2			2			2			2
Current portion of operating leases		11			12			18			12
Other current liabilities		161			201			134			164
Total current liabilities		275			368			295			296
Long-term debt, net of current portion		113			109			246			17
Pension and other postretirement liabilities		368			378			389			406
Operating leases, net of current portion		51			48			41			49
Other long-term liabilities		197			231			222			212
Total liabilities		1,004			1,134			1,193			980

Commitments and Contingencies (Note 11)
Commitments and Contingencies (Note 8)

Redeemable, convertible Series A preferred stock, no par value, $100 per share liquidation preference	186			182
Redeemable, convertible preferred stock, no par value, $100 per share liquidation preference							192			191

Equity (Deficit)
Equity
Common stock, $0.01 par value		—			—			—			—
Additional paid in capital		595			604			1,169			1,152
Treasury stock, at cost		(9	)		(9	)		(10	)		(9	)
Accumulated deficit		(195	)		(79	)		(614	)		(620	)
Accumulated other comprehensive loss		(421	)		(417	)		(441	)		(446	)
Total shareholders’ (deficit) equity		(30	)		99
TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND EQUITY (DEFICIT)	$	1,160		$	1,415
Total shareholders’ equity								104			77
TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND EQUITY							$	1,489		$	1,248

The accompanying notes are an integral part of these consolidated financial statements.

	Six Months Ended						Three Months Ended
	June 30,						March 31,
(in millions)	2020			2019			2021			2020
Cash flows from operating activities:
Net (loss) income	$	(116	)	$	183
Net income (loss)							$	6		$	(111	)
Adjustments to reconcile to net cash used in operating activities:
Depreciation and amortization		20			29			8			10
Pension income		(43	)		(45	)		(21	)		(22	)
Change in fair value of embedded derivatives in the Series A Preferred Stock and Convertible Notes		(49	)		(2	)
Change in fair value of embedded derivatives in the Series A, Series B and Series C Preferred Stock and Convertible Notes								1			(53	)
Net gain on sales of assets		(9	)		(209	)		—			(8	)
Asset impairments		3			—			—			3
Stock based compensation		1			5			3			1
Provision for deferred income taxes		160			4			—			161
Decrease in trade receivables		64			22			8			19
Increase in inventories		(17	)		(14	)		(22	)		(26	)
(Decrease) increase in trade payables		(50	)		9
Increase in trade payables								24			1
Decrease in liabilities excluding borrowings and trade payables		(31	)		(5	)		(22	)		(27	)
Other items, net		3			10			(1	)		11
Total adjustments		52			(196	)		(22	)		70
Net cash used in operating activities		(64	)		(13	)		(16	)		(41	)
Cash flows from investing activities:
Additions to properties		(9	)		(5	)		(1	)		(4	)
Net proceeds from sales of assets/businesses		2			302			—			2
Net proceeds from return on equity investment		2			—			—			1
Net cash (used in) provided by investing activities		(5	)		297
Net cash used in investing activities								(1	)		(1	)
Cash flows from financing activities:
Repayment of Term Credit Agreement		—			(395	)
Proceeds from Convertible Notes		—			98
Proceeds from borrowings		—			14
Repayment of finance leases		—			(1	)
Preferred stock dividend payments		(6	)		—
Payment of contingent consideration related to the sale of a business		—			(10	)
Net cash used in financing activities		(6	)		(294	)
Net proceeds from Term Loan Credit Agreement								215			—
Net proceeds from Convertible Notes								25			—
Net proceeds from Series C Preferred Stock								99			—
Proceeds from sale of common stock								10			—
Repurchase of Series A Preferred Stock								(100	)		—
Debt issuance costs								(2	)		—
Preferred stock cash dividend payments								(4	)		(3	)
Treasury stock purchases								(1	)		—
Net cash provided by (used in) financing activities								242			(3	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(3	)		1			(4	)		(4	)
Net decrease in cash, cash equivalents, restricted cash and cash in assets held for sale		(78	)		(9	)
Cash, cash equivalents, restricted cash and cash in assets held for sale, beginning of period		290			267
Cash, cash equivalents, restricted cash and cash in assets held for sale, end of period	$	212		$	258
Net increase (decrease) in cash, cash equivalents and restricted cash								221			(49	)
Cash, cash equivalents and restricted cash, beginning of period								256			290
Cash, cash equivalents and restricted cash, end of period							$	477		$	241

The accompanying notes are an integral part of these consolidated financial statements.

Six-Month Period Ending June 30, 2020

Eastman Kodak Company Common Shareholders

Common
Stock

Additional
Paid in
Capital

Accumulated
Deficit

Accumulated
Other
Comprehensive Loss

Treasury
Stock

Total

Series A Redeemable Convertible Preferred Stock

Equity (deficit) as of December 31, 2019

$
—

$
604

$
(79
)

$
(417
)

$
(9
)

$
99

$
182

Net loss

—

—

(111
)

—

—

(111
)

—

Other comprehensive (loss) income (net of tax):

Currency translation adjustments

—

—

—

(12
)

—

(12
)

—

Pension and other postretirement
   liability adjustments

—

—

—

3

—

3

—

Series A preferred stock cash dividends

—

(3
)

—

—

—

(3
)

—

Series A preferred stock deemed dividends

—

(2
)

—

—

—

(2
)

2

Stock-based compensation

—

1

—

—

—

1

—

Equity (deficit) as of March 31, 2020

$
—

$
600

$
(190
)

$
(426
)

$
(9
)

$
(25
)

$
184

Net loss

—

—

(5
)

—

—

(5
)

—

Other comprehensive (loss) income (net of tax):

Currency translation adjustments

—

—

—

(4
)

—

(4
)

—

Pension and other postretirement
   liability adjustments

—

—

—

9

—

9

—

Series A preferred stock cash
   dividends

—

(3
)

—

—

—

(3
)

—

Series A preferred stock deemed
   dividends

—

(2
)

—

—

—

(2
)

2

Equity (deficit) as of June 30, 2020

$
—

$
595

$
(195
)

$
(421
)

$
(9
)

$
(30
)

$
186

	Three-Month Period Ending March 31, 2021
	Eastman Kodak Company Common Shareholders
	Common Stock		Additional Paid in Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Treasury Stock			Total			Redeemable Convertible Preferred Stock
Equity (deficit) as of December 31, 2020	$	—	$	1,152		$	(620	)	$	(446	)	$	(9	)	$	77		$	191
Net income		—		—			6			—			—			6			—
Other comprehensive income (loss) (net of tax):
Currency translation adjustments		—		—			—			(1	)		—			(1	)		—
Pension and other postretirement liability adjustments		—		—			—			6			—			6			—
Repurchase of Series A preferred stock		—		—			—			—			—			—			(100	)
Exchange of Series A preferred stock		—		92			—			—			—			92			(92	)
Expiration of Series A preferred stock embedded derivative		—		11			—			—			—			11			—
Issuance of convertible, redeemable Series B preferred stock, net				(95	)											(95	)		93
Issuance of common stock		—		10			—			—			—			10			—
Issuance of convertible, redeemable Series C preferred stock, net		—		—			—			—			—			—			97
Preferred stock cash dividends		—		(1	)		—			—			—			(1	)		—
Preferred stock deemed dividends		—		(2	)		—			—			—			(2	)		2
Series C Preferred stock in-kind dividends		—		(1	)		—			—			—			(1	)		1
Purchase of treasury stock ⁽¹⁾		—		—			—			—			(1	)		(1	)		—
Stock-based compensation		—		3			—			—			—			3			—
Equity (deficit) as of March 31, 2021	$	—	$	1,169		$	(614	)	$	(441	)	$	(10	)	$	104		$	192

	Six-Month Period Ending June 30, 2019																			Three-Month Period Ending March 31, 2020
	Eastman Kodak Company Common Shareholders																			Eastman Kodak Company Common Shareholders
	Common Stock		Additional Paid in Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Treasury Stock			Total			Series A Redeemable Convertible Preferred Stock		Common Stock		Additional Paid in Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Treasury Stock			Total			Redeemable Convertible Preferred Stock
Equity (deficit) as of December 31, 2018	$	—	$	617		$	(200	)	$	(411	)	$	(9	)	$	(3	)	$	173
Equity (deficit) as of December 31, 2019																				$	—	$	604		$	(79	)	$	(417	)	$	(9	)	$	99		$	182
Net loss		—		—			(18	)		—			—			(18	)		—		—		—			(111	)		—			—			(111	)		—
Other comprehensive (loss) income (net of tax):
Currency translation adjustments		—		—			—			3			—			3			—		—		—			—			(12	)		—			(12	)		—
Pension and other postretirement liability adjustments		—		—			—			(1	)		—			(1	)		—		—		—			—			3			—			3			—
Series A preferred stock cash dividends		—		(3	)		—			—			—			(3	)		—		—		(3	)		—			—			—			(3	)		—
Series A preferred stock deemed dividends		—		(2	)		—			—			—			(2	)		2		—		(2	)		—			—			—			(2	)		2
Stock-based compensation		—		3			—			—			—			3			—		—		1			—			—			—			1			—
Prior period adjustment due to adoption of ASU 2016-02		—		—			5			—			—			5			—
Equity (deficit) as of March 31, 2019	$	—	$	615		$	(213	)	$	(409	)	$	(9	)	$	(16	)	$	175
Net income		—		—			201			—			—			201			—
Other comprehensive income (net of tax):
Currency translation adjustments		—		—			—			1			—			1			—
Pension and other postretirement liability adjustments		—		—			—			—			—			—			—
Series A preferred stock cash dividends		—		(3	)		—			—			—			(3	)		—
Series A preferred stock deemed dividends		—		(2	)		—			—			—			(2	)		2
Stock-based compensation		—		2			—			—			—			2			—
Equity (deficit) as of June 30, 2019	$	—	$	612		$	(12	)	$	(408	)	$	(9	)	$	183		$	177
Equity (deficit) as of March 31, 2020																				$	—	$	600		$	(190	)	$	(426	)	$	(9	)	$	(25	)	$	184

The accompanying notes are an integral part of these consolidated financial statements.

The consolidated interim financial statements are unaudited, and certain information and footnote disclosures related thereto normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been omitted in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. In the opinion of management, the accompanying unaudited consolidated interim financial statements reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the results of operations, financial position and cash flows of Eastman Kodak Company (“EKC” or the “Company”) and all companies directly or indirectly controlled, either through majority ownership or otherwise (collectively, “Kodak”). The results of operations for the interim periods are not necessarily indicative of the results for the entire fiscal year. These consolidated interim statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 (the ~~“2019~~“2020 Form 10-K”).

The consolidated interim financial statements have been prepared on the going concern basis of accounting, which assumes Kodak will continue to operate as a going concern and which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business.

As of June 30, 2020 and December 31, 2019, Kodak had approximately $180 million and $233 million, respectively, of cash and cash equivalents. $95 million and $72 million were held in the United States (“U.S.”) as of June 30, 2020 and December 31, 2019, respectively, and $85 million and $161 million were held outside the U.S. Cash balances held outside the U.S. are generally required to support local country operations and may have high tax costs or other limitations that delay the ability to repatriate, and therefore may not be readily available for transfer to other jurisdictions. Outstanding inter-company loans to the U.S. as of June 30, 2020 and December 31, 2019 were $429 million and $408 million, respectively, which includes short-term intercompany loans from Kodak’s international finance center of $130 million and $110 million as of June 30, 2020 and December 31, 2019, respectively. In China, where approximately $23 million and $89 million of cash and cash equivalents was held as of June 30, 2020 and December 31, 2019, respectively, there are limitations related to net asset balances that may impact the ability to make cash available to other jurisdictions in the world. On May 12, 2020, a Chinese subsidiary of Kodak transferred approximately $70 million to a U.S. subsidiary of Kodak associated with an inter-company transaction. Kodak had a net decrease in cash, cash equivalents, restricted cash and cash in assets held for sale of $78 million and $9 million for the six months ended June 30, 2020 and 2019, respectively, and a net increase in cash, cash equivalents, restricted cash and cash in assets held for sale of $23 million for the year ended December 31, 2019. Kodak used cash of $64 million and $13 million in operating activities for the six months ended June 30, 2020 and 2019, respectively, and generated cash from operating activities for the year ended December 31, 2019 of $12 million. Cash flow from operations in 2019 benefitted from working capital improvements and individual transactions that occurred during the year.

U.S. GAAP requires an evaluation of whether there are conditions or events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date the financial statements are issued. Initially, this evaluation does not consider the potential mitigating effect of management’s plans that have not been fully implemented. When substantial doubt exists, management evaluates the mitigating effect of its plans if it is probable that (1) the plans will be effectively implemented within one year after the date the financial statements are issued, and (2) when implemented, the plans will mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date the financial statements are issued or prior to the conditions or events that create the going concern risk.

~~Kodak~~ is facing liquidity challenges due to operating losses, low or negative cash flow from operations and collateral needs. Kodak has $80 million of letters of credit issued under the Amended and Restated Credit Agreement (the “ABL Credit Agreement”) which matures on May 26, 2021. The Company’s 5.50% Series A Convertible Preferred Stock (the “Series A Preferred Stock”) must be redeemed on November 15, 2021 if not converted prior to then. Additionally, Kodak has significant cash requirements to fund ongoing operations, restructuring programs, pension and other postretirement obligations, and other obligations. Kodak’s plans to return to sustainable positive cash flow include growing revenues profitably, reducing operating expenses, continuing to simplify the organizational structure, generating cash from selling and leasing underutilized assets and paring investment in new technology by eliminating or delaying product development programs as needed. Additionally, the Company looks to implement ways to reduce collateral needs in the U.S.

Kodak’s products are sold and serviced in numerous countries across the globe with more than half of sales generated outside the United States. Current global economic conditions are highly volatile due to the COVID-19 pandemic, resulting in market size contractions in many countries due to economic slowdowns and government restrictions on movement. The economic uncertainties surrounding the COVID-19 pandemic are adding complexity to Kodak’s plans to return to sustainable positive cash flow. To mitigate the economic impacts of the pandemic Kodak is employing temporary furloughs and pay reductions and scaling manufacturing volumes due to expectations of reduced demand.

The recent history of negative operating cash flow, maturity of the ABL Credit Agreement in 2021, redemption date in 2021 for the Series A Preferred Stock, increased challenges in managing cash during the COVID-19 pandemic and general lack of certainty regarding the return to positive cash flow ~~raise substantial doubt about Kodak’s ability to continue as a going concern~~.

On July 29, 2020, the Company received conversion notices from holders of the Company’s 5.00% Secured Convertible Notes due 2021 (the “Notes”) exercising their rights to convert an aggregate of $95 million of principal amount of the Notes (the “Converted Notes”) into shares of the Company’s common stock, par value $.01 per share (“Common Stock”). Under the terms of the Notes, the conversion date of the Converted Notes is July 29, 2020 (the “Conversion Date”) and the Company was obligated to deliver an aggregate of 29,922,956 shares of Common Stock (the “Conversion Shares”) to the holders of the Converted Notes within five trading days after the Conversion Date. The Company issued the Conversion Shares on August 3, 2020 and has paid the $5.6 million of accumulated interest on the Converted Notes in cash. As a result, the Company’s obligations under the Converted Notes were fully discharged and the remaining outstanding principal amount of the Notes is $5 million.

The Company issued stock-based compensation grants for 2.4 million stock options on July 27, 2020. The terms of 1.8 million of the options awarded on July 27, 2020 provide for immediate vesting or vesting upon conversion of the Notes. The terms of 0.6 million of those options provide for vesting terms of between two and three years. As 95% of the Notes were converted on August 3, 2020, 1.7 million of the 1.8 million options with the accelerated vesting terms (all the options which vested immediately and 95% of the of the options that vested upon conversion of the Notes) vested by August 3, 2020. The valuation of the stock options granted on July 27, 2020 could result in material compensation expense being recognized in the three months ended September 30, 2020.

Certain amounts for prior periods have been reclassified to conform to the current period classification ~~due to Kodak’s new organization structure as of January 2020. Refer to Note 22, “Segment Information”~~in the disaggregated revenue information for ~~additional information.~~the Advanced Materials and Chemicals segment.

In ~~November 2018,~~August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting ~~Standard~~Standards Update (“ASU”) ~~2018-18, Collaborative Arrangements (Topic 808)~~2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): ~~Clarifying~~Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies accounting for convertible instruments. More convertible debt instruments will be reported as a single liability instrument and more convertible preferred stock as a single equity instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the ~~Interaction between Topic 808 and Topic 606. This guidance amended Topic 808 and Topic 606~~derivative scope exception, which will permit more equity contracts to ~~clarify that transactions~~qualify for it. The ASU also simplifies the diluted EPS calculation in ~~a collaborative arrangement should be accounted~~certain circumstances. The ASU is effective for under Topic 606 when the counterparty is a customer for a distinct good or service (i.e., unit of account). The amendments preclude an entity from presenting consideration from a transaction in a collaborative arrangement as revenue from contracts with customers if the counterparty is not a customer for that transaction. ~~The new standard is effective~~smaller reporting companies for fiscal years, and ~~for~~ interim periods within those fiscal years, beginning after December 15, ~~2019~~2023, (January 1, ~~2020~~2024 for Kodak). Early adoption is permitted for all entities for fiscal years beginning after December 15, 2020. The ~~amendments should be applied retrospectively~~ASU allows entities to ~~the date of initial application of Topic 606.~~ use either a modified retrospective or full retrospective transition method. Kodak adopted this ASU on January 1, ~~2020, and it did not have any~~2021 using the modified retrospective method, under which companies apply the guidance to all financial instruments that are outstanding as of the beginning of the year of adoption with the cumulative effect recognized as an adjustment to the opening balance of retained earnings. The adoption of this standard had no impact on Kodak’s ~~consolidated~~ financial statements.

In September 2018 the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, which amends the disclosure requirements in Topic 820 by adding, changing, or removing certain disclosures about recurring or nonrecurring fair value measurements. The additional and/or modified disclosures relate primarily to Level 3 fair value measurements while removing certain disclosures related to transfers between Level 1 and Level 2 of the fair value hierarchy. The ASU is effective retrospectively, for fiscal years beginning after December 15, 2019 (January 1, 2020 for Kodak) and interim periods within those fiscal years. Entities are permitted to early adopt any removed or modified disclosures but can delay adoption of the new disclosures until their effective date. Kodak retrospectively early adopted the provisions of the ASU that removed or modified disclosures in the fourth quarter of 2018 and prospectively adopted the provisions related to new disclosures January 1, 2020. The standard addresses disclosures only and did not have an impact on Kodak’s consolidated financial statements.

In September 2018, the FASB issued ASU 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans, which amends the disclosure requirements in ASC 715-20 by adding, clarifying, or removing certain disclosures. ASU 2018-14 requires all entities to disclose (1) the weighted average interest crediting rates for cash balance plans and other plans with promised interest crediting rates, and (2) an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period. The ASU also clarifies certain disclosure requirements for entities with two or more defined benefit pension plans when aggregate disclosures are presented. The ASU removes other disclosures from the existing guidance, such as the requirement to disclose the effects of a one-percentage-point change in the assumed health care cost trend rates. The ASU is effective retrospectively for fiscal years ending after December 15, 2020 (the year ended December 31, 2020 for Kodak). Kodak adopted this ASU on January 1, 2020. The standard addresses disclosures only and did not have an impact on Kodak’s consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which addresses how a customer should account for the costs of implementing a cloud computing service arrangement (also referred to as a “hosting arrangement”). Under ASU 2018-15, entities should account for costs associated with implementing a cloud computing arrangement that is considered a service contract in the same way as implementation costs associated with a software license; implementation costs incurred in the application development stage, such as costs for the cloud computing arrangement’s integration with on-premise software, coding, and configuration or customization, should be capitalized and amortized over the term of the cloud computing arrangement, including periods covered by certain renewal options. The ASU is effective in fiscal years beginning after December 15, 2019 (January 1, 2020 for Kodak) including interim periods within those fiscal years. The ASU should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. Kodak adopted this ASU prospectively on January 1, 2020, and it did not have any impact on Kodak’s consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” which provides optional relief through specific exceptions and practical expedients for transitioning away from reference rates that are expected to be discontinued. The relief generally applies to eligible modifications of contractual terms that change (or have the potential to change) the amount or timing of contractual cash flows related to replacement of a reference rate. The relief allows such modifications to be accounted for as continuations of existing contracts without additional analysis. The optional relief is available from March 2020 through December 31, 2022. Kodak is currently evaluating the impact of this ASU.

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”, which removes certain exceptions related to intra-period tax allocations and deferred tax accounting on outside basis differences in foreign subsidiaries and equity method investments. Additionally, it provides other simplifying measures for the accounting for income taxes. The new standard is effective for fiscal years beginning after December 15, ~~2021~~2020 (January 1, ~~2022~~2021 for Kodak) ~~with early adoption permitted.~~. Kodak ~~is currently evaluating the~~adopted this ASU prospectively on January 1, 2021 and it did not have any impact ~~of this ASU.~~on Kodak’s consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 (as amended by ASUs 2018-19, 2019-04, 2019-05, 2019-10, 2019-11, 2020-02 and 2020-03) requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. In addition, the ASU requires credit losses relating to available-for-sale debt securities to be recorded through an allowance for credit losses. The amendments in this ASU broaden the information that an entity must consider in developing its expected credit loss estimate for assets measured either collectively or individually. The ASU is effective for smaller reporting companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022, (January 1, 2023 for Kodak). Early adoption is permitted. Kodak is currently evaluating the impact of this ASU.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Statement of Financial Position that sums to the total of such amounts shown in the Statement of Cash Flows:

Restricted cash -reported in Other current ~~portion~~assets on the Consolidated Statement of Financial Position primarily represents amounts that support hedging activities. In addition, as of December 31, 2019, it also contained collateral for a guaranty provided to MIR Bidco, SA (the “Purchaser”) who purchased Kodak’s Flexographic Packaging business (“FPD”). On April 16, 2019 the Purchaser of FPD paid Kodak $15 million in the U.S. as a prepayment for transition services and products and services to be provided by Kodak to the Purchaser. Kodak provided a $15 million guaranty, supported by cash collateral in China, to the Purchaser. The Purchaser had the option to satisfy its payment obligations to Kodak through a reduction of the prepayment balance or in cash. When the Purchaser satisfied its payment obligations to Kodak by utilizing its prepayment balance, Kodak followed a guaranty amendment process to reduce the amount of its guaranty and cash collateral supporting the prepayment balance. As of June 30, 2020 and December 31, 2019, the remaining prepayment balance was $0 million and $3 million, respectively, and the cash collateral supporting Kodak’s guaranty was $0 million and $4 million, respectively.

