Fair Value Measurements

6 Months Ended

Jun. 30, 2020

Fair Value Measurements [Abstract]

Fair Value Measurements

13. Fair Value Measurements

Fair value standards under 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
	2020		(Level 1)	(Level 2)		(Level 3)
Current assets:
Other current assets (1)	$	123		$	123
Non-current assets:
Other assets (1)	$	79		$	79
Current liabilities:
Other accrued liabilities (1)	$	91		$	91
Non-current liabilities:
Other liabilities (1)	$	85		$	85

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

			Fair value measurements at reporting date using
			Quoted prices in	Significant other		Significant
			active markets for	observable		unobservable
	December 31,		identical assets	inputs		inputs
	2019		(Level 1)	(Level 2)		(Level 3)
Current assets:
Other current assets (1)	$	157		$	157
Non-current assets:
Other assets (1)(2)	$	92		$	71	$	21
Current liabilities:
Other accrued liabilities (1)	$	100		$	100
Non-current liabilities:
Other liabilities (1)	$	165		$	165

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

(2)Other assets include one of the Company’s renewable energy derivative contracts that was measured using unobservable (Level 3) inputs, in the amount of $21 million.

For the six months ended June 30, 2020, assets and liabilities that were measured using unobservable (Level 3) inputs resulted in a loss recognized in earnings of $21 million for a renewable energy derivative contract. For the year ended December 31, 2019, assets and liabilities that were measured using unobservable (Level 3) inputs resulted in unrealized gains recognized in earnings of $21 million for a renewable energy derivative contract and the reversal of a liability for contingent consideration of $20 million.

Assets and Liabilities Measured on a Non-Recurring Basis

For the three months ended June 30, 2020, Corning incurred a long-lived asset impairment loss for an asset group related to the reassessment and reprioritization of research and development programs within our All Other segment. Given the current economic environment and market opportunities, Corning has rescoped and significantly reduced its investment in these research and development programs. The impairment analysis resulted in a total pre-tax asset impairment loss of $195 million, which was substantially all the carrying value. The fair value of the asset group was measured using unobservable (Level 3) inputs. Refer to Note 2 (Restructuring, Impairment and Other Charges and Credits) to the consolidated financial statements for additional information on restructuring activities and impairment.

At December 31, 2019, Hemlock Semiconductor Group (“HSG”), one of the Company’s equity method affiliates, wrote down its long-lived assets to fair value on a nonrecurring basis. HSG engaged a third-party appraiser to assist in determining the fair value of its long-lived assets using unobservable (Level 3) inputs based on the highest and best use of the asset group. As a result, HSG recognized pre-tax asset impairment losses of $916 million for the year ended December 31, 2019. Corning’s share of the pre-tax impairment loss was $369 million. For the six months ended June 30, 2020, no material asset impairment losses were recognized on a nonrecurring basis by HSG.

There were no other significant financial assets and liabilities measured on a nonrecurring basis as of June 30, 2020 and December 31, 2019.