Note 10 - Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Goodwill and Intangible Assets Disclosure [Text Block]

Goodwill

Goodwill is the excess of cost of an acquired entity over the amounts assigned to assets acquired and liabilities assumed in a business combination.  Goodwill relates, and is assigned directly, to a specific reporting unit.  Reporting units are either operating segments or one level below the operating segment.  Impairment testing for goodwill is done at a reporting unit level.  Goodwill is reviewed for indicators of impairment quarterly, or if an event occurs or circumstances change that indicate that the carrying amount may be impaired.  Corning also performs a detailed quantitative impairment test every three years, even if there are no impairment indicators present.  We use this calculation as quantitative validation of the qualitative process; this process does not represent an election to perform the quantitative impairment test in place of the qualitative review.

The qualitative process includes an extensive review of expectations for the long-term growth of our businesses and forecasted future cash flows.  If we are required to perform the quantitative impairment analysis, our valuation method is an “income approach” using a discounted cash flow model in which cash flows anticipated over several periods, plus a terminal value at the end of that time horizon, are discounted to their present value using an appropriate rate of return.  Our estimates are based upon historical experience, current knowledge from our commercial relationships, and available external information about future trends.  If the fair value is less than the carrying value, a loss is recorded to reflect the difference between the fair value and carrying value.  The most recent quantitative test was performed in 2020, and the fair value of the Company's reporting units significantly exceeded the respective carrying values.

Changes in the carrying amount of goodwill for the twelve months ended December 31, 2021 and 2020, were as follows (in millions):

	Display Technologies			Optical Communications			Specialty Materials		Life Sciences			All Other			Total
Balance at December 31, 2019	$	129		$	931		$	150	$	616		$	109		$	1,935
Acquired goodwill (1)													495			495
Foreign currency translation adjustment and other		3			12					2			13			30
Balance at December 31, 2020	$	132		$	943		$	150	$	618		$	617		$	2,460
Foreign currency translation adjustment and other		(7	)		(28	)				(2	)		(2	)		(39	)
Balance at December 31, 2021	$	125		$	915		$	150	$	616		$	615		$	2,421

(1) The Company obtained a controlling interest in HSG during the third quarter of 2020. Refer to Note 4 (HSG Transactions and Acquisitions) to the consolidated financial statements for additional information on this transaction.

Corning’s gross goodwill balance and accumulated impairment losses were $8.9 billion and $6.5 billion, respectively, for the year ended December 31, 2021. Corning’s gross goodwill balance and accumulated impairment losses were $9.0 billion and $6.5 billion, respectively, for the year ended December 31, 2020. Accumulated impairment losses were generated primarily through goodwill impairments related to the Optical Communications segment.

Other Intangible Assets

Other intangible assets were as follows (in millions):

	December 31,
	2021						2020
	Gross		Accumulated amortization		Net		Gross		Accumulated amortization		Net
Amortized intangible assets:
Patents, trademarks & trade names	$	498	$	279	$	219	$	500	$	255	$	245
Customer lists and other (1)		1,464		535		929		1,517		454		1,063
Total	$	1,962	$	814	$	1,148	$	2,017	$	709	$	1,308

(1) Other is comprised of intangible assets related to developed technologies and intellectual know-how.

Corning’s amortized intangible assets are primarily related to the Optical Communications and Life Sciences segments and “All Other”.  The net carrying amount of intangible assets decreased during the year, primarily driven by amortization of $129 million, disposals of $24 million and foreign currency translation and other adjustments of $7 million.

Amortization expense related to all intangible assets is expected to be approximately $120 million annually for years 2022 through 2026.