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Note 13 - Employee Retirement Plans | 12 Months Ended
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Dec. 31, 2015
Compensation and Retirement Disclosure [Abstract] |
Pension and Other Postretirement Benefits Disclosure [Text Block] |
13. | Employee Retirement Plans
Defined Benefit Plans We have defined benefit pension plans covering certain domestic and international employees. Our funding policy has been to contribute, as necessary, an amount in excess of the minimum requirements in order to achieve the Company’s long-term funding targets. In 2015, we made voluntary cash contributions of $65 million to our domestic defined benefit pension plan and contributed $35 million to our international pension plans. In 2014, we made voluntary cash contributions of $85 million to our domestic defined benefit pension plan and contributed $45 million to our international pension plans. Although we will not be subject to any mandatory contributions in 2016, we anticipate making voluntary cash contributions of up to $62 million to our domestic pension plan and up to $36 million to our international pension plans in 2016. Corning offers postretirement plans that provide health care and life insurance benefits for retirees and eligible dependents. Certain employees may become eligible for such postretirement benefits upon reaching retirement age and service requirements. For current retirees (including surviving spouses) and active employees eligible for the salaried retiree medical program, we have placed a “cap” on the amount we will contribute toward retiree medical coverage in the future. The cap is equal to 120% of our 2005 contributions toward retiree medical benefits. Once our contributions toward salaried retiree medical costs reach this cap, impacted retirees will have to pay the excess amount in addition to their regular contributions for coverage. This cap was attained for post-65 retirees in 2008 and has impacted their contribution rate in 2009 and going forward. The pre-65 retirees triggered the cap in 2010, which has impacted their contribution rate in 2011 and going forward. Furthermore, employees hired or rehired on or after January 1, 2007 will be eligible for Corning retiree medical benefits upon retirement; however, these employees will pay 100% of the cost. Obligations and Funded Status The change in benefit obligation and funded status of our employee retirement plans follows (in millions):
| Total pension benefits |  | Domestic pension benefits |  | International pension benefits
December 31, | 2015 |  | 2014 |  | 2015 |  | 2014 |  | 2015 |  | 2014
Change in benefit obligation |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Benefit obligation at beginning of year | $ | 3,809 |  | $ | 3,300 |  | $ | 3,222 |  | $ | 2,844 |  | $ | 587 |  | $ | 456
Service cost |  | 90 |  |  | 82 |  |  | 64 |  |  | 55 |  |  | 26 |  |  | 27
Interest cost |  | 144 |  |  | 160 |  |  | 126 |  |  | 137 |  |  | 18 |  |  | 23
Plan participants’ contributions |  | 1 |  |  | 1 |  |  | 1 |  |  | 1 |  |  |  |  |  |
Acquisitions |  |  |  |  | 103 |  |  |  |  |  |  |  |  |  |  |  | 103
Amendments |  |  |  |  | 25 |  |  |  |  |  | 25 |  |  |  |  |  |
Actuarial (gain) loss |  | (95) |  |  | 394 |  |  | (87) |  |  | 327 |  |  | (8) |  |  | 67
Other |  | (8) |  |  | (3) |  |  |  |  |  |  |  |  | (8) |  |  | (3)
Benefits paid |  | (188) |  |  | (207) |  |  | (165) |  |  | (167) |  |  | (23) |  |  | (40)
Foreign currency translation |  | (38) |  |  | (46) |  |  |  |  |  |  |  |  | (38) |  |  | (46)
Benefit obligation at end of year | $ | 3,715 |  | $ | 3,809 |  | $ | 3,161 |  | $ | 3,222 |  | $ | 554 |  | $ | 587
Change in plan assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fair value of plan assets at beginning of year | $ | 3,263 |  | $ | 2,896 |  | $ | 2,814 |  | $ | 2,596 |  | $ | 449 |  | $ | 300
Actual (loss) gain on plan assets |  | (108) |  |  | 355 |  |  | (111) |  |  | 287 |  |  | 3 |  |  | 68
Employer contributions |  | 116 |  |  | 147 |  |  | 77 |  |  | 97 |  |  | 39 |  |  | 50
Plan participants’ contributions |  | 1 |  |  | 1 |  |  | 1 |  |  | 1 |  |  |  |  |  |
Acquisitions |  |  |  |  | 97 |  |  |  |  |  |  |  |  |  |  |  | 97
Benefits paid |  | (188) |  |  | (207) |  |  | (165) |  |  | (167) |  |  | (23) |  |  | (40)
Foreign currency translation |  | (26) |  |  | (26) |  |  |  |  |  |  |  |  | (26) |  |  | (26)
