10. Hedging Activities

Undesignated Hedges

The table below includes a total gross notional value for translated earnings contracts of $12.6 billion and $13.6 billion at March 31, 2019 and December 31, 2018, respectively. These include gross notional value for average rate forwards of $10.1 billion and $11.0 billion, zero-cost collars and purchased put or call options of $2.5 billion and $2.6 billion at March 31, 2019 and December 31, 2018, respectively. The majority of the average rate forward contracts hedge a significant portion of the Company’s exposure to the Japanese yen with maturities spanning the years 2019-2022 and with gross notional values of $8.5 billion and $9.1 billion at March 31, 2019 and December 31, 2018, respectively. The average rate forward contracts also partially hedge the impacts of the South Korean won, Chinese yuan, euro and British pound translation on the Company’s projected net income. 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, only the put or the call option can be exercised at maturity.

The following tables summarize the notional amounts and respective fair values of Corning’s derivative financial instruments on a gross basis for March 31, 2019 and December 31, 2018 (in millions):



					Asset derivatives					Liability derivatives
	Gross notional amount				Balance	Fair value				Balance	Fair value
	March 31,		Dec. 31,		sheet	March 31,		Dec. 31,		sheet	March 31,		Dec. 31,
	2019		2018		location	2019		2018		location	2019		2018

Derivatives designated as hedging instruments

Foreign exchange contracts (1)	$	336	$	391	Other current assets	$	7	$	4	Other accrued liabilities			$	(2)
					Other assets		5		2

Derivatives not designated as hedging instruments

Foreign exchange contracts, other		937		900	Other current assets		2		5	Other accrued liabilities	$	(1)		(7)

Translated earnings contracts		12,640		13,620	Other current assets		116		94	Other accrued liabilities		(42)		(47)
					Other assets		38		43	Other liabilities		(237)		(386)

Total derivatives	$	13,913	$	14,911		$	168	$	148		$	(280)	$	(442)

(1)

Cash flow hedges with a typical duration of 24 months or less.

The effect of cash flow hedges on Corning’s consolidated statements of income (loss) and other comprehensive income (loss) is not material for the three months ended March 31, 2019 and 2018.

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



		Gain (loss) recognized in income
		Three months ended
	Location of gain/(loss)	March 31,
Undesignated derivatives	recognized in income	2019		2018

Foreign exchange contracts – balance sheet and loans	Other expense, net	$	(2)	$	(19)
Foreign currency hedges related to translated earnings (1)	Translated earnings contract gain (loss), net		184		(622)

Total undesignated		$	182	$	(641)

(1) The impact to income was primarily driven by yen-denominated hedges of translated earnings.