Restricted cash includes ~~$9 million and $22~~$49 million as of ~~June 30, 2020 and~~March 31, 2021 representing the cash collateral required to be posted by the Company under the Letter of Credit Facility (“L/C Cash Collateral”). Restricted cash included $35 million as of December 31, ~~2019, respectively,~~2020, supporting compliance with the Excess Availability threshold under the ABL Credit Agreement, as defined therein (Refer to Note 8,5, “Debt and Finance Leases” for information on the ~~decrease in~~ Restricted cash supporting the L/C Cash Collateral and the Excess Availability threshold). In addition, Restricted cash as of ~~both June 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 includes an escrow of ~~$10~~$15 million and ~~$14~~$12 million, respectively, in China to secure various ongoing obligations under the agreements for the strategic relationship with Lucky HuaGuang Graphics Co. Ltd. Restricted cash also included $3 million and $5$4 million of security posted related to Brazilian legal contingencies as of ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively.

The Other component above consists of other miscellaneous long-term assets that, individually, were less than 5% of the total assets component within the Consolidated Statement of Financial Position as of the end of the preceding year, and therefore have been aggregated in accordance with Regulation S-X.

~~The following table presents the carrying value of goodwill by reportable segment.~~

As a result of the change in segments that became effective as of January 1, 2020, Kodak’s goodwill reporting units changed. Refer to Note 22, “Segment Information” for additional information on the change to Kodak’s organizational structure. The Digital Printing segment has three goodwill reporting units: Electrophotographic Printing Solutions; Prosper and Versamark; and Software. The Advanced Materials and Chemicals segment has three goodwill reporting units: Motion Picture and Industrial Films and Chemicals; Advanced Materials and Functional Printing; and Kodak Services for Business. ~~The~~ ~~Traditional Printing~~ ~~segment and Brand segment each have one goodwill reporting unit.~~

As of December 31, 2019, the goodwill balance of $12 million under the prior year segment reporting structure was comprised of $6 million for the Brand, Film and Imaging segment and $6 million for the Kodak Software segment, which had only one reporting unit (Software). The goodwill in the Brand, Film and Imaging segment was reported in the Consumer Products reporting unit.

The goodwill previously reported in the Consumer Products goodwill reporting unit was transferred to the Brand goodwill reporting unit using a relative fair value allocation to affected reporting units. Goodwill previously reported in the Software reporting unit was transferred to the Digital Printing segment where it continues to remain its own reporting unit.

~~The gross carrying amount and accumulated amortization by major intangible asset category as of June 30, 2020 and December 31, 2019 were as follows~~:

In the first quarter of 2020, due to the uncertainty regarding the negative impact of the COVID-19 pandemic at that time, Kodak performed an interim test of impairment for the Kodak trade name. Based on the result of the interim impairment test, Kodak concluded the carrying value of the Kodak trade name exceeded its fair value. Pre-tax impairment charges of $3 million are included in Other operating income, net in the six months ended June 30, 2020 in the Consolidated Statement of Operations.

Kodak also performed an interim test of impairment for the Kodak trade name as of June 30, 2020 due to the continued uncertainty regarding the negative impact of the COVID-19 pandemic. The interim impairment tests of the Kodak trade name used the income approach, specifically the relief from royalty method. Based on the result of the interim impairment test as of June 30, 2020, Kodak concluded the fair value of the Kodak trade name exceeded its’ carrying value resulting in no additional impairment.

~~Amortization expense related to intangible assets was $2 million for the three months ended June 30, 2020 and 2019 and $3 million for the six months ended June 30, 2020 and 2019.~~

~~Estimated future amortization expense related to intangible assets that are currently being amortized as of June 30, 2020 was as follows:~~

The Other component above consists of other miscellaneous long-term liabilities that, individually, were less than 5% of the total liabilities component within the Consolidated Statement of Financial Position as of the end of the preceding year, and therefore have been aggregated in accordance with Regulation S-X.

~~Amended~~Debt and ~~Restated~~finance leases and related maturities and interest rates were as follows at March 31, 2021 and December 31, 2020:

Annual maturities of debt and finance leases outstanding at March 31, 2021 were as follows:

~~On January 27, 2020 Kodak exercised its right under the~~ ~~ABL Credit Agreement~~ to permanently reduce lender commitments, reducing the commitments from $150 million to $120 million. As a result, the minimum Excess Availability decreased to $15 million from the previous minimum of $18.75 million.

On ~~March 27, 2020,~~February 26, 2021, the Company entered into a Credit Agreement (the “Term Loan Credit Agreement”) with certain funds affiliated with Kennedy Lewis Investment Management LLC (“KLIM”) as lenders (the “Term Loan Lenders”) and Alter Domus (US) LLC, as administrative agent. Pursuant to the Term Loan Credit Agreement, the Term Loan Lenders provided the Company with (i) an initial term loan in the amount of $225 million, which was drawn in full on the same date, and (ii) a commitment to provide delayed draw term loans in an aggregate principal amount of up to $50 million on or before February 26, 2023 (collectively, the “Term Loans”). Net proceeds from the Term Loan Credit Agreement were $215 million ($225 million aggregate principal less $10 million in debt transaction costs). The Term Loans have a five-year maturity and are non-amortizing.

The Term Loans bear interest at a rate of 8.5% per annum payable quarterly in cash and 4.0% per annum Paid-In-Kind interest (“PIK”) or in cash quarterly, at the Company’s option, for an aggregate interest rate of 12.5% per annum. The Company expects to elect the 4.0% per annum in PIK which will be added to the carrying value of the debt through the term and interest expense will be recorded using the effective interest method. The Term Loans are guaranteed by the Company and certain of its domestic subsidiaries (the “Subsidiary Guarantors”), and are secured by (i) a first priority lien on substantially all assets of the Company and the Subsidiary Guarantors (subject to certain exceptions) not constituting ABL Priority Collateral or L/C Cash Collateral (see below for definitions of ABL Priority Collateral and L/C Cash Collateral), including 100% of the stock of material U.S. subsidiaries and 65% of the stock of material foreign subsidiaries (the “Term Loan Priority Collateral”) and (ii) a third priority lien on the ABL Priority Collateral and L/C Cash Collateral. The Term Loan Credit Agreement limits, among other things, the ability of the Company ~~that are guarantors (the “Subsidiary Guarantors”) entered into Amendment No. 3~~and its Restricted Subsidiaries (as defined in the Term Loan Credit Agreement) to (i) incur indebtedness, (ii) incur or create liens, (iii) dispose of assets, (iv) make restricted payments and (v) make investments, and also contains customary affirmative covenants including delivery of certain of the ~~ABL~~Company’s financial statements set forth therein. The Term Loan Credit Agreement ~~(the “Amendment”)~~does not include a financial maintenance covenant.

On February 26, 2021, in connection with the ~~lenders party thereto (the “Lenders”), Bank of America, N.A., as administrative and collateral agent, and Bank of America, N.A. and each~~execution of the parties to the ABL Credit Agreement as lenders. Each of the capitalized but undefined terms used in the context of describing the ABL Credit Agreement and the Amendment has the meaning ascribed to such term in the ABL Credit Agreement and the Amendment.

The Amendment decreased the available asset-based revolving loans (the “ABL Loans”) and letters of credit from an aggregate amount of up to $120 million to $110 million, subject to the Borrowing Base. As a result of the additional reduction in lender commitments, the minimum Excess Availability decreased to $13.75 million from the previous amount of $15 million.

The Amendment also changed Equipment Availability from (i) the lesser of 75% of Net Orderly Liquidation Value of Eligible Equipment or $6 million to (ii) the lesser of 70% of Net Orderly Liquidation Value of Eligible Equipment or $14.75 million as of March 31, 2020. The Equipment Availability was $14.75 million for June 30, 2020. The $14.75 million amount decreases by $1 million per quarter starting on July 1, 2020 until maturity or the amount is decreased to $0, whichever comes first.

The changes effected by the Amendment to the Excess Availability and Equipment Availability combined with increases in Available Accounts Receivable and Inventory allowed the Company to decrease Eligible Cash by $13 million without causing Excess Availability to fall below 12.5 % of lender commitments. Available Accounts Receivable and Inventory and Eligible Equipment have the meaning ascribed to these terms in the ABL Credit Agreement.

~~The Company had issued approximately $80 million of letters of credit under the ABL Credit Agreement as of both June 30, 2020 and December 31, 2019. Under the ABL~~Term Loan Credit Agreement, the Company ~~is required~~entered into a letter agreement with KLIM (the “Board Rights Agreement”). Pursuant to ~~maintain Excess Availability above 12.5%~~the Board Rights Agreement, the Company’s Board of ~~lender commitments ($13.75 million~~Directors (“Board”) appointed an individual designated by KLIM as a member of the Board effective April 1, 2021. The individual appointed has been nominated for reelection at ~~June 30, 2020). If Excess Availability is below 12.5% of lender commitments~~ the ~~Company~~next annual meeting on May 19, 2021. KLIM also has the ~~ability~~right to ~~fund amounts into the Eligible Cash account which will increase Excess Availability for purposes~~nominate one (1) director at each annual or special meeting of the ~~previous month-end compliance reporting. On July 20, 2020~~Company’s shareholders until the ~~Company funded $5 million~~third anniversary of the execution of the Board Rights Agreement or until KLIM ceases to hold at least 50% of the original principal amount of the Term Loans and commitments under the Term Loan Credit Agreement, whichever is earlier.

Until KLIM ceases to hold at least 50% of the original principal amount of the Term Loans and commitments under the Term Loan Credit Agreement, at any time that KLIM’s designated director is not serving on the Board, KLIM will have the right to designate a non-voting observer to the ~~Eligible Cash account. Including~~Board. Such observer will have the ~~July 20, 2020 Eligible Cash funding in~~right to attend meetings of the ~~June 30, 2020 compliance calculation~~Board and, under certain circumstances, committees and subcommittees of the ~~Company had approximately $17 million of Excess Availability under the ABL Credit Agreement for the June 30, 2020 compliance reporting~~Board and ~~$22 million of Excess Availability under the ABL Credit Agreement as of December 31, 2019. To maintain Excess Availability of greater than 12.5% of lender commitments ($13.75 million~~to receive information and ~~$18.75 million as of June 30, 2020 and December 31, 2019, respectively), incremental~~materials made available to the ~~$5 million funding of the Eligible Cash account on July 20, 2020, Kodak funded $9 million~~Board, in each case, subject to certain restrictions and $22 million to the Eligible Cash account held with the ABL Credit Agreement Administrative Agent as of June 30, 2020 and December 31, 2019, respectively, which is classified as Restricted Cash in the Consolidated Statement of Financial Position.exceptions.

In addition to the changes discussed above, the Amendment increased the interest rate charged on the ABL Loans. The interest rate on the ABL Loans (which is based on Excess Availability) increased to LIBOR plus 3.50% - 4.00% per annum from LIBOR plus 2.25% - 2.75% per annum or the Base Rate plus 2.50% - 3.00% per annum from the Base Rate plus 1.25% - 1.75% per annum.Securities Purchase Agreement

On ~~May 20, 2019,~~February 26, 2021, the Company and ~~Longleaf Partners Small Cap Fund, C2W Partners Master Fund Limited and Deseret Mutual Pension Trust, which are investment funds managed by Southeastern Asset Management, Inc.~~the Term Loan Lenders (the ~~“Notes Purchasers”~~“Buyers”), entered into a ~~Notes~~Securities Purchase Agreement (the ~~“Purchase~~

“Securities Purchase Agreement”) pursuant to which the Company ~~agreed to issue and sell~~sold to the ~~Notes Purchasers,~~Buyers (i) an aggregate of 1,000,000 shares (the “Purchased Shares”) of the Company’s common stock (“Common Stock”) for a purchase price of $10.00 in cash per share for an aggregate purchase price of $10 million and ~~the Notes Purchasers agreed to purchase from the Company, $100~~(ii) $25 million aggregate principal amount of the ~~Convertible Notes.~~Company’s newly issued 5.0% unsecured convertible promissory notes due May 28, 2026 (the “Convertible Notes”) in a private placement transaction. The transaction closed on May 24, 2019. The proceeds were used to repay the remaining first lien term loans outstanding ($83 million) under the Senior Secured First Lien Term Credit Agreement (the “Term Credit Agreement”), which was terminated with the repayment. The remaining proceeds were used for general corporate purposes. The Notes Purchasers also hold all outstanding sharesissuance and sale of the ~~Series A Preferred Stock, which vote with the shares of common stock~~Purchased Shares and Convertible Notes were consummated on ~~an as-converted basis, and are holders of shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”).~~February 26, 2021.

The Convertible Notes bear interest at a rate of ~~5.00%~~5.0% per annum, which will be payable in cash on ~~their~~the maturity date and ~~at the option of the Company,~~ in ~~either cash or~~ additional shares of Common Stock on any conversion date. The payment of interest only at the maturity date has the same effect as delivering additional debt instruments to the ~~holders~~Holders of the Convertible Notes and therefore is considered ~~paid-in-kind interest (“PIK”).~~PIK. Therefore, PIK will be added to the carrying value of the debt through the term and interest expense will be recorded using the effective interest method.

The maturity date of the Convertible Notes is ~~initially November 1, 2021.~~ May 28, 2026.

The ~~Company has~~Buyers will have the ~~option~~right to ~~extend~~elect at any time to convert the ~~maturity~~Convertible Notes into shares of Common Stock at an initial conversion rate equal to 100 shares of Common Stock per each $1,000 principal amount of the Convertible Notes ~~by up~~(based on an initial conversion price equal to ~~three years~~$10.00 per share of Common Stock). The conversion rate and conversion price will be subject to certain customary anti-dilution adjustments.

If the closing price of the Common Stock equals or exceeds $14.50 (subject to adjustment in the ~~event that~~same manner as the ~~Series A Preferred Stock is refinanced with debt or equity or~~conversion price) for 45 trading days within any period of 60 consecutive trading days, the Company will have the right to cause the mandatory ~~redemption date~~conversion of the ~~Series A Preferred~~Convertible Notes into shares of Common Stock.

In the event of certain fundamental transactions, the Buyers will have the right, within a period of 30 days following the occurrence of such transaction (“Holder Fundamental Transaction Election Period”), to elect to either require prepayment of the Convertible Notes at par plus accrued and unpaid interest or convert all or a portion of the Convertible Notes into shares of Common Stock ~~is extended.~~at the conversion rate then in effect plus any additional shares based on the price per share of Common Stock in connection with the fundamental transaction, or to receive the shares of a successor entity, if any.

The Convertible Notes were considered more akin to a debt-type instrument and the economic characteristics and risks of the embedded conversion features are not considered clearly and closely related to the Convertible Notes. Accordingly, these embedded features were bifurcated from the Convertible Notes and separately accounted for on a combined basis at fair value as a single derivative liability. Kodak allocated ~~$14~~$12 million of the net proceeds received to a derivative liability based on the aggregate fair value of the embedded features ~~and term extension~~ on the date of issuance which reduced the net carrying value of the Convertible Notes. The derivative is being accounted for at fair value with subsequent changes in the fair value being reported as part of Other income, net in the Consolidated Statement of Operations. The fair value of the Convertible Notes ~~(refer~~embedded derivative as of March 31, 2021 was a liability of $11 million and is included in Other long-term liabilities in the accompanying Consolidated Statement of Financial Position. Refer to Note ~~24,~~20, “Financial Instruments”). for information on the valuation of the derivative.

The carrying value of the Convertible Notes as of March 31, 2021 and at the time of issuance ~~$84~~was $13 million ($~~100~~25 million aggregate gross proceeds less ~~$14~~$12 million allocated to the derivative ~~liability and $2~~liability). The estimated fair value of the Convertible Notes as of March 31, 2021 was $24 million ~~in transaction costs),~~(Level 3). The carrying value is being accreted to the ~~face~~aggregate principal amount using the effective interest method from the date of issuance through the maturity date.

On February 26, 2021, the Company and the Buyers entered into a Registration Rights Agreement (the “Securities Registration Rights Agreement”) providing the Buyers with registration rights in respect of ~~June 30, 2020, none~~the Purchased Shares and the Common Stock issuable upon conversion of the Convertible Notes. The Securities Registration Rights Agreement contains other customary terms and conditions, including certain customary indemnification obligations; however, the Securities Registration Rights Agreement does not obligate the Company to facilitate an underwritten offering of the registered Common Stock by the Buyers.

On February 26, 2021, the Company and the Subsidiary Guarantors entered into an amendment to the Amended and Restated Credit Agreement, dated as of May 26, 2016, among the Company, the Subsidiary Guarantors, the lenders party thereto, Bank of America, N.A., as agent (the “Agent”), and Bank of America, N.A. and JPMorgan Chase Bank, N.A., as arrangers (the “ABL Credit Agreement” and, as amended by the Amended ABL Credit Agreement, the “Amended ABL Credit Agreement”), with the Agent and the Required Lenders. Each of the capitalized and undefined terms have the meaning ascribed to such term in the ABL Credit Agreement.

The Amended ABL Credit Agreement amends the ABL Credit Agreement to, among other things, (i) extend the maturity date to February 26, 2024 or the date that is 90 days prior to the earliest scheduled maturity date or mandatory redemption date of any of the Company’s Term Loan Credit Agreement, Convertible Notes, Series B Preferred Stock, Series C Preferred Stock or any refinancings of any of the foregoing and (ii) decrease the aggregate amount of commitments from $110 million to $90 million. Commitments under the Amended ABL Credit Agreement continue to be able to be used in the form of revolving loans or letters of credit. The Company had ~~been converted.~~issued approximately $42 million letters of credit under the Amended ABL Credit Agreement as of March 31, 2021 and $90 million letters of credit under the ABL Credit Agreement as of December 31, 2020.

The revolving loans bear interest at the rate of LIBOR plus 3.50%-4.00% per annum (subject to provisions providing for a replacement benchmark rate upon the discontinuation of LIBOR) or a floating Base Rate (as defined in the Amended ABL Credit Agreement) plus 2.50%-3.00% per annum, based on Excess Availability (as defined in the Amended ABL Credit Agreement). The Company will pay an unused line fee of 37.5-50 basis points per annum, depending on whether the unused portion of the maximum amount available is less than or equal to 50% or greater than 50%, respectively. The Company will pay a letter of credit fee of 3.50%-4.00% per annum, based on Excess Availability, on issued and outstanding letters of credit, in addition to a fronting fee of 25 basis points on such letters of credit.

Obligations under the Amended ABL Credit Agreement continue to be secured by: (i) a first priority lien on assets of the Company and the Subsidiary Guarantors constituting cash (other than L/C Cash Collateral, as defined below), accounts receivable, inventory, machinery and equipment and certain other assets (the “ABL Priority Collateral”) and (ii) a second priority lien on substantially all assets of the Company and the Subsidiary Guarantors (subject to certain exceptions) other than the ABL Priority Collateral, including the L/C cash collateral and 100% of the stock of material U.S. subsidiaries and 65% of the stock of material foreign subsidiaries.

The Amended ABL Credit Agreement continues to limit, among other things, the ability of the Company and its Restricted Subsidiaries (as defined in the Amended ABL Credit Agreement) to (i) incur indebtedness, (ii) incur or create liens, (iii) dispose of assets, (iv) make restricted payments and (v) make investments. The Amended ABL Credit Agreement leaves in place customary affirmative covenants, including delivery of certain of the Company’s financial statements set forth therein.

Under the Amended ABL Credit Agreement the Company is required to maintain Minimum Liquidity of at least $80 million, which is tested at the end of each quarter. Minimum Liquidity was $284 million at March 31, 2021. If Minimum Liquidity falls below $80 million an Event of Default would occur and the Agent has the right to declare the obligation of each Lender to make Revolving Loans and of the Issuing Banks to issue Letters of Credit to be terminated, and declare the Revolving Loans, all interest thereon and all other amounts payable under the Amended ABL Credit Agreement to be due and payable.

Under the Amended ABL Credit Agreement the Company is required to maintain Excess Availability above 12.5% of lender commitments ($11.25 million and $13.75 million as of March 31, 2021 and December 31, 2020, respectively), which is tested at the end of each month. Excess Availability was $41 million and $20 million as of March 31, 2021 and December 31, 2020, respectively. If Excess Availability falls below 12.5% of lender commitments a Fixed Charge Coverage Ratio Trigger Event would occur. During any Fixed Charge Coverage Ratio Trigger Event, the Company would be required to maintain a Fixed Charge Coverage Ratio of greater than or equal to 1.0 to 1.0. If Excess Availability falls below 12.5% of lender commitments, Kodak may, in addition to the requirement to be in compliance with the minimum Fixed Charge Coverage Ratio, become subject to cash dominion control. Since Excess Availability was greater than 12.5% of lender commitments at March 31, 2021 and December 31, 2020, Kodak is not required to have a minimum Fixed Charge Coverage Ratio of 1.0 to 1.0. The Amended ABL Credit Agreement also removed Eligible Cash from the Borrowing Base. Therefore, amounts funded into the Eligible Cash account will no longer increase Excess Availability for purposes of compliance reporting. As of December 31, 2020, to maintain Excess Availability of greater than 12.5% of lender commitments, Kodak funded $35 million to the Eligible Cash account held with the ABL Credit Agreement Administrative Agent, which was classified as Restricted Cash in the Consolidated Statement of Financial Position.

If Excess Availability falls below 12.5% of lender commitments and the Fixed Charge Coverage Ratio is less than 1.0 to 1.0, an Event of Default would occur and the Agent has the right to declare the obligation of each Lender to make Revolving Loans and of the Issuing Banks to issue Letters of Credit to be terminated, and declare the Revolving Loans, all interest thereon and all other amounts payable under the Amended ABL Credit Agreement to be due and payable.

On February 26, 2021, the Company and the Subsidiary Guarantors entered into a Letter of Credit Facility Agreement (the “L/C Facility Agreement”, and together with the Term Loan Credit Agreement and the Amended ABL Credit Agreement the “Credit Agreements”) among the Company, the Subsidiary Guarantors, the lenders party thereto (the “L/C Lenders”), Bank of America, N.A., as agent, and Bank of America, N.A., as issuing bank. Pursuant to the L/C Facility Agreement, the L/C Lenders committed to issue letters of credit on the Company’s behalf in an aggregate amount of up to $50 million, provided that the Company posts cash collateral in an amount greater than or equal to 103% of the aggregate amount of letters of credit issued and outstanding at any given time (the “L/C Cash Collateral”).

