Note 18 - Financial Instruments | 9 Months Ended |
Sep. 30, 2014 |
Fair Value Disclosures [Abstract] | ' |
Fair Value Disclosures [Text Block] | ' |
NOTE 18: FINANCIAL INSTRUMENTS |
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The following tables present the carrying amounts, estimated fair values, and location in the Consolidated Statement of Financial Position for Kodak’s financial instruments: |
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| | | | Value Of Items Recorded At Fair Value | | | | | | | |
(in millions) | | | | As of September 30, 2014 | | | | | | | |
| | | | Total | | | Level 1 | | | Level 2 | | | Level 3 | | | | | | | |
ASSETS | | | | | | | | | | | | | | | | | | | | |
Derivatives | | | | | | | | | | | | | | | | | | | | |
Short-term foreign exchange contracts | Receivables, net | | | $ | 4 | | | $ | - | | | $ | 4 | | | $ | - | | | | | | | |
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Marketable securities | | | | | | | | | | | | | | | | | | | | | | | | |
Long-term available-for-sale securities | Other long-term assets | | | 4 | | | | 4 | | | | - | | | | - | | | | | | | |
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LIABILITIES | | | | | | | | | | | | | | | | | | | | | | | | |
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Derivatives | | | | | | | | | | | | | | | | | | | | | | | | |
Short-term foreign exchange contracts | Other current liabilities | | | 1 | | | | - | | | | 1 | | | | - | | | | | | | |
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(in millions) | | | | Value Of Items Not Recorded At Fair Value | | | | | | | |
| | | | As of September 30, 2014 | | | | | | | |
| | | | Total | | | Level 1 | | | Level 2 | | | Level 3 | | | | | | | |
LIABILITIES | | | | | | | | | | | | | | | | | | | | | | | | |
Debt | | | | | | | | | | | | | | | | | | | | | | | | |
Short-term debt | Current portion of long-term debt | Carrying value | | $ | 4 | | | $ | - | | | $ | 4 | | | $ | - | | | | | | | |
| | Fair value | | | 4 | | | | - | | | | 4 | | | | - | | | | | | | |
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Long-term debt | Long-term debt, net of current portion | Carrying value | | | 672 | | | | - | | | | 672 | | | | - | | | | | | | |
| | Fair value | | | 686 | | | | - | | | | 686 | | | | - | | | | | | | |
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| | | | Value Of Items Recorded At Fair Value | | | | | | | |
(in millions) | | | | As of December 31, 2013 | | | | | | | | | | | |
| | | | Total | | | Level 1 | | | Level 2 | | | Level 3 | | | | | | | |
ASSETS | | | | | | | | | | | | | | | | | | | | | | | | |
Derivatives | | | | | | | | | | | | | | | | | | | | | | | | |
Short-term foreign exchange contracts | Receivables, net | | | $ | 1 | | | $ | - | | | $ | 1 | | | $ | - | | | | | | | |
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Marketable securities | | | | | | | | | | | | | | | | | | | | | | | | |
Long-term available-for-sale securities | Other long-term assets | | | 2 | | | | 2 | | | | - | | | | - | | | | | | | |
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LIABILITIES | | | | | | | | | | | | | | | | | | | | | | | | |
Derivatives | | | | | | | | | | | | | | | | | | | | | | | | |
Short-term foreign exchange contracts | Other current liabilities | | | 3 | | | | - | | | | 3 | | | | - | | | | | | | |
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| | | | Value Of Items Not Recorded At Fair Value | | | | | | | |
(in millions) | | | | As of December 31, 2013 | | | | | | | | | | | |
| | | | Total | | | Level 1 | | | Level 2 | | | Level 3 | | | | | | | |
LIABILITIES | | | | | | | | | | | | | | | | | | | | | | | | |
Debt | | | | | | | | | | | | | | | | | | | | | | | | |
Short-term debt | Current portion of long-term debt | Carrying value | | $ | 4 | | | $ | - | | | $ | 4 | | | $ | - | | | | | | | |
| | Fair value | | | 4 | | | | - | | | | 4 | | | | - | | | | | | | |
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Long-term debt | Long-term debt, net of current portion | Carrying value | | | 674 | | | | - | | | | 674 | | | | - | | | | | | | |
| | Fair value | | | 687 | | | | - | | | | 687 | | | | - | | | | | | | |
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Fair Value |
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Fair values of marketable securities are determined using quoted prices in active markets for identical assets (Level 1 fair value measurements). Fair values of Kodak’s forward contracts are determined using observable inputs (Level 2 fair value measurements), and are based on the present value of expected future cash flows (an income approach valuation technique) considering the risks involved and using discount rates appropriate for the duration of the contracts. Transfers between levels of the fair value hierarchy are recognized based on the actual date of the event or change in circumstances that caused the transfer. There were no transfers between levels of the fair value hierarchy during the three months or nine months ended September 30, 2014. |