Fair value of plan assets at end of year | $ | 3,058 |  | $ | 3,263 |  | $ | 2,616 |  | $ | 2,814 |  | $ | 442 |  | $ | 449
Funded status at end of year |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fair value of plan assets | $ | 3,058 |  | $ | 3,263 |  | $ | 2,616 |  | $ | 2,814 |  | $ | 442 |  | $ | 449
Benefit obligations |  | (3,715) |  |  | (3,809) |  |  | (3,161) |  |  | (3,222) |  |  | (554) |  |  | (587)
Funded status of plans | $ | (657) |  | $ | (546) |  | $ | (545) |  | $ | (408) |  | $ | (112) |  | $ | (138)
Amounts recognized in the consolidated balance sheets consist of: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Noncurrent asset | $ | 50 |  | $ | 47 |  |  |  |  |  |  |  | $ | 50 |  | $ | 47
Current liability |  | (35) |  |  | (41) |  | $ | (30) |  | $ | (30) |  |  | (5) |  |  | (11)
Noncurrent liability |  | (672) |  |  | (552) |  |  | (515) |  |  | (378) |  |  | (157) |  |  | (174)
Recognized liability | $ | (657) |  | $ | (546) |  | $ | (545) |  | $ | (408) |  | $ | (112) |  | $ | (138)
Amounts recognized in accumulated other comprehensive income consist of: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net actuarial loss | $ | 332 |  | $ | 308 |  | $ | 305 |  | $ | 278 |  | $ | 27 |  | $ | 30
Prior service cost (credit) |  | 35 |  |  | 41 |  |  | 37 |  |  | 44 |  |  | (2) |  |  | (3)
Amount recognized at end of year | $ | 367 |  | $ | 349 |  | $ | 342 |  | $ | 322 |  | $ | 25 |  | $ | 27
The accumulated benefit obligation for defined benefit pension plans was $3.5 billion and $3.6 billion at December 31, 2015 and 2014, respectively.
| Postretirement benefits
December 31, | 2015 |  | 2014
Change in benefit obligation |  |  |  |  |
Benefit obligation at beginning of year | $ | 862 |  | $ | 815
Service cost |  | 13 |  |  | 11
Interest cost |  | 33 |  |  | 38
Plan participants’ contributions |  | 7 |  |  | 7
Amendments |  |  |  |  | (5)
Actuarial (gain) loss |  | (97) |  |  | 49
Other |  | 4 |  |  |
Benefits paid |  | (61) |  |  | (56)
Medicare subsidy received |  | 2 |  |  | 3
Foreign currency translation |  |  |  |  |
Benefit obligation at end of year | $ | 763 |  | $ | 862
Funded status at end of year |  |  |  |  |
Fair value of plan assets | $ | 0 |  | $ | 0
Benefit obligations |  | (763) |  |  | (862)
Funded status of plans | $ | (763) |  | $ | (862)
Amounts recognized in the consolidated balance sheets consist of: |  |  |  |  |
Current liability | $ | (45) |  | $ | (48)
Noncurrent liability |  | (718) |  |  | (814)
Recognized liability | $ | (763) |  | $ | (862)
Amounts recognized in accumulated other comprehensive income consist of: |  |  |  |  |
Net actuarial loss | $ | 33 |  | $ | 132
Prior service credit |  | (19) |  |  | (27)
Amount recognized at end of year | $ | 14 |  | $ | 105
The following information is presented for pension plans where the projected benefit obligation as of December 31, 2015 and 2014 exceeded the fair value of plan assets (in millions):
| December 31,
| 2015 |  | 2014
Projected benefit obligation | $ | 3,341 |  | $ | 3,425
Fair value of plan assets | $ | 2,635 |  | $ | 2,831
In 2015, the fair value of plan assets exceeded the projected benefit obligation for the United Kingdom, one of the South Korea and one of the France pension plans. The following information is presented for pension plans where the accumulated benefit obligation as of December 31, 2015 and 2014 exceeded the fair value of plan assets (in millions):
| December 31,
| 2015 |  | 2014
Accumulated benefit obligation | $ | 3,159 |  | $ | 479
Fair value of plan assets | $ | 2,634 |  | $ | 17
In 2015, the fair value of plan assets exceeded the accumulated benefit obligation for the United Kingdom, the South Korea and one of the France pension plans. The components of net periodic benefit expense for our employee retirement plans follow (in millions):
| Total pension benefits |  | Domestic pension benefits |  | International pension benefits
December 31, | 2015 |  | 2014 |  | 2013 |  | 2015 |  | 2014 |  | 2013 |  | 2015 |  | 2014 |  | 2013
Service cost | $ 90 |  | $ 82 |  | $ 70 |  | $ 64 |  | $ 55 |  | $ 60 |  | $26 |  | $ 27 |  | $10
Interest cost | 144 |  | 160 |  | 131 |  | 126 |  | 137 |  | 115 |  | 18 |  | 23 |  | 16
Expected return on plan assets | (178) |  | (174) |  | (169) |  | (166) |  | (159) |  | (158) |  | (12) |  | (15) |  | (11)