The term of the L/C Facility Agreement is three years, subject to the same automatic springing maturity as the Amended ABL Credit Agreement. The Company had issued approximately $48 million letters of credit under the L/C Facility Agreement as of March 31, 2021. The current balance on deposit in the L/C Cash Collateral account is approximately $49 million, of which $14 million was deposited into the L/C Cash Collateral account from proceeds of the financing transactions described herein and the remainder of which was cash collateral previously used to secure letters of credit under the ABL Credit Agreement. The L/C Facility Agreement has the same requirement to maintain Minimum Liquidity of $80 million as is contained in the Amended ABL Credit Agreement.

Redeemable convertible preferred stock was as follows at March 31, 2021 and December 31, 2020

On November 15, 2016, the Company issued 2,000,000 shares of Series A Preferred Stock for an aggregate purchase price of $200 million, or $100 per share, pursuant to a Series A Preferred Stock Purchase Agreement with Southeastern Asset Management, Inc. (“Southeastern”) and Longleaf Partners Small-Cap Fund, C2W Partners Master Fund Limited and Deseret Mutual Pension Trust, which are investment funds managed by Southeastern (such investment funds, collectively, the “Purchasers”), dated November 7, 2016. The Company ~~has~~ classified the Series A Preferred Stock as temporary equity in the Consolidated Statement of Financial Position.

On February 26, 2021 the Company entered into a Series A Preferred Stock Repurchase and Exchange Agreement (the “Repurchase and Exchange Agreement”) with Southeastern and the Purchasers. The Company repurchased one million shares of the Series A Preferred Stock under the terms of the Repurchase and Exchange Agreement for $100,641,667, representing the liquidation value of the Series A Preferred Stock plus accrued and unpaid dividends. In addition, the Company and the Purchasers agreed to exchange the remaining one million shares of Series A Preferred Stock held by the Purchasers for shares of the Company’s newly created 4.0% Series B Convertible Preferred Stock, no par value (the “Series B Preferred Stock”) on a one-for-one basis plus accrued and unpaid dividends of $641,667. The exchange of shares of Series A Preferred Stock for shares of Series B Preferred Stock is a noncash financing activity.

Kodak allocated $43 million of the net proceeds ~~received~~from the issuance of the Series A Stock to a derivative liability based on the aggregate fair value of the embedded conversion features on the date of issuance, which reduced the net carrying value of the Series A Preferred Stock (see Note ~~24,~~20, “Financial Instruments”). The carrying value of the Series A Preferred Stock at the time of issuance, $155 million ($200 million aggregate gross proceeds less $43 million allocated to the derivative liability and $2 million in transaction costs), iswas being accreted to the mandatory redemption amount using the effective interest method to Additional paid in capital in the Consolidated Statement of Financial Position as a deemed dividend from the date of issuance through the mandatory redemption date, November 15, 2021.

The carrying value, including the fair value of the embedded derivative liability, of the Series A Preferred Stock prior to extinguishment approximated $203 million. Upon repurchase and exchange of the Series A Preferred Stock, Kodak recorded $8 million as a deemed dividend to Additional paid in

capital in the Consolidated Statement of Financial Position, representing the difference between the fair value of consideration transferred and the carrying value of the Series A Preferred Stock.

The holders of Series A Preferred Stock were entitled to cumulative dividends payable quarterly in cash at a rate of 5.50% per annum.

The fair value of the Series B Preferred Stock at the time of issuance approximated $95 million. The Company has classified the Series B Preferred Stock as temporary equity in the Consolidated Statement of Financial Position.

On February 25, 2021, the Company filed with the Department of Treasury of the State of New Jersey a Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of the Company (the “Series B Certificate of Designations”) which established the designation, number of shares, rights, preferences and limitations of the Series B Preferred Stock which became effective upon filing. The Series B Preferred Stock ranks senior to the Common Stock and pari passu with the Series C Preferred Stock with respect to dividend rights and rights on liquidation, winding-up and dissolution. The Series B Preferred Stock has a liquidation preference of $100 per share, and the holders of Series B Preferred Stock are entitled to cumulative dividends payable quarterly in cash at a rate of ~~5.50%~~4.0% per annum. Until the third quarter of 2018 all dividends owed on the Series A Preferred Stock were declared and paid when due. No quarterly dividend was declared in the third or fourth quarters of 2018 or the first and second quarters of 2019. The Company declared quarterly cash dividends in the third and fourth quarters of 2019 and the first and second quarters of 2020 that were paid when due. In July 2020, the Company declared and paid the four quarterly dividends that were in arrears. The total amount of dividends in arrears was $11 million.

The Purchasers have the right to nominate members to the Company’s board of directors proportional to their ownership on an as converted basis, which initially allowed the Purchasers to nominate two members to the board. If dividends on any Series AB Preferred Stock are in arrears for six or more consecutive or non-consecutive dividend periods, the holders of the Series AB Preferred Stock ~~voting with holders of all other preferred stock of the Company whose voting rights are then exercisable,~~ will be entitled to ~~vote for the election of two additional directors in~~nominate one director at the next annual shareholder meeting and all subsequent shareholder meetings until all accumulated dividends on such Series AB Preferred Stock ~~and other voting preferred stock~~ have been paid or set aside. The ~~nomination right~~Company declared the quarterly cash dividends for the first quarter of 2021 in March 2021, which were paid in April 2021. Holders of Series B Preferred Stock will have certain limited special approval rights, including with respect to the issuance of pari passu or senior equity securities of the ~~Purchasers will be reduced by two nominees~~Company.

Each share of Series B Preferred Stock is convertible, at the option of each holder at any time, into shares of Common Stock at the ~~holders~~initial conversion rate of 9.5238 shares of Common Stock for each share of Series AB Preferred Stock (equivalent to an initial conversion price of $10.50 per share of Common Stock). The initial conversion rate and the corresponding conversion price will be subject to certain customary anti-dilution adjustments. If a holder elects to convert any shares of Series B Preferred Stock during a specified period in connection with a fundamental change (as defined in the Series B Certificate of Designations), such holder can elect to have the conversion rate adjusted and can elect to receive a cash payment in lieu of shares for a portion of the shares. Such holder will also be entitled to a payment in respect of accumulated dividends. In addition, the Company will have the right to ~~elect, or participate~~require holders to convert any shares of Series B Preferred Stock in connection with certain reorganization events in which case the ~~election of, two additional directors. Two of~~conversion rate will be adjusted, subject to certain limitations.

The Company will have the ~~directors on~~right to cause the ~~Company’s current board of directors were nominated by the Purchasers although the holders~~mandatory conversion of the Series AB Preferred Stock ~~currently have the contractual right to nominate only one director based on the results of the ownership formula.~~

~~As of June 30, 2020, the Series A Preferred Stock has not been converted and none of the anti-dilution provisions have been triggered. Any~~into shares of ~~Series A Preferred~~Common Stock ~~not converted prior to the fifth anniversary of~~at any time after the initial issuance of the Series AB Preferred Stock ~~are~~if the closing price of the Common Stock has equaled or exceeded $14.50 (subject to adjustment in the same manner as the conversion price) for 45 trading days within a period of 60 consecutive trading days.

The Company concluded that the Series B Preferred Stock is considered more akin to a debt-type instrument and that the economic characteristics and risks of the conversion option upon a fundamental change by the holder was not considered clearly and closely related to the Series B Preferred Stock. Accordingly, this embedded conversion feature was bifurcated from the Series B Preferred Stock and separately accounted for at fair value as a derivative. The Company allocated $1 million to the derivative liability based on the aggregate fair value of the embedded conversion feature on the date of issuance which reduced the original carrying value of the Series B Preferred Stock. The derivative is being accounted for at fair value with subsequent changes in the fair value being reported as part of Other income, net in the Consolidated Statement of Operations. The fair value of the Series B Preferred Stock embedded derivative as of March 31, 2021 was a liability of $1 million and is included in Other long-term liabilities in the accompanying Consolidated Statement of Financial Position. Refer to Note 20, “Financial Instruments” for information on the valuation of the derivative.

The carrying value of the Series B Preferred Stock at the time of issuance, $93 million ($95 million fair value of Series B Preferred Stock on February 26, 2021 less $1 million allocated to the derivative liability and $1 million of transaction costs) is being accreted to the mandatory redemption amount using the effective interest method to Additional paid in capital in the Consolidated Statement of Financial Position as a deemed dividend from the date of issuance through the mandatory redemption date, May 28, 2026.

If any shares of Series B Preferred Stock have not been converted prior to May 28, 2026 (the “Redemption Date”), the Company is required to ~~be redeemed~~redeem such shares at $100 per share plus the amount of accrued and unpaid dividends. As the Company concluded that the Series B Preferred Stock is considered more akin to a debt-type instrument, the redemption feature is considered to be clearly and closely related to the host contract and therefore was not required to be separated from the Series B Preferred Stock.

On February 26, 2021, the Company and GO EK Ventures IV, LLC (the “Investor”) entered into a Series C Preferred Stock Purchase Agreement (the “Purchase Agreement”) pursuant to which the Company agreed to sell to the Investor, and the Investor agreed to purchase from the Company, an aggregate of 1,000,000 shares of the Company’s newly created 5.0% Series C Convertible Preferred Stock, no par value per share (the

“Series C Preferred Stock”), for a purchase price of $100 per share, representing $100 million of gross proceeds to the Company. The initial issuance and sale of 750,000 shares ($75 million gross proceeds) closed on February 26, 2021, and the final issuance and sale of the remaining 250,000 shares ($25 million gross proceeds) closed on March 30, 2021 after expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act. The Investor is a fund managed by Grand Oaks Capital. The Company intends to use the proceeds from the sale of the Series C Preferred Stock for general corporate purposes including the funding of growth initiatives. The Company has classified the Series C Preferred Stock as temporary equity in the Consolidated Statement of Financial Position.

On February 25, 2021, the Company filed with the Department of Treasury of the State of New Jersey a Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of the Company (the “Series C Certificate of Designations”) which established the designation, number of shares, rights, preferences and limitations of the Series C Preferred Stock and became effective upon filing. The Series C Preferred Stock ranks senior to the Common Stock and pari passu with the Series B Preferred Stock with respect to dividend rights and rights on liquidation, winding-up and dissolution. The Series C Preferred Stock has an initial liquidation preference of $100 per share, and holders of Series C Preferred Stock will be entitled to cumulative dividends payable quarterly “in-kind” in the form of additional shares of Series C Preferred Stock at a rate of 5.0% per annum. If dividends on the Series C Preferred Stock are not declared and paid for any given fiscal quarter, the liquidation preference is automatically increased by the amount of such unpaid dividends. Holders of the Series C Preferred Stock will also be entitled to participate in any dividends paid on the Common Stock (other than stock dividends) on an as-converted basis, with such dividends on any shares of the Series C Preferred Stock being payable upon conversion of such shares of Series C Preferred Stock to Common Stock. The Company declared the quarterly “in-kind” dividend for the first quarter of 2021 in March 2021 and issued additional shares of Series C Preferred Stock in April 2021.

Holders of Series C Preferred Stock are entitled to vote together with the holders of the Common Stock as a single class, in each case, on an

as-converted basis, except where a separate class vote is required by law. Holders of Series C Preferred Stock will have certain limited special approval rights, including with respect to the issuance of pari passu or senior equity securities of the Company.

Each share of Series C Preferred Stock is convertible, at the option of each holder at any time, into shares of Common Stock at the initial conversion price of $10 per share of Common Stock. The initial conversion price and the corresponding conversion rate will be subject to certain customary anti-dilution adjustments and to proportional increase in the event the liquidation preference of the Series C Preferred Stock is automatically increased as described above. If a holder elects to convert any shares of Series C Preferred Stock during a specified period in connection with a fundamental change (as defined in the Series C Certificate of Designations), such holder can elect to have the conversion rate adjusted and can elect to receive a cash payment in lieu of shares for a portion of the shares of Common Stock. Such holder will also be entitled to a payment in respect of accumulated dividends and a payment based on the present value of all required remaining dividend payments through May 28, 2026, the mandatory redemption date. Such additional payments will be payable at the Company’s option in cash or in additional shares of Common Stock. In addition, the Company will have the right to require holders to convert any shares of Series C Preferred Stock in connection with certain reorganization events in which case the conversion rate will be adjusted, subject to certain limitations.

The Company will have the right to cause the mandatory conversion of the Series C Preferred Stock into shares of Common Stock (i) at any time after February 26, 2023 if the closing price of the Common Stock has equaled or exceeded 200% of the then-effective conversion price for 45 trading days within a period of 60 consecutive trading days, or (ii) at any time after February 26, 2024 if the closing price of the Common Stock has equaled or exceeded 150% of the then-effective conversion price for 45 trading days within a period of 60 consecutive trading days.

The Company concluded that the Series C Preferred Stock is considered more akin to a debt-type instrument and that the economic characteristics and risks of the conversion option upon a fundamental change by the holder is not considered clearly and closely related to the Series C Preferred Stock. Accordingly, this embedded conversion feature was bifurcated from the Series C Preferred Stock and separately accounted for as a derivative. The Company allocated $2 million of the net proceeds received to the derivative liability based on the aggregate fair value of the embedded conversion features on the dates of issuance which reduced the original carrying value of the Series C Preferred Stock. The derivative is being accounted for at fair value with subsequent changes in the fair value being reported as part of Other income, net in the Consolidated Statement of Operations. The fair value of the Series C Preferred Stock derivative as of March 31, 2021 was a liability of $2 million and is included in Other long-term liabilities in the accompanying Consolidated Statement of Financial Position. Refer to Note 20, “Financial Instruments” for information on the valuation of the derivative.

The carrying value of the Series C Preferred Stock at the time of issuance, $97 million ($100 million aggregate gross proceeds less $2 million allocated to the derivative liability and $1 million in transaction costs) is being accreted to the mandatory redemption amount using the effective

interest method to Additional paid in capital in the Consolidated Statement of Financial Position as a deemed dividend from the date of issuance through the mandatory redemption date.

If any shares of Series C Preferred Stock have not been converted prior to the Redemption Date, the Company is required to redeem such shares at $100 per share plus the amount of accrued and unpaid dividends thereon; provided that the holders of the Series C Preferred Stock have the right to extend such redemption date by up to two years. As the Company concluded that the Series C Preferred Stock is considered more akin to a debt-type instrument, the redemption feature is considered to be clearly and closely related to the host contract and therefore was not required to be separated from the Series C Preferred Stock.

On February 26, 2021, the Company and the Investor entered into a Registration Rights Agreement (the “Series C Registration Rights Agreement”) which provides the Investor with customary registration rights in respect of the shares of Common Stock issuable upon conversion of the Series C Preferred Stock. The Series C Registration Rights Agreement contains other customary terms and conditions, including certain customary indemnification obligations.

Income recognized on operating lease arrangements for the three months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019 and~~ is presented ~~below (income~~below. Income recognized for sales-type lease arrangements is $1 million and $0 million for ~~both periods):~~three months ended March 31, 2021 and 2020, respectively:

As of ~~June 30, 2020,~~March 31, 2021, the Company had outstanding letters of credit of ~~$80~~$42 million and $48 million issued under the Amended ABL Credit Agreement and the L/C Facility Agreement, respectively, as well as bank guarantees and letters of credit of $2 $2 million, surety bonds in the amount of ~~$38~~$29 million, and restricted cash of ~~$32~~$76 million, primarily related to ~~address~~cash collateral for the outstanding letters of credit under the L/C Facility Agreement, to ensure payment of possible casualty and workers’ compensation claims, ~~support~~ legal contingencies, hedging activities, ~~compliance with the Excess Availability threshold under the ABL Credit Agreement,~~ environmental liabilities, rental payments and to support various customs, tax and trade activities.

Kodak’s Brazilian operations are involved in various litigation matters in Brazil and have received or been the subject of numerous governmental assessments related to indirect and other taxes in various stages of litigation, as well as civil litigation and disputes associated with former employees and contract labor. The tax matters, which comprise the majority of the litigation matters, are primarily related to federal and state value-added taxes. Kodak’s Brazilian operations are disputing these matters and intend to vigorously defend its position. Kodak routinely assesses all these matters as to the probability of ultimately incurring a liability in its Brazilian operations and records its best estimate of the ultimate loss in situations where it assesses the likelihood of loss as probable. As of ~~June 30, 2020,~~March 31, 2021, the unreserved portion of these contingencies, inclusive of any related interest and penalties, for which there was at least a reasonable possibility that a loss may be incurred, amounted to approximately $5$4 million.

In connection with assessments in Brazil, local regulations may require Kodak’s Brazilian operations to post security for a portion of the amounts in dispute. As of ~~June 30, 2020,~~March 31, 2021, Kodak’s Brazilian operations have posted security composed of $3 million of pledged cash reported within Restricted cash in the Consolidated Statement of Financial Position and liens on certain Brazilian assets with a net book value of approximately ~~$41~~$39 million. Generally, any encumbrances on the Brazilian assets would be removed to the extent the matter is resolved in Kodak's favor.

On July 28, 2020, the U.S. International Development Finance Corporation (the “DFC”) announced (the “DFC Announcement”) the signing of a non-binding letter of interest to provide a subsidiary of the Company with a potential $765 million loan (the “DFC Loan”) to support the launch of Kodak Pharmaceuticals, an initiative that would manufacture pharmaceutical ingredients for essential generic drugs (the “DFC Pharmaceutical Project”).

in the Southern District of New York (collectively, the “Securities Class Actions”). The Securities Class Actions seek damages and other relief based on alleged violations of federal securities laws in the context of the DFC Announcement of the potential DFC Loan and DFC Pharmaceutical Project. Since the filing of the Securities Class Actions, procedural activities have been ongoing relating to the determination of venue and lead plaintiff.

The Company has also received three requests under New Jersey law demanding, among other things, that the Company take certain actions in response to alleged breaches of fiduciary duty relating to option grants and securities transactions in the context of the DFC Announcement and alleged proxy statement disclosure deficiencies. The Company has responded to and engaged in discussions concerning these requests, and its response and discussions may serve as the basis for the requestors to bring shareholder derivative lawsuits (any such lawsuits, collectively with the Fiduciary Class Action, the “Fiduciary Matters”).

The DFC Announcement has also prompted investigations by several congressional committees, the SEC and the New York Attorney General’s office.

The Attorney General of the State of New York has threatened to file a lawsuit against the Company and its Chief Executive Officer alleging violations of New York State’s Martin Act in connection with the Chief Executive Officer’s purchase of 46,737 shares of the Company’s common stock on June 23, 2020 (the “Threatened Claim”). This purchase was made by the Chief Executive Officer during an ‘open window’ period and in compliance with the Company’s insider trading policy, including pre-approval by its general counsel. The Chief Executive Officer has never sold any Kodak shares. The Company considers the Threatened Claim to be unsupported by law or fact and intends to vigorously defend itself against the Threatened Claim should it be filed.

The Securities Class Actions, Fiduciary Matters and investigations by several congressional committees, the SEC and the New York Attorney General’s office pertaining to the DFC Announcement remain ongoing. The Company intends to vigorously defend itself against the Securities Class Actions and Fiduciary Matters and is cooperating in the investigations related to the DFC Announcement.

Kodak is involved in various lawsuits, claims, investigations, remediations and proceedings, including, from time to time, commercial, customs, employment, environmental, tort and health and safety matters, which are being handled and defended in the ordinary course of business. Kodak is also subject, from time to time, to various assertions, claims, proceedings and requests for indemnification concerning intellectual property, including patent infringement suits involving technologies that are incorporated in a broad spectrum of Kodak’s products and claims arising out of Kodak’s licensing its brand. These matters are in various stages of investigation and litigation and are being vigorously defended. Based on information currently available, Kodak does not believe that it is probable that the outcomes in any of these matters, individually or collectively, will have a material adverse effect on its financial condition or results of operations. Litigation is inherently unpredictable, and judgments could be rendered or settlements entered that could adversely affect Kodak’s operating results or cash flows in a particular period. Kodak routinely assesses all of its litigation and threatened litigation as to the probability of ultimately incurring a liability and records its best estimate of the ultimate loss in situations where it assesses the likelihood of loss as probable.

In connection with the settlement of certain of the Company’s historical environmental liabilities at Eastman Business Park, a more than 1,200-acre technology center and industrial complex in Rochester, New York, in the event the historical liabilities exceed $99 million, the Company will become liable for 50% of the portion above $99 million with no limitation to the maximum potential future payments. There is no liability recorded for this guarantee.

Kodak offers its customers extended warranty arrangements that are generally one year, but may range from three months to six years after the original warranty period. The change in Kodak’s deferred revenue balance in relation to these extended warranty and maintenance arrangements from December 31, ~~2019~~2020 to ~~June 30, 2020,~~March 31, 2021, which is reflected in Other current liabilities in the accompanying Consolidated Statement of Financial Position, was as follows:

The following tables present revenue disaggregated by major product, portfolio summary and geography.

