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Reportable Segments
 12 Months Ended
Dec. 31, 2018
Reportable Segments [Abstract]  
Reportable Segments

17.Reportable Segments



Our reportable segments are as follows:



·

Display Technologies – manufactures glass substrates for flat panel liquid crystal displays and other high performance display panels.

·

Optical Communications – manufactures carrier network and enterprise network components for the telecommunications industry.

·

Specialty Materials – manufactures products that provide more than 150 material formulations for glass, glass ceramics and fluoride crystals to meet demand for unique customer needs.

·

Environmental Technologies – manufactures ceramic substrates and filters for automotive and diesel applications. 

·

Life Sciences – manufactures glass and plastic labware, equipment, media and reagents to provide workflow solutions for scientific applications.



All other segments that do not meet the quantitative threshold for separate reporting have been grouped as “All Other.”  This group is primarily comprised of the results of the pharmaceutical technologies, auto glass and new product lines and development projects, as well as certain corporate investments such as Eurokera and Keraglass equity affiliates. 

17.Reportable Segments (continued) 

Effective beginning in the first quarter of 2018, the Company has changed its measurement of segment sales and segment net income, and has recast prior periods presented based on the new methodology.  Included in this new measurement is a change in our segment tax rate to 21% to better reflect the new corporate tax rate under the 2017 Tax Act.  Additionally, the impact of changes in the Japanese yen, Korean won, Chinese yuan and New Taiwan dollar will be excluded from segment sales and segment net income for the Display Technologies and Specialty Materials segments, and certain income and expenses that were previously allocated to our segments are now included in the unallocated amounts in the reconciliation of reportable segment net income to consolidated net income.  These include items that are not used by our chief operating decision maker (“CODM”) in evaluating the results of or in allocating resources to our segments and include the following items:  the impact of our translated earnings contracts; acquisition-related costs; discrete tax items and other tax-related adjustments; litigation, regulatory and other legal matters; restructuring, impairment and other charges; adjustments relating to acquisitions; and other non-recurring non-operational items.  Although we exclude these amounts from segment results, they are included in reported consolidated results.



We prepared the financial results for our reportable segments on a basis that is consistent with the manner in which we internally disaggregate financial information to assist in making internal operating decisions.  We included the earnings of equity affiliates that are closely associated with our reportable segments in the respective segment’s net income.  We have allocated certain common expenses among reportable segments differently than we would for stand-alone financial information.  Segment net income may not be consistent with measures used by other companies.  The accounting policies of our reportable segments are the same as those applied in the Consolidated Financial Statements. 

17.Reportable Segments (continued) 



The following provides historical segment information as described above:



Segment Information (in millions)





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Display
Technologies

 

Optical
Communications

 

Specialty
Materials

 

Environmental
Technologies

 

Life
Sciences

 

All
Other

 

Total



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the year ended December 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment net sales

$

 3,276 

 

$

 4,192 

 

$

 1,479 

 

$

 1,289 

 

$

 946 

 

$

 216 

 

$

 11,398 

Depreciation (1)

$

 585 

 

$

 218 

 

$

 136 

 

$

 119 

 

$

 50 

 

$

 38 

 

$

 1,146 

Research, development
  and engineering expenses (2)

$

 106 

 

$

 212 

 

$

 163 

 

$

 118 

 

$

 20 

 

$

 231 

 

$

 850 

Income tax (provision) benefit

$

 (221)

 

$

 (163)

 

$

 (83)

 

$

 (55)

 

$

 (31)

 

$

 76 

 

$

 (477)

Net income (loss) (3)

$

 835 

 

$

 592 

 

$

 313 

 

$

 208 

 

$

 117 

 

$

 (281)

 

$

 1,784 

Investment in affiliated companies, at equity

$

 131 

 

$

 3 

 

$

 6 

 

 

 

 

$

 1 

 

$

 171 

 

$

 312 

Segment assets (4)

$

 8,794 

 

$

 3,042 

 

$

 2,176 

 

$

 1,633 

 

