Note 17 - Reportable Segments

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

17.  Reportable Segments

The Company has determined that it has five reportable segments for financial reporting purposes, as follows:

• Optical Communications – manufactures carrier network and enterprise network components for the telecommunications industry; the carrier network group consists primarily of products and solutions for optical-based communications infrastructure for services such as video, data and voice communications, and the enterprise network group consists primarily of optical-based communication networks sold to businesses, governments and individuals for their own use.

• Display Technologies – manufactures high quality glass substrates for flat panel displays including liquid crystal displays and organic light-emitting diodes that are used primarily in televisions, notebook computers, desktop monitors, tablets and handheld devices.

• Specialty Materials – manufactures products that provide material formulations for glass, glass ceramics and fluoride crystals to meet demand for unique customer needs across a wide variety of commercial and industrial markets, including materials optimized for mobile consumer electronics, semiconductor equipment optics and consumables, aerospace and defense optics, radiation shielding products, sunglasses and telecommunications components.

• Environmental Technologies – manufactures ceramic substrates and filter products for emissions control systems in mobile applications.

• Life Sciences – develops, manufactures and supplies laboratory products, including labware, equipment, media, serum and reagents enabling workflow solutions for drug discovery and bioproduction.

All other businesses that do not meet the quantitative threshold for separate reporting have been grouped as Hemlock and Emerging Growth Businesses. Net sales for this group are mainly attributable to HSG, an operating segment produces solar and semiconductor products. The emerging growth businesses primarily consist of Pharmaceutical Technologies, Auto Glass Solutions and the Emerging Innovations Group.

Financial results for the reportable segments and Hemlock and Emerging Growth Businesses are prepared on a basis consistent with the internal disaggregation of financial information to assist the chief operating decision maker (“CODM”) in making internal operating decisions. As a significant portion of segment revenues and expenses are denominated in currencies other than the U.S. dollar, management believes it is important to understand the impact on segment net sales and segment net income of translating these currencies into U.S. dollars. Therefore, the Company utilizes constant-currency reporting for the Display Technologies, Specialty Materials, Environmental Technologies and Life Sciences segments to exclude the impact on segment sales and segment net income (loss) from the Japanese yen, South Korean won, Chinese yuan, New Taiwan dollar and euro, as applicable to the segment. The most significant constant-currency adjustment relates to the Japanese yen exposure within the Display Technologies segment. The constant-currency rates established for our core performance measures are internally derived long-term management estimates, which are closely aligned with our hedging instrument rates. These hedging instruments may include, but are not limited to, foreign exchange forward or option contracts and foreign-denominated debt.

The Company believes that the use of constant-currency reporting allows management to understand segment results without the volatility of currency fluctuation, analyze underlying trends in the businesses and establish operational goals and forecasts.

Constant-currency rates are as follows and are applied to all periods presented and to all foreign exchange exposures during the period, even though we may be less than 100% hedged:

Currency	Japanese yen	Korean won	Chinese yuan	New Taiwan dollar	Euro
Rate	¥107	₩1,175	¥6.7	NT$31	€.81

17.  Reportable Segments (Continued)

In addition, certain income and expenses are excluded from segment net income (loss) and included in the unallocated amounts in the reconciliation of reportable segment net income (loss) to consolidated net income. These items are not used by the CODM in allocating resources or evaluating the results of the segments and include the following: the impact of translating the Japanese yen-denominated debt; the impact of the translated earnings contracts; acquisition-related costs; certain discrete tax items and other tax-related adjustments; restructuring, impairment and other charges and credits; certain litigation, regulatory and other legal matters; pension mark-to-market adjustments; and other non-recurring non-operational items. Although these amounts are excluded from segment results, they are included in reported consolidated results.

Corning's administrative and staff functions are performed on a centralized basis and such costs and expenses are allocated among the segments differently than they would be for stand-alone financial reporting purposes. These include certain costs and expenses of shared services, such as information technology, human resources, legal, finance and supply chain management. Expenses that are not allocated to the segments are included in the reconciliation of reportable segment net income to consolidated net income. Segment net income (loss) may not be consistent with measures used by other companies.

