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November 15, 2021
Roger Byrd
General Counsel
EASTMAN KODAK CO
343 State Street
Rochester, NY 14650
Re: EASTMAN KODAK CO
Form 10-K filed
March 16, 2021
Correspondence
filed October 14, 2021
File No. 001-00087
Dear Mr. Byrd:
We have reviewed your October 14, 2021 response to our comment
letter and have the
following comments. In some of our comments, we may ask you to provide
us with information
so we may better understand your disclosure. Please respond to these
comments within ten
business days by providing the requested information or advise us as
soon as possible when you
will respond. If you do not believe our comments apply to your facts and
circumstances, please
tell us why in your response. After reviewing your response to these
comments, we may have
additional comments.
Response Letter filed October 14, 2021
Form 10-K filed March 16, 2021
Note 20 -- Retirement Plans, page 83
1. ASC 715-20-50-1d states
that the objectives of benefit plan asset disclosures include
providing users of the
financial statements with an understanding of the classes of plan
assets and any
significant concentrations of risk therein. It is not clear whether your
existing disclosures,
or your proposed revisions, fully satisfy these objectives. For
example, your
disclosure on page 88 reports that $1.1 billion of Plan Assets are invested
in government bonds,
but three pages later you disclose that the entire balance is
comprised of
derivatives. You now propose to revise your table of Plan Assets
to recharacterize these
assets as Hedge Funds. This proposed revision does not clearly
communicate that the
hedge fund assets appear to be primarily comprised of derivative
instruments. Please
provide us with a schedule that segregates your December 31, 2020,
hedge fund investments
into more detailed asset classes so we can better understand the
nature of your Plan
investments and whether your proposed revisions are consistent with
the cited objectives.
The detailed asset classes should be consistent with the relevant risk
Roger Byrd
FirstName
EASTMANLastNameRoger
KODAK CO Byrd
Comapany 15,
November NameEASTMAN
2021 KODAK CO
November
Page 2 15, 2021 Page 2
FirstName LastName
factors that materially impact each investment. For example, it may be
appropriate to
separate your hedge fund investments based on their primary underlying
assets,
e.g. interest rate derivative instrument hedge funds, foreign exchange
derivative
instrument hedge funds, distressed investments hedge funds, natural
resource investment
hedge funds, etc. Please see ASC 715-20-50-1d.5 and the examples
provided in ASC 820-
10-55-100 and 107 as well as the analogous guidance in ASC ASC
820-10-50-2.
2. In your response number 4 you state that the notional amount of your
government bonds
futures contracts was $1.6 billion at December 31, 2020. Please expand
your footnote
disclosure to include this information and to clarify whether the net
carrying value of
these contracts is the ($4m) reported in the table on page 88.
3. Please provide the disclosures required by ASC 715-20-50-1.n regarding
related party
transactions and the amount of the Registrant's securities that are
included in Plan Assets,
if any.
4. Please explain the page 89 reference to "derivative-linked hedge
funds" and clarify
whether this disclosure is intended to communicate that those hedge
funds are primarily
comprised of derivative instruments. Further, please explain to us how
you calculated the
4% equity exposure and 29% government bond exposure measures reported
on page 91. If
those amounts are essentially the carrying value of your
derivative-linked hedge funds,
then please disclose the notional amount of the underlying derivative
contracts and
quantify the amount by which your loss exposure on these contracts
exceeds carrying
value.
5. On page 91 you disclose, "In instances where exposures are obtained
via derivatives, the
majority of the exposure value is available to be invested, and is
typically invested, in a
diversified portfolio of hedge fund strategies that generate returns
in addition to the return
generated by the derivatives." Please help us to better understand
this disclosure by
applying this characterization to a specific Plan Asset that reflected
this fact pattern at
December 31, 2020. Quantify and fully describe the exposure and
explain how you
concluded that the corresponding portfolio of hedge fund strategies is
actually
"diversified." It is not clear whether the existing disclosure fully
depicts the degree of risk
in your derivative-linked hedge funds.
6. Response number 1 in your letter states that $.8 billion of Plan
Assets do not carry
redemption rights. Please expand your footnote disclosure to include
this information.
Also, for each class of investment, please provide quantified
disclosure about any
restrictions and/or limits on your ability to redeem plan investments.
See ASC 820-10-50-
6A. If approximately 25% of your total plan assets are invested in
real estate funds,
private equity funds, and natural resource investments that may not
mature or be sellable
in the near term without significant loss than that information should
be clearly disclosed.
7. Your disclosure on page 87 states that there are no significant
concentrations of risk in
Kodak's defined benefit plan assets. Please provide a disclosure that
clearly reconciles this
statement with the disclosure on page 91 that 29% of Plan assets
represents US
Roger Byrd
EASTMAN KODAK CO
November 15, 2021
Page 3
Government bond exposure obtained via derivatives.
8. On page 87 you disclose that your investment objectives include
maintaining broad
diversification between and within asset classes and fund managers.
However, the
disclosure does not indicate whether your objective was met with
respect to your fund
managers. Please disclose the extent to which any investment or fund
manager controlled
over 10% of Major US Plan Assets in 2020.
9. We understand that the dollar amounts in your 10-K disclosure of
December 31, 2020
Major U.S. Plans assets on page 88 will differ to an extent from the
corresponding KRIP
investment balances included in the audited financial statements filed
with your Form
5500. However, there appears to be significant disparities between the
asset classes
presented in the 10-K and the asset classes presented on the audited
Statements of Net
Assets Available for Benefits. For example, the 10-K reports $383
million of equity
securities whereas the Statements of Net Assets appears to show $1.4
million of common
and preferred stocks. Please explain this disparity. Also, for each
asset class
balance reported on page 88, please tell us the amounts thereof that
are comprised of
(1) Partnership/Joint Venture Interests, (2) Common/Collective Trusts,
and (3)
Commingled Hedge Funds as presented on the Statements of Net Assets.
10. Based on your response number 2 and the information in your Form 5500,
it appears that
the actual amount of government bonds in your Major U.S. Plan Assets
at December 31,
2020 and 2019 approximated $5 million and $39 million, respectively,
whereas the
amounts reported in your 10-K were $1.1 billion in both periods.
Consequently, it appears
that the amount of Plan Assets comprised of government bonds was 1% or
less instead
of the 30% reported in your 10-K. Please tell us whether this error,
combined with any
other similar classification errors, constitutes a material weakness
in your internal
controls.
11. We note that virtually all Major U.S. Plan assets, except for
investment grade bonds, are
measured at NAV. Please explain to us what steps you took in
determining that each
individual investment within the reported $3.254 billion of NAV plan
assets met the
requirements of ASC 820-10-15-4 to be measured at NAV. Clarify also
how you
determined that the entire cash and cash equivalents balance lacked a
readily determinable
fair value.
You may contact Al Pavot at 202-551-3738 or Terence O'Brien at
202-551-3355 if you
have any questions.
FirstName LastNameRoger Byrd Sincerely,
Comapany NameEASTMAN KODAK CO
Division of
Corporation Finance
November 15, 2021 Page 3 Office of Life
Sciences
FirstName LastName