Three Months Ended	Three Months Ended													Three Months Ended
June 30, 2020
March 31, 2021														March 31, 2021

(in millions)		Traditional Printing		Digital Printing		Advanced Materials and Chemicals		Brand		All Other		Total			Traditional Printing		Digital Printing		Advanced Materials and Chemicals		Brand		All Other		Total
Plates, inks and other consumables		$	90	$	12	$	1	$	—	$	—	$	103		$	121	$	17	$	5	$	—	$	—	$	143
Ongoing service arrangements ⁽¹⁾			20		29		—		—		—		49			20		34		1		—		—		55
Total annuities			110		41		1		—		—		152			141		51		6		—		—		198
Equipment & software			9		11		—		—		—		20			7		13		—		—		—		20
Film and chemicals			—		—		33		—		—		33			—		—		40		—		—		40
Other ₍₂₎			—		—		4		2		2		8			—		—		—		3		4		7
Total		$	119	$	52	$	38	$	2	$	2	$	213		$	148	$	64	$	46	$	3	$	4	$	265


Six Months Ended
June 30, 2020

(in millions)		Traditional Printing		Digital Printing		Advanced Materials and Chemicals		Brand		All Other		Total
Plates, inks and other consumables		$	216	$	31	$	3	$	—	$	—	$	250
Ongoing service arrangements ⁽¹⁾			41		64		—		—		—		105
Total annuities			257		95		3		—		—		355
Equipment & software			16		22		—		—		—		38
Film and chemicals			—		—		71		—		—		71
Other ₍₂₎					—		6		5		5		16
Total		$	273	$	117	$	80	$	5	$	5	$	480

Three Months Ended	Three Months Ended													Three Months Ended
June 30, 2019
March 31, 2020														March 31, 2020

(in millions)		Traditional Printing		Digital Printing		Advanced Materials and Chemicals		Brand		All Other		Total			Traditional Printing		Digital Printing		Advanced Materials and Chemicals		Brand		All Other		Total
Plates, inks and other consumables		$	146	$	21	$	3	$	—	$	—	$	170		$	126	$	18	$	5	$	—	$	—	$	149
Ongoing service arrangements ⁽¹⁾			22		39		1		—		—		62			21		35		—		—		—		56
Total annuities			168		60		4		—		—		232			147		53		5		—		—		205
Equipment & software			13		9		—		—		—		22			7		12		—		—		—		19
Film and chemicals			—		—		42		—		—		42			—		—		35		—		—		35
Other⁽²⁾			—		—		6		2		3		11			—		—		2		3		3		8
Total		$	181	$	69	$	52	$	2	$	3	$	307		$	154	$	65	$	42	$	3	$	3	$	267

Six Months Ended
June 30, 2019

(in millions)		Traditional Printing		Digital Printing		Advanced Materials and Chemicals		Brand		All Other		Total
Plates, inks and other consumables		$	283	$	42	$	6	$	—	$	—	$	331
Ongoing service arrangements ⁽¹⁾			43		79		2		—		—		124
Total annuities			326		121		8		—		—		455
Equipment & software			21		20		—		—		—		41
Film and chemicals			—		—		80		—		—		80
Other⁽²⁾			—		—		12		5		5		22
Total		$	347	$	141	$	100	$	5	$	5	$	598

Three Months Ended	Three Months Ended													Three Months Ended
June 30, 2020
March 31, 2021														March 31, 2021

(in millions)		Traditional Printing		Digital Printing		Advanced Materials and Chemicals		Brand		All Other		Total			Traditional Printing		Digital Printing		Advanced Materials and Chemicals		Brand		All Other		Total
Growth engines ⁽¹⁾		$	27	$	30	$	1	$	2	$	—	$	60		$	47	$	37	$	1	$	—	$	—	$	85
Strategic other businesses ⁽²⁾			92		10		35		—		2		139			101		14		45		3		4		167
Planned declining businesses ⁽³⁾			—		12		2		—		—		14			—		13		—		—		—		13
Total		$	119	$	52	$	38	$	2	$	2	$	213		$	148	$	64	$	46	$	3	$	4	$	265

Six Months Ended
June 30, 2020

(in millions)		Traditional Printing		Digital Printing		Advanced Materials and Chemicals		Brand		All Other		Total
Growth engines ⁽¹⁾		$	71	$	66	$	1	$	5	$	—	$	143
Strategic other businesses ⁽²⁾			202		25		74		—		5		306
Planned declining businesses ⁽³⁾					26		5		—		—		31
Total		$	273	$	117	$	80	$	5	$	5	$	480

Three Months Ended	Three Months Ended													Three Months Ended
June 30, 2019
March 31, 2020														March 31, 2020

(in millions)		Traditional Printing		Digital Printing		Advanced Materials and Chemicals		Brand		All Other		Total			Traditional Printing		Digital Printing		Advanced Materials and Chemicals		Brand		All Other		Total
Growth engines⁽¹⁾		$	45	$	32	$	—	$	2	$	—	$	79		$	44	$	36	$	—	$	—	$	—	$	80
Strategic other businesses ⁽²⁾			136		19		44		—		3		202			110		15		39		3		3		170
Planned declining businesses ⁽³⁾			—		18		8		—		—		26			—		14		3		—		—		17
Total		$	181	$	69	$	52	$	2	$	3	$	307		$	154	$	65	$	42	$	3	$	3	$	267

Six Months Ended
June 30, 2019

(in millions)		Traditional Printing		Digital Printing		Advanced Materials and Chemicals		Brand		All Other		Total
Growth engines⁽¹⁾		$	84	$	67	$	2	$	5	$	—	$	158
Strategic other businesses ⁽²⁾			263		36		83		—		5		387
Planned declining businesses ⁽³⁾			—		38		15		—		—		53
Total		$	347	$	141	$	100	$	5	$	5	$	598

Three Months Ended	Three Months Ended													Three Months Ended
June 30, 2020
March 31, 2021														March 31, 2021

(in millions)		Traditional Printing		Digital Printing		Advanced Materials and Chemicals		Brand		All Other		Total			Traditional Printing		Digital Printing		Advanced Materials and Chemicals		Brand		All Other		Total
United States		$	26	$	24	$	25	$	2	$	2	$	79		$	29	$	27	$	33	$	3	$	4	$	96
Canada			3		1		1		—		—		5			2		3		—		—		—		5
North America			29		25		26		2		2		84			31		30		33		3		4		101
Europe, Middle East and Africa			49		18		2		—		—		69			68		19		3		—		—		90
Asia Pacific			36		8		10		—		—		54			42		14		10		—		—		66
Latin America			5		1		—		—		—		6			7		1		—		—		—		8
Total		$	119	$	52	$	38	$	2	$	2	$	213		$	148	$	64	$	46	$	3	$	4	$	265

Six Months Ended
June 30, 2020

(in millions)		Traditional Printing		Digital Printing		Advanced Materials and Chemicals		Brand		All Other		Total
United States		$	61	$	52	$	55	$	5	$	5	$	178
Canada			6		3		1		—		—		10
North America			67		55		56		5		5		188
Europe, Middle East and Africa			117		42		5		—		—		164
Asia Pacific			75		18		19		—		—		112
Latin America			14		2		—		—		—		16
Total		$	273	$	117	$	80	$	5	$	5	$	480

Three Months Ended	Three Months Ended													Three Months Ended
June 30, 2019
March 31, 2020														March 31, 2020

(in millions)		Traditional Printing		Digital Printing		Advanced Materials and Chemicals		Brand		All Other		Total			Traditional Printing		Digital Printing		Advanced Materials and Chemicals		Brand		All Other		Total
United States		$	41	$	32	$	32	$	2	$	3	$	110		$	35	$	28	$	30	$	3	$	3	$	99
Canada			3		3		—		—		—		6			3		2		—		—		—		5
North America			44		35		32		2		3		116			38		30		30		3		3		104
Europe, Middle East and Africa			75		23		6		—		—		104			68		24		3		—		—		95
Asia Pacific			51		9		13		—		—		73			39		10		9		—		��		58
Latin America			11		2		1		—		—		14			9		1		—		—		—		10
Total		$	181	$	69	$	52	$	2	$	3	$	307		$	154	$	65	$	42	$	3	$	3	$	267

Six Months Ended
June 30, 2019

(in millions)		Traditional Printing		Digital Printing		Advanced Materials and Chemicals		Brand		All Other		Total
United States		$	77	$	71	$	62	$	5	$	5	$	220
Canada			5		4		1		—		—		10
North America			82		75		63		5		5		230
Europe, Middle East and Africa			147		43		10		—		—		200
Asia Pacific			96		19		26		—		—		141
Latin America			22		4		1		—		—		27
Total		$	347	$	141	$	100	$	5	$	5	$	598

The timing of revenue recognition, billings and cash collections results in billed trade receivables, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities) in the Consolidated Statement of Financial Position. The contract assets are transferred to trade receivables when the rights to consideration become unconditional. The amounts recorded for contract assets at ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 were $2$1 million and $4$2 million, respectively, and are reported in Other current assets in the Consolidated Statement of Financial Position. The contract liabilities primarily relate to prepaid service contracts, upfront payments for certain equipment purchases or prepaid royalties on intellectual property arrangements. The amounts recorded for contract liabilities at ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 were ~~$55~~$57 million and ~~$61~~$64 million, respectively, of which ~~$40~~$41 million and ~~$43~~$47 million are reported in Other current liabilities, respectively, and ~~$15~~$16 million and ~~$18~~$17 million, respectively, are reported in Other long-term liabilities in the Consolidated Statement of Financial Position.

Revenue recognized for the three ~~and six~~ months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~ that was included in the contract liability balance at the beginning of the year was $5$25 million and ~~$31~~$26 million, ~~in 2020, respectively, and $5 million and $30 million in 2019,~~ respectively, and primarily represented revenue from prepaid service contracts and equipment revenue recognition. Contract liabilities as of ~~June 30,~~both March 31, 2021 and 2020 included $19 ~~million and $21~~ million of cash payments received during the three ~~and six~~ months ended ~~June 30, 2020, respectively. Contract liabilities as of June 30, 2019 included $20 million~~March 31, 2021 and ~~$23 million of cash payments received during the three and six months ended June 30, 2019, respectively.~~2020.

Kodak does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less or for which revenue is recognized at the amount to which Kodak has the right to invoice for services performed. Performance obligations with an original expected length of greater than one year generally consist of deferred service contracts, operating leases and licensing arrangements. As of ~~June 30, 2020,~~March 31, 2021, there was approximately ~~$65~~$70 million of unrecognized revenue from unsatisfied performance obligations. Approximately ~~20%~~25% of the revenue from unsatisfied performance obligations is expected to be recognized in the ~~rest~~remainder of ~~2020,~~2021, 25% in ~~2021,~~2022, 20% in ~~2022~~2023 and ~~35%~~30% thereafter.

For the three months ended ~~June 30, 2020,~~March 31, 2021, the difference between Kodak’s effective tax rate and the U.S. statutory rate of 21.0% is primarily attributable to: (1) the impact related to existing valuation allowances associated with changes in net deferred tax assets from current earnings, (2) the results from operations in jurisdictions outside the ~~U.S and~~U.S., (3) a ~~provision~~benefit associated with foreign withholding taxes on undistributed ~~earnings.~~earnings and (4) changes in audit reserves, including a settlement with a taxing authority in a location outside the U.S.

During the quarter ended March 31,2021, Kodak agreed to terms with a taxing authority outside the U.S. and settled open tax audits for years through 2014. For these years, Kodak originally recorded liabilities for unrecognized tax positions totaling $3 million (plus interest of approximately $4 million), which were substantially offset by pre-paid assets.

For the ~~six~~three months ended ~~June 30,~~March 31, 2020, the difference between Kodak’s effective tax rate and the U.S. statutory rate of 21.0% is primarily attributable to: (1) ~~a provision of $167 million associated with the establishment of valuation allowances in certain outside U.S. jurisdictions, (2)~~ the impact related to existing valuation allowances associated with changes in net deferred tax assets from current earnings and ~~losses and (3)~~(2) the results from operations in jurisdictions outside the U.S.

Kodak establishes valuation allowances for deferred income tax assets in accordance with U.S. GAAP, which provides that such valuation allowances shall be established unless realization of the income tax benefits is more likely than not. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. At each reporting period, Kodak considers the scheduled reversal of deferred tax liabilities and assets, available taxes in carryback periods, tax planning strategies and projected future taxable income in making this assessment.

As of December 31, 2019, Kodak’s deferred tax asset valuation allowance is $821 million. Of this amount, $168 million was attributable to the Company’s net deferred tax assets outside the U.S. of $322 million, and $653 million related to the Company’s net deferred tax assets in the U.S. of $633 million, for which Kodak believed it was more likely than not that the assets would not be realized.

~~As of~~ March 31, 2020, Kodak determined that it was more likely than not that deferred tax assets outside the U.S. which were not offset with valuation allowances as of March 31, 2020 would not be realized due to reductions in estimates of future profitability as a result of the COVID-19 pandemic in locations outside the U.S. Accordingly, Kodak recorded a provision of $167 million associated with the establishment of a valuation allowance on those deferred tax assets.

Additionally,, on February 21, 2020, Kodak agreed to terms with the IRS and settled the federal audit for calendar years 2013 and 2014. For these years, Kodak originally recorded a federal unrecognized tax position totaling $41 million, which was fully offset by tax attributes. This settlement resulted in an increase in net deferred tax assets and was fully offset by a corresponding increase in Kodak’s U.S. valuation allowance, resulting in no net tax benefit.

For the three and six months ended June 30, 2019, the difference between Kodak’s recorded provision and the benefit that would result from applying the U.S. statutory rate of 21.0%, is primarily attributable to: (1) the impact related to existing valuation allowances associated with changes in net deferred tax assets from current earnings and losses, (2) the results from operations in jurisdictions outside the U.S. and (3) a provision associated with foreign withholding taxes on undistributed earnings.

Charges for restructuring activities are recorded in the period in which Kodak commits to a formalized restructuring plan, or executes the specific actions contemplated by the plan, and all criteria for liability recognition under the applicable accounting guidance have been met. Restructuring actions taken in the first six months of 2020 were initiated to reduce Kodak’s cost structure as part of its commitment to drive sustainable profitability and included various targeted reductions in manufacturing, service, sales and other administrative functions.

~~The activity in the accrued balances and the non-cash charges and credits incurred in relation to restructuring activities for the six months ended June 30, 2020 were as follows:~~

~~The $1 million and $7 million of charges for the three and six months ended June 30, 2020, respectively, were reported as Restructuring costs and other in the Consolidated Statement of Operations.~~

The severance costs for the 3 months ended June 30, 2020 related to the elimination of 3 administrative positions outside of the U.S. The severance costs for the six months ended June 30, 2020 related to the elimination of approximately 90 positions including approximately 20 manufacturing/service positions, and 70 administrative and sales positions. The geographic composition of these positions includes approximately 40 in the U.S. and Canada and 50 throughout the rest of the world.

~~As a result of these initiatives, the majority of the severance will be paid during periods through the end of the year.~~

Components of the net periodic benefit cost for all major U.S. and non-U.S. defined benefit plans are as follows:

	Three Months Ended												Six Months Ended												Three Months Ended
	June 30,												June 30,												March 31,
	2020						2019						2020						2019						2021						2020
(in millions)	U.S.			Non-U.S.			U.S.			Non-U.S.			U.S.			Non-U.S.			U.S.			Non-U.S.			U.S.			Non-U.S.			U.S.			Non-U.S.
Major defined benefit plans:
Service cost	$	3		$	1		$	2		$	1		$	6		$	2		$	5		$	2		$	3		$	1		$	3		$	1
Interest cost		22			2			31			3			43			4			61			6			12			1			21			2
Expected return on plan assets		(49	)		(4	)		(54	)		(5	)		(98	)		(9	)		(107	)		(11	)		(42	)		(3	)		(49	)		(5	)
Amortization of:
Prior service credit		(1	)		—			(1	)		—			(3	)		—			(3	)		—			(2	)		—			(2	)		—
Actuarial loss		3			1			—			1			7			3			—			2			7			2			4			2
Net pension income before special termination benefits		(22	)		—			(22	)		—			(45	)		—			(44	)		(1	)
Net pension (income) expense before special termination benefits																										(22	)		1			(23	)		—
Special termination benefits		—			—			1			—			1			—			2			—			—			—			1			—
Curtailment gain		—			—			(2	)		—			—			—			(2	)		—
Net pension income from major plans		(22	)		—			(23	)		—			(44	)		—			(44	)		(1	)
Other plans		—			1			—			(3	)		—			1			—			(4	)
Total net pension (income) expense	$	(22	)	$	1		$	(23	)	$	(3	)	$	(44	)	$	1		$	(44	)	$	(5	)	$	(22	)	$	1		$	(22	)	$	—

For the three ~~and six~~ months ~~ended June 30,~~ending March 31, 2020 ~~and 2019~~ the special termination benefits ~~charges~~ were incurred as a result of Kodak’s restructuring actions and have been included in Restructuring costs and other in the Consolidated Statement of Operations for ~~those periods.~~that period.

Basic earnings per share computations are based on the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share include any dilutive effect of potential common shares. In periods with a net loss ~~from continuing operations~~ available to common shareholders, diluted earnings per share are calculated using weighted-average basic shares for that period, as utilizing diluted shares would be anti-dilutive to loss per share.

A reconciliation of the amounts used to calculate basic and diluted earnings per share for the three ~~and six~~ months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019 follows (in millions):~~follows:

Three Months Ended

Six Months Ended

June 30,

June 30,

(in millions)

2020

2019

2020

2019

Loss from continuing operations

$
(5
)

$
(6
)

$
(116
)

$
(18
)
Less: Series A convertible preferred stock cash dividend

(3
)

(3
)

(6
)

(6
)
Less: Series A convertible preferred stock deemed dividend

(2
)

(2
)

(4
)

(4
)
Loss from continuing operations available to common
shareholders - basic and diluted

$
(10
)

$
(11
)

$
(126
)

$
(28
)

Net (loss) income

$
(5
)

$
201

$
(116
)

$
183

Less: Series A convertible preferred stock cash dividend

(3
)

(3
)

(6
)

(6
)
Less: Series A convertible preferred stock deemed dividend

(2
)

(2
)

(4
)

(4
)
Net (loss) income available to common shareholders
- basic and diluted

$
(10
)

$
196

$
(126
)

$
173

	Three Months Ended
	March 31,
(in millions)	2021			2020
Net income (loss)	$	6		$	(111	)
Less: Preferred stock cash dividends		(1	)		(3	)
Less: Preferred stock deemed dividends		(2	)		(2	)
Less: Preferred stock in-kind dividend		(1	)		—
Plus: Expiration of Series A preferred stock embedded derivative		11			—
Net income (loss) available to common shareholders - basic and diluted	$	13		$	(116	)

The computation of diluted earnings per share for the three months ended March 31, 2021 excluded the impact of (1) the assumed conversion of 1.0 million shares of Series B Preferred Stock, (2) the assumed conversion of 1.0 million shares of Series C Preferred Stock, (3) the assumed exercise of 3.2 million of outstanding employee stock options, (4) the assumed conversion of $25 million of Convertible Notes issued in 2021 and (5) the assumed vesting of 0.3 million unvested restricted stock units because the effects would have been anti-dilutive.

As a result of the net loss ~~from continuing operations~~ available to common shareholders for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020, ~~and 2019,~~ Kodak calculated diluted earnings per share using weighted-average basic shares outstanding. If Kodak reported ~~earnings from continuing operations~~income available to common shareholders for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020, ~~and 2019,~~ the calculation of diluted earnings per share would have included the assumed ~~conversion~~vesting of ~~0.5~~0.3 million unvested restricted stock ~~units for both periods in 2020 and 0.5 million and 0.4 million unvested restricted stock units for the periods in 2019, respectively.~~units.

The computation of diluted earnings per share for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 ~~and 2019~~ also excluded the impact of (1) the assumed conversion of 2.0 million shares of Series A Preferred Stock, (2) the assumed exercise of 6.8 million outstanding employee stock options and ~~(2)~~(3) the assumed conversion of ~~outstanding employee stock options~~$100 million of ~~7.1 million for both periods in 2020 and 7.2 million for both periods~~Convertible Notes issued in 2019 because the effects would have been anti-dilutive. ~~In addition, the computation~~

On February 26, 2021 James V. Continenza, Executive Chairman and Chief Executive Officer of ~~diluted earnings per share for the three and six months ended June 30, 2020~~Kodak, and the ~~three months ended June 30,~~Company entered into an Executive Chairman and CEO Agreement (the “New Employment Agreement”). The New Employment Agreement is effective for a three-year period beginning on February 26, 2021. Pursuant to the New Employment Agreement, Mr. Continenza will not have the right to exercise any stock options granted to him in February 2019 ~~also excluded~~or July 2020 to the ~~assumed conversion~~extent that, after giving effect to the issuance of ~~$100~~the Company’s common stock resulting from such exercise, Mr. Continenza (together with his affiliates and any person acting as a group), would beneficially own more than 4.99% of the then issued and outstanding shares of Common Stock (the “Beneficial Ownership Limitation”). The Beneficial Ownership Limitation shall cease and be of no further force and effect upon a Change of Control (as such term is defined in the Company’s Amended and Restated 2013 Omnibus Incentive Plan). The restrictions on the exercisability of previous stock option awards is a modification of the original awards. As the February 2019 and July 2020 stock options were fully vested prior to the modification date and there was no incremental value provided in the modification, no additional compensation expense was recognized. Also pursuant to the New Employment Agreement, Mr. Continenza was granted 200,000 fully vested restricted stock units. The Company recognized $2 million of ~~Convertible Notes because~~stock-based compensation expense associated with the ~~effect would have been anti-dilutive.~~grant of restricted stock units.

The Company has 560 million shares of authorized stock, consisting of: (i) 500 million shares of common stock, par value $0.01 per share and (ii) 60 million shares of preferred stock, no par value, issuable in one or more series.

As of ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, there were ~~43.7~~78.5 million and ~~43.2~~77.2 million shares of common stock outstanding, ~~respectively,~~respectively. In the three months ended March 31, 2021 the Company issued 1.0 million shares of common stock pursuant to the Securities Purchase Agreement. Refer to Note 5, “Debt and Finance Leases” for information on the Securities Purchase Agreement.

Preferred stock issued and outstanding as of March 31, 2021 consisted of 1.0 million shares of Series B Preferred Stock and 1.0 million shares of Series C Preferred Stock. Preferred stock issued and outstanding as of December 31, 2020 consisted of 2.0 million shares of Series A Preferred Stock. Refer to Note 6, “Redeemable, Convertible Preferred Stock” for information on the changes in preferred stock.

Treasury stock consisted of approximately 0.8 million shares and 0.7 million shares as of ~~both June 30, 2020~~March 31, 2021 and December 31, ~~2019.~~2020, respectively.

