Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

The sections titled “Proposal 1 Election of Directors,” “Corporate Governance and the Board of Directors” and “Delinquent Section 16(a) Reports” in our Definitive Proxy Statement are incorporated by reference in this Annual Report on Form 10-K.

Executive Officers of the Registrant

Refer to Part I, Item 1. of this Annual Report on Form 10-K for a listing of executive officers.

Corning’s Board of Directors

Donald W. Blair  Retired Executive Vice President and Chief Financial Officer, NIKE, Inc.

Mr. Blair was the executive vice president and chief financial officer of NIKE, Inc. from 1999 to October 2015. Prior to joining NIKE, he served 15 years at PepsiCo, Inc. in a number of senior executive-level corporate and operating unit financial assignments, including chief financial officer roles for PepsiCo Japan (based in Tokyo) and Pepsi-Cola International’s Asia Division (based in Hong Kong). He began his career in 1981 as an accountant with Deloitte Haskins & Sells. Mr. Blair joined Corning’s Board in 2014. Age 64. 

Leslie A. Brun  Chairman and Chief Executive Officer, Sarr Group LLC

Mr. Brun is chairman and chief executive officer of Sarr Group, LLC, co-founder, chairman and chief executive officer of Ariel Alternatives, LLC, senior advisor of G100, Council Advisors, World 50 and a member of the Council on Foreign Relations. He is also the founder and former chief executive officer and chairman of Hamilton Lane, where he served as chief executive officer and chairman from 1991 until 2005, former lead director of Merck & Co., Inc., former director and chairman of the board of Automatic Data Processing, Inc. and a former director of Hewlett Packard Enterprise Company. In addition, Mr. Brun also served as a managing director and co-founder of the investment banking group of Fidelity Bank and as a past vice president in the corporate finance division of E.F. Hutton & Co. Mr. Brun joined Corning’s Board in 2018. Age 70.

Stephanie A. Burns  Retired Chairman and Chief Executive Officer, Dow Corning Corporation

Dr. Burns has nearly 38 years of global innovation and business leadership experience. Dr. Burns joined Dow Corning in 1983 as a researcher and specialist in organosilicon chemistry. In 1994, she became the company’s first director of women’s health. She was elected to the Dow Corning Board of Directors in 2001 and elected as president in 2003. She served as chief executive officer from 2004 until May 2011 and served as chair from 2006 until her retirement in December 2011.  Dr. Burns joined Corning’s Board in 2012. Age 67.

Richard T. Clark  Retired Chairman, Chief Executive Officer and President, Merck & Co., Inc. Lead Independent Director

Mr. Clark retired from Merck in 2011. He joined Merck in 1972 and held a broad range of senior management positions. He became president and chief executive officer of Merck in May 2005 and chairman of the board in April 2007. He transitioned from the chief executive officer role in January 2011 and served as Merck board chairman through November 2011. He was president of the Merck Manufacturing Division (June 2003 to May 2005) of Merck Sharp & Dohme Corp. He is chairman emeritus of the board of Project Hope and a trustee of several charitable non-profit organizations. Mr. Clark joined Corning’s Board in 2011. Age 76.

Pamela J. Craig  Retired Chief Financial Officer, Accenture plc.

From 2006 through 2013, Ms. Craig served as chief financial officer of Accenture plc., a global management consulting, technology services and outsourcing company, following many other leadership roles in line management, consulting and operations during her 34 years with the company. She is also actively involved in charitable organizations focused on education and on the advancement of women in business, including The Women’s Forum of New York, New York University Stern School of Business, Junior Achievement of New Jersey and is a member of the Board of Trustees of Smith College. Ms. Craig joined Corning’s Board in 2021. Age 65.

Robert F. Cummings, Jr.  Retired Vice Chairman of Investment Banking, JPMorgan Chase & Co.

Mr. Cummings retired as vice chairman of Investment Banking at JPMorgan Chase & Co. in 2016. He had served in that role since 2010, advising on client opportunities across sectors and industry groups. Mr. Cummings began his business career in the investment banking division of Goldman, Sachs & Co. in 1973 and was a partner of that firm from 1986 to 1998. He served as an advisory director at Goldman Sachs until 2002. Mr. Cummings joined Corning’s Board in 2006. Age 73.

Roger W. Ferguson, Jr.  Retired President and Chief Executive Officer, TIAA

Mr. Ferguson was the President and Chief Executive Officer of TIAA from April 2008 – April 2021. He is also the former Vice Chairman of the Board of Governors of the U.S. Federal Reserve System. Prior to joining TIAA in April 2008, Mr. Ferguson was head of financial services for Swiss Re and Chairman of Swiss Re America Holding Corporation. From 1984 to 1997, he was an Associate and Partner at McKinsey & Company. He began his career as an attorney at the New York City office of Davis Polk & Wardwell. Mr. Ferguson joined Corning’s Board in 2021. Age 71.

Deborah A. Henretta   Retired Group President of Global E-Business, Procter & Gamble Company

Ms. Henretta has over 37 years of business leadership experience across both developed and developing markets, as well as expertise in brand building, marketing, philanthropic program development and government relations. She joined Procter & Gamble (P&G) in 1985. In 2005, she was appointed President of P&G’s business in ASEAN, Australia and India. She was appointed group president, P&G Asia in 2007, group president of P&G Global Beauty Sector in 2013 and group president of P&G E-Business in 2015. She retired from P&G in 2015. Ms. Henretta joined Corning’s Board in 2013. Age 61.

Daniel P. Huttenlocher  Dean, MIT Stephen A. Schwarzman College of Computing

Dr. Huttenlocher is the Dean of the MIT Schwarzman College of Computing. Prior to joining MIT, Dr. Huttenlocher served as dean and vice provost of Cornell Tech from 2012 – 2019 and worked for Cornell University from 1988 to 2012 in various positions. Before Cornell, Dr. Huttenlocher worked at Xerox Palo Alto Research Center and was Chief Technology Officer at Intelligent Markets, Inc. He has also served as the Chair of the John D. and Catherine T. MacArthur Foundation, an independent foundation that makes grants and impact investments to support non-profit organizations addressing global social challenges.  Dr. Huttenlocher holds a Ph.D. in computer science and a Master of Science degree in Electrical Engineering, both from the Massachusetts Institute of Technology.  Dr. Huttenlocher joined Corning’s Board in 2015. Age 64.

Kurt M. Landgraf  Retired President, Washington College

From July 2017 to July 2020, Mr. Landgraf was president of Washington College. He previously served as president and chief executive officer of Educational Testing Service (ETS), a private non-profit educational testing and measurement organization, from 2000 until his retirement in December 2013. Prior to that, he was executive vice president and chief operating officer of E.I. Du Pont de Nemours and Company (DuPont), where he previously held a number of senior leadership positions, including chief financial officer. Mr. Landgraf joined Corning’s Board in 2007. Age 76.

Kevin J. Martin  Vice President, US Public Policy, Meta Platforms, Inc.

Mr. Martin is Vice President, US Public Policy at Meta Platforms, Inc. Prior to joining Meta, he was a partner and co-chair of the telecommunications practice at Squire Patton Boggs, an international law firm (2009 to 2015). From March 2005 to January 2009, he was chairman of the Federal Communications Commission (FCC). Mr. Martin joined Corning’s Board in 2013. Age 56.

Deborah D. Rieman  Retired Executive Chairman, Metamarkets Group

Dr. Rieman has more than 33 years of experience in the software and information technology industries. In 2016, she retired as executive chairman of Metamarkets Group. Previously, she was managing director of Equus Management Company, a private investment fund. From 1995 to 1999, she served as president and chief executive officer of Check Point Software Technologies, Incorporated. Dr. Rieman joined Corning’s Board in 1999. Age 73.

Hansel E. Tookes II  Retired Chairman and Chief Executive Officer, Raytheon Aircraft Company

Mr. Tookes retired from Raytheon Company in December 2002. He joined Raytheon in 1999 and served as president of Raytheon International, chairman and chief executive officer of Raytheon Aircraft and executive vice president of Raytheon Company. From 1980 to 1999, Mr. Tookes served United Technologies Corporation as president of Pratt and Whitney’s Large Military Engines Group and in a variety of other leadership positions.  He was a Lieutenant Commander and military pilot in the United States Navy and commercial pilot with United Airlines.  He is also a former member of the National Academies Aeronautics and Space Engineering Board.  Mr. Tookes joined Corning’s Board in 2001. Age 75.

Wendell P. Weeks  Chairman and Chief Executive Officer

Mr. Weeks has been the Chief Executive Officer of Corning Incorporated since April 2005 and Chairman of the Board of Directors since April 2007.  He has also held a variety of financial, commercial, business development and general management positions across Corning’s Market-Access Platforms and technologies since he joined the company in 1983.  Mr. Weeks joined Corning’s Board in 2000.  Age 63.

Mark S. Wrighton  President, George Washington University

Dr. Wrighton has nearly 30 years of leadership experience overseeing large research universities. He currently serves as president of George Washington University, on sabbatical from his position as a professor and chancellor emeritus of Washington University in St. Louis where he served 24 years as its chief executive officer and 14 years as chancellor. Before joining Washington University in St. Louis, he was a researcher and professor at the Massachusetts Institute of Technology, where he was head of the Department of Chemistry from 1987 to 1990, and then provost from 1990 to 1995. Dr. Wrighton served as a presidential appointee to the National Science Board from 2000 to 2006. He is also a past chair of the Association of American Universities, the Business Higher Education Forum and the Consortium on Financing Higher Education. He was elected to membership in the American Academy of Arts and Sciences and the American Philosophical Society and he is a Fellow of the American Association for the Advancement of Science. Dr. Wrighton joined Corning’s Board in 2009.  Age 73.

Code of Ethics

Our Board of Directors adopted the Code of Ethics (“Code”) for the Chief Executive Officer and Financial Executives. This Code has been in existence for more than ten years. The Code applies to our Chief Executive Officer, Chief Financial Officer, Controller and other financial executives.  During 2022, no amendments to or waivers of the provisions of the Code were made with respect to any of our directors or executive officers. A copy of the Code of Ethics is available on our website at http://www.corning.com/worldwide/en/about-us/investor-relations/codes-of-conduct-ethics.html. We will also provide a copy of the Code of Ethics to shareholders without charge upon written request to Corporate Secretary, Corning Incorporated, One Riverfront Plaza, Corning, NY 14831. We will disclose future amendments to, or waivers from, the Code of Ethics on our website within four business days following the date of such amendment or waiver.

Item 11. Executive Compensation

The sections titled “Compensation Discussion and Analysis,” “Director Compensation” and “Compensation and Talent Management Committee Interlocks and Insider Participation” in our Definitive Proxy Statement are incorporated by reference in this Annual Report on Form 10-K.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The section titled “Beneficial Ownership Table” in our Definitive Proxy Statement are incorporated by reference in this Annual Report on Form 10-K.

Equity Compensation Plan Information

The following table provides information about the Company’s equity compensation plans as of December 31, 2022:

		Number of securities to be issued upon exercise of outstanding options, warrants and rights				Weighted-average exercise price of outstanding options, warrants and rights				Number of securities remaining available for future issuance under equity compensation plans (1)
Equity compensation plans approved by security holders (2)			9,664,672			$	22.92				32,332,203
Equity compensation plans not approved by security holders
Total			9,664,672			$	22.92				32,332,203

(1)	Excludes 9.6 million of securities to be issued upon exercise of outstanding options, warrants and rights.
(2)	Shares indicated are total grants under the most recent shareholder approved plans.

Item 13. Certain Relationships and Related Transactions and Director Independence

The sections titled “Policy on Transactions with Related Persons,” “Director Independence” and “Corporate Governance and the Board of Directors-Committees” in our Definitive Proxy Statement are incorporated by reference into this Annual Report on Form 10-K.

Item 14. Principal Accounting Fees and Services

The sections titled “Fees Paid to Independent Registered Public Accounting Firm” and “Policy Regarding Audit Committee Pre-Approval of Audit and Permitted Non-Audit Services of Independent Registered Public Accounting Firm” in our Definitive Proxy Statement are incorporated by reference in this Annual Report on Form 10-K.

PricewaterhouseCoopers LLP (“PwC”) issued its annual Public Company Accounting Oversight Board Rule 3526 independence letter to the Audit Committee of our Board of Directors and therein reported that it is independent under applicable standards in connection with its audit opinion for the financial statements contained in this report. The Audit Committee has discussed with PwC its independence from Corning and concurred with PwC.

PART IV

Item 15. Exhibits

(a)	Documents filed as part of this report:
					Page
	1.	Financial statements			58
			See separate index to financial statements
(b)	Exhibits filed as part of this report:

	2.1	Framework Agreement, dated as of October 22, 2013, by and among Samsung Display Co., Ltd.; Corning Incorporated and the other parties thereto. (Incorporated by reference to Exhibit 10.65 to Corning’s Form 10-K filed on February 10, 2014, as amended by its Form 10-K/A filed on March 21, 2014). The Company has omitted certain schedules, exhibits and similar attachments to the Framework Agreement pursuant to Item 601(b)(2) of Regulation S-K.
	2.2	Transaction Agreement, dated December 10, 2015, by and between Corning Incorporated, The Dow Chemical Company, Dow Corning Corporation and HS Upstate Inc. (Incorporated by reference to Exhibit 1.1 of Corning’s Form 8-K filed on December 11, 2015).
	2.3	Assignment Agreement, dated as of December 29, 2015, between Samsung Display Co., Ltd., Corning Incorporated, Corning Precision Materials Co., Ltd., and Corning Luxembourg S.àr.l., Corning Hungary Data Services Limited Liability Company, Corning Japan K.K., and Samsung Corning Advanced Glass LLC (Incorporated by reference to Exhibit 2.1 of Corning’s Form 8-K filed on December 29, 2015).
	3.1	Restated Certificate of Incorporation dated April 27, 2012, filed with the Secretary of State of the State of New York on April 27, 2012 (Incorporated by reference to Exhibit 3(i) 1 of Corning’s Form 8-K filed on May 1, 2012).
	3.2	Certificate of Amendment to the Restated Certificate of Incorporation dated January 14, 2014, filed with the Secretary of State of the State of New York on January 14, 2014 (Incorporated by reference to Exhibit 3.1 of Corning’s Form 8-K filed on January 15, 2014).
	3.3	Amended and Restated By-Laws of Corning Incorporated, effective as of February 2, 2022 (Incorporated by reference to Exhibit 3.1 of Corning’s Form 8-K filed February 3, 2022).
	4.1	Indenture, dated November 8, 2000, by and between the Company and of The Bank of New York Mellon Trust Company, N.A. (successor to J. P. Morgan Chase & Co., formerly The Chase Manhattan Bank), as trustee (Incorporated by reference to Exhibit 4.01 to Corning’s Registration Statement on Form S-3, Registration Statement No. 333-251135). The Company agrees to furnish to the Commission on request copies of other instruments with respect to long-term debt.
	4.2	Form of certificate for shares of the common stock (Incorporated by reference to Exhibit 4.4 to Corning’s registration statement on Form S-8 dated May 7, 2010 (Registration Statement No. 333-166642)).
	4.3	Shareholder Agreement, dated as of October 22, 2013, by and between Samsung Display Co., Ltd. and Corning Incorporated (Incorporated by reference to Exhibit 10.66 to Corning’s Form 10-K filed on February 10, 2014, as amended by its Form 10-K/A filed on March 21, 2014 and further amended by the First Amendment to Shareholder Agreement, dated April 5, 2021, incorporated by reference to Exhibit 10.2 to Corning's Form 8-K filed on April 5, 2021).
	4.4	Standstill Agreement, dated as of October 22, 2013, by and among Samsung Electronics Co., Ltd., Samsung Display Co., Ltd. and Corning Incorporated (Incorporated by reference to Exhibit 10.67 to Corning’s Form 10-K filed on February 10, 2014, as amended by its Form 10-K/A filed on March 21, 2014).
	4.5	Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934. (Incorporated by reference to Exhibit 4.5 to Corning’s Form 10-K filed on February 12, 2021.)
	10.1	2003 Equity Plan for Non-Employee Directors (Incorporated by reference to Exhibit 3 of Corning Proxy Statement, Definitive 14A filed March 10, 2003 for April 24, 2003 Annual Meeting of Shareholders).
	10.2	Form of Officer Severance Agreement dated as of February 1, 2004 between Corning Incorporated and Lawrence D. McRae (Incorporated by reference to Exhibit 10.1 of Corning’s Form 10-Q filed May 4, 2004).