Amortization of prior service cost (credit) | 6 |  | 6 |  | 5 |  | 7 |  | 7 |  | 6 |  | (1) |  | (1) |  | (1)
Recognition of actuarial loss (gain) | 165 |  | 29 |  | (30) |  | 162 |  | 4 |  | (41) |  | 3 |  | 25 |  | 11
Total net periodic benefit expense | $227 |  | $103 |  | $ 7 |  | $193 |  | $ 44 |  | $ (18) |  | $34 |  | $ 59 |  | $25
Other changes in plan assets and benefit obligations recognized in other comprehensive income: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Curtailment effects |  |  | $ (3) |  |  |  |  |  |  |  |  |  |  |  | $ (3) |  |
Settlements | $ (1) |  | (2) |  |  |  |  |  |  |  |  |  | $(1) |  | (2) |  |
Current year actuarial loss (gain) | 191 |  | 212 |  | $(264) |  | $189 |  | $198 |  | $(274) |  | 2 |  | 14 |  | $10
Recognition of actuarial (loss) gain | (165) |  | (29) |  | 30 |  | (162) |  | (4) |  | 41 |  | (3) |  | (25) |  | (11)
Current year prior service cost |  |  | 25 |  |  |  |  |  | 25 |  |  |  |  |  |  |  |
Amortization of prior service (cost) credit | (6) |  | (6) |  | (5) |  | (7) |  | (7) |  | (6) |  | 1 |  | 1 |  | 1
Total recognized in other comprehensive (income) loss | $ 19 |  | $197 |  | $(239) |  | $ 20 |  | $212 |  | $(239) |  | $(1) |  | $(15) |  | $ 0
Total recognized in net periodic benefit cost and other comprehensive (income) loss | $246 |  | $300 |  | $(232) |  | $213 |  | $256 |  | $(257) |  | $33 |  | $ 44 |  | $25
| Postretirement benefits
| 2015 |  | 2014 |  | 2013
Service cost | $ | 13 |  | $ | 11 |  | $ | 13
Interest cost |  | 33 |  |  | 38 |  |  | 39
Amortization of net loss |  | 3 |  |  |  |  |  | 15
Amortization of prior service credit |  | (7) |  |  | (6) |  |  | (6)
Total net periodic benefit expense | $ | 42 |  | $ | 43 |  | $ | 61
Other changes in plan assets and benefit obligations recognized in other comprehensive income: |  |  |  |  |  |  |  |
Current year actuarial (gain) loss | $ | (96) |  | $ | 49 |  | $ | (178)
Amortization of actuarial loss |  | (3) |  |  |  |  |  | (15)
Current year prior service credit |  |  |  |  | (5) |  |  | (5)
Amortization of prior service credit |  | 7 |  |  | 6 |  |  | 6
Total recognized in other comprehensive (income) loss | $ | (92) |  | $ | 50 |  | $ | (192)
Total recognized in net periodic benefit cost and other comprehensive (income) loss | $ | (50) |  | $ | 93 |  | $ | (131)
The Company expects to recognize $6 million of net prior service cost as a component of net periodic pension cost in 2016 for its defined benefit pension plans. The Company expects to recognize $1 million of net actuarial gain and $4 million of net prior service credit as components of net periodic postretirement benefit cost in 2016. Corning uses a hypothetical yield curve and associated spot rate curve to discount the plan’s projected benefit payments. Once the present value of projected benefit payments is calculated, the suggested discount rate is equal to the level rate that results in the same present value. The yield curve is based on actual high-quality corporate bonds across the full maturity spectrum, which also includes private placements as well as Eurobonds that are denominated in U.S. currency. The curve is developed from yields on approximately 350-375 bonds from four grading sources, Moody’s, S&P, Fitch and the Dominion Bond Rating Service. A bond will be included if at least half of the grades from these sources are Aa, non-callable bonds. The very highest 10% yields and the lowest 40% yields are excluded from the curve to eliminate outliers in the bond population. Mortality is one of the key assumptions used in valuing liabilities of retirement plans. It is used to assign a probability of payment for future plan benefits that are contingent upon participants’ survival. To make this assumption, benefit plan sponsors typically use a base mortality table and an improvement scale that adjusts the rates of mortality for future anticipated changes to historical death rates. For the seven years prior to the year ended December 31, 2014, Corning utilized the RP 2000 mortality table with improvement Scale AA in performing valuations of its U.S. pension and OPEB liabilities. On October 27, 2014, the Society of Actuaries (“SOA”) published new mortality tables for benefit plan sponsors to consider when measuring their benefit plan costs and obligations. These tables reflect the fact that life expectancies have improved since the last