Note 12 - Hedging Activities

9 Months Ended

Sep. 30, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

12.      Hedging Activities

Undesignated Hedges

The table below includes a total gross notional value for the foreign currency hedges related to translated earnings of $12.7 billion at September 30, 2015 (at December 31, 2014: $12.1 billion), including zero-cost collars of $5.7 billion (at December 31, 2014: $2.3 billion) and average rate forwards of $7.0 billion (at December 31, 2014: $9.8 billion).  With respect to the zero-cost collars, the gross notional amount includes the value of both the put and call options.  However, due to the nature of the zero-cost collars, either the put or the call option can be exercised at maturity.  As of September 30, 2015, the total net notional value of the zero-cost collars was $3.0 billion (at December 31, 2014: $1.2 billion).

The following tables summarize the notional amounts and respective fair values of Corning’s derivative financial instruments on a gross basis for September 30, 2015 and December 31, 2014 (in millions):

	U.S. Dollar		Asset derivatives			Liability derivatives
	Gross notional amount		Balance sheet location	Fair value		Balance sheet location	Fair value
	Sept. 30, 2015	Dec. 31, 2014		Sept. 30, 2015	Dec. 31, 2014		Sept. 30, 2015	Dec. 31, 2014
Derivatives designated as hedging instruments
Foreign exchange contracts	$    803	$    487	Other current assets	$      7	$    22	Other accrued liabilities	$  (10)	$  (6)
			Other assets	1		Other liabilities	(28)
Interest rate contracts	550	1,300	Other assets	2	1	Other liabilities		(15)
Derivatives not designated as hedging instruments
Foreign exchange contracts, other	592	1,285	Other current assets	2	17	Other accrued liabilities	(5)	(5)
Foreign currency hedges related to translated earnings	12,678	12,126	Other current assets	540	649	Other accrued liabilities	(59)	(33)
			Other assets	605	846	Other liabilities	(72)
Total derivatives	$14,623	$15,198		$1,157	$1,535		$(174)	$(59)

The following tables summarize the effect of derivative financial instruments on Corning’s consolidated financial statements for the three months ended September 30, 2015 and 2014 (in millions):

	Effect of derivative instruments on the consolidated financial statements for the three months ended September 30
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)
	2015	2014		2015	2014
Interest rate hedges			Sales	$4	$1
Foreign exchange contracts	$(58)	$11	Cost of sales	1	2
Total cash flow hedges	$(58)	$11		$5	$3

(1) The amount of hedge ineffectiveness at September 30, 2015 and 2014 was insignificant.

The following tables summarize the effect of derivative financial instruments on Corning’s consolidated financial statements for the nine months ended September 30, 2015 and 2014 (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/(loss) reclassified from accumulated OCI into income (effective)	Gain reclassified from accumulated OCI into income (effective) (1)
	2015	2014		2015	2014
Interest rate hedges	$  (7)		Sales	$14	$1
Foreign exchange contracts	(24)	$6	Cost of sales	7	2
Total cash flow hedges	$(31)	$6		$21	$3

(1) The amount of hedge ineffectiveness at September 30, 2015 and 2014 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
		Three months ended September 30,				Nine months ended September 30,
		2015		2014		2015		2014
Foreign exchange contracts – balance sheet	Foreign currency hedge gain (loss), net	$	(6)	$	21	$	7	$	16
Foreign exchange contracts – loans	Foreign currency hedge gain (loss), net		1		5		3		6
Foreign currency hedges related to translated earnings	Foreign currency hedge gain (loss), net		(149)		739		42		600
Total undesignated		$	(154)	$	765	$	52	$	622