‎	10.3	Form of Amendment dated as of February 1, 2004 to Change In Control Agreement dated as of October 4, 2000 between Corning Incorporated and Lawrence D. McRae (Incorporated by reference to Exhibit 10.4 of Corning’s Form 10-Q filed May 4, 2004).
	10.4	Form of Change In Control Amendment dated as of October 4, 2000 between Corning Incorporated and Lawrence D. McRae (Incorporated by reference to Exhibit 10.5 of Corning’s Form 10-Q filed May 4, 2004).

	10.5	Amendment dated as of February 1, 2004 to Change In Control Agreement dated as of April 23, 2002 between Corning Incorporated and Wendell P. Weeks (Incorporated by reference to Exhibit 10.8 of Corning’s Form 10-Q filed May 4, 2004).
	10.6	Change In Control Agreement dated as of April 23, 2002 between Corning Incorporated and Wendell P. Weeks (Incorporated by reference to Exhibit 10.9 of Corning’s Form 10-Q filed May 4, 2004).
	10.7	Amended 2003 Equity Plan for Non-Employee Directors (Incorporated by reference to Appendix K of Corning Proxy Statement, Definitive 14A filed March 8, 2006 for April 27, 2006 Annual Meeting of Shareholders).
	10.8	Amended Corning Incorporated 2003 Equity Plan for Non-Employee Directors effective October 4, 2006 (Incorporated by reference to Exhibit 10.28 of Corning’s Form 10-K filed February 27, 2007).
	10.9	Executive Supplemental Pension Plan effective February 7, 2007 and signed February 12, 2007 (Incorporated by reference to Exhibit 10.31 of Corning’s Form 10-K filed February 27, 2007).
	10.10	Executive Supplemental Pension Plan as restated and signed April 10, 2007 (Incorporated by reference to Exhibit 10 of Corning’s Form 10-Q filed April 27, 2007).
	10.11	Corning Incorporated Performance Incentive Plan dated October 3, 2007 (Incorporated by reference to Exhibit 10.36 of Corning’s Form 10-K filed February 15, 2008).
	10.12	Corning Incorporated Supplemental Pension Plan dated October 3, 2007 (Incorporated by reference to Exhibit 10.38 of Corning’s Form 10-K filed February 15, 2008).
	10.13	Corning Incorporated Supplemental Investment Plan dated October 3, 2007 (Incorporated by reference to Exhibit 10.39 of Corning’s Form 10-K filed February 15, 2008).
	10.14	Amendment No. 2 dated February 13, 2008 and Amendment dated as of February 1, 2004 to Letter of Understanding between Corning Incorporated and Wendell P. Weeks, and Letter of Understanding dated April 23, 2002 between Corning Incorporated and Wendell P. Weeks (Incorporated by reference to Exhibit 10.42 of Corning’s Form 10-K filed February 15, 2008).
	10.15	Form of Change in Control Agreement Amendment No. 2, effective December 5, 2007 (Incorporated by reference to Exhibit 10.43 of Corning’s Form 10-K filed February 15, 2008).
	10.16	Form of Officer Severance Agreement Amendment, effective December 5, 2007 (Incorporated by reference to Exhibit 10.44 of Corning’s Form 10-K filed February 15, 2008).
	10.17	Amendment No. 1 to Corning Incorporated Supplemental Investment Plan, approved December 17, 2007 (Incorporated by reference to Exhibit 10.45 of Corning’s Form 10-K filed February 15, 2008).
	10.18	Amendment No. 1 to Corning Incorporated Supplemental Pension Plan, approved December 17, 2007 (Incorporated by reference to Exhibit 10.46 of Corning’s Form 10-K filed February 15, 2008).
	10.19	Amendment No. 1 to Corning Incorporated Executive Supplemental Pension Plan, approved December 17, 2007 (Incorporated by reference to Exhibit 10.47 of Corning’s Form 10-K filed February 15, 2008).

	10.20	Amendment No. 2 to Executive Supplemental Pension Plan effective July 16, 2008 (Incorporated by reference to Exhibit 10 of Corning’s Form 10-Q filed July 30, 2008).
	10.21	Form of Change of Control Agreement Amendment No. 3 effective December 19, 2008 (Incorporated by reference to Exhibit 10.53 of Corning’s Form 10-K filed February 24, 2009).
	10.22	Form of Officer Severance Agreement Amendment No. 2 effective December 19, 2008 (Incorporated by reference to Exhibit 10.54 of Corning’s Form 10-K filed February 24, 2009).
	10.23	Amendment No. 3 dated December 19, 2008 to Letter of Understanding dated April 23, 2002 between Corning Incorporated and Wendell P. Weeks (Incorporated by reference to Exhibit 10.55 of Corning’s Form 10-K filed February 24, 2009).
	10.24	Amendment No. 2 to Corning Incorporated Supplemental Investment Plan approved April 29, 2009 (Incorporated by reference to Exhibit 10.1 of Corning’s Form 10-Q filed July 29, 2009).
	10.25	2010 Equity Plan for Non-Employee Directors (Incorporated by reference to Appendix B of Corning Proxy Statement, Definitive 14A filed March 15, 2010 for April 29, 2010 Annual Meeting of Shareholders).
	10.26	Amendment No. 2 to Corning Incorporated Supplemental Pension Plan dated December 18, 2008 (Incorporated by reference to Exhibit 10.66 of Corning’s Form 10-K filed February 10, 2011).
	10.27	Amendment No. 3 to Corning Incorporated Executive Supplemental Pension Plan effective December 31, 2008 (Incorporated by reference to Exhibit 10.59 of Corning’s Form 10-K filed February 13, 2013).
	10.28	2021 Long-Term Incentive Plan (Incorporated by reference to Appendix B of Corning Proxy Statement, Definitive 14A filed March 18, 2021, for April 29, 2021 Annual Meeting of Shareholders).
	10.29	Amendment No. 4 to Corning Incorporated Executive Supplemental Pension Plan effective December 31, 2012 (Incorporated by reference to Exhibit 10.62 of Corning’s Form 10-K filed February 13, 2013).

	10.30	Form of Officer Severance Agreement dated as of January 1, 2015 between Corning Incorporated and each of the following individuals: Eric S. Musser; Lewis A. Steverson and Edward A. Schlesinger (Incorporated by reference to Exhibit 10.1 of Corning’s Form 10-Q filed July 30, 2015).
	10.31	Form of Change in Control Agreement dated as of January 1, 2015 between Corning Incorporated and each of the following individuals: Eric S. Musser; Lewis A. Steverson and Edward A. Schlesinger (Incorporated by reference to Exhibit 10.2 of Corning’s Form 10-Q filed July 30, 2015).
	10.32	Tax Matters Agreement, dated December 10, 2015, by and between Corning Incorporated, The Dow Chemical Company, Dow Corning Corporation and HS Upstate Inc. (Incorporated by reference to Exhibit 1.2 of Corning’s Form 8-K filed on December 11, 2015).

	10.33	Form of Corning Incorporated Restricted Stock Unit Grant Notice and Agreement for Non-Employee Directors (for grants made under the 2012 Equity Plan for Non-Employee Directors), effective January 1, 2017 (Incorporated by reference to Exhibit 10.74 of Corning’s Form 10-K filed February 6, 2017).
	10.34	Credit Agreement dated as of June 6, 2022, among Corning Incorporated, JPMorgan Chase Bank, N.A., Citibank, N.A., Bank of America, N.A., Goldman Sachs Bank USA, HSBC Bank USA, National Association, Morgan Stanley Bank, N.A., MUFG Bank, Ltd., Standard Chartered Bank, Sumitomo Mitsui Banking Corporation, Wells Fargo Bank, National Association, Bank of China New York Branch, and The Bank of New York Mellon (Incorporated by reference to Exhibit 10.1 to Corning’s Form 8-K filed on June 7, 2022).
	10.35	Corning Incorporated Deferred Compensation Plan for Non-Employee Directors as Amended and Restated on January 1, 2018 (Incorporated by reference to Exhibit 10.77 of Corning’s Form 10-K filed February 14, 2020).
	10.36	2019 Equity Plan for Non-Employee Directors (Incorporated by reference to Appendix B of Corning Proxy Statement, Definitive 14A filed March 22, 2019 for May 2, 2019 Annual Meeting of Shareholders).
	10.37	Form of Corning Incorporated Restricted Stock Unit Grant Notice and Agreement for Non-Employee Directors (for grants made under the 2019 Equity Plan for Non-Employee Directors), effective January 1, 2020 (Incorporated by reference to Exhibit 10.79 of Corning’s Form 10-K filed February 14, 2020).
	10.38	Form of Corning Incorporated Performance Share Unit Agreement, effective January 1, 2020 (Incorporated by reference to Exhibit 10.80 of Corning’s Form 10-K filed February 14, 2020).
	10.39	Share Repurchase Agreement, dated April 5, 2021, between Samsung Display Co., Ltd. and Corning Incorporated (Incorporated by reference to Exhibit 10.1 to Corning's Form 8-K filed on April 5, 2021).
	10.40	Corning Incorporated Supplemental Investment Plan as Amended and Restated, effective January 1, 2023.
	10.41	Corning Incorporated Executive Supplemental Pension Plan as Amended and Restated, effective January 1, 2023.
	10.42	Corning Incorporated Supplemental Pension Plan as Amended and Restated, effective January 1, 2023.
	14	Corning Incorporated Code of Ethics for Chief Executive Officer and Financial Executives, and Code of Conduct for Directors and Executive Officers (Incorporated by reference to Appendix G of Corning Proxy Statement, Definitive 14A filed March 13, 2012 for April 26, 2012 Annual Meeting of Shareholders).
	21	Subsidiaries of the Registrant at December 31, 2021.
	23	Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm.
	24	Powers of Attorney (included on the Signatures page of this Annual Report on Form 10-K).
	31.1	Certification Pursuant to Rule 13a-15(e) and 15d-15(e), As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31.2	Certification Pursuant to Rule 13a-15(e) and 15d-15(e), As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32	Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	101.INS	Inline XBRL Instance Document
	101.SCH	Inline XBRL Taxonomy Extension Schema Document
	101.CAL	Inline XBRL Taxonomy Calculation Linkbase Document
	101.LAB	Inline XBRL Taxonomy Label Linkbase Document
	101.PRE	Inline XBRL Taxonomy Presentation Linkbase Document
	101.DEF	Inline XBRL Taxonomy Definition Document
	104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

Item 16. Form 10-K Summary.

None.

Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the Registrant has duly caused his report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Corning Incorporated
Date: February 13, 2023	By:	/s/ Wendell P. Weeks
		Wendell P. Weeks
		Chairman of the Board of Directors,
		Chief Executive Officer

Power of Attorney

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Edward A. Schlesinger, Lewis A. Steverson and Stefan Becker, jointly and severally, his or her attorneys-in-fact, each with the power of substitution, for him or her in any and all capacities, to sign any amendments to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities as indicated and on the 13th day of February, 2023.

Signature		Capacity
/s/ Wendell P. Weeks		Chairman of the Board of Directors, ‎Chief Executive Officer, and Director
Wendell P. Weeks		(Principal Executive Officer)
/s/ Edward A. Schlesinger		Executive Vice President and Chief Financial Officer ‎(Principal Financial Officer)
Edward A. Schlesinger
/s/ Stefan Becker		Senior Vice President, Finance and Corporate Controller ‎(Principal Accounting Officer)
Stefan Becker
/s/ Donald W. Blair		Director
Donald W. Blair
/s/ Leslie A. Brun		Director
Leslie A. Brun
/s/ Stephanie A. Burns		Director
Stephanie A. Burns
/s/ Richard T. Clark		Director
Richard T. Clark
/s/ Pamela J. Craig		Director
Pamela J. Craig

Signature		Capacity
/s/ Robert F. Cummings, Jr.		Director
Robert F. Cummings, Jr.
/s/ Roger W. Ferguson Jr.		Director
Roger W. Ferguson Jr.
/s/ Deborah A. Henretta		Director
Deborah A. Henretta
/s/Daniel P. Huttenlocher		Director
Daniel P. Huttenlocher
/s/ Kurt M. Landgraf		Director
Kurt M. Landgraf
/s/ Kevin J. Martin		Director
Kevin J. Martin
/s/ Deborah D. Rieman		Director
Deborah D. Rieman
/s/ Hansel E. Tookes II		Director
Hansel E. Tookes II
/s/ Mark S. Wrighton		Director
Mark S. Wrighton

Corning Incorporated

2022 Annual Report

Index to Financial Statements

			Page
Report of Independent Registered Public Accounting Firm (PCAOB ID 238)			56
Consolidated Statements of Income			58
Consolidated Statements of Comprehensive Income			59
Consolidated Balance Sheets			60
Consolidated Statements of Cash Flows			61
Consolidated Statements of Changes in Shareholders’ Equity			62
Notes to Consolidated Financial Statements
	1.	Summary of Significant Accounting Policies	63
	2.	Restructuring, Impairment and Other Charges and Credits	71
	3.	HSG Transactions and Acquisitions	73
	4.	Revenue	74
	5.	Inventories	75
	6.	Leases	75
	7.	Income Taxes	76
	8.	Property, Plant and Equipment, Net of Accumulated Depreciation	80
	9.	Goodwill and Other Intangible Assets	80
	10.	Other Assets and Other Liabilities	81
	11.	Debt	83
	12.	Employee Retirement Plans	84
	13.	Commitments, Contingencies and Guarantees	90
	14.	Hedging Activities	91
	15.	Fair Value Measurements	93
	16.	Shareholders’ Equity	94
	17.	Earnings Per Common Share	98
	18.	Share-Based Compensation	99
	19.	Reportable Segments	101

Report of Independent Registered Public Accounting Firm 

To the Board of Directors and Shareholders of Corning Incorporated

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Corning Incorporated and its subsidiaries (the “Company”) as of December 31, 2022 and 2021, and the related consolidated statements of income, comprehensive income, changes in shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2022, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021**,** and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. 

