Note 14 - Hedging Activities

3 Months Ended

Mar. 31, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

14.      Hedging Activities

Undesignated Hedges

The table below includes a total gross notional value for the translated earnings contracts of $11.6 billion at March 31, 2014 (at December 31, 2013: $6.8 billion), comprising purchased collars of $4.5 billion (at December 31, 2013: $5.9 billion) and average rate forwards of $7.1 billion (at December 31, 2013: $0.9 billion).  With respect to the purchased collars, the gross notional amount includes the value of both the put and call options.  However, due to the nature of the purchased collar instruments, either the put or the call option can be exercised at maturity.  As of March 31, 2014, the total net notional value of the purchased collars was $2 billion (at December 31, 2013: $3 billion). 

The following tables summarize the notional amounts and respective fair values of Corning’s derivative financial instruments on a gross basis for March 31, 2014 and December 31, 2013 (in millions):

	U.S. Dollar		Asset derivatives			Liability derivatives
	Gross notional amount		Balance sheet location	Fair value		Balance sheet location	Fair value
	2014	2013		2014	2013		2014	2013
Derivatives designated as hedging instruments
Foreign exchange contracts	$   388	$   433	Other current assets	$    2	$    8	Other accrued liabilities	$ (3)	$ (3)
Interest rate contracts	$   550	$   550				Other liabilities	$(23)	$(28)
Derivatives not designated as hedging instruments
Foreign exchange contracts	$  1,100	$   804	Other current assets	$    9	$  20	Other accrued liabilities	$ (4)	$ (3)
Translated earnings contracts	$11,615	$6,826	Other current assets	$248	$344	Other accrued liabilities	$ (1)	$ (3)
			Other assets	$120	$  90
Total derivatives	$13,653	$8,613		$379	$462		$(31)	$(37)

The following tables summarize the effect of derivative financial instruments on Corning’s consolidated financial statements for the three months ended March 31, 2014 and 2013 (in millions):

	Effect of derivative instruments on the consolidated financial statements for the quarter ended March 31
Derivatives in hedging relationships	Gain/(loss) recognized in other comprehensive income (OCI)		Location of gain/(loss) reclassified from accumulated OCI into income (effective)	Gain reclassified from accumulated OCI into income (effective) (1)
	2014	2013		2014	2013
Interest rate hedges			Cost of sales	$0	$  8
Foreign exchange contracts	$(7)	$37	Other income, net	$0	$13
Total cash flow hedges	$(7)	$37		$0	$21

(1) The amount of hedge ineffectiveness at March 31, 2014 and 2013 was insignificant.

		Gain (loss) recognized in income (1)
Undesignated derivatives	Location	2014		2013
Foreign exchange contracts – balance sheet	Other income, net	$	(12)	$	47
Foreign exchange contracts – loans	Other income, net		4		58
Translated earnings contracts	Other income, net		2		24
Total undesignated		$	(6)	$	129

(1) Certain amounts for prior periods were reclassified to conform to the current presentation.  The gain (loss) on foreign exchange contracts is now disclosed in two categories, Foreign exchange contracts – balance sheet, and Foreign exchange contracts – loans.