comprehensive study of mortality data was released in 2000. Therefore, in the fourth quarter of 2014, Corning undertook a review of its mortality assumption for its U.S. benefit plans to determine if an update to our current mortality table was appropriate. Based on the findings of this analysis, Corning believes that the RP-2014 table adjusted for Corning’s experience with future improvements projected using scale BB-2D represents the best estimate of future mortality improvement for Corning’s U.S. benefit plans. Prior to the December 31, 2015 valuation of its defined benefit pension and OPEB plans, Corning used the traditional, single weighted-average discount rate approach to develop the obligation, interest cost and service cost components of net periodic benefit cost for its defined benefit pension and OPEB plans. The individual spot rates from the yield curve are used in measuring the pension plan projected benefit obligation (PBO) or OPEB plan accumulated postretirement benefit obligation (APBO) at the measurement date. The benefit obligation is effectively calculated as the aggregate present value at the measurement date of each future benefit payment related to past service, with each payment discounted using a spot rate from a high-quality corporate bond yield curve that matches the duration of the benefit payment. Under Corning’s traditional, single weighted-average discount rate approach, a single weighted-average rate is developed from the approach described above and rounded to the nearest 25 basis points. Traditionally, the weighted-average discount rate is determined at the plan measurement date, based on the same projected future benefit payments used in developing the benefit obligation. The traditional single weighted-average discount rate represents the constant annual rate that would be required to discount all future benefit payments related to past service from the date of expected future payment to the measurement date such that the aggregate present value equals the benefit obligation. Beginning with the December 31, 2015 valuation of its defined benefit pension and OPEB plans, Corning is changing its methodology of determining the service and interest cost components of net periodic pension and other postretirement benefit costs to a more granular approach. Under the new approach the cash flows from each applicable pension and OPEB plan will be used to directly calculate the benefit obligation, service cost and interest cost using the spot rates from the applicable yield curve. Moving to a more granular approach has a limited impact on the determination of the respective benefit obligations. The only impacts will be as a result of the elimination of the rounding of the discount rate that occurred in the traditional approach and the use of specific cash flows for Corning’s non-qualified pension plans, while separately applying the yield curve to each separate OPEB plan instead of aggregating the OPEB plan cash flows. This change will result in a decrease in the interest cost and service cost components of net periodic pension and OPEB costs. For Corning’s pension plans, this change will increase the immediate recognition of actuarial losses (or decrease the immediate recognition of actuarial gains), due to Corning’s previous election to immediately recognize actuarial gains and losses outside of the corridor. For Corning’s OPEB plans, this change will increase the accumulated other comprehensive income (AOCI) account balance due to the accumulation of lower actuarial gains or higher actuarial losses. Over time, the amortization of the actuarial losses from AOCI will begin to reduce the savings from the lower interest cost and service cost. This change is a change in accounting estimate and therefore applied prospectively (beginning with the next measurement date of December 31, 2015). No restatement of prior periods is required. Measurement of postretirement benefit expense is based on assumptions used to value the postretirement benefit obligation at the beginning of the year. The weighted-average assumptions used to determine benefit obligations at December 31 follow:
| Pension benefits |  |
| Domestic |  | International |  | Postretirement benefits
| 2015 |  | 2014 |  | 2013 |  | 2015 |  | 2014 |  | 2013 |  | 2015 |  | 2014 |  | 2013
Discount rate | 4.24% |  | 4.00% |  | 4.75% |  | 3.23% |  | 3.21% |  | 4.08% |  | 4.31% |  | 4.00% |  | 4.75%
