Company: KODK
Filing Date: 2025-03-17
Form Type: 10-K
Source: 0000950170-25-040256
Chunk: 95

Company: EASTMAN KODAK CO
Filing Date: 2025-03-17
Form: 10-K
Item: Item 1B
Chunk 95
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 31, 2024 and 2023 the notional amount of these derivative instruments was approximately $574 million and $384 million, respectively. Daily variation margin payments are made to or received from the counterparty for changes in the market value of futures contracts and are recorded as realized gains and losses in the actual return on plan assets balance. As these futures contracts have short-term maturities, the fair value of these derivative instruments at December 31, 2024 and 2023 was ($5) million and $1 million, respectively, which represents the unrealized losses and gains on these contracts. Refer to Note 19, “Retirement Plans” for additional information.

An increase in interest rates is the primary factor that could precipitate material losses in Kodak’s major U.S. defined benefit plan's existing derivatives portfolio. A 25-basis point increase in interest rates would cause a loss from the government bond derivatives of approximately $21 million. However, as illustrated in the above table, a 25-basis point increase in the discount rate used to measure the PBO of the U.S. Plan would cause a $37 million decrease in the PBO. Accordingly, while an increase in interest rates would expose the U.S. Plan’s derivative investments to losses, it would also likely result in an offsetting decrease to the U.S. Plan’s PBO.

Kodak’s major U.S. defined benefit plan has invested in a diversified portfolio of hedge funds that utilize a variety of investment strategies. The total NAV of these hedge funds was approximately $0.7 billion and $1.6 billion as of December 31, 2024 and 2023, respectively. Separate from the major U.S. defined benefit plan’s direct investments in exchange traded futures contracts, hedge funds may utilize derivative instruments to execute their investment strategy.

Any gains or losses, as well as changes in the fair value of derivative investments held by the hedge fund, are included in the hedge fund’s NAV. Losses could occur in the future from hedge fund investments which may result in part from the use of derivative investments by the hedge funds. However, the maximum potential loss on any individual fund would be limited to the U.S. Plan’s investment in that fund.

Inventories

Inventories are stated at the lower of average cost or net realizable value. Judgment is required to assess the ultimate demand for and realizable value of inventory. The analysis of inventory carrying values considers several factors including length of time inventory is on hand,