Note 4 - Revenue

9 Months Ended

Sep. 30, 2021

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

4. Revenue

Revenue Disaggregation Table

The following table shows revenues by major product categories, similar to the Company’s reportable segment disclosure. Within each product category, contract terms, conditions and economic factors affecting the nature, amount, timing and uncertainty of revenue recognition and cash flows are substantially similar. Commercial markets and selling channels are also similar. Except for an inconsequential amount of revenue for Telecommunications products, product category revenues are recognized at point in time when control transfers to the customer.

Revenues by product category are as follows (in millions):

	Three months ended				Nine months ended
	September 30,				September 30,
	2021		2020		2021		2020
Display products	$	936	$	834	$	2,758	$	2,211
Telecommunication products		1,131		909		3,143		2,587
Specialty glass products		556		570		1,490		1,339
Environmental substrate and filter products		382		369		1,233		891
Life science products		304		220		917		707
All Other (1)		306		99		865		218
Total revenue	$	3,615	$	3,001	$	10,406	$	7,953
Impact of foreign currency movements (2)		24		6				66
Cumulative adjustment related to customer contract (3)								105
Net sales of reportable segments and All Other	$	3,639	$	3,007	$	10,406	$	8,124

(1)	The Company obtained a controlling interest in HSG during the third quarter of 2020 and has consolidated results in "All Other" as of September 9, 2020.
(2)	This amount primarily represents the impact of foreign currency adjustments in the Display Technologies segment.
(3)	Amount represents the negative impact of a cumulative adjustment to reduce revenue by $105 million recorded during the first quarter of 2020. The adjustment was associated with a previously recorded commercial benefit asset, reflected as a prepayment, to a customer with a long-term supply agreement that substantially exited its production of LCD panels.

Refer to Note 16 (Reportable Segments) to the consolidated financial statements for additional information.

Contract Assets and Liabilities

Contract assets, such as incremental costs to obtain or fulfill contracts, are an insignificant component of Corning’s revenue recognition process. Most of Corning’s fulfillment costs as a manufacturer of products are classified as inventory, fixed assets and intangible assets, which are accounted for under the respective guidance for those asset types. Other contract fulfillment costs are immaterial due to the nature of the products and their respective manufacturing processes.

Contract liabilities include deferred revenue, other advance payments and customer deposits. Other advance payments are not significant to operations and are classified as part of other accrued liabilities in the consolidated financial statements. Customer deposits and deferred revenue are predominately related to Display products and Corning's controlling interest in HSG, respectively. 

Customer Deposits

As of September 30, 2021 and December 31, 2020, Corning had customer deposits of approximately $1.3 billion and $1.4 billion, respectively.  Most of these customer deposits were non-refundable and allowed customers to secure rights to glass produced by Corning under long-term supply agreements.  The duration of these long-term supply agreements ranges up to 10 years.  As glass is shipped to customers, Corning will recognize revenue and reduce the amount of the customer deposit liability.

Customer deposits used were $59 million and $182 million, respectively, and $34 million and $107 million, respectively, in the three and nine months ended September 30, 2021 and 2020.  As of September 30, 2021 and December 31, 2020, $1.1 billion was recorded as other long-term liabilities.  The remaining $224 million and $211 million, respectively, were classified as other current liabilities. 

Deferred Revenue

As of September 30, 2021 and December 31, 2020, Corning had deferred revenue of approximately $932 million and $1.0 billion, respectively.  The deferred revenue was related to the performance obligations of non-refundable consideration previously received by HSG from its customers under long-term supply agreements.

The deferred revenue is tracked on a per-customer contract-unit basis. As customers take delivery of the committed volumes under the terms of the contract, a per-unit amount of deferred revenue is recognized when control of the promised goods is transferred to the customer based upon the units shipped.

As of September 30, 2021 and December 31, 2020, $792 million and $872 million, respectively, were classified as long-term liabilities and $140 million and $152 million, respectively, were classified as current liabilities.  

Refer to Note 3 (HSG Transactions) to the consolidated financial statements for additional information.