The changes in Other comprehensive income (loss) ~~income,~~, by component, were as follows:

	Three Months Ended						Six Months Ended						Three Months Ended
	June 30,						June 30,						March 31,
(in millions)	2020			2019			2020			2019			2021			2020
Currency translation adjustments	$	(4	)	$	1		$	(16	)	$	4		$	(1	)	$	(12	)
Pension and other postretirement benefit plan changes
Newly established net actuarial gain		5			5			6			5
Newly established net actuarial (loss) gain														(1	)		1
Tax Provision		—			(2	)		—			(2	)		—			—
Newly established net actuarial gain, net of tax		5			3			6			3
Newly established net actuarial (loss) gain, net of tax														(1	)		1
Reclassification adjustments:
Amortization of prior service credit ^(a)		(2	)		(3	)		(4	)		(4	)		(2	)		(2	)
Amortization of actuarial losses ^(a)		5			2			10			2			9			5
Recognition of losses (gains) due to curtailments and settlements		1			(2	)		1			(2	)		—			—
Total reclassification adjustments		4			(3	)		7			(4	)		7			3
Tax provision		—			—			(1	)		—			—			(1	)
Reclassification adjustments, net of tax		4			(3	)		6			(4	)		7			2
Pension and other postretirement benefit plan changes, net of tax		9			—			12			(1	)		6			3
Other comprehensive income (loss)	$	5		$	1		$	(4	)	$	3		$	5		$	(9	)

~~Effective January 1, 2020~~ Kodak ~~changed its organizational structure. Prepress Solutions, formerly part of the Print Systems segment, operates as a separate segment named the~~has four reportable segments: Traditional Printing, ~~segment. Electrophotographic Printing Solutions, formerly part of the Print Systems segment, was combined with the Enterprise Inkjet Systems segment and Kodak Software segment to form the~~ Digital Printing, ~~segment. The Brand, Film and Imaging segment, except for the licensing of the Kodak brand to third parties, was combined with the Advanced Materials and 3D Printing segment to form the~~ Advanced Materials and Chemicals ~~segment. The licensing of the Kodak brand to third parties operates as a separate segment named the Brand segment. The Eastman Business Park segment is no longer a reportable segment.~~and Brand. A description of Kodak’s reportable segments follows.

Traditional Printing: The Traditional Printing segment is comprised of Prepress Solutions.

Digital Printing: The Digital Printing segment is comprised of four lines of business: the Electrophotographic Printing Solutions business, the Prosper business, the Versamark business and the Kodak Software business.

Advanced Materials and Chemicals: The Advanced Materials and Chemicals segment is comprised of ~~five~~four lines of business: Industrial Film and Chemicals, Motion Picture, Advanced Materials and Functional Printing ~~Technology~~ and Kodak Services for Business.

All Other: All Other is comprised of the operations of the Eastman Business Park, a more than 1,200-acre technology center and industrial complex.

Segment Operational EBITDA and Consolidated ~~(Loss)~~ Income from ~~Continuing~~ Operations Before Income Taxes

	Three Months Ended						Six Months Ended						Three Months Ended
	June 30,						June 30,						March 31,
(in millions)	2020			2019			2020			2019			2021			2020
Traditional Printing	$	1		$	9		$	2		$	15		$	5		$	1
Digital Printing		(3	)		(4	)		(5	)		(6	)		—			(2	)
Advanced Materials and Chemicals		(7	)		(8	)		(16	)		(18	)		(4	)		(9	)
Brand		2			2			4			3			2			2
Total of reportable segments		(7	)		(1	)		(15	)		(6	)		3			(8	)
All Other		1			—			—			(1	)		—			(1	)
Depreciation and amortization		(10	)		(14	)		(20	)		(29	)		(8	)		(10	)
Restructuring costs and other		(1	)		(2	)		(8	)		(4	)		(1	)		(7	)
Stock based compensation		—			(2	)		(1	)		(5	)		(3	)		(1	)
Consulting and other costs ⁽¹⁾		(1	)		(2	)		(1	)		(5	)		(5	)		—
Idle costs ⁽²⁾		(1	)		(2	)		(1	)		(3	)		(1	)		—
Former CEO separation agreement compensation		—			—			—			(2	)
Other operating (loss) income, net, excluding income from transition services agreement ⁽³⁾		—			(2	)		6			(2	)
Other operating income, net, excluding income from transition services agreement ⁽³⁾														1			6
Interest expense ⁽⁴⁾		(4	)		(5	)		(8	)		(8	)		(4	)		(4	)
Pension income excluding service cost component ⁽⁴⁾		27			26			53			53			25			26
Other (charges) income, net ⁽⁴⁾		(8	)		—			45			(1	)
Consolidated (loss) income from continuing operations before income taxes	$	(4	)	$	(4	)	$	50		$	(13	)
Other income net ⁽⁴⁾														—			53
Consolidated income from operations before income taxes													$	7		$	54

Kodak’s segment measure of profit and loss is an adjusted earnings before interest, taxes, depreciation and amortization (“Operational EBITDA”).

As demonstrated in the above table, Operational EBITDA represents the earnings (loss) from ~~continuing~~ operations excluding the provision for income taxes; non-service cost components of pension and ~~OPEB~~other postemployment benefits (“OPEB”) income; depreciation and amortization expense; restructuring costs; stock-based compensation expense; consulting and other costs; idle costs; ~~former Chief Executive Officer (“CEO”) separation agreement compensation;~~ other operating ~~(loss)~~ income, net (unless otherwise indicated); interest ~~expense;~~expense and other ~~(charges)~~ income, net.

Kodak’s segments are measured using Operational EBITDA both before and after allocation of corporate selling, general and administrative expenses (“SG&A”). The segment earnings measure reported is after allocation of corporate SG&A as this most closely aligns with U.S. GAAP. Research and Development activities not directly related to the other segments are reported within the Advanced Materials and Chemicals segment.

~~Discontinued operations of Kodak include the former Flexographic Packaging segment comprised of Kodak’s Flexographic Packaging Business (“FPD”).~~

Kodak consummated the sale of certain assets of FPD to the Purchaser on April 8, 2019 for net cash consideration at closing, in addition to the assumption by Purchaser of certain liabilities of FPD, of $320 million, pursuant to the Stock and Asset Purchase Agreement (“SAPA”) signed in November 2018 and amended in March 2019. Assets and liabilities of FPD in China were transferred at a deferred closing on July 1, 2019 for net cash consideration of $5.9 million at closing and a promissory note for $1.4 million in addition to the assumption by Purchaser of certain liabilities of FPD, in accordance with the SAPA. Kodak operated FPD in China, subject to certain covenants, until the deferred closing occurred. The promissory note was reduced by a true-up payment of $0.2 million owed by Kodak to the Purchaser which reflected the actual economic benefit attributable to the operation of FPD in China from the time of the initial closing through the time of the deferred closing.

~~Kodak recognized an after- tax gain on the sale of FPD of $207 million in the quarter ended June 30, 2019 and $212 million in the year ended December 31, 2019.~~

The results of operations of FPD are classified as discontinued operations in the Consolidated Statement of Operations for all periods presented. Direct operating expenses of the discontinued operations are included in the results of discontinued operations. Indirect expenses that were historically allocated to the discontinued operations have been included in the results of continuing operations.

After the initial closing, Kodak was required to use a portion of the proceeds from the sale of FPD to repay $312 million of the loans under the Term Credit Agreement. Interest expense on debt that was required to be repaid as a result of the sale was allocated to discontinued operations.

Kodak, as a result of its global operating and financing activities, is exposed to changes in foreign currency exchange rates 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 does not utilize financial instruments for trading or other speculative purposes.

Kodak’s foreign currency forward contracts are not designated as hedges and are marked to market through net income (loss) ~~earnings~~ at the same time that the exposed assets and liabilities are remeasured through net income (loss) ~~earnings~~ (both in Other ~~(income) charges,~~income, net in the Consolidated Statement of Operations). The notional amount of such contracts open at ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 was approximately ~~$329~~$331 million and ~~$332~~ $361

million, respectively. The majority of the contracts of this type held by Kodak as of ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 are denominated in euros, ~~Japanese yen,~~ Chinese renminbi and ~~Swiss francs.~~ Japanese yen.

The net effect of foreign currency forward contracts in the results of operations is shown in the following table:

Kodak had no derivatives designated as hedging instruments for the three ~~and six~~ months ended ~~June 30, 2020 and 2019.~~March 31, 2021.

In the event of a default under the ~~ABL~~Company’s Credit ~~Agreement,~~Agreements, 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.

As discussed in Note 8,5, “Debt and Finance Leases”, the Company concluded that the Convertible Notes are considered more akin to a debt-type instrument and that the economic characteristics and risks of the embedded conversion features, ~~and term extension option were~~are not considered clearly and closely related to the Convertible Notes. The embedded conversion features not considered clearly and closely related are the conversion at the option of the holder (“Optional Conversion”), the mandatory conversion by Kodak (“Mandatory Conversion”) and the conversion in the event of a fundamental ~~change or reorganization~~transaction by the holder at the then applicable conversion rate (“Fundamental ~~Change or Reorganization Conversion”~~Change”). Accordingly, these embedded conversion features ~~and term extension option~~ were bifurcated from the Convertible Notes and separately accounted for on a combined basis as a single derivative asset or liability.

The derivative iswas in a liability position at ~~June 30, 2020~~March 31, 2021 and ~~December 31, 2019 and is~~was reported in Other long-term liabilities in the Consolidated Statement of Financial Position. The derivative is being accounted for at fair value with changes in fair value ~~being~~ reported in Other ~~charges (income),~~income, net in the Consolidated Statement of Operations.

As discussed in Note 9,6, “Redeemable, Convertible, Preferred Stock”, the Company concluded that the Series AB Preferred Stock and the Series C Preferred Stock are considered more akin to a debt-type instrument and that the economic characteristics and risks of the conversion in the event of a Fundamental Change is not considered clearly and closely related to the Series B and Series C Preferred Stock. Accordingly, this embedded conversion feature was bifurcated from both the Series B and Series C Preferred Stock and both are separately accounted for as a single derivative asset or liability. Both derivatives were in a liability position at March 31, 2021 and were reported in Other long-term liabilities in the Consolidated Statement of Financial Position. The derivatives are being accounted for at fair value with changes in fair value reported in Other income, net in the Consolidated Statement of Operations.

As discussed in Note 6, “Redeemable, Convertible, Preferred Stock”, the Company concluded that the Series A Preferred Stock iswas considered more akin to a debt-type instrument and that the economic characteristics and risks of the embedded conversion features, except where the conversion price was increased to the liquidation preference, were not considered clearly and closely related to the Series A Preferred Stock. The embedded conversion features not considered clearly and closely related are the conversion at the option of the holder (“Optional Conversion”); the ability of Kodak to automatically convert the stock after the second anniversary of issuance (“Mandatory Conversion”) and the conversion in the event of a fundamental change or reorganization (“Fundamental Change or Reorganization Conversion”). Accordingly, these embedded conversion features were bifurcated from the Series A Preferred Stock and separately accounted for on a combined basis as a single derivative asset or liability. The ~~derivative~~embedded conversion features were revalued as of February 26, 2021 when the Company repurchased one million of the Series A Preferred Stock and exchanged the remaining one million shares of Series A Preferred Stock for Series B Preferred Stock. The revaluation as of February 26, 2021 resulted in the recognition of $2 million of net expense which was ~~in an asset position at June 30, 2020 and is~~ reported in Other ~~long-term assets~~income, net in the Consolidated Statement of ~~Financial Position.~~Operations. With the repurchase and exchange of the shares of the Series A Preferred Stock the embedded conversion features derivative liability expired. The derivative was in a liability position at December 31, ~~2019~~2020 and was reported in Other long-term liabilities in the Consolidated Statement of Financial Position. The derivative iswas being accounted for at fair value with changes in fair value being reported in Other ~~charges (income),~~income, net in the Consolidated Statement of Operations.

Fair values of Kodak’s foreign currency 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. The gross fair value of foreign currency forward contracts in an asset position are reported in Other current assets and the gross fair value of foreign currency forward contracts in a liability position are reported in Other current liabilities in the Consolidated Statement of Financial Position. The gross fair value of forward contracts in an asset position as of ~~both June 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 was $0 million and $1 ~~million.~~million, respectively. The gross fair value of foreign currency forward contracts in a liability position as of ~~both June 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 was $2 million and $0 ~~million.~~ million, respectively.

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 three ~~and six~~ months ended ~~June 30, 2020.~~March 31, 2021.

The fair value of the embedded conversion features ~~and term extension option~~ derivatives ~~are~~was calculated using unobservable inputs (Level 3 fair measurements). The value of the ~~Optional Conversion~~embedded derivatives associated with ~~both~~ the Convertible Notes and Series A, Series B and Series C Preferred Stock iswere calculated using a binomial lattice model. The value of the term extension option reflects the probability weighted average value of the Convertible Notes using the original maturity date and a hypothetical extended maturity date, with all other contractual terms unchanged.

The following tables present the key inputs in the determination of fair value for the embedded conversion ~~features and termination option derivatives:~~features:

The Fundamental Change ~~and Reorganization Conversion~~ values at issuance were calculated as the difference between the total value of the Convertible Notes, Series B or Series AC Preferred Stock, as applicable, and the sum of the net present value of the cash flows if the Convertible Notes are repaid at their ~~initial~~ maturity date or Series AB and Series C Preferred Stock is redeemed on ~~its fifth anniversary~~their redemption date and the values of the other embedded derivatives. The Fundamental Change ~~and Reorganization Conversion~~ values reduce the value of the embedded conversion features ~~and term extension option~~ derivative liability. Other than events that alter the likelihood of a fundamental change or reorganization event, the value of the Fundamental Change ~~and Reorganization Conversion~~ reflects the value as of the issuance date, amortized for the passage of time. The Fundamental Change and Reorganization Conversion value for the Series A Preferred Stock exceeded the value of the Optional Conversion and Mandatory Conversion values at June 30, 2020 resulting in the Series A Preferred Stock derivative being reported as an asset.

The fair values of long-term debt (Level 2 fair value measurements) are determined by reference to quoted market prices of similar instruments, if available, or by pricing models based on the value of related cash flows discounted at current market interest rates. The fair values of long-term borrowings were ~~$119~~$283 million and ~~$111~~$17 million at ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively.

The carrying values of cash and cash equivalents, restricted cash and the current portion of long-term debt approximate their fair values at both ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019.~~2020.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

CAUTIONARY STATEMENT PURSUANT TO SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This report on Form 10-Q includes “forward–looking statements” as that term is defined under the Private Securities Litigation Reform Act of 1995.

Forward–looking statements include statements concerning Kodak’s plans, objectives, goals, strategies, future events, future revenue or performance, capital expenditures, liquidity, investments, financing needs and business trends and other information that is not historical information. When used in this document, the words “estimates,” “expects,” “anticipates,” “projects,” “plans,” “intends,” “believes,” “predicts,” “forecasts,” “strategy,” “continues,” “goals,” “targets,” or future or conditional verbs, such as “will,” “should,” “could,” or “may,” and similar expressions, as well as statements that do not relate strictly to historical or current facts, are intended to identify forward–looking statements. All forward–looking statements, including management’s examination of historical operating trends and data, are based upon Kodak’s expectations and various assumptions. Future events or results may differ from those anticipated or expressed in the forward-looking statements. Important factors that could cause actual events or results to differ materially from the forward-looking statements include, among others, the risks and uncertainties described in more detail in the Company’s Annual Report on Form 10–K for the year ended December 31, ~~2019~~2020 under the headings “Business,” “Risk Factors,” “Legal Proceedings,” and/or “Management’s Discussion and Analysis of Financial Condition and Results of Operations–Liquidity and Capital Resources,” in the corresponding sections of this report on Form 10-Q ~~and the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2020,~~ and in other filings the Company makes with the SEC from time to time, as well as the following:

There may be other factors that may cause Kodak’s actual results to differ materially from the forward–looking statements. All forward–looking statements attributable to Kodak or persons acting on its behalf apply only as of the date of this report on Form 10-Q and are expressly qualified in their entirety by the cautionary statements included or referenced in this document. Kodak undertakes no obligation to update or revise forward–looking statements to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events, except as required by law.

Kodak is a global technology company focused on print, ~~and~~ advanced materials and chemicals. Kodak provides industry-leading hardware, software, consumables and services primarily to customers in commercial print, packaging, publishing, manufacturing and entertainment. Kodak is committed to environmental stewardship and ongoing leadership in developing sustainable solutions. ~~Its~~

Kodak’s broad portfolio of superior products, responsive support and world-class research and development (“R&D”) make Kodak solutions a smart investment for customers looking to improve their profitability and drive growth.

Revenue decreased ~~$94 million and $118~~$2 million when compared to the prior year quarter, ~~and year-to-date periods, respectively, (31% and 20%, respectively)~~(1%), including the ~~unfavorable~~favorable impact of currency ($~~3 million and $6~~9 million) in the current year ~~quarter and year-to-date periods, respectively.~~quarter.

The film industry and segments within the print industry face competition from digital substitution. Kodak’s strategy is to:

A discussion of opportunities and challenges related to Kodak’s strategy follows:

~~None of the Traditional Printing segment’s manufacturing facilities were ordered to close by governmental authorities.~~ Many of the segment’s customers around the globe continued to operate during the COVID-19 pandemic but at decreased volumes. ~~Therefore, demand for the segment’s products declined.~~ The Traditional Printing segment ~~may also be~~was impacted by supply chain disruptions and travel ~~restrictions. With~~restrictions and manufacturing volumes were reduced, primarily in 2020, in response to the decline in customer demand ~~manufacturing~~for the segment’s products. The segment has seen some recovery of volumes ~~were reduced.~~starting in the later part of 2020 and continued improvement in customer demand in the first quarter of 2021; however, ~~The~~the duration and extent of demand declines ~~and then recovery is~~remains unclear. Manufacturing employees are being temporarily furloughed, as necessary, under reduced production plans. The segment is utilizing furloughs and pay-cuts for non-manufacturing employees in a way which will allow continued operation and product development.

~~None~~Many of the Digital Printing ~~segment’s manufacturing facilities were ordered to close by governmental authorities. Many of the segment’s~~segment customers around the globe continued to operate during the COVID-19 pandemic but at decreased volumes. ~~Therefore, demand for the segment’s products declined.~~ The Digital Printing segment ~~may also be~~was impacted by supply chain disruptions and travel ~~restrictions. With~~restrictions and manufacturing volumes were reduced, primarily in 2020, in response to the decline in customer demand ~~manufacturing~~for the segment’s products. The segment has seen some recovery of volumes ~~were reduced.~~starting in the later part of 2020 and continued improvement in customer demand in the first quarter of 2021; however, ~~The~~the duration and extent of demand declines ~~and then recovery is~~remains unclear. Manufacturing employees are being temporarily furloughed, as necessary, under reduced production plans. The segment is utilizing furloughs and pay-cuts for non-manufacturing employees in a way which will allow continued operation and product development.

Advanced Materials and Chemicals experienced adverse impacts from the COVID-19 pandemic in ~~the second quarter of~~ 2020, most notably in Motion Picture where the industry ~~has been~~was heavily impacted and productions in affected regions ~~have been~~were suspended. ~~None of the~~ ~~Advanced Materials and Chemicals~~ ~~segment’s manufacturing facilities were ordered to close by governmental authorities.~~ ~~However, each~~Each of the segment’s product lines was impacted by lowered demand and ~~may also be impacted by supply chain disruptions and~~ travel restrictions. While there is continued risk and the ultimate ~~The~~ duration and extent of ~~demand declines and then~~the COVID-19 pandemic remains unclear, the segment has seen a recovery ~~is unclear. Manufacturing volumes were reduced due to the~~of customer demand ~~decline~~starting in the ~~near-term. Manufacturing employees are being temporarily furloughed, as necessary, under reduced production plans.~~later part of 2020 for Motion Picture film and other Advanced Materials and Chemicals product lines, which continued in the first quarter of 2021 with volume improvements compared with the prior year quarter.

Effective January 1, 2020 Kodak changed its organizational structure. Prepress Solutions, formerly part of the Print Systems segment, now operates as a separate segment named the Traditional Printing segment. Electrophotographic Printing Solutions, formerly part of the Print Systems segment, was combined with the Enterprise Inkjet Systems segment and Kodak Software segment to form the Digital Printing segment. The Brand, Film and Imaging segment, except for the licensing of the Kodak brand to third parties, was combined with the Advanced Materials and 3D Printing segment to form the Advanced Materials and Chemicals segment. The licensing of the Kodak brand to third parties operates as a separate segment named the Brand segment. The Eastman Business Park segment is no longer a reportable segment. A description of the reportable segments follows.

Kodak has four reportable segments: Traditional Printing, Digital Printing, Advanced Materials and Chemicals, and Brand. The balance of Kodak’s ~~continuing~~ operations, which do not meet the criteria of a reportable segment, are reported in All Other and primarily represent the Eastman Business Park operations. Refer to the 2020 Form 10-K for a description of the Company’s segments.

The Traditional Printing segment is comprised of Prepress Solutions, which includes Kodak’s digital offset plate offerings and computer-to-plate imaging solutions. The Traditional Printing segment provides digital and traditional product and service offerings to a variety of commercial industries, including commercial print, direct mail, book publishing, newspapers and magazines and packaging.

While the businesses in this segment are experiencing competitive pricing pressures, innovations in Kodak product lines that can command premium prices offset some of the long-term market price erosion. Additionally, Kodak seeks to mitigate the impact of market dynamics on pricing and volume pressures and of increases in manufacturing costs, including aluminum prices, through a combination of price increases, commodity contracts, improved production efficiency and cost reduction initiatives. In January 2019, Kodak received exemptions from U.S. tariffs on aluminum. The U.S. aluminum tariffs are still in place and Kodak’s exemptions continue.

Prepress Solutions capitalizes on a contract-based, stable and recurring cash flow-generative business model. The average duration of customer contracts is two years. These contracts offer stability and generate recurring revenue. The core of the business is the manufacturing of aluminum digital printing plates of varying sizes. These plates can be as small as 23cm x 27cm and as large as 126cm x 287cm. Unexposed plates are sold to commercial printing companies for use in the offset printing process. Kodak also manufactures equipment, known as Computer to Plate (“CTP”) equipment, which images the plates with a laser. The plates are used in the offset printing process, which transfers ink from the plate onto a rubber blanket and then onto the substrate to be printed. Due to the nature of the imaging and printing process, a new plate must be used for each printing run. As a result, there is a recurring revenue stream from the sale of these plates.