The following provides historical segment information as described above:

Segment Information (in millions)

	Optical Communications			Display Technologies			Specialty Materials			Environmental Technologies			Life Sciences			Hemlock and Emerging Growth Businesses			Total
For the year ended December 31, 2023
Segment net sales	$	4,012		$	3,532		$	1,865		$	1,766		$	959		$	1,446		$	13,580
Depreciation (1)	$	263		$	481		$	149		$	129		$	69		$	144		$	1,235
Research, development and engineering expenses (2)	$	238		$	102		$	229		$	99		$	33		$	162		$	863
Income tax provision (3)	$	(130	)	$	(220	)	$	(53	)	$	(103	)	$	(13	)	$	(22	)	$	(541	)
Segment net income	$	478		$	842		$	202		$	386		$	50		$	15		$	1,973
Investment in affiliated companies, at equity	$	3		$	105		$	11					$	3		$	174		$	296
Segment assets (4)	$	3,241		$	7,899		$	2,476		$	1,873		$	782		$	2,307		$	18,578
Capital expenditures	$	176		$	363		$	175		$	31		$	41		$	303		$	1,089
For the year ended December 31, 2022
Segment net sales	$	5,023		$	3,306		$	2,002		$	1,584		$	1,228		$	1,662		$	14,805
Depreciation (1)	$	249		$	547		$	155		$	128		$	60		$	146		$	1,285
Research, development and engineering expenses (2)	$	230		$	124		$	222		$	98		$	37		$	163		$	874
Income tax provision (3)	$	(180	)	$	(203	)	$	(90	)	$	(78	)	$	(40	)	$	(24	)	$	(615	)
Segment net income	$	661		$	769		$	340		$	292		$	153		$	39		$	2,254
Investment in affiliated companies, at equity	$	3		$	102		$	8					$	4		$	144		$	261
Segment assets (4)	$	3,295		$	8,104		$	2,419		$	2,061		$	862		$	2,136		$	18,877
Capital expenditures	$	368		$	495		$	306		$	110		$	116		$	218		$	1,613
For the year ended December 31, 2021
Segment net sales	$	4,349		$	3,700		$	2,008		$	1,586		$	1,234		$	1,243		$	14,120
Depreciation (1)	$	224		$	605		$	161		$	139		$	52		$	134		$	1,315
Research, development and engineering expenses (2)	$	216		$	110		$	208		$	111		$	33		$	160		$	838
Income tax (provision) benefit (3)	$	(152	)	$	(249	)	$	(99	)	$	(72	)	$	(51	)	$	11		$	(612	)
Segment net income (loss)	$	553		$	960		$	371		$	269		$	194		$	(51	)	$	2,296
Investment in affiliated companies, at equity	$	3		$	109		$	6					$	4		$	142		$	264
Segment assets (4)	$	3,183		$	8,672		$	2,328		$	2,150		$	791		$	2,024		$	19,148
Capital expenditures	$	301		$	710		$	183		$	228		$	128		$	149		$	1,699

(1)	Depreciation expense for Corning’s reportable segments and Hemlock and Emerging Growth Businesses 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) Income tax (provision) benefit reflects a tax rate of 21%.

(4) Segment assets include inventory, accounts receivable, property, plant and equipment, net of accumulated depreciation, and associated equity companies.

17.  Reportable Segments (Continued)

The following table presents a reconciliation of net sales of reportable segments to consolidated net sales (in millions):

	Year ended December 31,
	2023			2022			2021
Net sales of reportable segments	$	12,134		$	13,143		$	12,877
Net sales of Hemlock and Emerging Growth Businesses		1,446			1,662			1,243
Impact of constant currency reporting (1)		(992	)		(616	)		(38	)
Consolidated net sales	$	12,588		$	14,189		$	14,082

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

The following table presents a reconciliation of net income of reportable segments to consolidated net income (in millions):

	Year ended December 31,
	2023			2022			2021
Net income of reportable segments	$	1,958		$	2,215		$	2,347
Net income (loss) of Hemlock and Emerging Growth Businesses		15			39			(51	)
Unallocated amounts:
Impact of constant currency reporting		(744	)		(480	)		(87	)
Gain on foreign currency hedges related to translated earnings		161			348			354
Translation gain on Japanese yen-denominated debt		100			191			180
Litigation, regulatory and other legal matters		(61	)		(100	)		(16	)
Research, development, and engineering expense (1)(2)		(162	)		(163	)		(151	)
Amortization of intangibles		(122	)		(123	)		(129	)
Interest expense, net		(244	)		(237	)		(265	)
Income tax benefit		373			204			120
Pension mark-to-market		(15	)		(11	)		(32	)
Severance (charges) credits (2)		(187	)		(70	)		13
Capacity optimization and other charges and credits (3)		(284	)		(344	)		(123	)
Bond redemption loss (4)								(31	)
Gain on sale of business					53			54
Other corporate items		(207	)		(206	)		(277	)
Net income	$	581		$	1,316		$	1,906

(1) Amount does not include research, development and engineering expense related to restructuring, impairment and other charges and credits and pension mark-to-market.