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Income Taxes - Receivables for South Korean Tax Disputes

As described in Notes 1, 7, and 10 to the consolidated financial statements, in evaluating the tax benefits associated with the Company’s various tax filing positions, management records a tax benefit for uncertain tax positions using the highest cumulative tax benefit that is more likely than not to be realized. Adjustments are made to the asset or liability for unrecognized tax benefits in the period in which the Company files the return containing the tax position or when new information becomes available. The Company is currently appealing certain South Korean tax assessments and tax refund claims for tax years 2010 through 2018. The Company is required to deposit the disputed tax amounts with the South Korean government as a condition of its appeal of any tax assessment. The Company believes that it is more likely than not that the Company will prevail in the appeals process and as a result, management recorded a non-current receivable of $349 million as of December 31, 2022.

The principal considerations for our determination that performing procedures relating to the receivables for South Korean tax disputes is a critical audit matter are (i) the significant judgment by management when applying the more-likely-than-not recognition criteria to the Company’s uncertain tax positions based on the application of the tax law; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence relating to management’s assumption that the Company will prevail in the appeal of any tax assessment; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to uncertain tax positions, including management’s assessment of the South Korean tax disputes. These procedures also included, among others, obtaining management’s assessment and evidence supporting the more-likely-than-not tax position on the South Korean tax disputes and evaluating the reasonableness of the likelihood that the tax positions will ultimately be sustained upon examination by the South Korean tax authorities and through the appeals process. Professionals with specialized skill and knowledge were used to assist in evaluating management’s assessment and supporting evidence related to the application of the tax law.

/s/ PricewaterhouseCoopers LLP

New York, New York

February 13, 2023

We have served as the Company’s auditor since 1944.

Consolidated Statements of Income	Corning Incorporated and Subsidiary Companies

		Year ended December 31,
(in millions, except per share amounts)		2022				2021				2020
Net sales		$	14,189			$	14,082			$	11,303
Cost of sales			9,683				9,019				7,772
Gross margin			4,506				5,063				3,531
Operating expenses:
Selling, general and administrative expenses			1,898				1,827				1,747
Research, development and engineering expenses			1,047				995				1,154
Amortization of purchased intangibles			123				129				121
Operating income			1,438				2,112				509
Interest income			15				11				15
Interest expense			(292	)			(300	)			(276	)
Translated earnings contract gain (loss), net (Note 14)			351				354				(38	)
Transaction-related gain, net (Note 3)											498
Other income (expense), net			285				249				(74	)
Income before income taxes			1,797				2,426				634
Provision for income taxes (Note 7)			(411	)			(491	)			(111	)
Net income			1,386				1,935				523
Net income attributable to non-controlling interest			(70	)			(29	)			(11	)
Net income attributable to Corning Incorporated		$	1,316			$	1,906			$	512
Earnings per common share available to common shareholders:
Basic (Note 17)		$	1.56			$	1.30			$	0.54
Diluted (Note 17)		$	1.54			$	1.28			$	0.54
Reconciliation of net income attributable to Corning Incorporated versus net income available to common shareholders:
Net income attributable to Corning Incorporated		$	1,316			$	1,906			$	512
Series A convertible preferred stock dividend							(24	)			(98	)
Excess consideration paid for redemption of preferred stock (1)							(803	)
Net income available to common shareholders		$	1,316			$	1,079			$	414

(1)	Refer to Note 16 (Shareholders’ Equity) in the accompanying notes to the consolidated financial statements for additional information.

The accompanying notes are an integral part of these consolidated financial statements.

Consolidated Statements of Comprehensive Income	Corning Incorporated and Subsidiary Companies

		Year ended December 31,
(in millions)		2022				2021				2020
Net income		$	1,386			$	1,935			$	523
Foreign currency translation adjustments and other (Note 16)			(779	)			(604	)			528
Unamortized gains (losses) and prior service credits (costs) for postretirement benefit plans			154				178				(88	)
Realized and unrealized losses on derivatives			(30	)			(9	)			(9	)
Other comprehensive (loss) income, net of tax			(655	)			(435	)			431
Comprehensive income			731				1,500				954
Comprehensive income attributable to non-controlling interest			(70	)			(29	)			(11	)
Comprehensive income attributable to Corning Incorporated		$	661			$	1,471			$	943

The accompanying notes are an integral part of these consolidated financial statements.

Consolidated Balance Sheets	Corning Incorporated and Subsidiary Companies

		December 31,
(in millions, except share and per share amounts)		2022				2021
Assets
Current assets:
Cash and cash equivalents		$	1,671			$	2,148
Trade accounts receivable, net of doubtful accounts - $40 and $42			1,721				2,004
Inventories (Note 5)			2,904				2,481
Other current assets (Notes 10 and 14)			1,157				1,026
Total current assets			7,453				7,659
Property, plant and equipment, net of accumulated depreciation - $14,147 and $13,969 (Note 8)			15,371				15,804
Goodwill, net (Note 9)			2,394				2,421
Other intangible assets, net (Note 9)			1,029				1,148
Deferred income taxes (Note 7)			1,073				1,066
Other assets (Notes 10 and 14)			2,179				2,056
Total Assets		$	29,499			$	30,154
Liabilities and Equity
Current liabilities:
Current portion of long-term debt and short-term borrowings (Note 11)		$	224			$	55
Accounts payable			1,804				1,612
Other accrued liabilities (Notes 10 and 13)			3,147				3,139
Total current liabilities			5,175				4,806
Long-term debt (Note 11)			6,687				6,989
Postretirement benefits other than pensions (Note 12)			407				622
Other liabilities (Notes 10 and 13)			4,955				5,192
Total liabilities			17,224				17,609
Commitments and contingencies (Note 13)
Shareholders’ equity (Note 16):
Common stock – Par value $0.50 per share; Shares authorized 3.8 billion; Shares issued: 1.8 billion and 1.8 billion			910				907
Additional paid-in capital – common stock			16,682				16,475
Retained earnings			16,778				16,389
Treasury stock, at cost; Shares held: 977 million and 970 million			(20,532	)			(20,263	)
Accumulated other comprehensive loss			(1,830	)			(1,175	)
Total Corning Incorporated shareholders’ equity			12,008				12,333
Non-controlling interest			267				212
Total equity			12,275				12,545
Total Liabilities and Equity		$	29,499			$	30,154

The accompanying notes are an integral part of these consolidated financial statements. ‎

Consolidated Statements of Cash Flows	Corning Incorporated and Subsidiary Companies

		Year ended December 31,
(in millions)		2022				2021				2020
Cash Flows from Operating Activities:
Net income		$	1,386			$	1,935			$	523
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation			1,329				1,352				1,399
Amortization of purchased intangibles			123				129				121
Loss on disposal of assets			189				57				138
Severance charges (reversals)			70				(13	)			148
Severance payments			(11	)			(26	)			(147	)
Share-based compensation expense			175				190				207
Translation (gain) loss on Japanese yen-denominated debt			(191	)			(180	)			86
Deferred tax (benefit) provision			(46	)			16				(20	)
Pension plan contributions							(24	)			(221	)
Translated earnings contract (gain) loss			(351	)			(354	)			38
Unrealized translation loss (gain) on transactions			68				77				(133	)
(Gain) loss on investment			(8	)			23				(107	)
Asbestos claim payments											(130	)
Tax assessment refunds											101
Asset impairment											217
Transaction-related gain, net											(498	)
Changes in assets and liabilities:
Trade accounts receivable			113				(54	)			(274	)
Inventories			(522	)			(103	)			423
Other current assets			(139	)			(224	)			(25	)
Accounts payable and other current liabilities			349				772				190
Customer deposits and government incentives			110				28				104
Deferred income			(49	)			(116	)			(46	)
Other, net			20				(73	)			86
Net cash provided by operating activities			2,615				3,412				2,180
Cash Flows from Investing Activities:
Capital expenditures			(1,604	)			(1,637	)			(1,377	)
Proceeds from sale or disposal of assets							17				37
Proceeds from sale of business			76				103
Investments in and proceeds from unconsolidated entities, net			(38	)			84				(28	)
Realized gains on translated earnings contracts			300				67				12
Premiums paid on hedging contracts			(75	)			(48	)			(9	)
Other, net			(14	)			(5	)			55
Net cash used in investing activities			(1,355	)			(1,419	)			(1,310	)
Cash Flows from Financing Activities:
Repayments of short-term borrowings			(87	)			(144	)			(100	)
Repayments of long-term debt							(716	)			(121	)
Proceeds from issuance of short-term debt			70
Proceeds from issuance of long-term debt			57				22				243
Payment for redemption of preferred stock			(507	)			(507	)
Payments of employee withholding tax on stock awards			(47	)			(61	)			(11	)
Proceeds from exercise of stock options			40				97				124
Purchases of common stock for treasury			(221	)			(274	)			(105	)
Dividends paid			(932	)			(871	)			(787	)
Other, net			(22	)			2				28
Net cash used in financing activities			(1,649	)			(2,452	)			(729	)
Effect of exchange rates on cash			(88	)			(65	)			97
Net (decrease) increase in cash and cash equivalents			(477	)			(524	)			238
Cash and cash equivalents at beginning of year			2,148				2,672				2,434
Cash and cash equivalents at end of year		$	1,671			$	2,148			$	2,672

The accompanying notes are an integral part of these consolidated financial statements.‎

Consolidated Statements of Changes in Shareholders’ Equity	Corning Incorporated and Subsidiary Companies

										Additional												Accumulated				Total Corning
		Convertible								paid-in												other				Incorporated				Non-
		preferred				Common				capital				Retained				Treasury				comprehensive				shareholders’				controlling
(in millions)		stock				stock				common				earnings				stock				loss				equity				interest				Total
Balance as of December 31, 2019		$	2,300			$	859			$	14,323			$	16,408			$	(19,812	)		$	(1,171	)		$	12,907			$	90			$	12,997
Net income															512												512				11				523
Other comprehensive income																							431				431				1				432
Purchase of common stock for treasury																			(105	)							(105	)							(105	)
Shares issued to benefit plans and for option exercises							4				319																323								323
Common dividends ($0.88 per share)															(681	)											(681	)							(681	)
Preferred dividends ($42,500 per share)															(98	)											(98	)							(98	)
Non-controlling interest in HSG (1)																															102				102
Other, net (2)															(21	)			(11	)							(32	)			(13	)			(45	)
Balance as of December 31, 2020		$	2,300			$	863			$	14,642			$	16,120			$	(19,928	)		$	(740	)		$	13,257			$	191			$	13,448
Net income															1,906												1,906				29				1,935
Other comprehensive loss																							(435	)			(435	)			(1	)			(436	)
Redemption of preferred stock (3)			(700	)											(803	)											(1,503	)							(1,503	)
Conversion of preferred stock to common stock (3)			(1,600	)			40				1,560
Purchase of common stock for treasury																			(274	)							(274	)							(274	)
Shares issued to benefit plans and for option exercises							4				273																277								277
Common dividends ($0.96 per share)															(812	)											(812	)							(812	)
Preferred dividends ($10,625 per share)															(24	)											(24	)							(24	)
Other, net (2)															2				(61	)							(59	)			(7	)			(66	)
Balance as of December 31, 2021		$	-			$	907			$	16,475			$	16,389			$	(20,263	)		$	(1,175	)		$	12,333			$	212			$	12,545
Net income															1,316												1,316				70				1,386
Other comprehensive loss																							(655	)			(655	)			(2	)			(657	)
Purchase of common stock for treasury																			(221	)							(221	)							(221	)
Shares issued to benefit plans and for option exercises							3				207																210								210
Common dividends ($1.08 per share)															(926	)											(926	)							(926	)
Other, net (2)															(1	)			(48	)							(49	)			(13	)			(62	)
Balance as of December 31, 2022		$	-			$	910			$	16,682			$	16,778			$	(20,532	)		$	(1,830	)		$	12,008			$	267			$	12,275

(1)	Refer to Note 3 (HSG Transactions and Acquisitions) in the accompanying notes to the consolidated financial statements for additional information.
(2)	Treasury stock includes the deemed surrender to the Company of common stock to satisfy employee tax withholding obligations.
(3)	Refer to Note 16 (Shareholders’ Equity) in the accompanying notes to the consolidated financial statements for additional information.

The accompanying notes are an integral part of these consolidated financial statements.

Corning Incorporated and Subsidiary Companies

Notes to Consolidated Financial Statements

1.  Summary of Significant Accounting Policies

Organization

Corning Incorporated is a provider of high-performance glass for notebook computers, flat panel desktop monitors, display televisions and other information display applications; carrier network and enterprise network products for the telecommunications industry; ceramic substrates for gasoline and diesel engines in automotive and heavy-duty vehicle markets; laboratory products for the scientific community and specialized polymer products for biotechnology applications; advanced optical materials for the semiconductor industry and the scientific community; polycrystalline silicon products and other technologies. In these notes, the terms “Corning,” “Company,” “we,” “us,” or “our” mean Corning Incorporated and subsidiary companies.

Basis of Presentation and Principles of Consolidation 

The consolidated financial statements include the consolidated accounts of Corning Incorporated and its subsidiaries that are consolidated in conformity with accounting principles generally accepted in the United States of America (“GAAP”). All intercompany accounts, transactions and profits have been eliminated. Investments in partially-owned affiliates are accounted for by the equity method when the Company exercises significant influence, which typically occurs when its ownership interest exceeds 20% and the Company does not have a controlling interest. The Company’s share of earnings or losses of these affiliated companies is included in the consolidated operating results.

