Note 14 - Hedging Activities

9 Months Ended

Sep. 30, 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 $13.9 billion at September 30, 2014 (at December 31, 2013: $6.8 billion), including purchased and zero cost collars of $4.4 billion (at December 31, 2013: $5.9 billion) and average rate forwards of $9.5 billion (at December 31, 2013: $0.9 billion).  With respect to the purchased collars and zero cost collars, the gross notional amount includes the value of both the put and call options.  However, due to the nature of the purchased and zero cost collars, either the put or the call option can be exercised at maturity.  As of September 30, 2014, the total net notional value of the purchased collars and zero cost collars was $2.3 billion (at December 31, 2013: $3 billion).

The following tables summarize the gross notional amounts and respective fair values of Corning’s derivative financial instruments on a gross basis for September 30, 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	$	150	$	433	Other current assets	$	8	$	8	Other accrued liabilities			$	(3)
					Other assets		1
Interest rate contracts		550		550						Other liabilities	$	(18)		(28)
Derivatives not designated as hedging instruments
Foreign exchange contracts		1,118		804	Other current assets		17		20	Other accrued liabilities		(11)		(3)
Translated earnings contracts		13,899		6,826	Other current assets		378		344	Other accrued liabilities		(18)		(3)
					Other assets		477		90	Other liabilities		(8)
Total derivatives	$	15,717	$	8,613		$	881	$	462		$	(55)	$	(37)

The following table summarizes the effect of derivative financial instruments on Corning’s consolidated financial statements for the three months ended September 30, 2014 and 2013 (in millions):

	Effect of derivative instruments on the consolidated financial statements for the three months ended September 30
Derivatives in hedging relationships	Gain recognized in other comprehensive income (OCI)				Location of gain reclassified from accumulated OCI into income (effective)	Gain reclassified from accumulated OCI into income (effective) (1)
	2014		2013			2014		2013
-					Sales	$	1
Interest rate contracts			$	3	Cost of sales		2	$	9
Foreign exchange contracts	$	11		(3)	Other (expense) income, net				17
Total cash flow hedges	$	11	$	0		$	3	$	26

(1) The amount of hedge ineffectiveness for the three months ended September 30, 2014 and 2013 was insignificant.

The following table summarizes the effect of derivative financial instruments on Corning’s consolidated financial statements for the nine months ended September 30, 2014 and 2013 (in millions):

	Effect of derivative instruments on the consolidated financial statements for the nine months ended September 30
Derivatives in hedging relationships	Gain/(loss) recognized in other comprehensive income (OCI)				Location of gain reclassified from accumulated OCI into income (effective)	Gain reclassified from accumulated OCI into income (effective) (1)
	2014		2013			2014		2013
-					Sales	$	1
Interest rate contracts			$	40	Cost of sales		2	$	28
Foreign exchange contracts	$	6		48	Other (expense) income, net				48
Total cash flow hedges	$	6	$	88		$	3	$	76

(1) The amount of hedge ineffectiveness for the nine months ended September 30, 2014 and 2013 was insignificant.

The following table summarizes the effect on the consolidated financial statements relating to Corning’s derivative financial instruments (in millions):

Undesignated derivatives	Location of gain/(loss) recognized in income	Gain/(loss) recognized in income (1)
		Three months ended September 30,				Nine months ended September 30,
		2014		2013		2014		2013
Foreign exchange contracts – balance sheet	Other income (expense), net	$	21	$	(6)	$	16	$	82
Foreign exchange contracts – loans	Other income (expense), net		5		(2)		6		83
Translated earnings contracts	Other income (expense), net		739		(46)		600		205
Total undesignated		$	765	$	(54)	$	622	$	370

(1) Certain amounts for prior periods were reclassified to conform to the current year presentation.