$

 585 

 

$

 1,018 

 

$

 17,248 

Capital expenditures

$

 755 

 

$

 417 

 

$

 242 

 

$

 273 

 

$

 55 

 

$

 329 

 

$

 2,071 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the year ended December 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment net sales

$

 3,137 

 

$

 3,545 

 

$

 1,403 

 

$

 1,106 

 

$

 879 

 

$

 188 

 

$

 10,258 

Depreciation (1)

$

 534 

 

$

 193 

 

$

 129 

 

$

 124 

 

$

 52 

 

$

 45 

 

$

 1,077 

Research, development
  and engineering expenses (2)

$

 88 

 

$

 174 

 

$

 152 

 

$

 113 

 

$

 22 

 

$

 211 

 

$

 760 

Income tax (provision) benefit

$

 (234)

 

$

 (129)

 

$

 (79)

 

$

 (44)

 

$

 (25)

 

$

 69 

 

$

 (442)

Net income (loss) (3)

$

 888 

 

$

 469 

 

$

 301 

 

$

 165 

 

$

 95 

 

$

 (259)

 

$

 1,659 

Investment in affiliated companies, at equity

$

 134 

 

$

 2 

 

$

 3 

 

 

 

 

 

 

 

$

 140 

 

$

 279 

Segment assets (4)

$

 8,662 

 

$

 2,599 

 

$

 2,155 

 

$

 1,402 

 

$

 538 

 

$

 824 

 

$

 16,180 

Capital expenditures

$

 795 

 

$

 505 

 

$

 223 

 

$

 157 

 

$

 42 

 

$

 156 

 

$

 1,878 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the year ended December 31, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment net sales

$

 3,288 

 

$

 3,005 

 

$

 1,124 

 

$

 1,032 

 

$

 839 

 

$

 152 

 

$

 9,440 

Depreciation (1)

$

 598 

 

$

 175 

 

$

 109 

 

$

 129 

 

$

 58 

 

$

 50 

 

$

 1,119 

Research, development
  and engineering expenses (2)

$

 45 

 

$

 147 

 

$

 126 

 

$

 102 

 

$

 24 

 

$

 191 

 

$

 635 

Income tax (provision) benefit

$

 (253)

 

$

 (96)

 

$

 (61)

 

$

 (42)

 

$

 (24)

 

$

 55 

 

$

 (421)

Net income (loss) (3)

$

 953 

 

$

 351 

 

$

 228 

 

$

 159 

 

$

 90 

 

$

 (220)

 

$

 1,561 

Investment in affiliated companies, at equity

$

 41 

 

$

 (1)

 

 

 

 

$

 32 

 

 

 

 

$

 252 

 

$

 324 

Segment assets (4)

$

 8,032 

 

$

 2,010 

 

$

 1,604 

 

$

 1,267 

 

$

 504 

 

$

 750 

 

$

 14,167 

Capital expenditures

$

 464 

 

$

 245 

 

$

 120 

 

$

 97 

 

$

 39 

 

$

 56 

 

$

 1,021 



(1)

Depreciation expense for Corning’s reportable segments includes an allocation of depreciation of corporate property not specifically identifiable to a segment.

(2)

Research, development and engineering expenses include direct project spending that is identifiable to a segment.

(3)

Many of Corning’s administrative and staff functions are performed on a centralized basis.  Where practicable, Corning charges these expenses to segments based upon the extent to which each business uses a centralized function.  Other staff functions, such as corporate finance, human resources and legal are allocated to segments, primarily as a percentage of sales.

(4)

Segment assets include inventory, accounts receivable, property, plant and equipment, net of accumulated depreciation, and associated equity companies and cost investments.



A reconciliation of reportable segments and All Other net sales to consolidated net sales follows (in millions):



 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 



 

Years ended December 31,



 

2018

 

2017

 

2016

Net sales of reportable segments and All Other

 

$

 11,398 

 

$

 10,258 

 

$

 9,440 

     Impact of foreign currency movements (1)

 

 

 (108)

 

 

 (142)

 

 

 (50)

Net sales

 

$

 11,290 

 

$

 10,116 

 

$

 9,390 



(1)

This amount primarily represents the impact of foreign currency adjustments in the Display Technologies segment.

