Note 20 - Financial Instruments |
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| Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial Instruments | NOTE 20: FINANCIAL INSTRUMENTS Kodak, as a result of its global operating and financing activities, is exposed to changes in foreign currency exchange rates, commodity pricing 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, as well as forecasted foreign currency denominated intercompany assets. 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 earnings (loss) at the same time that the exposed assets and liabilities are re-measured through net earnings (loss) (both in Other (income) charges, net in the Consolidated Statement of Operations). The notional amount of such contracts open at June 30, 2026 and December 31, 2025 was approximately $193 million and $224 million, respectively. The majority of the contracts of this type held by Kodak as of June 30, 2026 were denominated in Chinese renminbi and Japanese yen and as of December 31, 2025 were denominated in Chinese renminbi, Japanese yen and European euros. 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, 2026 and 2025. In the event of a default under any of the Company’s credit 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.
Fair Value
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 June 30, 2026 and December 31, 2025 was zero and less than $1 million, respectively. The gross fair value of foreign currency forward contracts in a liability position as of June 30, 2026 and December 31, 2025 was $1 million and less than $1 million, respectively.
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 $100 million and $151 million at June 30, 2026 and December 31, 2025, 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, 2026 and December 31, 2025.
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, 2026.
As disclosed in Note 7, “Redeemable, Convertible Preferred Stock”, the embedded conversion options were bifurcated from the 6.0% Series B Preferred Stock and are accounted for on a combined basis as a single derivative liability. The fair value of these embedded conversion options is determined using significant unobservable inputs (Level 3 fair value measurements). The Company estimates the fair value of each embedded conversion option using a binomial lattice model, and the combined fair value is recorded as a derivative liability.
The following table presents the key inputs used in the determination of fair value for the embedded conversion options:
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