The Company consolidates variable interest entities (“VIEs”) when it has the power to direct the significant activities of the entity and the obligation to absorb losses or receive benefits from the entity that may be significant. The Company did not have any material consolidated or nonconsolidated VIEs in its operations for the presented reporting periods.

On September 9, 2020, Hemlock Semiconductor Group (“HSG”) redeemed the entire ownership interest of DuPont in HSG with a value of $250 million (the “Redemption”).  Upon completion of the Redemption, Corning obtained a 100% interest in HS LLC and an 80.5% interest in HSO LLC, which are affiliated entities within HSG.  Since September 9, 2020, HSG’s results have been consolidated in Corning’s consolidated financial statements and included within Hemlock and Emerging Growth Businesses.  Refer to Note 3 (HSG Transactions and Acquisitions) in the notes to the consolidated financial statements for additional information.

Certain prior year amounts have been reclassified to conform to the current year’s presentation. These reclassifications had no impact on the results of operations, financial position, or changes in shareholders’ equity.

Use of Estimates

The preparation of financial statements, in conformity with GAAP, requires management to make estimates and assumptions affecting reported amounts of assets, liabilities, revenue, expenses and the disclosure of contingent assets and liabilities in the consolidated financial statements and related notes. Significant estimates and assumptions in these consolidated financial statements include estimates associated with revenue recognition, restructuring charges, goodwill and long-lived asset impairment tests, estimates of fair value of acquired assets and liabilities, estimates of fair value of investments, equity interests, environmental and legal liabilities, income taxes and deferred tax valuation allowances, assumptions used in calculating pension and other postretirement employee benefit expenses and the fair value of share-based compensation. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be different from these estimates.

63

1.  Summary of Significant Accounting Policies (Continued)

Revenue Recognition 

Most of the Company’s revenue is generated by delivery of products to customers and recognized at a point in time based on evaluation of when the customer obtains control of the products. Revenue is recognized when all performance obligations under the terms of a contract are satisfied and control of the product has been transferred to the customer. If customer acceptance clauses are present and it cannot be objectively determined that control has been transferred, revenue is only recorded when customer acceptance is received and all performance obligations have been satisfied. Sales of goods typically do not include multiple product and/or service elements. Shipping and handling fees are treated as fulfillment costs and not as separate performance obligations under the terms of revenue contracts due to the perfunctory nature of the shipping and handling obligations.

Revenue is measured as the amount of consideration expected in exchange for transferring goods or providing services. Sales tax, value-added tax and other taxes are collected concurrently with revenue-producing activities and excluded from revenue. Incidental contract costs that are not material in the context of the delivery of goods and services are recognized as an expense.

At the time revenue is recognized, allowances are recorded with the related reduction to revenue for estimated product returns, allowances and price discounts based upon historical experience and related terms of customer arrangements. Where product warranties are offered, liabilities are established for estimated warranty costs based upon historical experience and specific warranty provisions. Warranty liabilities are adjusted when experience indicates the expected outcome will differ from initial estimates of the liability. Product warranty liabilities were not material as of December 31, 2022 and 2021.

In addition, the Company has contractual arrangements with certain customers, mainly related to Telecommunications products and comprised of design, installation, training and software maintenance services, in which revenue is recognized over time. The performance obligations under these contracts generally require services to be performed over time, resulting in either a straight-line amortization method or an input method using incurred and forecasted expense to predict revenue recognition patterns which follows satisfaction of the performance obligation. Corning’s other revenue was not material for the years ended December 31, 2022, 2021 and 2020.

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 fulfillment costs are immaterial due to the nature of the products and their respective manufacturing processes.

Contract liabilities include customer deposits, deferred revenue and other advanced payments. Customer deposits are primarily related to Display products and deferred revenue is primarily related to HSG. Other advanced payments are not significant to operations and are recorded within other accrued liabilities on the consolidated balance sheets.

Research and Development Costs

Research and development costs are charged to expense as incurred. Research and development costs totaled $0.9 billion, $0.8 billion and $1.0 billion for the years ended December 31, 2022, 2021 and 2020, respectively.

Foreign Currency Translation and Transactions

The determination of the functional currency for Corning’s foreign subsidiaries is made based on the appropriate economic factors. For most foreign operations, the local currencies are generally considered to be the functional currencies. Corning’s most significant exception is a Taiwanese subsidiary, which uses the Japanese yen as its functional currency. For all transactions denominated in a currency other than a subsidiary’s functional currency, foreign currency remeasurement gains and losses are included in income for the period in which the exchange rates changed. A net foreign currency remeasurement gain of $130 million, gain of $126 million and loss of $37 million was recorded for the years ended December 31, 2022, 2021 and 2020, respectively. 

64

1.  Summary of Significant Accounting Policies (Continued)

Foreign subsidiary functional currency balance sheet accounts have been translated at period-end exchange rates, and statement of operations accounts have been translated using average exchange rates for the period. Translation gains and losses are recorded as a separate component of accumulated other comprehensive loss in shareholders’ equity. The effects of remeasuring non-functional currency assets and liabilities into the functional currency are included in current earnings, except for those related to intra-entity foreign currency transactions of a long-term investment nature which are recorded together with translation gains and losses in accumulated other comprehensive loss in shareholders’ equity. Upon sale or substantially complete liquidation of an investment in a foreign entity, the amount of net translation gains or losses that have been accumulated in other comprehensive loss attributable to that investment are reported as a gain or loss for the period in which the sale or liquidation occurs.

Share-Based Compensation

Corning maintains long-term incentive plans (the “Plans”) for key employees and non-employee members of its Board of Directors. The Plans are established to grant equity-based compensation awards, including time-based restricted stock and restricted stock units, performance-based restricted stock units, stock options, stock appreciation rights or a combination of awards (collectively, “share-based awards”).

Share-based compensation cost is allocated to cost of sales, selling, general and administrative expenses and research, development and engineering expenses in the consolidated statements of income. 

The cost of share-based compensation awards is equal to the fair value of the award at the grant date and compensation expense is recognized for awards expected to ultimately vest. The number of awards expected to vest equals the total awards granted less an estimation of the number of forfeitures expected to occur prior to vesting. The Company reassesses the probability of vesting at each reporting period and adjusts share-based compensation expense based on its probability assessment.

The forfeiture rate is calculated based on over 15 years of historical data and is adjusted if actual forfeitures differ significantly from the original estimates. The effect of any change in estimated forfeitures would be recognized through a cumulative adjustment that would be included in compensation cost in the period of the change in estimate. For awards containing retirement provisions that are granted to retirement eligible employees, share-based compensation expense is recognized over the period in which the required performance is expected to be met.

During the requisite service period, the Company also recognizes a deferred income tax benefit for the expense recognized. At the time of subsequent vesting, exercise, forfeiture, or expiration of an award, the difference between the Company’s actual income tax deduction, if any, and the previously accrued income tax benefit is recognized in income tax expense/benefit during the current period.

Time-Based Restricted Stock and Restricted Stock Units

Time-based restricted stock and restricted stock units are issued by the Company on a discretionary basis, and are payable in shares of the Company’s common stock upon vesting. The fair value is based on the closing market price of the Company’s stock on the grant date. For awards granted to non-employee members of the Company’s Board of Directors, as there are no vesting terms, the Company recognizes the compensation expense immediately.

Performance-Based Restricted Stock Units

Performance-based restricted stock units are earned upon the achievement of certain targets and are payable in shares of the Company’s common stock upon vesting, typically over a three year period. The fair value is based on the closing market price of the Company’s common stock on the grant date and assumes that the target payout level will be achieved. 

65

1.  Summary of Significant Accounting Policies (Continued)

Stock Options

Corning’s stock option plans provide non-qualified and incentive stock options to purchase authorized but unissued common shares, or treasury shares, at the closing market price on the grant date and generally become exercisable in tranches from one year to five years from the grant date. The maximum term of non-qualified and incentive stock options is 10 years from the grant date. An award is considered vested when the employee’s retention of the award is no longer contingent on providing subsequent service (the “non-substantive vesting period approach”).

Corning uses a multiple-point Black-Scholes valuation model to estimate the fair value of stock options, which incorporates assumptions including expected volatility, dividend yield, risk-free rate, expected term and forfeiture rates. Corning utilizes a blended approach for calculating the volatility assumption, which is based on the weighted average of the short-term implied volatility, the most recent volatility for the period equal to the expected term and the most recent 15-year historical volatility. The risk-free rate used is the implied rate for a zero-coupon U.S. Treasury bond with a term equal to the option’s expected term. The expected term is the period the options are expected to be outstanding and is calculated using a combination of historical exercise experience adjusted to reflect the current vesting period of options being valued and partial life cycles of outstanding options.

Cash and Cash Equivalents

Cash equivalents consist of highly liquid investments that are readily convertible into cash. Securities with contractual maturities of three months or less, when purchased, are considered cash equivalents. The carrying amount of these securities approximates fair value because of the short-term maturity of these instruments.

The following table presents supplemental disclosures of cash flow information (in millions):

		Year ended December 31,
		2022				2021				2020
Non-cash transactions:
Accruals for capital expenditures		$	414			$	357			$	231
Cash paid for interest and income taxes:
Interest (1)		$	275			$	287			$	298
Income taxes, net of refunds received		$	426			$	377			$	220

(1)	Includes approximately $48 million, $36 million and $58 million of interest costs that were capitalized as part of property, plant and equipment during the year ended December 31, 2022, 2021 and 2020, respectively.

Trade Accounts Receivable, net of Doubtful Accounts

The allowance for doubtful accounts is based on the best estimate of the amount of probable lifetime credit losses in existing accounts receivable. The Company determines the allowance based on historical write-off experience and expected future default rate by industry. In addition, in circumstances where the Company is made aware of a specific customer’s inability to meet its financial obligations, a specific allowance is established. The Company does not have any significant off-balance-sheet credit exposure related to its customers.

Inventories

Inventories are stated at the lower of cost or net realizable value using the first-in, first-out method.

Property, Plant and Equipment, Net of Accumulated Depreciation

Land, buildings and equipment, including precious metals, are recorded at cost. Depreciation is based on the estimated useful lives of the respective assets using the straight-line method. The estimated useful lives generally range from 10 to 40 years for buildings and improvements and 2 to 20 years for equipment, excluding precious metals as discussed below. Interest on borrowings is capitalized during the active construction period of major capital projects, added to the cost of the underlying assets and amortized over the useful lives of the assets.

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1.  Summary of Significant Accounting Policies (Continued)

Included in the subcategory of equipment are the following types of assets (excluding precious metals):

Asset type		Range of useful life (in years)
Computer hardware and software		3 to 7
Manufacturing equipment		2 to 15
Furniture and fixtures		5 to 10
Transportation equipment		3 to 20

Manufacturing equipment includes certain components of production equipment that are constructed of precious metals. These assets are not depreciated because they have very low physical losses and are repeatedly reclaimed and reused in the Company’s manufacturing processes over a very long useful life. The physical loss of precious metals in the manufacturing and reclamation process is treated as depletion and these losses are accounted for as a period expense based on actual units lost. Precious metals are integral to many glass production processes and are only acquired to support operations. These metals are not held for trading or other purposes.

Leases

Corning leases certain real estate, vehicles and equipment from third parties, which are classified as operating or finance leases.  Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Right-of-use assets and the corresponding lease liabilities are recognized at the commencement date based on the present value of lease payments for all leases with terms longer than twelve months. To determine the present value of lease payments, the Company uses its incremental borrowing rate based on information available on the lease commencement date or the implicit rate if it is readily determinable. The Company has elected to combine lease and non-lease components of a contract for its leases. 

Renewal and termination options are included in the calculation of the right-of-use assets and lease liabilities when considered to be reasonably certain to be exercised.

Lease expense is recognized on a straight-line basis over the lease term for operating leases.  Interest expense and amortization of the right-of-use assets relating to finance leases are calculated and recognized using the effective interest and straight-line methods, respectively.   

Corning does not have any significant agreements as a lessor.

Impairment of Long-Lived Assets

The recoverability of long-lived assets, such as property, plant and equipment and intangible assets, is reviewed when events or changes in circumstances occur that indicate the carrying value of the asset or asset group may not be recoverable. When impairment indicators are present, the estimated undiscounted future cash flows, including the eventual disposition of the asset group at market value, is compared to the assets’ carrying value to determine if the asset group is recoverable. For an asset group that fails the test of recoverability, the estimated fair value of long-lived assets is determined using an income approach that starts with the forecast of all the expected future net cash flows, including the eventual disposition at market value of long-lived assets, and considers the fair market value of all precious metals, if applicable. The recoverability of the carrying value of long-lived assets is assessed at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. If there is an impairment, a loss is recorded to reflect the difference between the assets’ fair value and carrying value.

The Company is required to assess the recoverability of the carrying value of long-lived assets when an indicator of impairment has been identified. The Company performs this review each quarter and exercises judgment in assessing whether impairment indicators are present. For the year ended December 31, 2020, Corning incurred a long-lived asset impairment and disposal loss for an asset group related to the reassessment and reprioritization of research and development programs relating to a business within Hemlock and Emerging Growth Businesses. Refer to Note 2 (Restructuring, Impairment and Other Charges and Credits) in the notes to the consolidated financial statements for additional information.

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1.  Summary of Significant Accounting Policies (Continued)

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.  This calculation is used as a 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 the businesses and forecasted future cash flows.  If required to perform the quantitative impairment analysis, the 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.  Estimates are based upon historical experience, current knowledge from 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.

Government Assistance

The Company receives government assistance, typically in the form of cash incentives primarily for capital expansion projects.  Cash incentives received are classified as a liability and recognized when it is probable that the Company will comply with any contractual conditions. Cash incentives relating to the purchase of property, plant and equipment are deducted from the cost of the relevant asset. Cash incentives relating to project costs or other expenses are recognized in the statements of income as a deduction to the related expense.

During the year ended December 31, 2022, cash incentives recognized as a reduction of property, plant and equipment or in net income were not material. As of December 31, 2022, the Company had $92 million classified within other accrued liabilities and $74 million classified within other liabilities in the consolidated balance sheet for cash incentives received, which primarily relate to capital expansion projects within Display Technologies and Pharmaceutical Technologies and are expected to be realized over the next 1-2 years.