Rate of compensation increase | 3.50% |  | 3.50% |  | 4.00% |  | 3.92% |  | 3.88% |  | 3.85% |  |  |  |  |  |
The weighted-average assumptions used to determine net periodic benefit cost for years ended December 31 follow:
| Pension benefits |  |
| Domestic |  | International |  | Postretirement benefits
| 2015 |  | 2014 |  | 2013 |  | 2015 |  | 2014 |  | 2013 |  | 2015 |  | 2014 |  | 2013
Discount rate | 4.00% |  | 4.75% |  | 3.75% |  | 3.21% |  | 4.08% |  | 4.48% |  | 4.00% |  | 4.75% |  | 4.00%
Expected return on plan assets | 6.00% |  | 6.25% |  | 6.00% |  | 2.97% |  | 4.12% |  | 3.73% |  |  |  |  |  |
Rate of compensation increase | 3.50% |  | 4.00% |  | 4.00% |  | 3.88% |  | 3.85% |  | 3.45% |  |  |  |  |  |
The assumed rate of return was determined based on the current interest rate environment and historical market premiums relative to fixed income rates of equities and other asset classes. Reasonableness of the results is tested using models provided by the plan actuaries.
Assumed health care trend rates at December 31 | 2015 |  | 2014
Health care cost trend rate assumed for next year | 7% |  | 6.67%
Rate that the cost trend rate gradually declines to | 5% |  | 5%
Year that the rate reaches the ultimate trend rate | 2024 |  | 2020
Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A one-percentage-point change in assumed health care cost trend rates would have the following effects (in millions):
| One-percentage-point increase |  | One-percentage-point decrease
Effect on annual total of service and interest cost | $ 4 |  | $ (3)
Effect on postretirement benefit obligation | $52 |  | $(43)
Plan Assets Corning’s expected long-term rates of return on plan assets reflect the average rates of earnings expected on the funds invested to provide for the benefits included in our domestic and international projected benefit obligations. We based these rates on asset/liability forecast modeling, which is based on our current asset allocation, the return and standard deviation for each asset class, current market conditions and transitions from current conditions to long-term returns. The Company’s overall investment strategy is to obtain sufficient return to offset or exceed inflation and provide adequate liquidity to meet the benefit obligations of the pension plan. Investments are made in public securities to ensure adequate liquidity to support benefit payments. Domestic and international stocks and bonds provide diversification to the portfolio. The target allocation range for global equity investment is 20%-25% which includes large, mid and small cap companies and investments in both developed and emerging markets. The target allocation for bond investments is 60%, which predominately includes corporate bonds. Long duration fixed income assets are utilized to mitigate the sensitivity of funding ratios to changes in interest rates. The target allocation range for non-public investments in private equity and real estate is 5%-15%, and is used to enhance returns and offer additional asset diversification. The target allocation range for commodities is 0%-5%, which provides some inflation protection to the portfolio. The following tables provide fair value measurement information for the Company’s major categories of our domestic defined benefit plan assets:
|  |  | Fair value measurements at reporting date using
(in millions) | December 31, 2015 |  | Quoted prices in active markets for identical assets (Level 1) |  | Significant other observable inputs (Level 2) |  | Significant unobservable inputs (Level 3)
Equity securities: |  |  |  |  |  |  |  |  |  |  |
U.S. companies | $ | 336 |  | $ | 51 |  | $ | 285 |  |  |
International companies |  | 322 |  |  | 79 |  |  | 243 |  |  |
Fixed income: |  |  |  |  |  |  |  |  |  |  |
U.S. corporate bonds |  | 1,566 |  |  | 158 |  |  | 1,408 |  |  |
Private equity (1) |  | 163 |  |  |  |  |  |  |  | $ | 163
Real estate (2) |  | 61 |  |  |  |  |  |  |  |  | 61
Cash equivalents |  | 71 |  |  | 71 |  |  |  |  |  |
Commodities (3) |  | 97 |  |  |  |  |  | 97 |  |  |
Total | $ | 2,616 |  | $ | 359 |  | $ | 2,033 |  | $ | 224
(1) | This category includes venture capital, leverage buyouts and distressed debt limited partnerships invested primarily in U.S. companies. The inputs are valued by discounted cash flow analysis and comparable sale analysis.
