XML 31 R18.htm IDEA: XBRL DOCUMENT v3.10.0.1
Employee Retirement Plans
 12 Months Ended
Dec. 31, 2018
Employee Retirement Plans [Abstract]  
Employee Retirement Plans

11.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 2018, we made voluntary cash contributions to our domestic defined benefit pension plan and our international pension plans in the amount of $105 million and $12 million, respectively.  In 2017, we made no voluntary cash contributions to our domestic defined benefit pension plan and $29 million to our international pension plans.  During 2019, we anticipate making cash contributions of $75 million to our U.S. qualified pension plan and $31 million to our international pension plans.



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 attained for pre-65 retirees in 2010.  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.

11.Employee Retirement Plans (continued)



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,

2018

 

2017

 

2018

 

2017

 

2018

 

2017



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in benefit obligation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Benefit obligation at beginning of year

$

 4,188 

 

$

 3,887 

 

$

 3,522 

 

$

 3,289 

 

$

 666 

 

$

 598 

Service cost

 

 103 

 

 

 92 

 

 

 78 

 

 

 66 

 

 

 25 

 

 

 26 

Interest cost

 

 132 

 

 

 126 

 

 

 116 

 

 

 112 

 

 

 16 

 

 

 14 

Plan participants’ contributions

 

 1 

 

 

 2 

 

 

 1 

 

 

 1 

 

 

 

 

 

 1 

Plan amendments

 

 21 

 

 

 

 

 

 20 

 

 

 

 

 

 1 

 

 

 

Actuarial loss (gain)

 

 (210)

 

 

 208 

 

 

 (200)

 

 

 222 

 

 

 (10)

 

 

 (14)

Other

 

 (1)

 

 

 3 

 

 

 

 

 

 3 

 

 

 (1)

 

 

 

Benefits paid

 

 (202)

 

 

 (195)

 

 

 (179)

 

 

 (171)

 

 

 (23)

 

 

 (24)

Foreign currency translation

 

 (29)

 

 

 65 

 

 

 

 

 

 

 

 

 (29)

 

 

 65 

Benefit obligation at end of year

$

 4,003 

 

$

 4,188 

 

$

 3,358 

 

$

 3,522 

 

$

 645 

 

$

 666 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in plan assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value of plan assets at beginning of year

$

 3,539 

 

$

 3,225 

 

$

 3,004 

 

$

 2,765 

 

$

 535 

 

$

 460 

Actual return on plan assets

 

 (201)

 

 

 413 

 

 

 (202)

 

 

 395 

 

 

 1 

 

 

 18 

Employer contributions

 

 135 

 

 

 46 

 

 

 118 

 

 

 14 

 

 

 17 

 

 

 32 

Plan participants’ contributions

 

 1 

 

 

 1 

 

 

 1 

 

 

 1 

 

 

 

 

 

 

Benefits paid

 

 (208)

 

 

 (195)

 

 

 (179)

 

 

 (171)

 

 

 (29)

 

 

 (24)

Foreign currency translation

 

 (27)

 

 

 49 

 

 

 

 

 

 

 

 

 (27)

 

 

 49 

Fair value of plan assets at end of year

$

 3,239 

 

$

 3,539 

 

$

 2,742 

 

$

 3,004 

 

$

 497 

 

$

 535 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Funded status at end of year

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value of plan assets

$

 3,239 

 

$

 3,539 

 

$

 2,742 

 

$

 3,004 

 

$

 497 

 

$

 535 

Benefit obligations

 

 (4,003)

 

 

 (4,188)

 

 

 (3,358)

 

 

 (3,522)

 

 

 (645)

 

 

 (666)

Funded status of plans

$

 (764)

 

$

 (649)

 

$

 (616)

 

$

 (518)

 

$

 (148)

 

$

 (131)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts recognized in the consolidated
  balance sheets consist of:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noncurrent asset

$

 81 

 

$

 76 

 

 

 

 

 

 

 

$

 81 

 

$

 76 

Current liability

 

 (29)

 

 

 (20)

 

$

 (13)

 

$

 (12)

 

 

 (16)

 

 

 (8)

Noncurrent liability

 

 (816)

 

 

 (705)

 

 

 (603)

 

 

 (506)

 

 

 (213)

 

 

 (199)

Recognized liability

$

 (764)