Environmental Liabilities

The Company accrues for its environmental investigation, remediation, operating and maintenance costs when it is probable that a liability has been incurred and the amount can be reasonably estimated. For environmental matters, the most likely cost to be incurred is accrued based on an evaluation of currently available facts with respect to each individual site, current laws and regulations and prior remediation experience. For sites with multiple potentially responsible parties, the Company considers its likely proportionate share of the anticipated remediation costs and the ability of the other parties to fulfill obligations in establishing a provision for those costs. Where no amount within a range of estimates is more likely to occur than another, the minimum undiscounted amount is accrued. When future liabilities are determined to be reimbursable by insurance coverage, an accrual is recorded for the potential liability and a receivable is recorded related to the insurance reimbursement when reimbursement is virtually certain.

The uncertain nature inherent in such remediation and the possibility that initial estimates may not reflect the outcome could result in additional costs being recognized by the Company in future periods.

Equity Method Investments

As of December 31, 2022 and 2021, Corning had investments in affiliated companies accounted for by the equity method totaling $261 million and $264 million, respectively. During the years ended December 31, 2022, 2021 and 2020 Corning had sales to affiliated companies of $228 million, $312 million and $253 million, respectively.

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1.  Summary of Significant Accounting Policies (Continued)

Equity method investments are reviewed for impairment on a periodic basis, or if an event occurs or circumstances change that indicate the carrying amount may be impaired. This assessment is based on a review of the equity investments’ performance and a review of indicators of impairment to determine whether there is evidence of a loss in value. For an equity investment with impairment indicators, the fair value is measured based on discounted cash flows, or other appropriate valuation methods, depending on the nature of the company involved. If it is probable that the carrying amount of the investment cannot be recovered, the impairment is considered other-than-temporary and recorded in earnings, and the equity investment balance is reduced to its fair value.

All equity investments that do not result in consolidation and are not accounted for under the equity method are measured at fair value with changes therein reflected in net income. The Company utilizes the measurement alternative for equity investments that do not have readily determinable fair values and measures these investments at cost less impairment, plus or minus observable price changes in orderly transactions. These investments were not material as of December 31, 2022 and 2021.

Employee Retirement Plans

Corning offers employee retirement plans consisting of defined benefit pension plans covering certain domestic and international employees and postretirement plans that provide health care and life insurance benefits for eligible retirees and dependents. The costs and obligations related to these benefits reflect the Company’s assumptions related to general economic conditions, particularly interest rates, expected return on plan assets, rate of compensation increase for employees and health care cost trend rates. The cost of providing plan benefits depends on demographic assumptions including retirements, mortality, turnover and plan participation.

Costs for defined benefit pension plans consist of two elements: (1) on-going costs recognized quarterly, which are comprised of service and interest costs, expected return on plan assets and amortization of prior service costs; and (2) mark-to-market gains and losses outside of the corridor, where the corridor is equal to 10% of the greater of the benefit obligation or the market-related value of plan assets at the beginning of the year, which are recognized annually in the fourth quarter of each year. These gains and losses result from changes in actuarial assumptions and the differences between actual and expected return on plan assets. Any interim remeasurement, triggered by a curtailment, settlement or significant plan change, as well as any true-up to the annual valuation, is recognized as a mark-to-market adjustment in the quarter in which such event occurs.

Costs for postretirement benefit plans consist of on-going costs recognized quarterly, and are comprised of service and interest costs, amortization of prior service costs and amortization of actuarial gains and losses. Actuarial gains and losses resulting from changes in actuarial assumptions are recognized as a component of accumulated other comprehensive loss in shareholders’ equity on an annual basis and amortized into operating results over the average remaining service period of employees expected to receive benefits under the plans, to the extent such gains and losses are outside the corridor.

Income Taxes

The Company accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to operating loss and tax credit carryforwards and for differences between the carrying amounts of existing assets and liabilities and their respective tax bases. Valuation allowances are established when management is unable to conclude that it is more likely than not that some portion, or all, of the deferred tax asset will ultimately be realized based upon the available evidence, including consideration of tax planning strategies.

The effective tax rate reflects the assessment of the ultimate outcome of tax audits. In evaluating the tax benefits associated with the Company’s various tax filing positions, a tax benefit for uncertain tax positions is recorded using the highest cumulative tax benefit that is more likely than not to be realized. Adjustments are made to the asset or liability for unrecognized tax benefits in the period in which the return containing the tax position is filed or when new information becomes available. The liability for unrecognized tax benefits, including accrued penalties and interest, is included in other accrued liabilities and other long-term liabilities on the consolidated balance sheets and within income tax expense in the consolidated statements of income.

Discrete events such as audit settlements or changes in tax laws are recognized in the period in which they occur.

Generally, Corning will indefinitely reinvest the foreign earnings of: (1) any subsidiary that lacks sufficient local statutory earnings from which to make a distribution or otherwise lacks the ability to repatriate its earnings, (2) any subsidiary where Corning’s intention is to reinvest those earnings in operations, (3) legal entities for which Corning holds a non-controlling interest, (4) any subsidiary with an accumulated deficit in earnings and profits, or (5) any subsidiary where a future distribution would trigger a significant net cost.

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1.  Summary of Significant Accounting Policies (Continued)

Fair Value Measurements

Major categories of financial assets and liabilities, including short-term investments, other assets and derivatives, are measured at fair value on a recurring basis. Certain assets and liabilities are measured at fair value on a nonrecurring basis when impaired, which include long-lived assets, goodwill, equity method investments, other investments and asset retirement obligations.

Fair value is the price that would be received from selling an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, the principal, or most advantageous, market in which Corning would transact is analyzed. Assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions and risk of non-performance, are considered.

A three-level valuation hierarchy, based upon the observable and unobservable inputs, is used for fair value measurements. Observable inputs are based on market data or independent sources while unobservable inputs are based on the Company’s own market assumptions. Once inputs have been characterized, the inputs are prioritized into one of three broad levels used to measure fair value: Level 1, quoted market prices in active markets for identical instruments, Level 2, significant other observable inputs and Level 3, significant unobservable inputs.

Derivative Instruments

The Company enters into a variety of foreign exchange forward contracts and foreign exchange option contracts to manage the exposure to fluctuations in foreign exchange rates.  Financial exposure is managed in accordance with corporate policies and procedures. The Company also utilizes derivatives that are bifurcated from its precious metals lease contracts to manage the exposure of its separate accounting pool of leased precious metals to changes in market prices.

All derivatives are recorded at fair value on the consolidated balance sheets.  Changes in the fair value of derivatives designated as cash flow hedges are not recognized in current operating results but are recorded in accumulated other comprehensive loss.  Amounts related to cash flow hedges are reclassified from accumulated other comprehensive loss when the underlying hedged item impacts earnings.  This reclassification is recorded within the same line item of the consolidated statements of income where the underlying hedged transaction was recorded, typically sales, cost of sales or other income (expense), net.  Changes in the fair value, excluding the time value component, of derivatives designated as fair value hedges are recognized in current operating results within other income (expense), net in the consolidated statements of income. Changes in the fair value of derivatives not designated as hedging instruments are recognized within translated earnings contract gain (loss), net and other income (expense), net in the consolidated statements of income.

New Accounting Standards

In November 2021, the FASB issued Accounting Standards Update 2021-10 Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance (“ASU 2021-10”).  ASU 2021-10 requires business entities to disclose information in the notes to the financial statements about certain types of government assistance.  The annual disclosure requirements apply to transactions with a government that are accounted for by analogizing either a grant or a contribution model.  The adoption of ASU 2020-10 did not have a material impact on the Company’s financial position or results of operations.

Recently issued accounting standards are not expected to have a material impact on the Company’s consolidated financial statements.

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2.  Restructuring, Impairment and Other Charges and Credits

The following table presents the restructuring, impairment and other charges and credits (in millions):

		Year ended December 31,
		2022				2021				2020
Severance		$	70			$	(13	)		$	148
Asset impairment											217
Capacity optimization			219				46				304
Other charges and credits			125				77				158
Total restructuring, impairment and other charges and credits		$	414			$	110			$	827

Corning periodically assesses the operating efficiency and cost structure of the Company’s asset base and global workforce and takes appropriate actions to align corporate resources with the business environment.

2022

Corning recorded $414 million in severance, accelerated depreciation, asset write-offs and other related charges for the year ended December 31, 2022. Capacity optimization charges include accelerated depreciation and asset write-offs associated with the exit of certain facilities, product lines and other exit activities primarily within Display Technologies, Specialty Materials and an emerging growth business. Severance charges were recorded across all segments and as of December 31, 2022, the severance accrual is not material and is expected to be settled within the next twelve months.

2020

In 2020 and in response to uncertain global economic conditions, Corning undertook actions to transform the Company’s cost structure and improve operational efficiency. These actions included a corporate-wide workforce reduction program, write-offs of certain assets and accelerated depreciation associated with the capacity optimization of certain manufacturing facilities as well as other exit charges and credits.

Severance

During the second quarter of 2020, Corning implemented a corporate-wide workforce reduction program. Severance charges were primarily incurred to facilitate realignment of capacity in the Asia regions for the Display Technologies segment, optimize the Optical Communications segment and contain corporate costs.

Asset Impairment

During the year ended December 31, 2020, Corning incurred a long-lived asset impairment and disposal loss for an asset group related to the reassessment of research and development programs relating to a business within Hemlock and Emerging Growth Businesses. Given the economic environment and market opportunities, Corning discontinued its investment in these research and development programs. The impairment analysis and disposition of certain assets resulted in a total pre-tax charge of $217 million, which was substantially all the carrying value, inclusive of an insignificant amount of goodwill. The fair value of the asset group for the impairment analysis was measured using unobservable (Level 3) inputs.

Capacity Optimization

Capacity optimization for the year ended December 31, 2020 primarily includes accelerated depreciation and asset write-offs associated with the exit of certain facilities and other exit activities in the Display Technologies and Specialty Materials business segments.

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2.  Restructuring, Impairment and Other Charges and Credits (Continued)

The following tables present the impact and respective location of total restructuring, impairment and other charges and credits in the consolidated statements of income (in millions):

		Year ended December 31, 2022
						Selling,				Research,
						general				development
						and				and
		Gross				administrative				engineering
		margin (1)				expenses				expenses				Other				Total
Severance		$	25			$	32			$	13							$	70
Capacity optimization			215				4												219
Other charges and credits			97				15				3			$	10				125
Total restructuring, impairment and other charges and credits		$	337			$	51			$	16			$	10			$	414

		Year ended December 31, 2021
						Selling,				Research,
						general				development
						and				and
		Gross				administrative				engineering
		margin (1)				expenses				expenses				Other				Total
Severance		$	(6	)		$	(5	)		$	(2	)						$	(13	)
Capacity optimization			36				7				3								46
Other charges and credits			50				(5	)						$	32				77
Total restructuring, impairment and other charges and credits		$	80			$	(3	)		$	1			$	32			$	110

		Year ended December 31, 2020
						Selling,				Research,
						general				development
						and				and
		Gross				administrative				engineering
		margin (1)				expenses				expenses				Other				Total
Severance		$	83			$	34			$	31							$	148
Asset impairment							6				211								217
Capacity optimization			288				16												304
Other charges and credits			72				60				5			$	21				158
Total restructuring, impairment and other charges and credits		$	443			$	116			$	247			$	21			$	827

(1)	Activity reflected in cost of sales.

3.  HSG Transactions and Acquisitions

During 2020, HSG entered into a series of agreements with DuPont resulting in a change in control of HSG and its consolidation into Corning. Through the agreements, HSG acquired DuPont’s TCS manufacturing assets, which was determined to be a business and recorded as a business combination. The fair value of the purchase price was $255 million. In conjunction with this acquisition, HSG settled the pre-existing TCS relationship (“TCS Settlement”) for a contractual amount of $175 million, which was determined to have a fair value of $200 million. Corning’s share of the pre-tax loss related to the TCS Settlement was $81 million and was recorded in other income (expense), net in the consolidated statements of income for the year ended December 31, 2020.

In addition, on  September 9, 2020, HSG redeemed DuPont’s entire ownership of HSG with a value of $250 million.  Upon completion of the Redemption, Corning obtained a 100% interest in HS LLC and 80.5% interest in HSO LLC. Corning accounted for the Redemption under the acquisition method of accounting in accordance with business combinations without the transfer of net cash consideration. The Redemption price of $250 million approximated the fair value of Corning’s equity interest in HSG immediately preceding the Redemption. The fair value of Corning’s equity interest in HSG was estimated by applying the income approach, which was based on significant assumptions such as projected revenue and discount rate. The Company used a discount rate of 16.5% and terminal growth rate of zero. As no net-cash consideration was transferred, the fair value of Corning’s previously held equity interest in HSG was used to measure the goodwill resulting from the Redemption and the Company’s controlling interest after the Redemption. 

Corning recognized a pre-tax gain of $498 million on its previously held equity investment in HSG as a result of the consolidation resulting from the Redemption. The gain was calculated based on the difference between the fair value and carrying value of the equity method investment immediately preceding the Redemption and included within the transaction-related gain, net in the consolidated statements of income for the year ended December 31, 2020.

The following table presents the calculation of the gain on previously owned equity (in millions):

Fair value of previously held equity investment		$	250
Equity investment liability balance as of acquisition date			(248	)
Corning's gain on previously held equity investment		$	498

Since September 9, 2020, HSG’s results have been consolidated in Corning’s consolidated financial statements and included within Hemlock and Emerging Growth Businesses. The amount of HSG’s net income is not material to Corning’s consolidated financial statements for the year ended December 31, 2020.

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4.  Revenue

Revenue Disaggregation Table

The following table shows revenue 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 around revenue recognition and cash flows are substantially similar. The commercial markets and selling channels are also similar. Except for an insignificant number of Telecommunications products, product category revenues are recognized at the point in time when control transfers to the customer.

The following table presents revenues by product category (in millions):

		Year ended December 31,
		2022				2021				2020
Telecommunication products		$	5,023			$	4,349			$	3,563
Display products			2,829				3,666				3,077
Specialty glass products			1,996				2,008				1,884
Environmental substrate and filter products			1,492				1,584				1,333
Life science products			1,187				1,232				981
Polycrystalline silicon products (1)			1,191				892				194
All other products (1)			471				351				271
Total Revenue		$	14,189			$	14,082			$	11,303

(1)	Corning obtained a controlling interest in HSG during the third quarter of 2020 and has consolidated results in Hemlock and Emerging Growth Businesses beginning on September 9, 2020. Refer to Note 3 (HSG Transactions and Acquisitions) in the notes to the consolidated financial statements for additional information.