(2) | This category includes industrial, office, apartments, hotels, infrastructure and retail investments which are limited partnerships predominately in the U.S. The inputs are valued by discounted cash flow analysis; comparable sale analysis and periodic external appraisals.
(3) | This category includes investments in energy, industrial metals, precious metals, agricultural and livestock primarily through futures, options, swaps and exchange traded funds.
|  |  | Fair value measurements at reporting date using
(in millions) | December 31, 2014 |  | Quoted prices in active markets for identical assets (Level 1) |  | Significant other observable inputs (Level 2) |  | Significant unobservable inputs (Level 3)
Equity securities: |  |  |  |  |  |  |  |  |  |  |
U.S. companies | $ | 310 |  | $ | 49 |  | $ | 261 |  |  |
International companies |  | 327 |  |  | 78 |  |  | 249 |  |  |
Fixed income: |  |  |  |  |  |  |  |  |  |  |
U.S. corporate bonds |  | 1,720 |  |  | 166 |  |  | 1,554 |  |  |
Private equity (1) |  | 192 |  |  |  |  |  |  |  | $ | 192
Real estate (2) |  | 84 |  |  |  |  |  |  |  |  | 84
Cash equivalents |  | 80 |  |  | 80 |  |  |  |  |  |
Commodities (3) |  | 101 |  |  |  |  |  | 101 |  |  |
Total | $ | 2,814 |  | $ | 373 |  | $ | 2,165 |  | $ | 276
(1) | This category includes venture capital, leverage buyouts and distressed debt limited partnerships invested primarily in U.S. companies. The inputs are valued by discounted cash flow analysis and comparable sale analysis.
(2) | This category includes industrial, office, apartments, hotels, infrastructure and retail investments which are limited partnerships predominately in the U.S. The inputs are valued by discounted cash flow analysis; comparable sale analysis and periodic external appraisals.
(3) | This category includes investments in energy, industrial metals, precious metals, agricultural and livestock primarily through futures, options, swaps and exchange traded funds.
The following tables provide fair value measurement information for the Company’s major categories of our international defined benefit plan assets:
|  |  | Fair value measurements at reporting date using
(in millions) | December 31, 2015 |  | Quoted prices in active markets for identical assets (Level 1) |  | Significant other observable inputs (Level 2) |  | Significant unobservable inputs (Level 3)
Equity securities: |  |  |  |  |  |  |  |  |  |  |
U.S. companies | $ | 7 |  |  |  |  | $ | 7 |  |  |
International companies |  | 23 |  |  |  |  |  | 23 |  |  |
Fixed income: |  |  |  |  |  |  |  |  |  |  |
International fixed income |  | 347 |  | $ | 286 |  |  | 61 |  |  |
Insurance contracts |  | 3 |  |  |  |  |  |  |  | $ | 3
Mortgages |  | 2 |  |  |  |  |  |  |  |  | 2
Cash equivalents |  | 60 |  |  | 60 |  |  |  |  |  |
Total | $ | 442 |  | $ | 346 |  | $ | 91 |  | $ | 5
|  |  | Fair value measurements at reporting date using
(in millions) | December 31, 2014 |  | Quoted prices in active markets for identical assets (Level 1) |  | Significant other observable inputs (Level 2) |  | Significant unobservable inputs (Level 3)
Equity securities: |  |  |  |  |  |  |  |  |  |  |
U.S. companies | $ | 6 |  |  |  |  | $ | 6 |  |  |
International companies |  | 22 |  |  |  |  |  | 22 |  |  |
Fixed income: |  |  |  |  |  |  |  |  |  |  |
International fixed income |  | 361 |  | $ | 293 |  |  | 68 |  |  |
Insurance contracts |  | 5 |  |  |  |  |  |  |  | $ | 5
Mortgages |  | 7 |  |  |  |  |  |  |  |  | 7
Cash equivalents |  | 48 |  |  | 48 |  |  |  |  |  |
Total | $ | 449 |  | $ | 341 |  | $ | 96 |  | $ | 12