 

$

 (649)

 

$

 (616)

 

$

 (518)

 

$

 (148)

 

$

 (131)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts recognized in accumulated other
  comprehensive income consist of:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net actuarial loss 

$

 338 

 

$

 300 

 

$

 324 

 

$

 285 

 

$

 14 

 

$

 15 

Prior service cost (credit)

 

 36 

 

 

 22 

 

 

 37 

 

 

 25 

 

 

 (1)

 

 

 (3)

Amount recognized at end of year 

$

 374 

 

$

 322 

 

$

 361 

 

$

 310 

 

$

 13 

 

$

 12 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accumulated benefit obligation for defined benefit pension plans was $3.8 billion and $3.9 billion at December 31, 2018 and 2017, respectively.

11.Employee Retirement Plans (continued)







 

 

 

 

 



 

 

 

 

 



Postretirement benefits

December 31,

2018

 

2017



 

 

 

 

 

Change in benefit obligation

 

 

 

 

 

Benefit obligation at beginning of year

$

 789 

 

$

 776 

Service cost

 

 10 

 

 

 10 

Interest cost

 

 24 

 

 

 26 

Plan participants’ contributions

 

 8 

 

 

 8 

Plan amendments

 

 (40)

 

 

 

Actuarial loss (gain)

 

 (48)

 

 

 17 

Benefits paid

 

 (46)

 

 

 (50)

Medicare subsidy received

 

 2 

 

 

 2 

Benefit obligation at end of year

$

 699 

 

$

 789 



 

 

 

 

 

Funded status at end of year

 

 

 

 

 

Fair value of plan assets

 

 

 

 

 

Benefit obligations

$

 (699)

 

$

 (789)

Funded status of plans

$

 (699)

 

$

 (789)



 

 

 

 

 

Amounts recognized in the consolidated balance sheets consist of:

 

 

 

 

 

Current liability

$

 (37)

 

$

 (40)

Noncurrent liability

 

 (662)

 

 

 (749)

Recognized liability

$

 (699)

 

$

 (789)



 

 

 

 

 

Amounts recognized in accumulated other comprehensive income consist of:

 

 

 

 

 

Net actuarial loss 

$

 21 

 

$

 68 

Prior service credit

 

 (44)

 

 

 (12)

Amount recognized at end of year 

$

 (23)

 

$

 56 



The following information is presented for pension plans where the projected benefit obligation as of December 31, 2018 and 2017 exceeded the fair value of plan assets (in millions):





 

 

 

 

 



 

 

 

 

 



December 31,



2018

 

2017



 

 

 

 

 

Projected benefit obligation

$

 3,754 

 

$

 3,843 

Fair value of plan assets

$

 2,910 

 

$

 3,173 



In 2018, the fair value of plan assets exceeded the projected benefit obligation for the United Kingdom pension plan.  In 2017, the fair value of plan assets exceeded the projected benefit obligation for the United Kingdom and one of the South Korean pension plans.



The following information is presented for pension plans where the accumulated benefit obligation as of December 31, 2018 and 2017 exceeded the fair value of plan assets (in millions):





 

 

 

 

 



 

 

 

 

 



December 31,



2018

 

2017



 

 

 

 

 

Accumulated benefit obligation

$

 3,410 

 

$

 3,555 

Fair value of plan assets

$

 2,766 

 

$

 3,025 



11.Employee Retirement Plans (continued)



In 2018, the fair value of plan assets exceeded the accumulated benefit obligation for the United Kingdom, South Korea and one of the Taiwan pension plans.  In 2017, the fair value of plan assets exceeded the accumulated benefit obligation for one of the Taiwan, the United Kingdom and the South Korea pension plans.