Customer Deposits

As of December 31, 2022 and 2021, Corning had customer deposits of approximately $1.3 billion.  Most of these customer deposits were non-refundable and allowed customers to secure rights to products produced by Corning under long-term supply agreements.  The duration of these long-term supply agreements ranges up to 10 years.  As products are shipped to customers, Corning will recognize revenue and reduce the amount of the customer deposit liability. 

For the years ended December 31, 2022 and 2021, customer deposits recognized were $198 million and $216 million, respectively. As of December 31, 2022 and 2021, $1.1 billion was recorded in other long-term liabilities. The remaining $132 million and $223 million, respectively, were recorded in other accrued liabilities.

Deferred Revenue

As of December 31, 2022 and 2021, Corning had deferred revenue of approximately $869 million and $912 million, respectively.  Deferred revenue was primarily related to the performance obligations of non-refundable consideration previously received by HSG from its customers under long term supply agreements.

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 compared to the remaining contractual units. During the years ended December 31, 2022 and 2021, the amount of deferred revenue recognized in the consolidated statements of income was not material.

As of December 31, 2022 and 2021, $725 million and $764 million, respectively, were recorded in other liabilities and $144 million and $148 million, respectively, were recorded in other accrued liabilities. 

The value of unsatisfied performance obligations is not disclosed for (i) contracts with an original expected length of one year or less and (ii) contracts for which revenue has been recognized at an amount for which the right exists to invoice for services performed.

Significant Customers

For 2022, 2021 and 2020, no customer met or exceeded 10% of Corning’s consolidated net sales.

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5.  Inventories

Inventories consisted of the following (in millions):

		December 31,
		2022				2021
Finished goods		$	1,315			$	1,215
Work in process			571				358
Raw materials and accessories			537				427
Supplies and packing materials			481				481
Inventories		$	2,904			$	2,481

6.  Leases

The following table presents the components of lease cost (in millions) (1):

		Year ended December 31,
		2022				2021				2020
Operating lease cost		$	147			$	139			$	133
Variable lease cost			51				59				41
Short-term lease cost			2				2				4
Total lease cost		$	200			$	200			$	178

(1)	Finance lease costs were not material for the years ended December 31, 2022, 2021 and 2020.

The following table presents the components of cash paid for amounts included in the measurement of lease liabilities (in millions) (1):

		December 31,
		2022				2021				2020
Operating cash outflows from operating leases		$	116			$	134			$	121

(1)	Cash payments for operating leases have been classified as operating activities on the consolidated statements of cash flows. Principal and interest payments for finance leases have been classified as financing activities and operating activities, respectively, on the consolidated statements of cash flows, and were not material for the years ended December 31, 2022, 2021 and 2020.

The following table presents supplemental consolidated balance sheet information (in millions, except lease term and discount rate) (1):

			December 31,
	Location of lease balances		2022				2021
Operating lease right-of-use assets	Other assets		$	842			$	741
Operating lease liabilities - current	Other current liabilities		$	111			$	94
Operating lease liabilities - noncurrent	Other liabilities		$	795			$	691
Weighted-average remaining lease term (in years)				14.3				12.9
Weighted-average discount rate				4.2	%			4.0	%

(1)	Finance leases were not material as of December 31, 2022 and 2021.

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6.  Leases (Continued)

As of December 31, 2022, maturities of operating lease liabilities are as follows (in millions) (1):

		December 31, 2022
2023		$	136
2024		$	106
2025		$	92
2026		$	83
2027		$	71
After 2027		$	756
Total operating payments		$	1,244
Less: imputed discount		$	338
Present value of lease payments		$	906

(1)	Finance leases were not material as of December 31, 2022.

As of December 31, 2022, Corning had additional operating leases, primarily for new production facilities, that have not yet commenced or been recorded, of approximately $168 million on an undiscounted basis. These operating leases will commence in 2023 with lease terms of 10 to 20 years.

7.  Income Taxes

The following table presents the components of income before income taxes (in millions):

		Year ended December 31,
		2022				2021				2020
U.S. companies		$	1,157			$	1,282			$	(62	)
Non-U.S. companies			640				1,144				696
Income before income taxes		$	1,797			$	2,426			$	634

The following table presents the current and deferred amounts of the provision for income taxes (in millions):

		Year ended December 31,
		2022				2021				2020
Current:
Federal		$	(191	)		$	(172	)		$	88
State and municipal			(16	)			(13	)			(16	)
Foreign			(250	)			(290	)			(203	)
Deferred:
Federal			52				(97	)			7
State and municipal			8				(7	)			3
Foreign			(14	)			88				10
Provision for income taxes		$	(411	)		$	(491	)		$	(111	)

Amounts reflected in the preceding tables are based on the location of the taxing authorities.

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7.  Income Taxes (Continued)

The following table presents the reconciliation of the statutory U.S. federal income tax rate to the effective tax rate:

		Year ended December 31,
		2022				2021				2020
Statutory U.S. federal income tax rate			21.0	%			21.0	%			21.0	%
State income tax, net of federal effect			0.7				1.0				1.4
Audit settlements & change in reserve			3.7				1.6				12.1
Differential arising from foreign earnings (1)			2.2				2.0				14.9
Valuation allowance			2.1				(0.5	)			2.5
Intercompany loan adjustment			0.6								6.1
Tax credits			(3.3	)			(2.6	)			(29.2	)
Foreign derived intangible income			(2.7	)			(1.3	)
Stock compensation			(0.8	)			(1.5	)			(1.7	)
Remeasurement of deferred tax assets and liabilities			(0.1	)							(13.2	)
Legal entity rationalization											(2.2	)
Non-deductible expenses							1.4				6.9
Global intangible low-taxed income							0.2				(0.5	)
Other items, net			(0.5	)			(1.1	)			(0.6	)
Effective tax rate			22.9	%			20.2	%			17.5	%

(1)	Includes impact of intercompany asset sales.

On September 9, 2020, Corning obtained a 100% controlling interest in HS LLC and an 80.5% controlling interest in HSO LLC. As a result, the deferred tax liability on the outside basis difference between book and tax basis for Corning’s investment in HS LLC and HSO LLC was adjusted by approximately $116 million.

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

During the year ended December 31, 2022, the Company distributed approximately $534 million from foreign subsidiaries to their respective U.S. parent companies.  As of December 31, 2022, Corning has approximately $1.3 billion of indefinitely reinvested foreign earnings. It remains impracticable to calculate the tax cost of repatriating unremitted earnings which are considered indefinitely reinvested.

77

7.  Income Taxes (Continued)

The following table presents the tax effects of temporary differences and carryforwards that gave rise to significant portions of the deferred tax assets and liabilities (in millions):

		December 31,
		2022				2021
Loss and tax credit carryforwards		$	281			$	375
Other assets			232				200
Research and development capitalization			280				81
Asset impairments and restructuring reserves			41				30
Postretirement medical and life benefits			102				154
Other accrued liabilities			311				354
Other employee benefits			346				329
Gross deferred tax assets			1,593				1,523
Valuation allowances			(166	)			(138	)
Total deferred tax assets			1,427				1,385
Intangible and other assets			(108	)			(103	)
Fixed assets			(289	)			(300	)
Finance leases			(200	)			(174	)
Total deferred tax liabilities			(597	)			(577	)
Net deferred tax assets		$	830			$	808

Net deferred tax assets on the consolidated balance sheets consisted of the following (in millions):

		December 31,
		2022				2021
Deferred tax assets		$	1,073			$	1,066
Other liabilities			(243	)			(258	)
Net deferred tax assets		$	830			$	808

The following table presents details of the deferred tax assets for loss and tax credit carryforwards (in millions):

						Expiration
		Total					2023-2027				2028-2032				2033-2042			Indefinite
Net operating losses		$	278			$	94			$	27			$	24			$	133
Tax credits			3								3
Balance as of December 31, 2022		$	281			$	94			$	30			$	24			$	133

The following table presents the changes in the deferred tax valuation allowance (in millions):

		2022				2021				2020
Balance as of January 1		$	138			$	167			$	215
Additions			81				13				27
Reductions			(53	)			(42	)			(75	)
Balance as of December 31		$	166			$	138			$	167

78

7.  Income Taxes (Continued)

The following table presents the reconciliation of the beginning and ending amount of unrecognized tax benefits (in millions):

		2022				2021				2020
Balance as of January 1		$	178			$	131			$	62
Additions based on tax positions related to the current year			10				54				19
Additions for tax positions of prior years			24				17				53
Reductions for tax positions of prior years			(5	)			(21	)
Settlements and lapse of statute of limitations			(1	)			(3	)			(3	)
Balance as of December 31		$	206			$	178			$	131

During 2020, the Internal Revenue Service (“IRS”) opened an audit for tax years 2015-2018. The Company does not expect additional material exposure for the tax years under audit. However, if upon conclusion of these matters, the ultimate determination of taxes owed is for an amount materially different than the current position, the overall tax expense and effective tax rate could be materially impacted in the period of adjustment. 

The additions for tax positions of prior years were primarily due to tax audits, development of tax court cases and tax law changes in various jurisdictions.

Included in the balance as of  December 31, 2022, 2021 and 2020 are $169 million, $120 million and $102 million, respectively, of unrecognized tax benefits that would impact the Company’s effective tax rate if recognized.

Accrued interest and penalties associated with uncertain tax positions are recognized as part of tax expense. For the years ended  December 31, 2022, 2021 and 2020 the amount recognized in interest expense and accrued for the payment of interest and penalties was not material.

It is possible that the amount of unrecognized tax benefits will change due to one or more of the following events during the next twelve months: audit activity, tax payments, or final decisions in matters that are the subject of controversy in various jurisdictions. The Company believes that adequate tax reserves are provided for these matters. However, if upon conclusion of these matters, the ultimate determination of taxes owed is for an amount materially different than the current reserves, the Company’s overall tax expense and effective tax rate could be materially impacted in the period of adjustment. As of December 31, 2022, the Company is not expecting any significant movements in the uncertain tax benefits in the next twelve months.

Corning Incorporated, as the common parent company, and all 80%-or-more-owned of its U.S. subsidiaries join in the filing of consolidated U.S. federal income tax returns. The statute of limitations is closed for all periods ending through December 31, 2012. All returns for periods ended through December 31, 2014, have been audited by and settled with the IRS.

Corning Incorporated and its U.S. subsidiaries file income tax returns on a combined, unitary or stand-alone basis in multiple state and local jurisdictions, which generally have statutes of limitations ranging from 3 to 5 years. Various state income tax returns are currently in the process of examination or administrative appeal. The Company does not expect any material proposed adjustments from any of these audits.

Corning’s foreign subsidiaries file income tax returns in the countries where their operations are located.  Generally, these countries have statutes of limitations ranging from 3 to 10 years.  The statute of limitations is closed through the following years in these major jurisdictions:  China (2008), Japan (2014), Taiwan (2016) and South Korea (2013).

Corning Precision Materials, a South Korean subsidiary, is currently appealing certain tax assessments and tax refund claims for tax years 2010 through 2018. The Company is required to deposit the disputed tax amounts with the South Korean government as a condition of its appeal of any tax assessment. Corning believes that it is more likely than not that the Company will prevail in the appeals process.  The non-current receivable balance was $349 million and $350 million as of  December 31, 2022 and  December 31, 2021, respectively, for the amount on deposit with the South Korean government. 

79

8.  Property, Plant and Equipment, Net of Accumulated Depreciation

Property, plant and equipment, net of accumulated depreciation consisted of the following (in millions):

		December 31,
		2022				2021
Land		$	420			$	441
Buildings			5,963				6,145
Equipment (1)			20,800				21,208
Construction in progress			2,335				1,979
Subtotal			29,518				29,773
Accumulated depreciation			(14,147	)			(13,969	)
Property, plant and equipment, net of accumulated depreciation (2)		$	15,371			$	15,804

(1)

Manufacturing equipment includes certain components of production equipment that are constructed of precious metals. As of December 31, 2022 and 2021, the carrying value of precious metals was $3.4 billion and $3.5 billion, respectively, and significantly lower than the fair market value. Depletion expense for precious metals for the years ended December 31, 2022, 2021 and 2020 was $27 million, $28 million and $24 million, respectively.

(2)

Approximately $48 million, $36 million and $58 million of interest costs were capitalized as part of property, plant and equipment during the years ended December 31, 2022, 2021 and 2020, respectively.

9.  Goodwill and Other Intangible Assets

The following table presents the changes in the carrying amount of goodwill for the years ended December 31, 2022 and 2021 (in millions):

		Optical Communications				Display Technologies				Specialty Materials				Life Sciences				Hemlock and Emerging Growth Businesses				Total
Balance as of December 31, 2020		$	943			$	132			$	150			$	618			$	617			$	2,460
Foreign currency translation adjustment and other			(28	)			(7	)							(2	)			(2	)			(39	)
Balance as of December 31, 2021		$	915			$	125			$	150			$	616			$	615			$	2,421
Acquired goodwill			4								1												5
Foreign currency translation adjustment and other			(14	)			(4	)							(10	)			(4	)			(32	)
Balance as of December 31, 2022		$	905			$	121			$	151			$	606			$	611			$	2,394

Corning’s gross goodwill balance and accumulated impairment losses were $8.9 billion and $6.5 billion, respectively, as of  December 31, 2022 and 2021. Accumulated impairment losses were generated primarily through goodwill impairments related to the Optical Communications segment.

80

9.  Goodwill and Other Intangible Assets (Continued)

Other Intangible Assets, Net

Other intangible assets, net consisted of the following (in millions):

		December 31,
		2022												2021
		Gross				Accumulated amortization				Net				Gross				Accumulated amortization				Net
Amortized intangible assets:
Patents, trademarks & trade names		$	496			$	300			$	196			$	498			$	279			$	219
Customer lists and other (1)			1,461				628				833				1,464				535				929
Other intangible assets, net		$	1,957			$	928			$	1,029			$	1,962			$	814			$	1,148

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

Corning’s amortized intangible assets are primarily related to Optical Communications, Life Sciences and certain businesses within Hemlock and Emerging Growth Businesses.  The net carrying amount of intangible assets decreased during the year, primarily driven by amortization of $123 million, offset by acquisitions of $9 million.

Annual amortization expense is expected to be approximately $119 million, $123 million, $121 million, $101 million and $94 million for years 2023 through 2027, respectively.