The tables below set forth a summary of changes in the fair value of the defined benefit plans Level 3 assets for the years ended December 31, 2015 and 2014:
| Level 3 assets – Domestic |  | Level 3 assets – International
| Year ended December 2015 |  | Year ended December 2015
(in millions) | Private equity |  | Real estate |  | Mortgages |  | Insurance contracts
Beginning balance at December 31, 2014 | $ | 192 |  | $ | 84 |  | $ | 7 |  | $ | 5
Actual return on plan assets relating to assets still held at the reporting date |  | 16 |  |  | 12 |  |  |  |  |  |
Transfers in and/or out of level 3 |  | (45) |  |  | (35) |  |  | (5) |  |  | (2)
Ending balance at December 31, 2015 | $ | 163 |  | $ | 61 |  | $ | 2 |  | $ | 3
| Level 3 assets – Domestic |  | Level 3 assets – International
| Year ended December 2014 |  | Year ended December 2014
(in millions) | Private equity |  | Real estate |  | Mortgages |  | Insurance contracts
Beginning balance at December 31, 2013 | $ | 207 |  | $ | 93 |  | $ | 0 |  | $ | 6
Actual return on plan assets relating to assets still held at the reporting date |  | 31 |  |  | 8 |  |  |  |  |  | 1
Transfers in and/or out of level 3 |  | (46) |  |  | (17) |  |  | 7 |  |  | (2)
Ending balance at December 31, 2014 | $ | 192 |  | $ | 84 |  | $ | 7 |  | $ | 5
Credit Risk 60% of domestic plan assets are invested in long duration bonds. The average rating for these bonds is A. These bonds are subject to credit risk, such that a decline in credit ratings for the underlying companies, countries or assets (for asset-backed securities) would result in a decline in the value of the bonds. These bonds are also subject to default risk. Currency Risk 12% of domestic assets are valued in non-U.S. dollar denominated investments that are subject to currency fluctuations. The value of these securities will decline if the U.S. dollar increases in value relative to the value of the currencies in which these investments are denominated. Liquidity Risk 9% of the domestic securities are invested in Level 3 securities. These are long-term investments in private equity and private real estate investments that may not mature or be sellable in the near-term without significant loss. At December 31, 2015 and 2014, the amount of Corning common stock included in equity securities was not significant. Cash Flow Data In 2016, we anticipate making voluntary cash contributions of approximately $62 million to our domestic defined benefit plan and approximately $36 million to our international defined benefit plans. The following reflects the gross benefit payments that are expected to be paid for our domestic and international defined benefit pension plans, the postretirement medical and life plans and the gross amount of annual Medicare Part D federal subsidy expected to be received (in millions):
| Expected benefit payments |  |
| Domestic pension benefits |  | International pension benefits | Postretirement benefits |  | Expected federal subsidy payments postretirement benefits
2016 | $ 192 |  | $ 18 | $ 45 |  | $ 2
2017 | $ 178 |  | $ 22 | $ 44 |  | $ 3
2018 | $ 186 |  | $ 24 | $ 44 |  | $ 3
2019 | $ 192 |  | $ 25 | $ 44 |  | $ 3
2020 | $ 198 |  | $ 29 | $ 46 |  | $ 3
2021-2025 | $1,100 |  | $168 | $230 |  | $16
Other Benefit Plans We offer defined contribution plans covering employees meeting certain eligibility requirements. Total consolidated defined contribution plan expense was $53 million, $62 million and $63 million for the years ended December 31, 2015, 2014 and 2013, respectively.

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