The components of net periodic benefit cost for our employee retirement plans follow (in millions):





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Total pension benefits

 

Domestic pension benefits

 

International pension benefits

December 31,

2018

 

2017

 

2016

 

2018

 

2017

 

2016

 

2018

 

2017

 

2016



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service cost

$

 103 

 

$

 92 

 

$

 85 

 

$

 78 

 

$

 66 

 

$

 61 

 

$

 25 

 

$

 26 

 

$

 24 

Interest cost

 

 132 

 

 

 126 

 

 

 124 

 

 

 116 

 

 

 112 

 

 

 111 

 

 

 16 

 

 

 14 

 

 

 13 

Expected return on plan assets 

 

 (189)

 

 

 (174)

 

 

 (165)

 

 

 (178)

 

 

 (163)

 

 

 (153)

 

 

 (11)

 

 

 (11)

 

 

 (12)

Amortization of prior service
  cost (credit)

 

 6 

 

 

 5 

 

 

 6 

 

 

 7 

 

 

 6 

 

 

 6 

 

 

 (1)

 

 

 (1)

 

 

 

Recognition of actuarial loss

 

 145 

 

 

 21 

 

 

 67 

 

 

 143 

 

 

 18 

 

 

 55 

 

 

 2 

 

 

 3 

 

 

 12 

Total net periodic benefit expense

$

 197 

 

$

 70 

 

$

 117 

 

$

 166 

 

$

 39 

 

$

 80 

 

$

 31 

 

$

 31 

 

$

 37 

Settlement charge

 

 (1)

 

 

 

 

 

 1 

 

 

 

 

 

 

 

 

 1 

 

 

 (1)

 

 

 

 

 

 

Total expense

$

 196 

 

$

 70 

 

$

 118 

 

$

 166 

 

$

 39 

 

$

 81 

 

$

 30 

 

$

 31 

 

$

 37 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other changes in plan assets and
  benefit obligations recognized
  in other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Settlements

$

 1 

 

 

 

 

$

 (2)

 

 

 

 

 

 

 

$

 (2)

 

$

 1 

 

 

 

 

 

 

Current year actuarial loss (gain)

 

 180 

 

$

 (30)

 

 

 84 

 

$

 182 

 

$

 (8)

 

 

 63 

 

 

 (2)

 

$

 (22)

 

$

 21 

Recognition of actuarial loss

 

 (145)

 

 

 (21)

 

 

 (64)

 

 

 (143)

 

 

 (18)

 

 

 (55)

 

 

 (2)

 

 

 (3)

 

 

 (9)

Current year prior service cost

 

 20 

 

 

 

 

 

 

 

 

 20 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of prior service
  (cost) credit

 

 (6)

 

 

 (5)

 

 

 (6)

 

 

 (7)

 

 

 (6)

 

 

 (6)

 

 

 1 

 

 

 1 

 

 

 

Total recognized in other
  comprehensive loss (income)  

$

 50 

 

$

 (56)

 

$

 12 

 

$

 52 

 

$

 (32)

 

$

 0 

 

$

 (2)

 

$

 (24)

 

$

 12 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 







 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 



 

Postretirement benefits



 

2018

 

2017

 

2016



 

 

 

 

 

 

 

 

 

Service cost

 

$

 10 

 

$

 10 

 

$

 9 

Interest cost

 

 

 24 

 

 

 26 

 

 

 26 

Amortization of actuarial net gain

 

 

 

 

 

 (1)

 

 

 (1)

Amortization of prior service credit

 

 

 (7)

 

 

 (3)

 

 

 (4)

Total net periodic benefit expense 

 

$

 27 

 

$

 32 

 

$

 30 



 

 

 

 

 

 

 

 

 

Other changes in plan assets and benefit obligations
  recognized in other comprehensive income:

 

 

 

 

 

 

 

 

 

Current year actuarial (gain) loss

 

$

 (47)

 

$

 17 

 

$

 15 

Amortization of actuarial net gain 

 

 

 

 

 

 1 

 

 

 1 

Current year prior service credit

 

 

 (40)

 

 

 

 

 

 

Amortization of prior service credit

 

 

 7 

 

 

 3 

 

 

 5 

Total recognized in other comprehensive income (loss)

 

$

 (80)

 

$

 21 

 

$

 21 



 

 

 

 

 

 

 

 

 

Total recognized in net periodic benefit cost and other
  comprehensive income

 

$

 (53)

 

$

 53 

 

$

 51 



11.Employee Retirement Plans (continued)



The Company expects to recognize $7 million of net prior service cost as a component of net periodic pension cost in 2019 for its defined benefit pension plans.  The Company expects to recognize $1 million of net actuarial gain and $7 million of net prior service credit as components of net periodic postretirement benefit cost in 2019.



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. 