10.  Other Assets and Other Liabilities

Other assets consisted of the following (in millions):

		December 31,
		2022				2021
Current assets:
Derivative instruments (Note 14)		$	454			$	336
Other current assets			703				690
Other current assets		$	1,157			$	1,026
Non-current assets:
Derivative instruments (Note 14)		$	224			$	164
South Korean tax deposits (Note 7)			349				350
Operating leases (Note 6)			842				741
Investments			360				318
Other non-current assets			404				483
Other assets		$	2,179			$	2,056

81

10.  Other Assets and Other Liabilities (Continued)

Other liabilities consisted of the following (in millions):

		December 31,
		2022				2021
Current liabilities:
Wages and employee benefits		$	727			$	824
Income taxes (Note 7)			127				196
Derivative instruments (Note 14)			174				144
Deferred revenue (Note 4)			144				148
Customer deposits (Note 4)			132				223
Share repurchase liability (Note 16)			506				506
Short-term leases (Note 6)			111				94
Other current liabilities			1,226				1,004
Other accrued liabilities		$	3,147			$	3,139
Non-current liabilities:
Defined benefit pension plan liabilities (Note 12)		$	668			$	707
Derivative instruments (Note 14)			17				49
Deferred revenue (Note 4)			725				764
Customer deposits (Note 4)			1,137				1,072
Share repurchase liability (Note 16)			17				517
Deferred tax liabilities (Note 7)			243				258
Long-term leases (Note 6)			795				691
Other non-current liabilities			1,353				1,134
Other liabilities		$	4,955			$	5,192

82

11.  Debt

Debt consisted of the following (in millions):

		December 31,
		2022				2021
Long-term debt
Medium-term notes, average rate 7.66%, due through 2023		$	45			$	45
Debentures, 6.85%, due 2029			159				160
Debentures, callable, 7.25%, due 2036			249				249
Debentures, 4.70%, due 2037			296				296
Debentures, 5.75%, due 2040			396				396
Debentures, 4.75%, due 2042			496				496
Debentures, 5.35%, due 2048			544				544
Debentures, 3.90%, due 2049			395				395
Debentures, 4.375%, due 2057			743				743
Debentures, 5.85%, due 2068			297				297
Debentures, 5.45%, due 2079			1,086				1,086
Yen-denominated debentures, 0.698%, due 2024			160				182
Yen-denominated debentures, 0.722%, due 2025			76				87
Yen-denominated debentures, 0.992%, due 2027			358				407
Yen-denominated debentures, 1.043%, due 2028			232				264
Yen-denominated debentures, 1.219%, due 2030			190				216
Yen-denominated debentures, 1.153%, due 2031			237				270
Yen-denominated debentures, 1.583%, due 2037			76				86
Yen-denominated debentures, 1.513%, due 2039			45				51
Financing Leases, average discount rate 4.4%, due through 2044			190				183
Other, average rate 3.93%, due through 2043			641				591
Total long-term debt, including current portion			6,911				7,044
Less current portion of long-term debt			224				55
Long-term debt		$	6,687			$	6,989

Based on borrowing rates currently available to us for loans with similar terms and maturities, the fair value of long-term debt was $6.1 billion and $8.3 billion as of  December 31, 2022 and 2021, respectively, compared to recorded book values of $6.7 billion and $7.0 billion as of  December 31, 2022 and 2021, respectively. The Company measures the fair value of its long-term debt using Level 2 inputs based primarily on current market yields for its existing debt traded in the secondary market.

On a quarterly basis, Corning will recognize the foreign currency translation gains and losses resulting from changes in exchanges rates within accumulated other comprehensive loss in shareholders’ equity. Cash proceeds from loans and debt issuances are disclosed as financing activities, and cash payments for interest and bond redemptions are disclosed as operating activities and financing activities, respectively, in the consolidated statements of cash flows. 

Corning did not have outstanding commercial paper as of  December 31, 2022 and 2021.

During the year ended December 31, 2022, Corning amended and restated its existing revolving credit agreement, which provides a committed $1.5 billion unsecured multi-currency line of credit, primarily to extend the term to 2027.  Additionally, Corning amended and restated its 25 billion Japanese yen liquidity facility, equivalent to approximately $191 million, primarily to extend the term to 2025.  As of December 31, 2022 and 2021, there were no outstanding amounts under either the amended and restated or the existing facilities. 

83

11.  Debt (Continued)

Corning is the obligor to unsecured variable rate loan facilities, with an aggregate capacity of 4,645 million Chinese yuan, equivalent to approximately $673 million, whose proceeds are used for capital investment and general corporate purposes.  As of December 31, 2022 and 2021, these facilities had variable rates ranging from 3.3% to 4.3% and 3.8% to 4.5%, respectively, and maturities ranging from 2023 to 2032.  As of December 31, 2022 and 2021, amounts outstanding under these facilities totaled $352 million and $277 million, respectively. 

The following table presents debt maturities by year as of  December 31, 2022 (in millions) (1):

2023				2024				2025				2026				2027				Thereafter
$	224			$	284			$	169			$	29			$	403			$	5,845

(1)	Excludes impact of an interest rate swap, bond discounts and deferred expenses.

Debt Issuances and Redemptions

During the year ended December 31, 2021, Corning redeemed $375 million of 2.9% debentures due in 2022 and $250 million of 3.7% debentures due in 2023, paying premiums of $10 million and $19 million, respectively, by exercising the make-whole call.  The bond redemptions resulted in an $11 million and $20 million loss, respectively.

Losses on bond redemption have been recorded within other income (expense), net in the consolidated statements of income.

12.  Employee Retirement Plans

Defined Benefit Plans

Corning has defined benefit pension plans covering certain domestic and international employees. The Company may contribute, as necessary, an amount exceeding the minimum requirements to achieve the Company’s long-term funding targets. During the year ended December 31, 2022, voluntary cash contributions were not material to domestic and international defined benefit plans. During the year ended December 31, 2021, cash contributions of $24 million were made to international pension plans. In 2023, the Company plans to make cash contributions of $49 million to international pension plans.

Corning offers postretirement plans that provide health care and life insurance benefits for retirees and eligible dependents. Certain employees may become eligible for such postretirement benefits upon reaching retirement age and service requirements. In 2022 and 2021, no voluntary cash contributions were made to domestic postretirement plans. For current retirees (including surviving spouses) and active employees eligible for the salaried retiree medical program, Corning has placed a “cap” on the amount to be contributed toward retiree medical coverage in the future. The cap is equal to 120% of the 2005 contributions toward retiree medical benefits. Once contributions toward salaried retiree medical costs reach this cap, impacted retirees will have to pay the excess amount in addition to their regular contributions for coverage. This cap was attained for post-65 retirees in 2008 and attained for pre-65 retirees in 2010. Furthermore, employees hired or rehired on or after January 1, 2007 will be eligible for Corning retiree medical benefits upon retirement; however, these employees will pay 100% of the cost.

84

12.  Employee Retirement Plans (Continued)

Obligations and Funded Status

The following table presents the change in benefit obligation and the funded status of the defined benefit pension and post-retirement benefit plans (in millions):

		Domestic pension benefits								International pension benefits								Postretirement benefits
		2022				2021				2022				2021				2022				2021
Change in benefit obligation
Benefit obligation at beginning of year		$	4,075			$	4,203			$	736			$	778			$	654			$	764
Service cost			105				102				22				25				9				10
Interest cost			98				78				11				10				15				15
Plan participants’ contributions																			7				7
Plan amendments			28
Actuarial gain			(925	)			(107	)			(137	)			(17	)			(209	)			(105	)
Other			3								(1	)			(2	)
Benefits paid			(202	)			(201	)			(21	)			(26	)			(42	)			(37	)
Foreign currency translation											(61	)			(32	)
Benefit obligation at end of year		$	3,182			$	4,075			$	549			$	736			$	434			$	654
Change in plan assets
Fair value of plan assets at beginning of year		$	3,598			$	3,575			$	584			$	598			$	9			$	30
Actual (loss) gain on plan assets			(728	)			208				(139	)			(2	)
Employer contributions			15				16				8				31				31				9
Plan participants’ contributions																			7				7
Benefits paid			(202	)			(201	)			(21	)			(26	)			(42	)			(37	)
Foreign currency translation											(51	)			(17	)
Fair value of plan assets at end of year		$	2,683			$	3,598			$	381			$	584			$	5			$	9
Funded status at end of year
Fair value of plan assets		$	2,683			$	3,598			$	381			$	584			$	5			$	9
Benefit obligations			(3,182	)			(4,075	)			(549	)			(736	)			(434	)			(654	)
Funded status of plans		$	(499	)		$	(477	)		$	(168	)		$	(152	)		$	(429	)		$	(645	)
Amounts recognized in the consolidated balance sheets consist of:
Noncurrent asset										$	26			$	100
Current liability		$	(18	)		$	(15	)			(7	)			(7	)		$	(22	)		$	(23	)
Noncurrent liability			(481	)			(462	)			(187	)			(245	)			(407	)			(622	)
Recognized liability		$	(499	)		$	(477	)		$	(168	)		$	(152	)		$	(429	)		$	(645	)
Amounts recognized in accumulated other comprehensive loss consist of:
Net actuarial loss (gain)		$	259			$	272			$	(2	)		$	(3	)		$	(226	)		$	(22	)
Prior service cost (credit)			44				22				(1	)			1				(15	)			(20	)
Amounts recognized at end of year		$	303			$	294			$	(3	)		$	(2	)		$	(241	)		$	(42	)

85

12.  Employee Retirement Plans (Continued)

Across total pension benefits, an actuarial gain of $1.1 billion was recognized in 2022 primarily due to increases in bond yields during the year, leading to a domestic and international plan weighted-average discount rates that were 263 and 126 basis points higher, respectively, than the prior year. In 2021, an actuarial gain of $124 million was recognized primarily due to increases in bond yields during the year, leading to domestic and international plan weighted-average discount rates that were 37 and 18 basis points higher, respectively, than the prior year. The accumulated benefit obligation for defined benefit pension plans was $3.5 billion and $4.5 billion as of  December 31, 2022 and 2021, respectively.

For postretirement benefits, an actuarial gain of $209 million was recognized in 2022 due to current year increases in bond yields, leading to a weighted-average discount rate that was 259 basis points higher than the prior year. In 2021, an actuarial gain of $105 million was recognized due to current year increases in bond yields, leading to a weighted-average discount rate that was 30 basis points higher than the prior year.

The following table presents information for pension plans where the projected benefit obligation or the accumulated benefit obligation exceeded the fair value of plan assets (in millions):

		December 31,
		2022				2021
Projected benefit obligation		$	3,406			$	4,358
Fair value of plan assets		$	2,712			$	3,627
Accumulated benefit obligation		$	3,238			$	4,110
Fair value of plan assets		$	2,712			$	3,627

The following table presents the components of net periodic benefit expense (income) for employee retirement plans, which other than the service cost component is recorded in other income (expense), net in the consolidated statements of income (in millions):

		Domestic pension benefits												International pension benefits												Postretirement benefits
		2022				2021				2020				2022				2021				2020				2022				2021				2020
Service cost		$	105			$	102			$	92			$	22			$	25			$	26			$	9			$	10			$	9
Interest cost			98				78				110				11				10				12				15				15				20
Expected return on plan assets			(210	)			(209	)			(186	)			(9	)			(7	)			(9	)
Amortization of prior service cost (credit)			6				4				6				(1	)			(1	)			(1	)			(5	)			(6	)			(5	)
Amortization of actuarial (gain) loss																											(5	)			2				1
Recognition of actuarial loss			29				10				12				8				1				10
Total net periodic benefit expense (income)		$	28			$	(15	)		$	34			$	31			$	28			$	38			$	14			$	21			$	25
Settlement charge															2
Special termination benefit charge			2								8																								1
Total expense (income)		$	30			$	(15	)		$	42			$	33			$	28			$	38			$	14			$	21			$	26
Other changes in plan assets and benefit obligations recognized in other comprehensive (loss) income:
Curtailment effects																						$	(4	)
Settlements														$	11
Current year actuarial loss (gain)		$	16			$	(105	)		$	94				(27	)		$	(7	)			(11	)		$	(209	)		$	(105	)		$	58
Amortization of actuarial gain (loss)																											5				(2	)			(1	)
Recognition of actuarial (loss) gain			(29	)			(10	)			(12	)			20				(1	)			(10	)
Current year prior service cost			28								1
Amortization of prior service (cost) credit			(6	)			(4	)			(6	)			1				1				1				5				6				5
Total recognized in other comprehensive (loss) income		$	9			$	(119	)		$	77			$	5			$	(7	)		$	(24	)		$	(199	)		$	(101	)		$	62

86

12.  Employee Retirement Plans (Continued)

Corning uses a hypothetical yield curve and associated spot rate curve to discount the plan’s projected benefit payments. Once the present value of projected benefit payments is calculated, the suggested discount rate is equal to the level rate that results in the same present value. The yield curve is based on actual high-quality corporate bonds across the full maturity spectrum, which also includes private placements and eurobonds that are denominated in U.S. currency. The curve is developed from yields on hundreds of bonds from four grading sources, Moody’s, S&P, Fitch and the Dominion Bond Rating Service. A bond will be included if at least half of the grades from these sources are Aa, non-callable bonds. The very highest 10% yields and the lowest 40% yields are excluded from the curve to eliminate outliers in the bond population.

Mortality is one of the key assumptions used in valuing liabilities of retirement plans. It is used to assign a probability of payment for benefits that are contingent upon participants’ survival. To make this assumption, benefit plan sponsors typically use a base mortality table and an improvement scale to mortality rates for future anticipated changes to historical death rates.

As of December 31, 2021, Corning updated the adjustment factors applied to its base mortality assumption (PRI-2012 white collar table and PRI-2012 blue collar table for non-union and union participants, respectively) to value its U.S. benefit plan obligation, with no change in 2022. In addition, Corning also updated to the MP-2020 projection scale and the mortality assumption applied to disabled participants (PRI-2012 disabled mortality base table with future improvements using MP-2020) for the year ended December 31, 2020, with no change in 2021 or 2022.  As the Society of Actuaries publishes additional mortality improvement scales and base mortality tables, Corning considers these revised schedules in setting its mortality assumptions.

Measurement of postretirement benefit expense is based on assumptions used to value the postretirement benefit obligation at the beginning of the year.