(2) Refer to Note 2 (Restructuring, Impairment and Other Charges and Credits) in the notes to the consolidated financial statements for additional information.

(3)	Amount includes charges associated with impairment losses, asset write-offs, accelerated depreciation, disposal costs and inventory write-downs. Refer to Note 2 (Restructuring, Impairment and Other Charges and Credits) in the notes to the consolidated financial statements for additional information.
(4)	Refer to Note 10 (Debt) in the notes to the consolidated financial statements for additional information.

The following table presents a reconciliation of total assets of reportable segments to consolidated total assets (in millions):

	December 31,
	2023		2022		2021
Total assets of reportable segments	$	16,271	$	16,741	$	17,124
Total assets of Hemlock and Emerging Growth Businesses		2,307		2,136		2,024
Unallocated amounts:
Current assets (1)		2,522		2,823		3,163
Investments (2)		119		99		54
Property, plant and equipment, net (3)		1,038		1,385		1,426
Other non-current assets (4)		6,243		6,315		6,363
Total assets	$	28,500	$	29,499	$	30,154

(1) Includes cash, other receivables, prepaid expenses and current portion of long-term derivative assets.

(2) Represents other corporate investments.

(3) Represents corporate property not specifically identifiable to an operating segment.

(4) Includes goodwill, other intangible assets, pension assets, long-term derivative assets, operating leases and deferred income taxes.

17.  Reportable Segments (Continued)

The following table presents selected financial information about the Company’s product lines and reportable segments (in millions):

	Year ended December 31,
Revenue from external customers	2023			2022			2021
Optical Communications
Carrier network	$	2,871		$	3,760		$	3,200
Enterprise network		1,141			1,263			1,149
Total Optical Communications		4,012			5,023			4,349
Display Technologies		3,532			3,306			3,700
Specialty Materials
Corning® Gorilla® Glass		1,136			1,331			1,403
Advanced optics and other specialty glass		729			671			605
Total Specialty Materials		1,865			2,002			2,008
Environmental Technologies
Automotive and other		1,123			934			936
Diesel		643			650			650
Total Environmental Technologies		1,766			1,584			1,586
Life Sciences
Labware		487			657			671
Cell culture products		472			571			563
Total Life Science		959			1,228			1,234
Hemlock and Emerging Growth Businesses
Polycrystalline Silicon		1,014			1,191			892
Other		432			471			351
Total Hemlock and Emerging Growth Businesses		1,446			1,662			1,243
Net sales of reportable segments		12,134			13,143			12,877
Net sales of Hemlock and Emerging Growth Businesses		1,446			1,662			1,243
Impact of constant currency reporting (1)		(992	)		(616	)		(38	)
Consolidated net sales	$	12,588		$	14,189		$	14,082

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

17.  Reportable Segments (Continued)

The following table presents information relating to the Company’s operations by geographic area (in millions):

	2023				2022				2021
	Net sales (1)		Long-lived assets (2)		Net sales (1)		Long-lived assets (2)		Net sales (1)		Long-lived assets (2)
North America:
United States	$	4,439	$	8,698	$	5,149	$	8,937	$	4,539	$	8,600
Canada		317		95		503		99		472		114
Mexico		84		211		96		180		93		289
Total North America		4,840		9,004		5,748		9,216		5,104		9,003
Asia Pacific:
Japan		667		388		617		429		780		496
Taiwan		855		1,515		813		1,696		983		1,923
China		4,439		4,575		4,435		4,794		4,495		4,966
Korea		418		3,092		514		3,294		640		3,479
Other		620		88		729		81		459		84
Total Asia Pacific		6,999		9,658		7,108		10,294		7,357		10,948
Europe:
Germany		535		464		539		459		462		500
Other		998		956		1,116		937		925		910
Total Europe		1,533		1,420		1,655		1,396		1,387		1,410
All Other		208		53		294		67		272		68
Total	$	13,580	$	20,135	$	14,805	$	20,973	$	14,120	$	21,429

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

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