Corning last updated the adjustment factors applied to its base mortality assumption (RP-2014 white collar table and RP-2014 blue collar table for non-union and union participants, respectively) to value its U.S. benefit plan obligations as of December 31, 2017.  In addition, Corning also updated to the MP-2017 projection scale for the year ended 2017.  As the Society of Actuaries publishes additional mortality improvement scales (MP-2018), Corning has considered these revised improvement scales in setting its future mortality improvement assumption.  As of December 31, 2018, Corning decided to continue application of its future improvement scale to the MP-2017 scale.



Furthermore, Corning updated for the year ended 2017 the mortality assumption applied to disabled participants to be the RP-2014 disabled mortality base table with future improvements using MP-2017.  These assumptions were unchanged for the year ended 2018.



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



2018

 

2017

 

2016

 

2018

 

2017

 

2016

 

2018

 

2017

 

2016

Discount rate

 4.28 

%

 

 3.58 

%

 

 4.01 

%

 

 1.96 

%

 

 1.93 

%

 

 2.29 

%

 

 4.33 

%

 

 3.63 

%

 

 4.07 

%

Rate of compensation increase

 3.50 

%

 

 3.50 

%

 

 3.50 

%

 

 2.96 

%

 

 2.81 

%

 

 3.97 

%

 

 

 

 

 

 

 

 

 



The weighted-average assumptions used to determine net periodic benefit cost for years ended December 31 follow:





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Pension benefits

 

 

 

 

 

 

 

 

 



Domestic

 

International

 

Postretirement benefits



2018

 

2017

 

2016

 

2018

 

2017

 

2016

 

2018

 

2017

 

2016

Discount rate

 3.58 

%

 

 4.01 

%

 

 4.24 

%

 

 1.93 

%

 

 2.29 

%

 

 3.23 

%

 

 3.63 

%

 

 4.06 

%

 

 4.31 

%

Expected return on plan assets

 6.00 

%

 

 6.00 

%

 

 6.00 

%

 

 2.13 

%

 

 3.97 

%

 

 3.92 

%

 

 

 

 

 

 

 

 

 

Rate of compensation increase

 3.50 

%

 

 3.50 

%

 

 3.50 

%

 

 2.81 

%

 

 2.06 

%

 

 2.89 

%

 

 

 

 

 

 

 

 

 



11.Employee Retirement Plans (continued)



Expected long-term returns on plan assets is based on long-term expectations for future returns informed by historical data in conjunction with the investment policies further described within “Plan Assets” below.  Reasonableness of the results is tested using models provided by the plan actuaries.







 

 

 



 

 

 

Assumed health care trend rates at December 31

2018

 

2017

Health care cost trend rate assumed for next year

 7.00% 

 

 6.50% 

Rate that the cost trend rate gradually declines to

 5% 

 

 5% 

Year that the rate reaches the ultimate trend rate

 2027 

 

 2024 



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 (credit)

$

 3 

 

$

 (2)

Effect on postretirement benefit obligation

$

 45 

 

$

 (37)



Plan Assets

The Company’s primary objective is to ensure the plan has sufficient return on assets to fund the plan’s current and future obligations as they become due.  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; Level 1 (quoted market prices in active markets for identical assets), Level 2 (significant other observable inputs) and Level 3 (significant unobservable inputs) of our domestic defined benefit plan assets:





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



December 31, 2018

 

December 31, 2017

(in millions)

Total

 

(Level 1)

 

(Level 2)

 

(Level 3)

 

Total

 

(Level 1)

 

(Level 2)

 

(Level 3)

Equity securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. companies

$

 363 

 

$

 2 

 

$

 361 

 

 

 

 

$

 374 

 

$

 57 

 

$

 317 

 

 

 

International companies

 

 324 

 

 

 

 

 

 324 

 

 

 

 

 

 420 

 

 

 117 

 

 

 303 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. corporate bonds

 

 1,626 

 

 

 183 

 

 

 1,443 

 

 

 

 

 

 1,815 

 

 

 197 

 

 

 1,618 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Private equity (1)

 

 82 

 

 

 

 

 

 

 

$

 82 

 

 

 105 

 

 

 

 

 

 

 

$

 105 

Real estate (2)

 

 148 

 

 

 

 

 

 

 

 

 148 

 

 

 147 

 

 

 

 

 

 

 

 

 147 

Cash equivalents

 

 199 

 

 

 199 

 

 

 

 

 

 

 

 

 21 

 

 

 21 

 

 

 

 

 

 

Commodities (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 122 

 

 

 

 

 

 122 

 

 

 

Total

$

 2,742 

 

$

 384 

 

$

 2,128 

 

$

 230 

 

$

 3,004 

 

$

 392 

 

$

 2,360 

 

$

 252 



(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.

