CORNING INC NY

17. Reportable Segments

The Company has determined that it hasfive reportable segments for financial reporting purposes, organized primarily based on product offerings, 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 that produces solar and semiconductor products. The emerging growth businesses primarily consist of Pharmaceutical Technologies, Auto Glass Solutions and the Emerging Innovations Group.

The chief operating decision maker (“CODM”) of the Company is the Company’s chief executive officer. The CODM assesses performance and decides how to allocate resources, including employees, financial or capital resources, based on segment net income (loss), which includes certain corporate overhead allocations directly attributable to each of the segments. The CODM considers actual-to-actual variances on a quarterly basis when making decisions about allocating capital and other resources to the segments and to assess the performance for each segment.

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 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 from the Japanese yen, South Korean won, Chinese yuan, New Taiwan dollar and euro, as applicable to the segment. In addition, effective January 1, 2024, the Company began utilizing constant-currency reporting for the Optical Communications segment to exclude the impact from the Mexican peso on segment results. Prior periods were not recast as the impact was not material. 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 used are as follows and are applied to all periods presented and to all foreign exchange exposures during the period, with the exception of the Mexican peso as discussed above, even though we may be less than 100% hedged:

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 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 (loss) to net income. Segment net income (loss) may not be consistent with measures used by other companies.

The following provides segment information as described above:

Segment Information(in millions)

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

(2)Depreciation expense includes an allocation of depreciation or corporate property not specifically identifiable to a segment.

(3)Other segment items for each reportable segment primarily includes the cost of materials, salaries, wages and benefits, including variable compensation, and selling, general and administrative expenses.

(4)Income tax provision (benefit) reflects a tax rate of 21%.

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

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

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

(2)Amount represents non-cash charges to write-down upfront payments made to a customer. Refer to Note 2 (Restructuring, Impairment and Other Charges and Credits) to the consolidated financial statements for additional information.

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

(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) for additional information.

(3)Amount includes charges associated with impairment losses, asset write-offs, accelerated depreciation, disposal costs, inventory write-downs and non-cash charges to write-down upfront payments made to a customer. Refer to Note 2 (Restructuring, Impairment and Other Charges and Credits) for additional information.

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

(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, right of use assets and deferred income taxes.

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

(1)Prior results for Optical Communications have been recast to confirm to the current period presentation. Reclassification between Carrier and Enterprise reflect how customers are utilizing Corning products in their deployments.

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

(3)Amount represents non-cash charges to write-down upfront payments made to a customer. Refer to Note 2 (Restructuring, Impairment and Other Charges and Credits) for additional information.

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

(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.