~~The Traditional Printing products and services are sold globally to customers through both a direct sales team as well as indirectly through dealers.~~

~~The Traditional Printing segment also provides service and support related to these products.~~

The Digital Printing segment contains Electrophotographic Printing Solutions, Prosper, Versamark and Software. Digital Printing products include high-quality digital printing solutions using electrically charged toner-based technology, ~~production press systems, consumables (primarily ink), inkjet components, software and services. Digital Printing products are distributed directly by Kodak and indirectly through dealers.~~

The Advanced Materials and Chemicals segment is comprised of four lines of business: Industrial Film and Chemicals, Motion Picture, Advanced Materials and Functional Printing and Kodak Services for Business (“KSB”). Kodak’s Advanced Materials and Chemicals products are distributed directly by Kodak and indirectly through dealers. ~~Kodak Alaris, a professional and consumer still photographic film and chemicals customer, represented approximately 20% of total Advanced Materials and Chemicals segment revenues in 2019.~~

The Brand segment Includes licensing of the Kodak brand to third parties. Kodak currently licenses its brand for use with a range of products including batteries, digital and instant print cameras and camera accessories, printers, and LED lighting. Kodak intends to continue efforts to grow its portfolio of brand licenses to generate both ongoing royalty streams and upfront payments. Brand licensees use the Kodak brand on their products and use their own distribution channels.

Segment Operational EBITDA and Consolidated Income ~~(Loss)~~ from ~~Continuing~~ Operations Before Income Taxes

	Three Months Ended						Six Months Ended						Three Months Ended
	June 30,						June 30,						March 31,
(in millions)	2020			2019			2020			2019			2021			2020
Traditional Printing	$	1		$	9		$	2		$	15		$	5		$	1
Digital Printing		(3	)		(4	)		(5	)		(6	)		—			(2	)
Advanced Materials and Chemicals		(7	)		(8	)		(16	)		(18	)		(4	)		(9	)
Brand		2			2			4			3			2			2
All Other		1			—			—			(1	)		—			(1	)
Depreciation and amortization		(10	)		(14	)		(20	)		(29	)		(8	)		(10	)
Restructuring costs and other		(1	)		(2	)		(8	)		(4	)		(1	)		(7	)
Stock based compensation		—			(2	)		(1	)		(5	)		(3	)		(1	)
Consulting and other costs ⁽¹⁾		(1	)		(2	)		(1	)		(5	)		(5	)		—
Idle costs ⁽²⁾		(1	)		(2	)		(1	)		(3	)		(1	)		—
Former CEO separation agreement compensation		—			—			—			(2	)
Other operating (loss) income, net, excluding income from transition services agreement ⁽³⁾		—			(2	)		6			(2	)
Other operating income, net, excluding income from transition services agreement ⁽³⁾														1			6
Interest expense ⁽⁴⁾		(4	)		(5	)		(8	)		(8	)		(4	)		(4	)
Pension income excluding service cost component ⁽⁴⁾		27			26			53			53			25			26
Other (charges) income, net ⁽⁴⁾		(8	)		—			45			(1	)
Consolidated (loss) income from continuing operations before income taxes	$	(4	)	$	(4	)	$	50		$	(13	)
Other income, net ⁽⁴⁾														—			53
Consolidated income from operations before income taxes													$	7		$	54

Kodak’s segment measure of profit and loss is an adjusted earnings before interest, taxes, depreciation and amortization (“Operational EBITDA”). Operational EBITDA represents the earnings (loss) from ~~continuing~~ operations excluding the provision for income taxes; non-service cost components of pension and OPEB income; depreciation and amortization expense; restructuring costs; stock-based compensation expense; consulting and other costs; idle costs; ~~former CEO separation agreement compensation;~~ other operating ~~(loss)~~ income, net (unless otherwise indicated); interest ~~expense;~~expense and other ~~(charges)~~ income, net.

Kodak’s segments are measured using Operational EBITDA both before and after the allocation of corporate SG&A expenses. The segment earnings measure reported is after allocation of corporate SG&A as this most closely aligns with U.S. GAAP. Research and development activities not directly related to the other segments are reported within the Advanced Materials and Chemicals segment.

	Three Months Ended June 30,															Six Months Ended June 30,															Three Months Ended March 31,
(in millions)	2020			% of Sales			2019			% of Sales			$ Change			2020			% of Sales			2019			% of Sales			$ Change			2021			% of Sales			2020			% of Sales			$ Change
Revenues	$	213					$	307					$	(94	)	$	480					$	598					$	(118	)	$	265					$	267					$	(2	)
Cost of revenues		192						265						(73	)		423						516						(93	)		225						231						(6	)
Gross profit		21			10	%		42			14	%		(21	)		57			12	%		82			14	%		(25	)		40			15	%		36			13	%		4
Selling, general and administrative expenses		34			16	%		54			18	%		(20	)		82			17	%		113			19	%		(31	)		46			17	%		48			18	%		(2	)
Research and development costs		8			4	%		11			4	%		(3	)		17			4	%		22			4	%		(5	)		8			3	%		9			3	%		(1	)
Restructuring costs and other		1			0	%		2			1	%		(1	)		8			2	%		4			1	%		4			1			0	%		7			3	%		(6	)
Other operating income, net		(3	)		(1	)%		—			0	%		(3	)		(10	)		(2	)%		—			0	%		(10	)		(1	)		(0	)%		(7	)		(3	)%		6
Loss from continuing operations before interest expense, other (income) charges, net and income taxes		(19	)		(9	)%		(25	)		(8	)%		6			(40	)		(8	)%		(57	)		(10	)%		17
Loss from operations before interest expense, pension income excluding service cost component, other income, net and income taxes																																(14	)		(5	)%		(21	)		(8	)%		7
Interest expense		4			2	%		5			2	%		(1	)		8			2	%		8			1	%		—			4			2	%		4			1	%		—
Pension income excluding service cost component		(27	)		(13	)%		(26	)		(8	)%		(1	)		(53	)		(11	)%		(53	)		(9	)%		—			(25	)		(9	)%		(26	)		(10	)%		1
Other charges (income), net		8			4	%		0			0	%		8			(45	)		(9	)%		1			0	%		(46	)
(Loss) income from continuing operations before income taxes		(4	)		(2	)%		(4	)		(1	)%		—			50			10	%		(13	)		(2	)%		63
Other income, net																																—			0	%		(53	)		(20	)%		53
Earnings from operations before income taxes																																7			3	%		54			20	%		(47	)
Provision for income taxes		1			0	%		2			1	%		(1	)		166			35	%		5			1	%		161			1			0	%		165			62	%		(164	)
Loss from continuing operations		(5	)		(2	)%		(6	)		(2	)%		1			(116	)		(24	)%		(18	)		(3	)%		(98	)
Income from discontinued operations, net of income taxes		—			0	%		207			67	%		(207	)		—			0	%		201			34	%		(201	)
Net (loss) income	$	(5	)		(2	)%	$	201			65	%	$	(206	)	$	(116	)		(24	)%	$	183			31	%	$	(299	)
Net income (loss)																																6			2	%		(111	)		(42	)%		117

For the three months ended ~~June 30, 2020~~March 31, 2021 revenues declined ~~$94~~$2 million compared with the same period in 2019, driven by volume declines and unfavorable pricing within Traditional Printing ($57 million and $3 million, respectively), volume declines in Advanced Materials and Chemicals and Digital Printing ($19 million and $18 million, respectively) and unfavorable foreign currency ($2 million). The revenue declines were offset by improved pricing and product mix in Advanced Materials and Chemicals ($4 million) and favorable mix of products in Digital Printing ($2 million). See segment discussions for additional details.

~~For the six months ended June 30,~~ 2020, ~~revenues declined $118 million compared with the same period in 2019,~~ driven by volume declines and unfavorable pricing and product mix within Traditional Printing ($6210 million and $8$3 million, respectively)~~, volume declines in Advanced Materials and Chemicals~~ and Digital Printing ($292 million and ~~$28~~$1 million, respectively) ~~and unfavorable foreign currency ($5 million)~~. The revenue declines were offset by improved volume, pricing and product mix in Advanced Materials and Chemicals ~~($8~~(each $2 million) and favorable ~~mix of products in Digital Printing~~foreign currency ($59 million). See segment discussions for additional details.

Gross profit for the three months ended ~~June 30, 2020 declined~~March 31, 2021 improved approximately ~~$21~~$4 million compared with the same period in ~~2019~~2020 reflecting ~~volume declines, unfavorable pricing and product mix as well as increased~~improved costs ~~in Traditional Printing~~ ($~~7 million, $4 million and $5 million, respectively)~~5 million), ~~volume declines and increased costs in Advanced Materials and Chemicals (each $5 million) and volume declines in Digital Printing ($3 million) partially offset by~~ favorable pricing and product mix in Advanced Materials and Chemicals ($42 million) and lower depreciation and amortization expenses ($42 million)~~. See segment discussions for additional details.~~

~~Gross profit for the six months ended June 30, 2020 declined approximately $25 million compared with the same period in 2019 reflecting~~ partially offset by volume declines and unfavorable pricing and product mix ~~as well as increased costs~~ in Traditional Printing ~~($7 million, $10 million~~(each $2 million) and ~~$7 million, respectively), volume declines and increased costs Advanced Materials and Chemicals ($8 million and $7 million, respectively) and volume declines and unfavorable costs in~~ Digital Printing ($4 million and $5 million, respectively) partially offset by favorable pricing and product mix in Advanced Materials and Chemicals ($9 million), favorable mix of products in Digital Printing ($3 million) and lower depreciation and amortization expenses ($9(each $1 million). See segment discussions for additional details.

Consolidated SG&A decreased ~~$20~~$2 million ~~and $31 million for~~in the ~~three and six month periods~~three-month period ended ~~June 30, 2020, respectively, primarily due to~~March 31, 2021, driven by lower investment in segment selling and marketing activities ~~driven by~~due to cost reduction efforts ($~~18 million for the quarter and $22 million year-to-date), and lower consulting and project costs ($2 million for the quarter and $4 million for the year). The temporary furloughs and pay cuts~~6 million) as well as higher bad debt expense in the ~~current quarter provided approximately $3 million of the $18 million savings in the three months ending June 30, 2020. The six-month~~prior year period ~~ended June 30, 2019 also included $2 million of compensation related to the former CEO separation agreement while the six-month period ending June 30, 2020 included increased bad debt expense~~primarily due to increased collection risk related to the COVID-19 pandemic ($3 million). The decrease was partially offset by an increase of $5 million in consulting and project costs with the internal and external investigations that started in the third quarter of 2020 as well as a $2 million increase in stock-based compensation expense primarily attributable to the equity awards granted to the Company’s Executive Chairman and Chief Executive Officer in the current quarter.

Consolidated R&D expenses decreased ~~$3 million and $5~~$1 million for the quarter ~~and year-to-date periods~~ ended ~~June 30, 2020, respectively,~~March 31, 2021 primarily due to cost reduction efforts.

The change in Other ~~charges (income)~~income, net was primarily driven by the embedded conversion features derivative liability associated with the Convertible ~~Notes.~~Notes in 2020. Refer to Note ~~15,~~12, “Other ~~Charges (Income),~~Income, Net” and Note ~~24,~~20, “Financial Instruments”.

The change in Provision for income taxes ~~in the year-to-date period~~ was ~~primarily~~ driven by the $167 million provision associated with the establishment of a valuation allowance on deferred tax assets outside the U.S. in 2020. Refer to Note ~~16,~~13, “Income Taxes”.

The Income from discontinued operations in the prior year periods primarily represents the gain recognized on the sale of the FPD business in April 2019. Refer to Note 23, “Discontinued Operations”.

The decrease in Traditional Printing revenues for the three months ended ~~June 30, 2020~~March 31, 2021 of approximately ~~$62~~$6 million reflected volume and pricing declines ($509 million and $4$2 million, respectively) in Prepress Solutions consumables, volume declines in Prepress Solutions service ($~~3 million) and Prepress equipment ($3~~2 million) and unfavorable product mix in Prepress systems ($1 million), partially offset by improved volume in Prepress systems ($1 million) and favorable foreign currency ($27 million). The volume declines were ~~primarily driven by COVID-19 pandemic related declines in customer demand.~~

The decrease in Traditional Printing revenues for the six months ended June 30, 2020 of approximately $74 million primarily reflected volume and pricing declines ($54 million and $9 million, respectively) in Prepress Solutions consumables, volume declines in Prepress Solutions service ($3 million) and Prepress equipment ($5 million) and unfavorable foreign currency ($4 million) offset by favorable pricing and product mix ($2 million) in Prepress equipment. The volume declines were primarilypartially driven by COVID-19 pandemic related declines in customer demand.

Traditional Printing Operational EBITDA for the three months ended ~~June 30, 2020 declined $8~~March 31, 2021 improved $4 million reflecting lower manufacturing costs ($5 million) primarily due to headcount reductions and other cost savings measures and lower sales and marketing expenses ($4 million) due to cost reduction efforts as well as higher bad debt expense in the prior year period primarily due to increased collection risk related to the COVID-19 pandemic ($2 million). The cost improvements were partially offset by volume and pricing declines ($61 million and $4$2 million, respectively) in Prepress Solutions consumables ~~volume declines in Prepress service~~and unfavorable foreign currency ($1 million), and higher manufacturing costs ($7 million) driven by unfavorable cost absorption from the volume declines partially offset by lower SG&A expenses ($8 million) and lower aluminum costs in the current year ($2 million).

Traditional Printing Operational EBITDA for the six months ended June 30, 2020 declined $13 million primarily due to volume and pricing declines ($6 million and $9 million, respectively) in Prepress Solutions consumables, volume declines in Prepress service ($2 million), higher manufacturing costs driven by unfavorable cost absorption from the volume declines ($9 million), aluminum tariff refunds received in 2019 ($2 million) and an increase in bad debt expense ($2 million) partially offset by lower SG&A expenses ($12 million) and lower aluminum costs in the current year ($4 million).

During 2018 U.S. tariffs imposed on aluminum purchases were included as part of the cost of printing plates sold. In January 2019, Kodak received retroactive exemptions from U.S. tariffs on aluminum. Due to the exemptions, all aluminum tariffs paid by Kodak in prior periods were recognized as a cost reduction in the prior year-to-date period.

The decline in Digital Printing revenues for the three months ended ~~June 30, 2020~~March 31, 2021 of approximately ~~$17~~$1 million primarily reflected volume declines in Electrophotographic Printing Solutions consumables and service ($114 million), in part due to the decline in customer demand with the COVID-19 pandemic, pricing declines in Electrophotographic Printing Solutions equipment ($2 million) and ~~PROSPER consumables~~volume and ~~service ($4 million) which were driven by the decline in customer demand with the COVID-19 pandemic. There were also volume~~pricing declines in ~~VERSAMARK service~~Prosper components ($2 million and ~~consumables ($3 million) due to both~~$1 million, respectively). The declines ~~in the installed base of VERSAMARK systems and the COVID 19 pandemic. The impact of the volume declines was~~were partially offset by ~~improved~~ volume improvements in ~~PROSPER components ($4 million).~~

The decline in Digital Printing revenues for the six months ended June 30, 2020 of approximately $24 million primarily reflected volume declines in Electrophotographic Printing Solutions consumables and service ($15 million), Electrophotographic Printing Solutions equipment ($4 million), ~~PROSPER consumables and service ($4 million) and PROSPER~~favorable product mix in Prosper systems ($1 million) ~~which were driven by the decline in customer demand with the COVID-19 pandemic. There were also volume declines in VERSAMARK service~~ and ~~consumables~~favorable foreign currency ($6 million) due to both declines in the installed base of VERSAMARK systems and the COVID 19 pandemic. The impact of the volume declines was partially offset by improved volume in PROSPER components ($5 million) and improved pricing in PROSPER components and PROSPER systems (each $12 million).

Digital Printing Operational EBITDA for the three months ended ~~June 30, 2020~~March 31, 2021 improved $1$2 million ~~driven by higher manufacturing costs~~reflecting improved volume in Electrophotographic Printing Solutions equipment ($32 million), ~~volume~~lower sales and marketing expenses ($2 million), improved pricing and lower costs in Software and favorable foreign currency (each $1 million) partially offset by pricing declines in Electrophotographic Printing Solutions ~~consumables and service~~equipment ($2 million), ~~PROSPER consumables~~volume and ~~service ($2 million) and VERSAMARK service and consumables ($1 million) offset by improved volume in PROSPER components ($2 million), inventory write-downs driven by~~ pricing declines in ~~PROSPER systems in the prior year quarter ($2 million)~~Prosper components and ~~lower SG&A costs ($5 million).~~

~~Digital Printing Operational EBITDA for the six months ended June 30, 2020 improved $1 million driven by higher manufacturing costs in Electrophotographic Printing Solutions ($6 million),~~ volume declines in ~~Electrophotographic Printing Solutions consumables and service ($3~~Software (each $1 million), PROSPER consumables and service ($2 million) and VERSAMARK service and consumables ($2 million) offset by improved volume in PROSPER components ($3 million), volume improvements in Electrophotographic Printing Solutions equipment ($1 million), improved pricing in PROSPER systems ($2 million) and PROSPER components ($1 million) and lower SG&A costs ($6 million).

Advanced Materials and Chemicals revenues for the three months ended ~~June 30, 2020 declined $14~~March 31, 2021 improved $4 million primarily from volume ~~declines~~and pricing improvements in ~~Motion Picture ($10 million) driven by productions halted as a result of the COVID 19 pandemic,~~ Industrial Film and Chemicals ($~~5 million) primarily due to the COVID-19 pandemic’s~~4 million and $1 million, respectively). Partially offsetting these impacts ~~on its customers and~~was volume declines in Consumer Inkjet Solutions ($21 million) ~~driven by lower sales~~as the final build of ~~ink to~~inventory was sold in the ~~existing installed base~~second quarter of ~~printers.~~2020. Additionally, ~~current year revenues for Kodak Services for Business declined ($2 million) primarily due to operations in Asia being impacted by the COVID-19 pandemic, and~~ the prior year period included revenues from ~~Kodakit~~KSB ($1 million) which ~~ceased operating~~was sold in ~~January~~December 2020. ~~Partially offsetting these impacts was improved pricing in Industrial Film and Chemicals ($4 million) driven by higher pricing for solvents and professional and consumer still photographic film.~~

Advanced Materials and Chemicals revenues for the six months ended June 30, 2020 declined $20 million primarily from volume declines in Motion Picture ($12 million) driven by productions halted as a result of the pandemic, Industrial Film and Chemicals ($6 million) primarily due to COVID-19 pandemic’s impacts on its customers, and Consumer Inkjet Solutions ($4 million) driven by lower sales of ink to the existing installed base of printers. Additionally, current year revenues for Kodak Services for Business declined ($4 million) primarily due to operations in Asia being impacted by the COVID-19 pandemic, and the prior year period included revenues from Kodakit ($3 million) which ceased operations in January 2020. Partially offsetting these impacts was improved pricing and improved product mix in Industrial Film and Chemicals ($8 million) driven by higher pricing and favorable product mix in professional and consumer still photographic film and higher pricing for solvents.

Advanced Materials and Chemicals Operational EBITDA improved $1$5 million for the three months ended ~~June 30, 2020 primarily due to~~March 31, 2021 reflecting favorable ~~pricing ($4 million) in Industrial Film~~volume and ~~Chemicals.~~

~~Also contributing were lower selling and administrative expenses ($4 million), and lower R&D costs ($2 million). Partially offsetting were volume declines in Motion Picture ($3 million), Consumer Inkjet Solutions ($1 million) and Industrial Film and Chemicals ($1 million), as well as unfavorable cost impacts~~pricing in Industrial Film and Chemicals ~~($3~~(each $1 million), and ~~Motion Picture ($2 million)~~ ~~driven by unfavorable cost absorption.~~

Advanced Materials and Chemicals Operational EBITDA improved $2 million for the six months ended June 30, 2020 primarily due to favorable pricing and improved product mix ($8 million) in Industrial Film and Chemicals. Also contributing were lower selling and administrative ~~expenses ($7 million)~~ and ~~lower~~ R&D expenses (each $1 million). Favorable costs in film manufacturing ($2 million) were offset by startup costs associated with the anticipated ramp up of a new coating services line ($2 million). Partially offsetting were volumes declines in Motion Picture ($4 million), Industrial Film and Chemicals ($2 million) and Consumer Inkjet Solutions ($2 million) as well as unfavorable cost impacts in Industrial Film and Chemicals ($5 million) and Motion Picture ($1 million) driven by unfavorable cost absorption.

Brand revenues and EBITDA for the three ~~and six~~ months ended ~~June 30, 2020~~March 31, 2021 remained ~~relatively~~ flat compared to the prior year ~~quarter and year-to-date periods.~~quarter.

Kodak recorded $1 million ~~and $8 million~~ of charges for the three ~~and six~~ months ended ~~June 30, 2020, respectively,~~March 31, 2021 in Restructuring costs and other in the Consolidated Statement of Operations.

Kodak made cash payments related to restructuring of approximately ~~$3 million and $10~~$4 million during the three ~~and six~~ months ended ~~June 30, 2020, respectively.~~March 31, 2021.

The restructuring actions implemented in the first ~~six~~three months of ~~2020~~2021 are expected to generate future annual cash savings of approximately $9$2 million. These savings are expected to reduce future annual Cost of revenues and SG&A expenses by $1 million ~~and $8 million, respectively.~~each. Kodak began realizing a portion of these savings in the first ~~six~~three months of ~~2020~~2021 and expects the majority of the annual savings to be in effect by the end of the ~~year~~third quarter of 2021 as actions are completed.

Updates to critical accounting policies and estimates in Kodak’s 2019 Annual Report on Form 10-K are presented in this section. Refer to Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the 2019 Annual Report on Form 10-K for a complete discussion of all Kodak’s critical accounting policies.

~~Valuation and Useful Lives of Long-Lived Assets, Including Goodwill and Intangible Assets~~

Goodwill is tested for impairment at a level of reporting referred to as a reporting unit, which is an operating segment or one level below an operating segment (a component) if the component constitutes a business for which discrete financial information is available and regularly reviewed by segment management. As a result of the change in segments that became effective as of January 1, 2020, Kodak’s goodwill reporting units changed. The Digital Printing segment has three goodwill reporting units: Electrophotographic Printing Solutions, Prosper and Versamark, and Software. The Advanced Materials and Chemicals segment has three goodwill reporting units: Motion Picture and Industrial Films and Chemicals, Advanced Materials and Functional Printing and Kodak Services for Business. The Traditional Printing segment, Brand segment and Eastman Business Park segment each have one goodwill reporting unit.