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Fair values of long-term borrowings are determined by reference to quoted market prices, if available, or by pricing models based on the value of related cash flows discounted at current market interest rates. The carrying values of cash and cash equivalents and restricted cash (which are not shown in the table above) approximate their fair values. |
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Foreign Exchange |
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Foreign exchange gains and losses arising from transactions denominated in a currency other than the functional currency of the entity involved are included in Other charges, net in the accompanying Consolidated Statement of Operations. The net effects of foreign currency transactions, including changes in the fair value of foreign exchange contracts, are shown below: |
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| | Successor | | | Predecessor | | | Successor | | | Predecessor | |
(in millions) | | Three Months Ended | | | One Month Ended | | | Two Months Ended | | | Nine Months Ended September 30, 2014 | | | One Month Ended | | | Eight Months Ended | |
30-Sep-14 | 30-Sep-13 | 31-Aug-13 | 30-Sep-13 | 31-Aug-13 |
Net loss | | $ | (1 | ) | | $ | (4 | ) | | $ | (3 | ) | | $ | (3 | ) | | $ | (4 | ) | | $ | (7 | ) |
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Derivative Financial Instruments |
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Kodak, as a result of its global operating and financing activities, is exposed to changes in foreign currency exchange rates, commodity prices, and interest rates, which may adversely affect its results of operations and financial position. Kodak manages such exposures, in part, with derivative financial instruments. Kodak does not utilize derivative financial instruments for trading or other speculative purposes. |
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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. |
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Kodak’s financial instrument counterparties are high-quality investment or commercial banks with significant experience with such instruments. Kodak manages exposure to counterparty credit risk by requiring specific minimum credit standards and diversification of counterparties. Kodak has procedures to monitor the credit exposure amounts. The maximum credit exposure at September 30, 2014 was not significant to Kodak. |
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In the event of a default under the Company’s Senior Secured First Lien Term Credit Agreement, Senior Secured Second Lien Term Credit Agreement, the ABL Credit Agreement, or a default under any derivative contract or similar obligation of Kodak, subject to certain minimum thresholds, the derivative counterparties would have the right, although not the obligation, to require immediate settlement of some or all open derivative contracts at their then-current fair value, but with liability positions netted against asset positions with the same counterparty. At September 30, 2014, Kodak had open derivative contracts in liability positions with a total fair value of $1 million. |
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Kodak had no derivatives designated as hedging instruments for the three and nine months ended September 30, 2014 and 2013. The location and amounts of pre-tax gains and losses related to derivatives not designated as hedging instruments reported in the Consolidated Statement of Operations are shown in the following table: |
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| | Gain (Loss) Recognized in Income on Derivatives | |
(in millions) | | Successor | | | Predecessor | | | Successor | | | Predecessor | |
Location of Gain (Loss) Recognized in Income on Derivatives | | Three Months Ended | | | One Month Ended | | | Two Months Ended | | | Nine Months Ended September 30, 2014 | | | One Month Ended | | | Eight Months Ended | |
30-Sep-14 | 30-Sep-13 | 31-Aug-13 | 30-Sep-13 | 31-Aug-13 |
Other charges, net | | $ | 4 | | | $ | (3 | ) | | $ | (3 | ) | | $ | 12 | | | $ | (3 | ) | | $ | 1 | |
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Foreign Currency Forward Contracts |
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Kodak’s foreign currency forward contracts used to mitigate currency risk related to existing foreign currency denominated assets and liabilities are not designated as hedges, and are marked to market through net (loss) earnings at the same time that the exposed assets and liabilities are re-measured through net (loss) earnings (both in Other charges, net) in the Consolidated Statement of Operations). The notional amount of such contracts open at September 30, 2014 was approximately $347 million. The majority of the contracts of this type held by Kodak as of September 30, 2014 were denominated in euros and British pounds. |
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