17.Reportable Segments (continued)



A reconciliation of reportable segment net income (loss) to consolidated net income follows (in millions):





 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 



Years ended December 31,



2018

 

2017

 

2016

Net income of reportable segments

$

 2,065 

 

$

 1,918 

 

$

 1,781 

Net loss of All Other

 

 (281)

 

 

 (259)

 

 

 (220)

Unallocated amounts:

 

 

 

 

 

 

 

 

   Impact of foreign currency movements not
      included in segment net income (loss)

 

 (157)

 

 

 (168)

 

 

 (85)

   Loss on foreign currency hedges
      related to translated earnings

 

 (78)

 

 

 (121)

 

 

 (448)

   Translation loss on Japanese yen-denominated debt

 

 (18)

 

 

 (14)

 

 

 

   Litigation, regulatory and other legal matters

 

 (124)

 

 

 12 

 

 

 (153)

   Research, development, and engineering expense

 

 (134)

 

 

 (106)

 

 

 (107)

   Equity in earnings of affiliated companies (1)

 

 390 

 

 

 352 

 

 

 288 

   Amortization of intangibles

 

 (93)

 

 

 (75)

 

 

 (64)

   Interest expense, net

 

 (149)

 

 

 (110)

 

 

 (127)

   Pension mark to market

 

 (145)

 

 

 (22)

 

 

 (67)

   Gain on realignment of equity investment

 

 

 

 

 

 

 

 2,676 

   Income tax benefit (provision)

 

 42 

 

 

 (1,709)

 

 

 424 

   Other corporate items 

 

 (252)

 

 

 (195)

 

 

 (203)

Net income (loss)

$

 1,066 

 

$

 (497)

 

$

 3,695 



(1)Primarily represents the equity earnings of HSG in 2018 and 2017, and Dow Corning in 2016.



A reconciliation of reportable segment assets to consolidated total assets follows (in millions):





 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 



December 31,



2018

 

2017

 

2016

Total assets of reportable segments

$

 16,230 

 

$

 15,356 

 

$

 13,417 

Non-reportable segments

 

 1,018 

 

 

 824 

 

 

 750 

Unallocated amounts:

 

 

 

 

 

 

 

 

Current assets (1)

 

 3,065 

 

 

 5,315 

 

 

 6,070 

Investments (2)

 

 64 

 

 

 61 

 

 

 12 

Property, plant and equipment, net (3)

 

 1,928 

 

 

 1,628 

 

 

 1,681 

Other non-current assets (4)

 

 5,200 

 

 

 4,310 

 

 

 5,969 

Total assets

$

 27,505 

 

$

 27,494 

 

$

 27,899 



(1)

Includes current corporate assets, primarily cash, short-term investments, current portion of long-term derivative assets and deferred taxes.

(2)

Primarily represents corporate equity and cost basis investments.  Asset balance does not include equity method affiliate liability balance of $105 and $241 for HSG in 2017 and 2016, respectively.

(3)

Represents corporate property not specifically identifiable to an operating segment.

(4)

Includes non-current corporate assets, pension assets, long-term derivative assets and deferred taxes.

17.Reportable Segments (continued)



Selected financial information concerning the Company’s product lines and reportable segments follow (in millions):





 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 



Years Ended December 31,

Revenues from External Customers

2018

 

2017

 

2016

Display Technologies

$

 3,276 

 

$

 3,137 

 

$

 3,288 



 

 

 

 

 

 

 

 

Optical Communications

 

 

 

 

 

 

 

 

Carrier network

 

 3,084 

 

 

 2,720 

 

 

 2,274 

Enterprise network

 

 1,108 

 

 

 825 

 

 

 731 



 

 

 

 

 

 

 

 

Total Optical Communications

 

 4,192 

 

 

 3,545 

 

 

 3,005 



 