Kodak performed interim tests of impairment for goodwill as of June 30, 2020 due to the continued uncertainty regarding the negative impact of the COVID-19 pandemic on its operations, and as of March 31, 2020, due to the decline in market capitalization as of that date since the last goodwill impairment test (December 31, 2019) and the uncertainty regarding the negative impact of the COVID-19 pandemic at that time. Kodak utilized the discounted cash flow method to estimate the fair value of all reporting units for both tests. Kodak established an estimate of future cash flows for the period ranging from July 1, 2020 to December 31, 2024 for the June 30, 2020 interim test, and April 1, 2020 to December 31, 2024 for the March 31, 2020 interim test. The future cash flows were discounted to present value. The expected cash flows were derived from earnings forecasts and assumptions regarding the timing and impact of the COVID-19 pandemic on each reporting unit as of each applicable interim test date. The discount rates are estimated based on an after-tax weighted average cost of capital (“WACC”) for each reporting unit reflecting the rate of return that would be expected by a market participant. The WACC also takes into consideration a company specific risk premium for each reporting unit reflecting the risk associated with the overall uncertainty of the financial projections. Discount rates of 16% to 55% were utilized in the June 30, 2020 valuation, and 21% to 55% for the March 31, 2020 valuation, both based on Kodak’s best estimates of the after-tax weighted-average cost of capital of each reporting unit as of the applicable valuation date.

A terminal value was included for all reporting units at the end of the cash flow projection period to reflect the remaining value that the reporting unit is expected to generate. The terminal value was calculated using either the constant growth method based on the cash flows of the final year of the discrete period or the H-model, which assumes the growth during the terminal period starts at a higher rate and declines in a linear manner over a specified transition period toward a stable growth rate.

Based upon the results of Kodak’s June 30, 2020 and March 31, 2020 analyses, no impairment of goodwill was indicated. Impairment of goodwill could occur in the future if a reporting unit’s fair value changes significantly, if Kodak’s market capitalization significantly declines, if a reporting unit’s carrying value changes materially compared with changes in its fair value, or as a result of changes in operating segments or reporting units.

Kodak updated the fair value of the Kodak trade name as of June 30, 2020 and March 31, 2020. The fair value of the Kodak trade name was valued using the income approach, specifically the relief from royalty method based on the following significant assumptions: (a) forecasted revenues ranging from July 1, 2020 to December 31, 2024 for the June 30, 2020 interim test, and April 1, 2020 to December 31, 2024 for the March 31, 2020 interim test, both valuations included a terminal year with growth rates ranging from -3% to 2.5% (b) an after-tax royalty rate of 0.4% of expected net sales, and (c) discount rates ranging from 16% to 25% for the June 30, 2020 interim test, and 23% to 32% for the March 31, 2020 interim test. The discount rates are based on the after-tax weighted-average cost of capital.

~~Based on the results of Kodak’s March 31, 2020 assessment, the carrying value of the Kodak trade name exceeded its fair value and Kodak recorded a pre-tax impairment charge of $3 million.~~

Based on the results of Kodak’s June 30, 2020 assessment, the fair value of the Kodak trade name exceeded its’ carrying value. Impairment of the Kodak trade name could occur in the future if estimated revenues decline or if there are significant changes in the discount or royalty rates. A one percent increase in the discount rate and a 10 percent miss in expected revenues would impact the fair value of the Kodak trade name by $2 million as of June 30, 2020.

Long-lived assets other than goodwill and indefinite-lived intangible assets are evaluated for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable. When evaluating long-lived assets for impairment, the carrying value of an asset group is compared to its estimated undiscounted future cash flows. An impairment is indicated if the estimated future cash flows are less than the carrying value of the asset group. The impairment is the excess of the carrying value over the fair value of the long-lived asset group.

Kodak updated its estimate of undiscounted cash flows for each asset group as of June 30, 2020 and March 31, 2020 using a probability weighted approach in determining the likelihood of possible adverse impacts from the COVID-19 pandemic as of each applicable interim test date. Based on the results of the interim impairment tests, no impairment indicators were noted. Impairment of long-lived assets other than goodwill and indefinite lived intangible assets could occur in the future if expected estimated future cash flows decline or if there are significant changes in the estimated useful life of the assets.

~~Kodak~~ ~~is facing~~The financing transactions entered into during the first quarter of 2021 provided additional liquidity ~~challenges due~~ to ~~operating losses and low or negative cash flow from~~the Company to fund on-going operations and collateral needs. Kodak has $80 million of letters of credit issued under the ABL Credit Agreement which matures on May 26, 2021. The Series A Preferred Stock must be redeemed on November 15, 2021 if not converted prior to then. Kodak has ongoing significant cash requirements to fund operations, restructuring programs, pension and other postretirement obligations, and ~~other obligations.~~to invest in growth opportunities in Kodak’s core businesses of print, advanced materials and chemicals as well as corporate infrastructure investments expected to contribute to improvements in cash flow. Kodak’s plans to return to sustainable positive cash flow include growing revenues profitably, reducing operating expenses, continuing to simplify the organizational structure, generating cash from selling and leasing underutilized assets and ~~paring investment in new technology by eliminating or delaying product development programs. Additionally, the Company looks to implement~~implementing ways to reduce cash collateral ~~needs in the U.S.~~ needs.

Kodak’s products are sold and serviced in numerous countries across the globe with more than half of sales generated outside the U.S. Current global economic conditions ~~are~~remain highly volatile due to the on-going COVID-19 ~~pandemic, resulting in market size contractions in many countries due to economic slowdowns and government restrictions on movement.~~pandemic. The conversion of accounts receivable to cash is taking longer and collection risk ~~has increased since before~~remains high. To mitigate the ~~pandemic.~~economic impacts of the pandemic Kodak reduced operating costs, largely beginning in the second quarter of 2020, through the use of temporary furloughs and pay reductions and adjusted manufacturing volumes to meet changing expectations around production requirements. The furloughs and pay-cuts largely ended in January 2021. While manufacturing volumes have improved for certain businesses the economic uncertainty surrounding the COVID-19 pandemic isrepresents an additional element of complexity in Kodak’s plans to return to sustainable positive cash flow. ~~To mitigate the economic impacts of the pandemic Kodak is employing temporary furloughs and pay reductions and scaling manufacturing volumes due to reduced volumes.~~ The Company ~~is also seeking~~continues to take advantage of any available government incentives around the world in response to the COVID-19 pandemic such as ~~employee related~~employee-related tax deferrals or holidays, wage subsidies and loan programs including those under the U.S. CARES Act, although the Company has not yet been able to take advantage of any loan programs and may not qualify for any loans under the programs created under the U.S. CARES Act. Many of the available government incentives for which the Company qualifies are in the form of deferrals of payments that will be required to be paid in the future.

Refer to the Going Concern section of Note 1, “Basis of Presentation and Recent Accounting Pronouncements”; Note 8, "Debt and Finance Leases," and Note 9, “Redeemable, Convertible Series A Preferred Stock” in the Notes to Financial Statements for further discussion. Refer to Note 2, “Cash, Cash Equivalents and Restricted Cash” for a reconciliation of cash, cash equivalents and restricted cash.

Net cash used in operating activities ~~increased $51~~decreased $25 million for the ~~six~~three months ended ~~June 30, 2020~~March 31, 2021 as compared with the corresponding period in ~~2019~~2020 primarily due to ~~increased~~improved earnings and decreases in cash ~~use~~used for accounts payable and ~~other liabilities,~~inventory partially offset by ~~higher~~lower reductions of accounts receivable in ~~2020, and the receipt in 2019 of a $15 million prepayment for transition services, products, and other services as a part of the divestiture of FPD.~~2021.

Net cash ~~provided by~~used in investing activities ~~decreased $302 million~~remained flat for the ~~six~~three months ended ~~June 30, 2020~~March 31, 2021 as compared with the corresponding period in ~~2019 due to the proceeds from the sale of FPD in the prior year.~~2020.

Net cash ~~used in~~provided by financing activities infor the ~~six~~three months ended ~~June 30, 2020 compares $288~~March 31, 2021 improved $245 million ~~favorably~~compared to the corresponding period in ~~2019~~2020 driven by the ~~prior year repayment~~net proceeds of ~~the Term Credit Agreement and the payment of contingent consideration partially offset by the issuance of the Convertible Notes and the proceeds~~$247 million received from the ~~RED – Rochester borrowing and the~~ current ~~year payment of preferred stock dividends.~~quarter refinancing transactions.

Available liquidity includes cash balances and the unused portion of the Amended ABL Credit Agreement. The amount of available liquidity is subject to fluctuations and includes cash balances held by various entities worldwide. At ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 approximately ~~$95~~$284 million and ~~$72~~$99 million, respectively, of cash and cash equivalents were held within the U.S. and approximately ~~$85~~$117 million and ~~$161~~$97 million, respectively, of cash and cash equivalents were held outside the U.S. Cash balances held outside the U.S. are generally required to support local country operations and may have high tax costs or other limitations that delay the ability to repatriate, and therefore may not be readily available for transfer to other jurisdictions. Kodak utilizes cash balances outside the U.S. to fund needs in the U.S. through the use of inter-company loans. As of ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, outstanding inter-company loans to the U.S. were ~~$429~~$417 million and ~~$408~~$449 million, respectively, which includes short-term inter-company loans from Kodak’s international finance center of ~~$130~~$117 million and ~~$110~~$150 million, respectively. In China, where approximately ~~$23~~$35 million and ~~$89~~$34 million of cash and cash equivalents was held as of ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively, there are limitations related to net asset balances that may impact the ability to make cash available to other jurisdictions in the world. ~~On May 12, 2020, a Chinese subsidiary of Kodak transferred approximately $70 million to a U.S. subsidiary of Kodak in anticipation of an inter-company transaction.~~ Under the terms of the Amended ABL Credit Agreement, the Company is permitted to invest up to ~~$100~~$75 million in ~~subsidiaries~~Restricted Subsidiaries that are not Loan Parties and in joint ventures or Unrestricted Subsidiaries that are not party to the Amended ABL Credit Agreement.

On March 27, 2020, the Company and the Subsidiary Guarantors entered into the Amendment with the Lenders and Bank of America, N.A., as administrative and collateral agent. The Amendment decreased the available asset-based revolving loans (the “ABL Loans”) and letters of credit from an aggregate amount of up to $120 million to $110 million, subject to the Borrowing Base.

As a result of the additional reduction in lender commitments, the minimum Excess Availability decreased to $13.75 million from the previous amount of $15 million. The changes provided by the Amendment to the Excess Availability and Equipment Availability combined with increases in Eligible Receivables and Eligible Inventory allowed the Company to decrease Eligible Cash by $13 million without causing Excess Availability to fall below 12.5% of lender commitments.

The Company had issued approximately ~~$80~~$42 million letters of credit under the Amended ABL Credit Agreement and $48 million letters of credit under the L/C Facility Agreement as of March 31, 2021. The letters of credit under the L/C Facility Agreement are collateralized by cash collateral (L/C Cash Collateral). The L/C Cash Collateral was $49 million at March 31, 2021 which was classified as Restricted Cash. The Company had issued approximately $90 million letters of credit under the ABL Credit Agreement as of ~~both June 30, 2020 and~~ December 31, ~~2019.~~ 2020.

Under the Amended ABL Credit Agreement and L/C Facility Agreement the Company is required to maintain Minimum Liquidity of at least $80 million, which is tested on the last day of each fiscal quarter. Minimum Liquidity was $284 million at March 31, 2021. If Minimum Liquidity falls below $80 million an Event of Default would occur and the Agent has the right to declare the obligation of each Lender to make Revolving Loans and of the Issuing Banks to issue Letters of Credit to be terminated, and declare the Revolving Loans, all interest thereon and all other amounts payable under the Amended ABL Credit Agreement to be due and payable.

Under the Amended ABL Credit Agreement the Company is required to maintain Excess Availability above 12.5% of lender commitments ($~~13.75~~11.25 million and $13.75 million as of March 31, 2021 and December 31, 2020, respectively), which is tested at ~~June 30, 2020).~~the end of each month. Excess Availability was $41 million and $20 million as of March 31, 2021 and December 31, 2020, respectively. If Excess Availability isfalls below 12.5% of lender commitments a Fixed Charge Coverage Ratio Trigger Event would occur. During any Fixed Charge Coverage Ratio Trigger Event, the Company ~~has the ability~~would be required to fund amounts into the Eligible Cash account which will increase Excess Availability for purposes of the previous month-end compliance reporting. On July 20, 2020 the Company funded $5 million to the Eligible Cash account. Including the July 20, 2020 Eligible Cash funding in the June 30, 2020 compliance calculation the Company had approximately $17 million of Excess Availability under the ABL Credit Agreement for the June 30, 2020 compliance reporting and $22 million of Excess Availability under the ABL Credit Agreement as of December 31, 2019. To maintain ~~Excess Availability~~a Fixed Charge Coverage Ratio of greater than ~~12.5% of lender commitments ($13.75 million and $18.75 million as of June 30, 2020 and December 31, 2019, respectively), incremental~~or equal to ~~the $5 million funding of the Eligible Cash account on July 20, 2020, Kodak funded $9 million and $22 million~~1.0 to the Eligible Cash account held with the ABL Credit Agreement Administrative Agent as of June 30, 2020 and December 31, 2019, respectively, which is classified as Restricted Cash in the Consolidated Statement of Financial Position.

~~Under the ABL Credit Agreement, if~~If Excess ~~Availability)~~Availability falls below 12.5% of lender ~~commitments),~~commitments, Kodak ~~would be required~~may, in addition to the requirement to be in compliance with the minimum Fixed Charge Coverage Ratio, ~~(the only financial covenant in the ABL Credit Agreement) and could~~ become subject to cash dominion control. In addition to Eligible Cash, the borrowing base is supported by Eligible Receivables, Eligible Inventory and Eligible Equipment. To the extent the assets supporting the borrowing base decline and/or letters of credit issued under the ABL Credit Agreement increase, if the remaining assets included in the borrowing base are not sufficient to support the required Excess Availability amount, funding of Eligible Cash may be required. Eligible Receivables, Eligible Inventory and Eligible Equipment have the meaning ascribed to these terms in the ABL Credit Agreement. Kodak intends to maintain Excess Availability above the minimum threshold. Since Excess Availability was greater than 12.5% of lender commitments ~~the June 30,~~at March 31, 2021 and December 31, 2020, ~~month-end compliance reporting date,~~ Kodak is not required to have a minimum Fixed Charge Coverage Ratio of 1.0 to 1.0. The Amended ABL Credit Agreement also removed Eligible Cash from the Borrowing Base. Therefore, amounts funded into the Eligible Cash account will no longer increase Excess Availability for purposes of compliance reporting. As of ~~June 30,~~December 31, 2020, ~~Fixed Charges exceeded EBITDA (as defined in~~to maintain Excess Availability of greater than 12.5% of lender commitments, Kodak funded $35 million to the Eligible Cash account held with the ABL Credit ~~Agreement) by approximately $27 million, therefore,~~Agreement Administrative Agent, which was classified as Restricted Cash in the Consolidated Statement of Financial Position.

If Excess Availability falls below 12.5% of lender commitments and the Fixed Charge Coverage Ratio ~~was~~is less than 1.0 to ~~1.0.~~1.0, an Event of Default would occur and the Agent has the right to declare the obligation of each Lender to make Revolving Loans and of the Issuing Banks to issue Letters of Credit to be terminated, and declare the Revolving Loans, all interest thereon and all other amounts payable under the Amended ABL Credit Agreement to be due and payable.

The holders of the Term Loans are entitled to quarterly cash interest payments at a rate of 8.5% per annum and holders of the Series B Preferred Stock are entitled to cumulative dividends payable quarterly in cash at a rate of 4.0% per annum. The Convertible Notes do not require any debt service until maturity on May 28, 2026 and holders of the Series C Preferred Stock are entitled to cumulative dividends payable quarterly “in-kind” in the form of additional shares of Series C Preferred Stock at a rate of 5.0% per annum.

The New York State Workers’ Compensation Board (“NYSWCB”) requires security deposits related to self-insured workers’ compensation obligations. The security deposit required by NYSWCB is based on actuarial calculations of the Company’s obligations and company specific factors such as its declining workforce and reducing exposure. The NYSWCB calculation also includes a financial contingency based on the employer’s credit rating and a calculation of unallocated loss adjustment expenses. In 2020 the NYSWCB waived these charges to provide employers some relief while they endure the economic impacts of the COVID-19 pandemic. The waived security deposits amounted to $16.7 million in 2020. The increase to the security deposit required by NYSWCB in 2020, not including the waived amounts, was $14.9 million. The Company has agreed to post additional collateral of approximately $3 million for each of the next five years to satisfy the current security deposit obligation. The collateral obligation can be satisfied by issuing letters of credit or through other means. The amount of security deposit required by NYSWCB will be re-calculated annually. Therefore, the amount of additional collateral required may change each year.

As a result of the Company’s current credit ratings, induring the second quarter of 2020 two surety bond holders notified the Company they ~~will require~~required approximately $9 million of incremental collateral. The Company reduced the surety bond value by approximately $9 million in July 2020 with an equivalent increase to an existing letter of credit with the New York Workers’ Compensation board. The Company could be required to provide up to $3 million of letters of credit to the issuers of certain surety bonds in the future to fully collateralize the bonds.

~~The holders~~U.S. International Development Finance Corporation Non-Binding Letter of Series A Preferred Stock are entitled to cumulative dividends payable quarterly in cash at a rate of 5.5% per annum. Until the third quarter of 2018 all dividends owed on the Series A Preferred Stock were declared and paid when due. No quarterly dividend was declared in the third or fourth quarters of 2018 or the first and second quarters of 2019. The Company declared quarterly cash dividends in the third and fourth quarters of 2019 and the first and second quarters of 2020 that were paid when due. In July 2020, the Company declared and paid the four quarterly dividends that were in arrears in the aggregate amount of $11 million.

On July 28, 2020 the U.S. International Development Finance Corporation ~~signed~~(the “DFC”) announced (the “DFC Announcement) the signing of a non-binding letter of interest to provide ~~up to~~ a ~~$765 million loan to Kodak Pharmaceuticals, Inc. (“KPI”), which is expected to be a wholly owned~~ subsidiary of the Company with a potential $765 million loan (the “DFC Loan”) to support the launch of Kodak Pharmaceuticals, an initiative that ~~will produce~~would manufacture pharmaceutical ~~ingredients.~~ingredients for essential generic drugs (the “DFC Pharmaceutical Project”). The ~~loan~~DFC Loan would be for facility upgrades and construction, provide working capital, and finance other necessary direct expenditures supporting the launch of ~~KPI.~~

~~Due~~Kodak Pharmaceuticals. The signing of the letter of interest indicated Kodak’s successful completion of the DFC’s initial screening, which would be followed by standard due diligence conducted by the DFC before financing would be formally committed. The application process for the DFC Loan was put on hold when investigations were commenced with respect to ~~exercises~~the circumstances surrounding the DFC Announcement. While the letter of ~~stock options primarily by ex-employees,~~interest with the DFC has never been formally terminated and the Company has not received ~~approximately $29 million, net~~any communication from the DFC rejecting its application, given the time that has elapsed and the recent changes in administration at the federal government and the DFC, the Company is operating on the basis that the DFC Loan as envisioned at the time of ~~tax payments, starting~~the DFC Announcement will not proceed. The Company remains interested in ~~July through~~working with the ~~date~~DFC and other governmental agencies to leverage its assets and technology to on-shore manufacturing of ~~this filing.~~pharmaceutical and other healthcare materials. As described under “Overview” above, the Company is also continuing to explore expanding further into the pharmaceutical space on a smaller scale than contemplated by the DFC Loan using other sources of capital, including a portion of the capital raised by the Company on February 26, 2021.

Kodak made net contributions (funded plans) or paid benefits (unfunded plans) totaling approximately $6$3 million to its defined benefit pension and postretirement benefit plans in the first ~~six~~three months of ~~2020.~~2021. For the balance of ~~2020,~~2021, the forecasted contribution (funded plans) and benefit payment (unfunded plans) requirements for its pension and postretirement plans are approximately ~~$10~~$13 million.

Cash flow from investing activities included $9$1 million of capital expenditures for the ~~six~~three months ended ~~June 30, 2020.~~March 31, 2021. Kodak expects approximately $15 million to $25 million of total capital expenditures for ~~2020.~~2021, before consideration of any investment Kodak may make utilizing proceeds from the first quarter 2021 financing transactions.

Kodak maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in Kodak’s reports filed or submitted under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including Kodak’s Executive Chairman and Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Kodak’s management, with the participation of Kodak’s Executive Chairman and Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of Kodak’s disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form ~~10-Q. Kodak’s Executive Chairman~~10-Q and ~~Chief Financial Officer~~ have concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, Kodak’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective.

There have been no changes in Kodak’s internal control over financial reporting during the most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, Kodak’s internal control over financial reporting.

On August 13, 2020 Tiandong Tang commenced a class action lawsuit against the Company, its Executive Chairman and Chief Executive Officer and its Chief Financial Officer in Federal District Court in the District of New Jersey, and on August 26, 2020 Jimmie A. McAdams and Judy P. McAdams commenced a class action lawsuit against the Company and its Executive Chairman and Chief Executive Officer in Federal District Court in the Southern District of New York (collectively, the “Securities Class Actions”). The Securities Class Actions seek damages and other relief based on alleged violations of federal securities laws in the context of the DFC Announcement of the potential DFC Loan and DFC Pharmaceutical Project. Since the filing of the Securities Class Actions, procedural activities have been ongoing relating to the determination of venue and lead plaintiff. The Company intends to vigorously defend itself against the Securities Class Actions.

In addition to the Securities Class Actions, on December 29, 2020 Robert Garfield commenced a class action lawsuit against the Company and each of the members of its Board of Directors in the Superior Court of Mercer County, New Jersey seeking equitable relief and damages in favor of the Company based on alleged breaches of fiduciary duty by the Company’s Board of Directors associated with alleged false and misleading proxy statement disclosure (the “Fiduciary Class Action”). The Company filed a motion to dismiss the Fiduciary Class Action on April 13, 2021. The Company has also received three requests under New Jersey law demanding, among other things, that the Company take certain actions in response to alleged breaches of fiduciary duty relating to option grants and securities transactions in the context of the DFC Announcement and alleged proxy statement disclosure deficiencies. The Company has responded to and engaged in discussions concerning these requests, and its response and discussions may serve as the basis for the requestors to bring shareholder derivative lawsuits (any such lawsuits, collectively with the Fiduciary Class Action, the “Fiduciary Matters”). The Company intends to vigorously defend the Fiduciary Matters.