11.Employee Retirement Plans (continued)



The following tables provide fair value measurement information for the Company’s major categories; Level 1 (quoted market prices in active markets for identical assets), Level 2 (significant other observable inputs) and Level 3 (significant unobservable inputs) of our international defined benefit plan assets:





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



December 31, 2018

 

December 31, 2017

(in millions)

Total

 

(Level 1)

 

(Level 2)

 

(Level 3)

 

Total

 

(Level 1)

 

(Level 2)

 

(Level 3)

Equity securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. companies

 

 

 

 

 

 

 

 

 

 

 

 

$

 8 

 

 

 

 

$

 8 

 

 

 

International companies

 

 

 

 

 

 

 

 

 

 

 

 

 

 29 

 

 

 

 

 

 29 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

International fixed income

$

 428 

 

$

 361 

 

$

 67 

 

 

 

 

 

 440 

 

$

 367 

 

 

 73 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Insurance contracts

 

 2 

 

 

 

 

 

 

 

$

 2 

 

 

 2 

 

 

 

 

 

 

 

$

 2 

Mortgages

 

 22 

 

 

 

 

 

 

 

 

 22 

 

 

 16 

 

 

 

 

 

 

 

 

 16 

Cash equivalents

 

 45 

 

 

 45 

 

 

 

 

 

 

 

 

 40 

 

 

 40 

 

 

 

 

 

 

Total

$

 497 

 

$

 406 

 

$

 67 

 

$

 24 

 

$

 535 

 

$

 407 

 

$

 110 

 

$

 18 



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, 2018 and 2017:





 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 



Level 3 assets – Domestic

 

Level 3 assets – International

 

Year ended December 2018

 

Year ended December 2018

(in millions)

Private
equity

 

Real
estate

 

Mortgages

 

Insurance
contracts



 

 

 

 

 

 

 

 

 

 

 

Beginning balance at December 31, 2017

$

 105 

 

$

 147 

 

$

 16 

 

$

 2 



 

 

 

 

 

 

 

 

 

 

 

Actual return on plan assets relating to assets
  still held at the reporting date

 

 15 

 

 

 9 

 

 

 

 

 

 

Transfers in and/or out of level 3

 

 (38)

 

 

 (8)

 

 

 6 

 

 

 

Ending balance at December 31, 2018

$

 82 

 

$

 148 

 

$

 22 

 

$

 2 







 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 



Level 3 assets – Domestic

 

Level 3 assets – International

 

Year ended December 2017

 

Year ended December 2017

(in millions)

Private
equity

 

Real
estate

 

Mortgages

 

Insurance
contracts



 

 

 

 

 

 

 

 

 

 

 

Beginning balance at December 31, 2016

$

 137 

 

$

 150 

 

 

 

 

$

 2 



 

 

 

 

 

 

 

 

 

 

 

Actual return on plan assets relating to assets
  still held at the reporting date

 

 7 

 

 

 6 

 

 

 

 

 

 

Transfers in and/or out of level 3

 

 (39)

 

 

 (9)

 

$

 16 

 

 

 

Ending balance at December 31, 2017

$

 105 

 

$

 147 

 

$

 16 

 

$

 2 



Credit Risk

59% 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.

11.Employee Retirement Plans (continued)



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

8% 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, 2018 and 2017, the amount of Corning common stock included in equity securities was not significant.



Cash Flow Data

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

2019

$

199

 

$

23

 

$

37

2020

$

203

 

$

30

 

$

40

2021

$

212

 

$

28

 

$

40

2022

$

220

 

$

31

 

$

42

2023

$

229

 

$

30

 

$

42

2024-2028

$

1,242

 

$

196

 

$

213



Other Benefit Plans



We offer defined contribution plans covering employees meeting certain eligibility requirements.  Total consolidated defined contribution plan expense was $67 million, $60 million and $53 million for the years ended December 31, 2018,  2017 and 2016, respectively.