Thursday, April 19, 2012

Kodak's First Day Affidavit Mentions Silver Prices

Even though Kodak had projected [Film, Photofinishing and Entertainment Group] (“FPEG”)to generate less cash as film was replaced by digital imaging, the FPEG business was still anticipated to generate substantial cash flow. The rate of the decline of the market for film between 2008 and 2010, however, was significantly steeper than anticipated by nearly all observers: the industry projected a 10% decline, Kodak forecasted a 20% decline and the actual decline was approximately 40%.

In addition to demand impairment, increasing commodity prices negatively impacted FPEG’s cash flow. FPEG purchased approximately $300 million of silver in 2011. Silver prices have ranged between 199% and 294% higher than 2008 prices. Because of the lingering effects of the economic crisis, Kodak cannot pass through all of these price increases to its customers.
The first day affidavit [pdf], which the Bankruptcy Litigation blog did a post about.

It was about a year ago that I mentioned rising silver prices were causing industrial users to substitute other, cheaper, and less price-volatile materials. 

1 comment:

Stagflationary Mark said...

I used to walk around with gold every day. Over the last year I stopped doing it.

So what changed?

The gold crowns in my mouth were substituted. ;)