The DFC Announcement has also prompted investigations by several congressional committees, the SEC and the New York Attorney General’s office. The Company is cooperating in those investigations.

Kodak’s Brazilian operations are involved in various litigation matters ~~in Brazil~~ and have received or been the subject of numerous governmental assessments related to indirect and other taxes in various stages of litigation, as well as civil litigation and disputes associated with former employees and contract labor. The tax matters, which comprise the majority of the litigation matters, are primarily related to federal and state value-added taxes and income taxes. Kodak’s Brazilian operations are disputing these matters and intend to vigorously defend their position. Kodak routinely assesses these matters as to the probability of ultimately incurring a liability in its Brazilian operations and records its best estimate of the ultimate loss in situations where it assesses the likelihood of loss as probable. As of June 30, 2020, Kodak’s Brazilian Operations maintained accruals of approximately $3 million for claims aggregating approximately $110 million inclusive of interest and penalties where appropriate. In connection with assessments and litigation in Brazil, local regulations may require Kodak’s Brazilian Operations to post security for a portion of the amounts in dispute. Generally, any encumbrances on the Brazilian assets would be removed to the extent the matter is resolved in Kodak’s favor.

Kodak is involved in various lawsuits, claims, investigations, remediations and proceedings, including, from time to time, commercial, customs, employment, environmental, tort and health and safety matters, which are being handled and defended in the ordinary course of business. Kodak is also subject, from time to time, to various assertions, claims, proceedings and requests for indemnification concerning intellectual property, including patent infringement suits involving technologies that are incorporated in a broad spectrum of Kodak’s products. These matters are in various stages of investigation and litigation and are being vigorously defended. Based on information currently available, Kodak does not believe that it is probable that the outcomes in any of these matters, individually or collectively, will have a material adverse effect on its financial condition or results of operations. Litigation is inherently unpredictable, and judgments could be rendered or settlements entered that could adversely affect Kodak’s operating results or cash flows in a particular period. Kodak routinely assesses all of its litigation and threatened litigation as to the probability of ultimately incurring a liability and records its best estimate of the ultimate loss in situations where it assesses the likelihood of loss as probable.

In addition to matters relating to Kodak’s operations, Kodak is involved in investigations being conducted by several congressional committees and the SEC stemming from events related to the announcement of the potential DFC Loan and Pharmaceutical Initiative discussed under Item 1A. Risk Factors below.

Reference is made to the Risk Factors set forth in Part I, Item 1A. of the ~~2019~~2020 Form 10-K. The Risk Factors remain applicable from the ~~2019~~2020 Form 10-K. In particular, Kodak continues to face risks associated with the COVID-19 pandemic as described in the 2019 Form 10-K under the captions “Risk Factors—Risks Relating to Kodak’s Business—Weakness or worsening of global economic conditions could adversely affect Kodak’s financial performance and liquidity” and “—Business disruptions could seriously harm Kodak’s future revenue and financial condition and increase its costs and expenses”. Certain known consequences to Kodak from the COVID-19 pandemic are disclosed in the financial statements contained in this Form 10-Q and under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operation.” The full extent to which the COVID-19 pandemic will impact Kodak’s results will depend on future developments, which are highly uncertain and cannot be predicted at the time of this filing, including new information which may emerge concerning the scope and duration of the pandemic and the restrictions and other actions implemented to fight it, among others. Direct and indirect effects from the COVID-19 pandemic could have a material adverse effect on the continuity of Kodak’s business operations and its results of operations and financial position, particularly if such effects have an extended duration.

On July 28, 2020, the U.S. International Development Finance Corporation (the “DFC”) announced the signing of a non-binding letter of interest to provide a subsidiary of the Company with a potential $765 million loan (the “DFC Loan”) to support the launch of Kodak Pharmaceuticals, an initiative that would manufacture pharmaceutical ingredients for essential generic drugs (the “Pharmaceutical Initiative”). As referenced in the DFC’s announcement, the signing of the letter of interest indicates Kodak’s successful completion of the DFC’s initial screening and will be followed by standard due diligence conducted by the DFC before financing is formally committed. The letter of interest is non-binding, and there can be no assurance that the DFC’s standard due diligence will be successfully completed or that, even if the due diligence is successfully completed, the DFC will proceed with the potential DFC Loan. Congressional investigations and an SEC investigation have been commenced which could affect the likelihood of the consummation of the DFC Loan. The DFC has tweeted that it will not proceed any further with the potential DFC Loan unless the recent allegations raised in the context of the potential DFC Loan have been cleared. The potential DFC Loan has sparked intense media interest and coverage. If the DFC Loan is not made or if the findings of the investigations are unfavorable, Kodak’s reputation could be damaged and its existing business could be adversely affected.

If the DFC Loan is ultimately consummated, the Pharmaceutical Initiative will be subject to the risks associated with Kodak’s business generally as described in the 2019 Form 10-K under the caption “Risk Factors—Risks Relating to Kodak’s Business”. Based on the developmental nature of the Pharmaceutical Initiative, if the project proceeds Kodak will face heightened risks relating to talent acquisition, construction, obtaining regulatory approvals, cost overruns, delays, product development and market development, among others. In particular, the economic success of the Pharmaceutical Initiative will depend in large part on products produced by the Pharmaceutical Initiative being able to successfully compete with pharmaceutical ingredients supplied by low-cost countries such as China and India through manufacturing and operating efficiencies, “buy American” initiatives or mandates, or otherwise. If the Pharmaceutical Initiative is not able to compete effectively or otherwise generate positive cash flow, the

subsidiary operating the Pharmaceutical Initiative (the “Pharmaceutical Subsidiary”) may not be able to distribute profits to the Company or repay the DFC Loan. It is contemplated that if the Pharmaceutical Subsidiary defaults on the DFC Loan, the Company will lose its equity interest in the Pharmaceutical Subsidiary (and, indirectly, the buildings and assets contributed by Kodak to the Pharmaceutical Subsidiary in connection with the Pharmaceutical Initiative). It is not contemplated that the Company will be a guarantor of the DFC Loan or responsible to repay the DFC Loan should the Pharmaceutical Subsidiary default on the DFC Loan.

As described in the 2019 Form 10-K under the caption “Risk Factors—Risks Related to the Company’s Common Stock—The Company’s stock price has been and may continue to be volatile”, there have been and may continue to be significant fluctuations in the market price of the Company’s common stock. For example, there have been significant market price fluctuations following the recent announcement of the potential DFC Loan and Pharmaceutical Initiative. The market price of the Company’s common stock may be particularly susceptible to additional significant fluctuations based on future announcements or disclosures concerning the potential DFC Loan, the Pharmaceutical Initiative, the related congressional and SEC investigations and the related internal review being performed by a special committee of the Company’s Board of Directors.

As described in the 2019 Form 10-K under the caption “Risk Factors—Risks Related to the Company’s Common Stock—The Company has registered the resale of a large portion of its outstanding securities. The resale of the Company’s common stock, or the perception that such resale may occur, may adversely affect the price of its common stock”, the resale of a substantial number of shares of common stock in the public market, or the perception that such resale might occur, could cause the market price of the Company’s common stock to decline. On August 3, 2020, the Company issued the 29,922,956 Conversion Shares to the holders of the Converted Notes (the “Converting Holders”). While the Conversion Shares have not been registered for resale, the Conversion Shares were issued without restrictive legends or transfer restrictions based on the Company’s receipt of an opinion of counsel for the Converting Holders that the resale of up to all of the Conversion Shares by the Converting Holders could be made in accordance with Rule 144 at any time in the three (3) month period commencing on August 3, 2020. The Company does not know if any of the Conversion Shares are still held by the Converting Holders, or if any of the Conversion Shares have been sold. If the Converting Holders continue to hold the Conversion Shares, future sales of the Conversion Shares by the Converting Holders could exert downward pressure on the Company’s stock price.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

NEW JERSEY		16-0417150
(State or other jurisdiction of ~~incorporation)~~incorporation or organization)		(IRS Employer Identification No.)

343 STATE STREET, ROCHESTER, NEW YORK		14650
(Address of principal executive offices)		(Zip Code)

		Page
Part I.—Financial Information

Item 1.	Financial Statements	3
	Consolidated Statement of Operations (Unaudited)	3
	Consolidated Statement of Comprehensive (Loss) Income (Unaudited)	4
	Consolidated Statement of Financial Position (Unaudited)	5
	Consolidated Statement of Cash Flows (Unaudited)	6
	Consolidated Statement of Equity (Deficit) (Unaudited)	7
	Notes to Financial Statements (Unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3230
	Liquidity and Capital Resources	4536
Item 4.	Controls and Procedures	4739

Part II. —Other Information

Item 1.	Legal Proceedings	4840
Item 1A.	Risk Factors	4840
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4940
Item 6.	Exhibits	4941

	Index to Exhibits	5041
	Signatures	5144

(in millions)	Type	Maturity	Weighted-Average Effective Interest Rate	March 31, 2021		December 31, 2020
Current portion:
	RED-Rochester, LLC	2033	11.46%	$	1	$	1
	Finance leases	Various	Various		1		1
					2		2
Non-current portion:
	Term note	2026	13.96%		216		—
	Convertible debt	2026	17.09%		13		—
	RED-Rochester, LLC	2033	11.46%		12		12
	Finance leases	Various	Various		3		3
	Other debt	Various	Various		2		2
					246		17
				$	248	$	19

							Valuation Date
	Valuation Date									February 26,
	June 30,			December 31,			March 31,			2021
	2020			2019			2021			(Inception)
Total value of embedded derivative liability ($ millions)	$	9		$	51		$	11		$	12
Kodak's closing stock price	$	2.23		$	4.65		$	7.87		$	8.62
Expected stock price volatility		98.82	%		104.61	%		70.00	%		70.00	%
Risk free rate		0.16	%		1.58	%		0.96	%		0.80	%
Yield on the convertible notes		11.15	%		11.52	%
Implied credit spread on the Convertible Notes								18.25	%		18.25	%

	Valuation Date
				February 26,
	March 31,			2021
	2021			(Inception)
Total value of embedded derivative liability ($ millions)	$	1		$	1
Kodak's closing stock price	$	7.87		$	8.62
Expected stock price volatility		70.00	%		70.00	%
Risk free rate		0.96	%		0.80	%
Implied credit spread on the preferred stock		19.75	%		19.75	%

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☐

	Six-Month Period Ending June 30, 2020
	Eastman Kodak Company Common Shareholders
	Common Stock		Additional Paid in Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Treasury Stock			Total			Series A Redeemable Convertible Preferred Stock
Equity (deficit) as of December 31, 2019	$	—	$	604		$	(79	)	$	(417	)	$	(9	)	$	99		$	182
Net loss		—		—			(111	)		—			—			(111	)		—
Other comprehensive (loss) income (net of tax):
Currency translation adjustments		—		—			—			(12	)		—			(12	)		—
Pension and other postretirement liability adjustments		—		—			—			3			—			3			—
Series A preferred stock cash dividends		—		(3	)		—			—			—			(3	)		—
Series A preferred stock deemed dividends		—		(2	)		—			—			—			(2	)		2
Stock-based compensation		—		1			—			—			—			1			—
Equity (deficit) as of March 31, 2020	$	—	$	600		$	(190	)	$	(426	)	$	(9	)	$	(25	)	$	184
Net loss		—		—			(5	)		—			—			(5	)		—
Other comprehensive (loss) income (net of tax):
Currency translation adjustments		—		—			—			(4	)		—			(4	)		—
Pension and other postretirement liability adjustments		—		—			—			9			—			9			—
Series A preferred stock cash dividends		—		(3	)		—			—			—			(3	)		—
Series A preferred stock deemed dividends		—		(2	)		—			—			—			(2	)		2
Equity (deficit) as of June 30, 2020	$	—	$	595		$	(195	)	$	(421	)	$	(9	)	$	(30	)	$	186

	June 30, 2020
(in millions)	Gross Carrying Amount		Accumulated Amortization		Net		Weighted-Average Amortization Period
Technology-based	$	99	$	79	$	20	5 years
Kodak trade name		18		—		18	Indefinite life
Customer-related		11		8		3	3 years
Total	$	128	$	87	$	41

	December 31, 2019
(in millions)	Gross Carrying Amount		Accumulated Amortization		Net		Weighted-Average Amortization Period
Technology-based	$	99	$	76	$	23	5 years
Kodak trade name		21		—		21	Indefinite life
Customer-related		11		8		3	4 years
Total	$	131	$	84	$	47

(in millions)
Q3 - Q4 2020	$	3
2021		5
2022		4
2023		4
2024		4
2025 and thereafter		3
Total	$	23

	Carrying Value		Maturity Value
Q2 -Q4 2021	$	2	$	2
2022		2		2
2023		1		1
2024		1		1
2025		1		1
2026 and thereafter		241		439
Total	$	248	$	446

(in millions)
Deferred revenue on extended warranties as of December 31, 2019	$	21
Extended warranty and maintenance arrangements deferred in 2020		45
Recognition of extended warranty and maintenance arrangement revenue in 2020		(47	)
Deferred revenue on extended warranties as of June 30, 2020	$	19

(in millions)
Deferred revenue on extended warranties as of December 31, 2020	$	19
New extended warranty and maintenance arrangements deferred		23
Recognition of extended warranty and maintenance arrangement revenue		(23	)
Deferred revenue on extended warranties as of March 31, 2021	$	19

(in millions)	Severance Reserve ⁽¹⁾			Exit Costs Reserve ⁽¹⁾			Long-lived Asset Impairments and Inventory Write-downs ⁽¹⁾		Total
Balance as of December 31, 2019	$	11		$	1		$	—	$	12
Q1 charges		6			1			—		7
Q1 utilization/cash payments		(7	)		—			—		(7	)
Q1 other adjustments and reclasses ⁽²⁾		(1	)		(1	)		—		(2	)
Balance as of March 31, 2020	$	9		$	1		$	—	$	10
Q2 charges	$	1		$	—		$	—	$	1
Q2 utilization/cash payments		(3	)		—			—		(3	)
Balance as of June 30, 2020	$	7		$	1		$	—	$	8

(in millions of shares)
Weighted average shares — basic and diluted	43.7	43.0	43.7	43.0
Weighted average shares — basic					77.8	43.6
Effect of dilutive securities
Employee stock options					2.3	—
Unvested restricted stock units					0.5	—
Weighted average shares — diluted					80.6	43.6

	Valuation Date
				March 30,			February 26,
				2021			2021
	March 31, 2021			(Inception - Final Sale)			(Inception - Initial Sale)
Total value of embedded derivative liability ($ millions)	$	2		$	1		$	1
Kodak's closing stock price	$	7.87		$	8.05		$	8.62
Expected stock price volatility		70.00	%		70.00	%		70.00	%
Risk free rate		0.96	%		0.94	%		0.80	%
Implied credit spread on the preferred stock		21.75	%		21.75	%		21.75	%

Exhibit Number

(3.1)		Second Amended and Restated Certificate of Incorporation of Eastman Kodak Company (Incorporated by reference to Exhibit ~~(4.1)~~4.1 of the Company’s Registration Statement on Form S-8 as filed on September 3, 2013).

(3.2)		Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of Eastman Kodak ~~Company~~Company. (Incorporated by reference to Exhibit ~~(3.1)~~3.1 of the Company’s Current Report on Form 8-K as filed November 16, 2016).

(3.3)		Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of Eastman Kodak Company (Incorporated by reference to Exhibit (3.1) of the Company’s Current Report on Form 8-K as filed September 12, 2019).

(3.4)		Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of Eastman Kodak Company (Incorporated by reference to Exhibit (3.2) of the Company’s Current Report on Form 8-K as filed September 12, 2019).

(3.5)		Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of Eastman Kodak Company (Incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K as filed December 29, 2020).

(3.6)		Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of Eastman Kodak Company (Incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K as filed March 1, 2021).

(3.7)		Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of Eastman Kodak Company (Incorporated by reference to Exhibit 3.2 of the Company’s Current Report on Form 8-K as filed March 1, 2021).

(3.8)		Fourth Amended and Restated By-Laws of Eastman Kodak Company (Incorporated by reference to Exhibit (3.5) of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020 as filed on May 12, 2020).

(4.1)		Registration Rights Agreement, dated as of February 26, 2021, by and between Eastman Kodak Company and GO EK Ventures IV, LLC (Incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K as filed March 1, 2021).

(4.2)		Registration Rights Agreement, dated as of February 26, 2021, by and among Eastman Kodak Company, Kennedy Lewis Capital Partners Master Fund LP and Kennedy Lewis Capital Partners Master Fund II LP. (Incorporated by reference to Exhibit 10.11 of the Company’s Current Report on Form 8-K as filed March 1, 2021).

(4.3)		Board Rights Agreement, dated as of February 26, 2021, by and between Eastman Kodak Company and Kennedy Lewis Investment Management LLC (Incorporated by reference to Exhibit 10.7 of the Company’s Current Report on Form 8-K as filed March 1, 2021).

(4.4)		Convertible Promissory Note, dated as of February 26, 2021, from Eastman Kodak Company to Kennedy Lewis Capital Partners Master Fund LP. (Incorporated by reference to Exhibit 10.8 of the Company’s Current Report on Form 8-K as filed March 1, 2021).

(4.5)		Convertible Promissory Note, dated as of February 26, 2021, from Eastman Kodak Company to Kennedy Lewis Capital Partners Master Fund II LP. (Incorporated by reference to Exhibit 10.9 of the Company’s Current Report on Form 8-K as filed March 1, 2021).

*(10.1)		Eastman Kodak Company 2013 Omnibus Incentive Plan ~~(As~~Form of Executive Restricted Stock Unit Award Agreement (with Immediate Vesting). (Incorporated by reference to Exhibit 10.12 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 as filed on March 16, 2021).

*(10.2)		Eastman Kodak Company 2013 Omnibus Incentive Plan Form of Executive Restricted Stock Unit Award Agreement (with Modified Accelerated Vesting). (Incorporated by reference to Exhibit 10.13 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 as filed on March 16, 2021).

*(10.3)		Executive Chairman and CEO Agreement between Eastman Kodak Company and James V. Continenza, dated February 26, 2021. (Incorporated by reference to Exhibit 10.17 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 as filed on March 16, 2021).

(10.4)		Amendment No. 4 to Amended and Restated ~~effective May 20, 2020)~~Credit Agreement (including attached Amended and Restated Credit Agreement), dated as of August 26, 2021 by and among Eastman Kodak Company, the Lenders named therein, the Guarantors named therein and Bank of America, N.A., as agent. (Incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K as filed ~~herewith.~~March 1, 2021).

(10.5)		Letter of Credit Facility Agreement, dated as of February 26, 2021, by and among Eastman Kodak Company, the Lenders named therein, the Guarantors named therein, Bank of America, N.A., as administrative agent and collateral agent and Bank of America, N.A., as issuing bank. (Incorporated by reference to Exhibit 10.5 of the Company’s Current Report on Form 8-K as filed March 1, 2021).

(10.6)		Security Agreement, dated February 26, 2021, from the Grantors referred to therein, as Grantors, to Bank of America, N.A., as Agent. (Incorporated by reference to Exhibit 10.26 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 as filed on March 16, 2021).

(10.7)		Credit Agreement, dated as of February 26, 2021, by and among Eastman Kodak Company, the Lenders named therein and Alter Domus (US) LLC, as Administrative Agent. (Incorporated by reference to Exhibit 10.6 of the Company’s Current Report on Form 8-K as filed March 1, 2021).

(10.8)		Guarantee and Collateral Agreement, dated February 26, 2021, made by the Grantors referred to therein, as Grantors, to Alter Domus (US) LLC, as Administrative Agent. (Incorporated by reference to Exhibit 10.28 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 as filed on March 16, 2021).

(10.9)		Intercreditor Agreement, dated as of February 26, 2021, among Bank of America, N.A., as Representative with respect to the ABL Credit Agreement, Bank of America, N.A., as Representative with respect to the LC Credit Agreement, and Alter Domus (US) LLC, as Representative with respect to the Term Loan Agreement, Eastman Kodak Company, and each of the other Grantors party thereto. (Incorporated by reference to Exhibit 10.29 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 as filed on March 16, 2021).

(10.10)		Intercreditor Agreement, dated as of February 26, 2021, among Bank of America, N.A., as Representative with respect to the ABL Credit Agreement, Bank of America, N.A., as Representative with respect to the LC Credit Agreement, Eastman Kodak Company, and each of the other Grantors party thereto. (Incorporated by reference to Exhibit 10.30 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 as filed on March 16, 2021).

(10.11)		Series A Preferred Stock Repurchase and Exchange Agreement, dated as of February 26, 2021, by and among Eastman Kodak Company, Southeastern Asset Management, Inc., Longleaf Partners Small-Cap Fund, C2W Partners Master Fund Limited and Deseret Mutual Pension Trust. (Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K as filed March 1, 2021).

(10.12)		Series C Preferred Stock Purchase Agreement, dated as of February 26, 2021, by and among Eastman Kodak Company and GO EK Ventures IV, LLC. (Incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K as filed March 1, 2021).

(10.13)		Securities Purchase Agreement, dated as of February 26, 2021, by and among Eastman Kodak Company, Kennedy Lewis Capital Partners Master Fund LP and Kennedy Lewis Capital Partners Master Fund II LP. (Incorporated by reference to Exhibit 10.8 of the Company’s Current Report on Form 8-K as filed March 1, 2021).

(31.1)		Certification signed by James V. Continenza, filed ~~herewith.~~herewith.

(31.2)		Certification signed by David E. Bullwinkle, filed herewith.

(32.1)		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by James V. Continenza, filed ~~herewith.~~herewith.

(32.2)		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 signed by David E. Bullwinkle, filed ~~herewith~~herewith..

(101.CAL)		XBRL Taxonomy Extension Calculation Linkbase.

(101.INS)		XBRL Instance Document.

(101.LAB)		XBRL Taxonomy Extension Label Linkbase.

(101.PRE)		XBRL Taxonomy Extension Presentation Linkbase.

(101.SCH)		XBRL Taxonomy Extension Schema Linkbase.

(101.DEF)		XBRL Taxonomy Extension Definition Linkbase

~~Date August 11, 2020~~Date: May 17, 2021		/s/ ~~Eric Samuels~~Richard T. Michaels
		~~Eric Samuels~~Richard T. Michaels
		Chief Accounting Officer and Corporate Controller
		(Chief Accounting Officer and Authorized Signatory)