Fair Value Measurements

6 Months Ended

Jun. 30, 2017

Fair Value Measurements [Abstract]

Fair Value Measurements

12.   Fair Value Measurements

Fair value standards under U.S. GAAP define fair value, establish a framework for measuring fair value in applying generally accepted accounting principles, and require disclosures about fair value measurements.  The standards also identify two kinds of inputs that are used to determine the fair value of assets and liabilities: observable and unobservable.  Observable inputs are based on market data or independent sources while unobservable inputs are based on the Company’s own market assumptions.  Once inputs have been characterized, the inputs are prioritized into one of three broad levels (provided in the table below) used to measure fair value.  Fair value standards apply whenever an entity is measuring fair value under other accounting pronouncements that require or permit fair value measurement and require the use of observable market data when available. 

The following tables provide fair value measurement information for the Company’s major categories of financial assets and liabilities measured on a recurring basis (in millions):

			Fair value measurements at reporting date using
			Quoted prices in	Significant other		Significant
			active markets for	observable		unobservable
	June 30,		identical assets	inputs		inputs
	2017		(Level 1)	(Level 2)		(Level 3)
Current assets:
Other current assets (1)(2)	$	521		$	227	$	294
Non-current assets:
Other assets (1)	$	50		$	50
Current liabilities:
Other accrued liabilities (1)(3)	$	46		$	43	$	3
Non-current liabilities:
Other liabilities (1)(3)	$	378		$	358	$	20

(1) Derivative assets and liabilities include foreign exchange contracts which are measured using observable quoted prices for similar assets and liabilities.

(2) Other assets include a contingent consideration asset which was measured by applying an option pricing model using projected future Corning Precision Materials’ revenues.

(3) Other accrued liabilities and other liabilities include contingent consideration that was measured using unobservable (Level 3) inputs. As of June 30, 2017 the fair value of the contingent consideration payables is $23 million.

			Fair value measurements at reporting date using
			Quoted prices in	Significant other		Significant
			active markets for	observable		unobservable
	December 31,		identical assets	inputs		inputs
	2016		(Level 1)	(Level 2)		(Level 3)
Current assets:
Other current assets (1)	$	435		$	435
Non-current assets:
Other assets (1)(2)	$	464		$	175	$	289
Current liabilities:
Other accrued liabilities (1)	$	88		$	88
Non-current liabilities:
Other liabilities (1)	$	282		$	282

(1) Derivative assets and liabilities include foreign exchange contracts which are measured using observable quoted prices for similar assets and liabilities.

(2) Other assets include asset-backed securities which are measured using observable quoted prices for similar assets and a contingent consideration asset which was measured by applying an option pricing model using projected future Corning Precision Materials’ revenues.

As a result of the acquisition of Samsung Corning Precision Materials in January 2014, the Company has contingent consideration that was measured using unobservable (Level 3) inputs.  Changes in the fair value of the contingent consideration in future periods are valued using an option pricing model and are recorded in Corning’s results in the period of the change.  As of June 30, 2017 and December 31, 2016, the fair value of the potential receipt of the contingent consideration in 2018 was $294 million and $289 million, respectively.

There were no significant financial assets and liabilities measured on a nonrecurring basis as of June 30, 2017 and December 31, 2016.