 

 

 

 

 

 

 

Specialty Materials

 

 

 

 

 

 

 

 

Corning Gorilla Glass

 

 1,069 

 

 

 1,044 

 

 

 807 

Advanced optics and other specialty glass

 

 410 

 

 

 359 

 

 

 317 



 

 

 

 

 

 

 

 

Total Specialty Materials

 

 1,479 

 

 

 1,403 

 

 

 1,124 



 

 

 

 

 

 

 

 

Environmental Technologies

 

 

 

 

 

 

 

 

Automotive and other

 

 719 

 

 

 627 

 

 

 585 

Diesel

 

 570 

 

 

 479 

 

 

 447 



 

 

 

 

 

 

 

 

Total Environmental Technologies

 

 1,289 

 

 

 1,106 

 

 

 1,032 



 

 

 

 

 

 

 

 

Life Sciences

 

 

 

 

 

 

 

 

Labware

 

 536 

 

 

 524 

 

 

 512 

Cell culture products

 

 410 

 

 

 355 

 

 

 327 



 

 

 

 

 

 

 

 

Total Life Science

 

 946 

 

 

 879 

 

 

 839 



 

 

 

 

 

 

 

 

All Other

 

 216 

 

 

 188 

 

 

 152 



$

 11,398 

 

$

 10,258 

 

$

 9,440 



17.Reportable Segments (continued)



Information concerning principal geographic areas was as follows (in millions):





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



2018

 

2017

 

2016



Net
sales (2)

 

Long-lived
assets (1)

 

Net
sales (2)

 

Long-lived
assets (1)

 

Net
sales (2)

 

Long-lived
assets (1)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North America

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

United States

$

 3,569 

 

$

 7,383 

 

$

 3,146 

 

$

 6,605 

 

$

 2,625 

 

$

 6,318 

Canada

 

 296 

 

 

 127 

 

 

 287 

 

 

 144 

 

 

 282 

 

 

 142 

Mexico

 

 53 

 

 

 200 

 

 

 27 

 

 

 174 

 

 

 50 

 

 

 134 

Total North America

 

 3,918 

 

 

 7,710 

 

 

 3,460 

 

 

 6,923 

 

 

 2,957 

 

 

 6,594 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asia Pacific

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Japan

 

 415 

 

 

 1,148 

 

 

 476 

 

 

 1,119 

 

 

 455 

 

 

 1,008 

Taiwan

 

 921 

 

 

 2,326 

 

 

 900 

 

 

 2,357 

 

 

 857 

 

 

 2,347 

China

 

 2,716 

 

 

 2,811 

 

 

 2,247 

 

 

 2,125 

 

 

 2,092 

 

 

 1,524 

Korea

 

 1,259 

 

 

 3,736 

 

 

 1,337 

 

 

 3,869 

 

 

 1,464 

 

 

 3,413 

Other

 

 436 

 

 

 85 

 

 

 378 

 

 

 71 

 

 

 363 

 

 

 167 

Total Asia Pacific

 

 5,747 

 

 

 10,106 

 

 

 5,338 

 

 

 9,541 

 

 

 5,231 

 

 

 8,459 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Europe

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Germany

 

 451 

 

 

 508 

 

 

 426 

 

 

 236 

 

 

 363 

 

 

 154 

Other

 

 905 

 

 

 1,155 

 

 

 701 

 

 

 1,108 

 

 

 617 

 

 

 1,125 

Total Europe

 

 1,356 

 

 

 1,663 

 

 

 1,127 

 

 

 1,344 

 

 

 980 

 

 

 1,279 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

All Other

 

 377 

 

 

 40 

 

 

 333 

 

 

 46 

 

 

 272 

 

 

 44 

Total

$

 11,398 

 

$

 19,519 

 

$

 10,258 

 

$

 17,854 

 

$

 9,440 

 

$

 16,376 



(1)

Long-lived assets primarily include investments, plant and equipment, goodwill and other intangible assets. 

(2)

Net sales are attributed to countries based on location of customer.