The following table presents the weighted-average assumptions used to determine benefit obligations:

		Pension benefits
		Domestic												International												Postretirement benefits
		2022				2021				2020				2022				2021				2020				2022				2021				2020
Discount rate			5.50	%			2.87	%			2.50	%			2.46	%			1.20	%			1.02	%			5.58	%			2.99	%			2.69	%
Rate of compensation increase			3.48	%			3.50	%			4.16	%			3.73	%			3.63	%			3.55	%
Cash balance crediting rate			4.14	%			3.86	%			3.84	%			0.82	%			0.91	%			0.94	%
Employee contributions crediting rate			4.62	%			1.57	%			0.62	%

The following table presents the weighted-average assumptions used to determine net periodic benefit expense (income):

		Pension benefits
		Domestic												International												Postretirement benefits
		2022				2021				2020				2022				2021				2020				2022				2021				2020
Discount rate			2.88	%			2.50	%			3.28	%			1.20	%			1.02	%			1.34	%			2.99	%			2.69	%			3.41	%
Expected return on plan assets			6.00	%			6.00	%			6.00	%			1.64	%			1.26	%			1.71	%
Rate of compensation increase			3.50	%			4.16	%			3.50	%			3.63	%			3.55	%			2.96	%
Cash balance crediting rate			3.86	%			3.84	%			3.94	%			0.91	%			0.94	%			0.97	%
Employee contributions crediting rate			1.57	%			0.62	%			2.03	%

The following table presents the assumed health care trend rates:

Assumed health care trend rates as of December 31		2022				2021
Health care cost trend rate assumed for next year (pre-65 / post-65 retirees)		7.00% / 4.25%				6.25% / 6.25%
Ultimate health care trend rate		5		%		5		%
Year that the rate reaches the ultimate trend rate		2031				2027

87

12.  Employee Retirement Plans (Continued)

Plan Assets

The Company’s primary objective is to ensure the plan has sufficient return on assets to fund the plan’s current and future obligations as they become due. Investments are primarily made in public securities to ensure adequate liquidity to support benefit payments. Domestic and international stocks provide diversification to the portfolio. The target allocation range equity investment is 40% which includes large, mid and small-cap companies and investments in both developed and emerging markets. The target allocation for bond investments is 60%, which predominately includes corporate bonds. Long-duration fixed income assets are utilized to mitigate the sensitivity of funding ratios to changes in interest rates.

The following table presents the fair values of domestic defined benefit and post-retirement benefit plan assets, by asset category (in millions):

		December 31, 2022																December 31, 2021
		Total				Level 1				Level 2				Level 3				Total				Level 1				Level 2				Level 3
Equity securities:
U.S. companies		$	1,168			$	63			$	1,105							$	977			$	20			$	957
International companies																			234								234
Fixed income:
U.S. treasury bonds			400				400												256				256
U.S. corporate bonds			1,060								1,060								1,770								1,770
Preferred securities			1								1								11								11
Private equity (1)			24											$	24				41											$	41
Real estate (2)			7												7				10												10
Cash equivalents			28				28												308				308
Total		$	2,688			$	491			$	2,166			$	31			$	3,607			$	584			$	2,972			$	51

(1)	This category includes venture capital, leverage buyouts and distressed debt limited partnerships invested primarily in U.S. companies. The inputs are valued by discounted cash flow analysis and comparable sale analysis.

(2)	This category includes industrial, office, apartments, hotels, infrastructure and retail investments which are limited partnerships predominately in the U.S. The inputs are valued by discounted cash flow analysis; comparable sale analysis and periodic external appraisals.

The following table presents the fair values of international defined benefit plan assets, by asset category (in millions):

		December 31, 2022																December 31, 2021
		Total				Level 1				Level 2				Level 3				Total				Level 1				Level 2				Level 3
Fixed income:
International fixed income		$	87			$	87											$	500			$	416			$	84
Insurance contracts			192											$	192				2											$	2
Mortgages			42												42				22												22
Cash equivalents			48				48												60				60
Other			12				1								11
Total		$	381			$	136			$	-			$	245			$	584			$	476			$	84			$	24

88

12.  Employee Retirement Plans (Continued)

The following table presents the changes in the fair value of the defined benefit plans’ Level 3 assets (in millions):

		Domestic								International
		Private equity				Real estate				Mortgages				Insurance contracts				Other
Balance as of December 31, 2020		$	51			$	140			$	20			$	3
Actual return on plan assets relating to assets still held at the reporting date			21				1				2
Actual return on plan assets relating to assets sold during the reporting period							4
Asset (sales) purchases			(31	)			(135	)							(1	)
Balance as of December 31, 2021		$	41			$	10			$	22			$	2
Actual return on plan assets relating to assets still held at the reporting date			(8	)							1
Actual return on plan assets relating to assets sold during the reporting period											1
Asset (sales) purchases			(9	)			(3	)			18				190			$	11
Balance as of December 31, 2022		$	24			$	7			$	42			$	192			$	11

Credit Risk

54% of domestic plan assets are invested in bonds with an average credit rating of AA-. These bonds are subject to both credit and default risk and changes in the risk could lead to a decline in the value of these bonds. 

Liquidity Risk

1% of the domestic securities are invested in Level 3 securities. These are long-term investments in private equity and private real estate investments that may not mature or be sellable in the near-term without significant loss.

As of  December 31, 2022 and 2021, the amount of Corning common stock included in equity securities was not significant.

Cash Flow Data

The following table presents the gross benefit payments expected to be paid for domestic and international defined benefit pension plans and the postretirement medical and life plans (in millions):

		Expected benefit payments
		Domestic pension benefits				International pension benefits				Postretirement benefits
2023		$	242			$	27			$	29
2024		$	243			$	34			$	29
2025		$	254			$	34			$	30
2026		$	260			$	38			$	30
2027		$	265			$	38			$	31
2028-2032		$	1,393			$	213			$	156

Other Benefit Plans

Corning offers defined contribution plans covering employees meeting certain eligibility requirements. Total consolidated defined contribution plan expense was $117 million, $98 million and $76 million for the years ended December 31, 2022, 2021 and 2020, respectively. 

89

13.  Commitments, Contingencies and Guarantees

Guarantees

The Company is required, at the time a guarantee is issued, to recognize a liability for the fair value or market value of the obligation it assumes. In the normal course of business, the Company does not routinely provide significant third-party guarantees. Generally, third-party guarantees provided by Corning are limited to certain financial guarantees, including stand-by letters of credit and performance bonds, and the incurrence of contingent liabilities in the form of purchase price adjustments related to attainment of milestones. These guarantees have various terms and none of these guarantees are individually significant. The Company believes a significant majority of these guarantees and contingent liabilities will expire without being funded.

Purchase Commitments

Purchase obligations are enforceable and legally binding obligations. The Company has purchase commitments primarily for raw materials and energy-related take-or-pay contracts. Commitments made under these obligations as of December 31, 2022 are as follows (in millions):

		Amount of commitment expiration per period
		Less than 1 year				1 to 3 years				3 to 5 years				5 years and thereafter
Purchase obligations		$	230			$	212			$	102			$	453

Litigation, Environmental and Indemnifications

Corning is a defendant in various lawsuits and is subject to various claims that arise in the normal course of business, the most significant of which are summarized below. In the opinion of management, the likelihood that the ultimate disposition of these matters will have a material adverse effect on Corning’s consolidated financial position, liquidity, or results of operations, is remote.

Dow Corning Chapter 11 Related Matters

Until June 1, 2016, Corning and The Dow Chemical Company (“Dow”) each owned 50% of the common stock of Dow Corning Corporation (“Dow Corning”). On May 31, 2016, Corning and Dow realigned their ownership interest in Dow Corning. Following the realignment, Corning no longer owned any interest in Dow Corning. With the realignment, Corning agreed to indemnify Dow for 50% of Dow Corning’s non-ordinary course, pre-closing liabilities to the extent such liabilities exceed the amounts reserved for them by Dow Corning as of May 31, 2016, subject to certain conditions and limits. Corning does not believe that its indemnity obligation will be material.

Dow Corning Environmental Claims

In September 2019, Dow formally notified Corning of certain environmental matters for which Dow asserts that it has or will experience losses arising from remediation and response at a number of sites. In the event Dow is liable for these claims, Corning may be required to indemnify Dow for up to 50% of that liability, subject to certain conditions and limits. As of December 31, 2022, Corning has determined a potential liability for these environmental matters is probable, and the amount reserved is not material. 

Environmental Litigation

Corning has been designated by federal or state governments under environmental laws, including Superfund, as a potentially responsible party that may be liable for cleanup costs associated with 19 hazardous waste sites. It is Corning’s policy to accrue for its estimated liability related to such hazardous waste sites and other environmental liabilities related to property owned by Corning based on expert analysis and continual monitoring by both internal and external consultants. As of  December 31, 2022 and 2021, Corning had accrued approximately $109 million and $55 million, respectively, for the estimated undiscounted liability for environmental cleanup and related litigation. Based upon the information developed to date, management believes that the accrued reserve is a reasonable estimate of the Company’s liability.

90

14.  Hedging Activities

Corning is primarily exposed to foreign currency risks due to fluctuations in exchange rates. These fluctuations affect the Company’s financial instruments and transactions denominated in foreign currencies, which impact earnings.

The most significant foreign currency exposures relate to the Japanese yen, South Korean won, new Taiwan dollar, Chinese yuan, the euro and British pound. Corning seeks to mitigate the impact of exchange rate movements in the income statement by using over-the-counter (“OTC”) derivative instruments including foreign exchange forward and option contracts. In general, the expirations of these contracts coincide with the timing of the underlying foreign currency commitments and transactions.

Corning is exposed to potential losses in the event of non-performance by counterparties to these derivative contracts. However, this risk is minimized by maintaining a portfolio with a diverse group of highly-rated major financial institutions. The Company does not expect to record any losses due to counterparty default. Neither the Company nor its counterparties are required to post collateral for these financial instruments. The Company qualified for and elected the end-user exception to the mandatory swap clearing requirement of the Dodd-Frank Act.

Designated Hedges

Corning uses OTC foreign exchange forward contracts designated as cash flow hedges to reduce the risk that movements in exchange rates will adversely affect the net cash flows resulting from the sale of products to customers and purchases from suppliers. The total gross notional values for foreign currency cash flow hedges are $419 million and $780 million as of December 31, 2022 and 2021, respectively, with maturities through 2024. Corning defers gains and losses related to the cash flow hedges into accumulated other comprehensive loss on the consolidated balance sheets until the hedged item impacts earnings. As of December 31, 2022, the amount expected to be reclassified into earnings within the next 12 months is a pre-tax gain of $20 million.

Corning has entered into leases of precious metals, with maturities through 2025. To offset the risk of changes in the fair value of the Company’s separate accounting pool of leased precious metals due to adverse changes in the respective market prices, Corning designated the bifurcated embedded derivatives included in these leases as fair value hedges. The gain or loss on the derivatives, as well as the offsetting loss or gain on the hedged item attributable to the hedged risk, are recognized in current earnings. The amounts representing the time value component of the derivatives are excluded from the assessment of effectiveness and amortized in earnings. The impact of the excluded component on Corning’s other comprehensive income and earnings is not material. The carrying amount of the leased precious metals pool, which is included within property, plant and equipment, net of accumulated depreciation in the consolidated balance sheets, is $278 million and $107 million, respectively, as of December 31, 2022 and 2021. The carrying amount of the leased precious metals pool includes cumulative fair value losses of $95 million and $5 million as of December 31, 2022 and 2021, respectively.

Corning uses regression analysis or the critical term match method to assess initial hedge effectiveness. Following the inception of a hedging relationship, hedge effectiveness is assessed quarterly based on qualitative factors. 

Undesignated Hedges

Corning uses OTC foreign exchange forward and option contracts not designated as hedging instruments for accounting purposes to offset economic currency risks. The undesignated hedges limit exposure to foreign functional currency fluctuations related to certain subsidiaries’ monetary assets, monetary liabilities and net earnings in foreign currencies. 

A significant portion of the Company’s non-U.S. revenue and expenses are denominated in Japanese yen, South Korean won, new Taiwan dollar, Chinese yuan and euro. When this revenue and these expenses are translated back to U.S. dollars, the Company is exposed to foreign exchange rate movements. To protect translated earnings against movements in these currencies, the Company has entered into a series of average rate forwards and option contracts. Most of these contracts hedge a significant portion of the Company’s exposure to the Japanese yen, with maturities through 2024, and South Korean won, with maturities through 2026.  

91

14.  Hedging Activities (Continued)

The following table summarizes the total gross notional value for translated earnings contracts as of December 31, 2022 and 2021 (in billions):

		Year ended December 31,
		2022				2021
Average rate forward contracts:
Japanese yen-denominated		$	0.1			$	2.9
South Korean won-denominated			2.1				1.2
Other foreign currencies (1)			0.7				0.3
Option contracts:
Japanese yen-denominated (2)			4.6				3.6
Other foreign currencies (3)							0.9
Total gross notional value for translated earning contracts		$	7.5			$	8.9

(1)	Denominational currencies for average rate forward contracts include the Chinese yuan, New Taiwan dollar, euro and British pound.
(2)	Japanese yen-denominated option contracts include purchased put and call options and zero-cost collars. With respect to the zero-cost collars, the gross notional amount includes the value of the put and call options. However, due to the nature of zero-cost collars, only the put or the call option can be exercised at maturity.
(3)	Other foreign currencies option contracts are purchased basket options that include a basket of underlying currencies, including the Japanese yen, South Korean won, Chinese yuan, euro and British pound, and each basket option have been settled against U.S. dollars.

The fair values of these derivative contracts are recorded as either assets (gain position) or liabilities (loss position) on the consolidated balance sheets. Changes in the fair value of the derivative contracts are recorded currently in earnings within translated earnings contract gain (loss), net in the consolidated statements of income.

The following table summarizes the notional amounts and respective fair values of Corning’s derivative financial instruments on a gross basis as of  December 31, 2022 and 2021 (in millions): 

									Asset derivatives									Liability derivatives
		Notional amount									Fair value									Fair value
		2022				2021			Balance sheet location		2022				2021			Balance sheet location		2022				2021
Derivatives designated as hedging instruments
Foreign exchange and precious metals lease contracts (1)		$	419			$	780		Other current assets		$	26			$	49		Other accrued liabilities		$	(1	)		$	(2	)
									Other assets			78				10		Other liabilities							(9	)
Derivatives not designated as hedging instruments
Foreign exchange contracts			2,231				3,864		Other current assets			44				91		Other accrued liabilities			(49	)			(95	)
Translated earnings contracts			7,543				8,899		Other current assets			384				196		Other accrued liabilities			(124	)			(47	)
									Other assets			146				154		Other liabilities			(17	)			(40	)
Total derivatives		$	10,193			$	13,543				$	678			$	500				$	(191	)		$	(193	)

(1)

As of December 31, 2022, derivatives designated as hedging instruments include foreign exchange cash flow hedges with gross notional amounts of $419 million and fair value hedges of leased precious metals with a gross notional amount of 23,152 troy ounces. As of December 31, 2021, derivatives designated as hedging instruments include foreign exchange cash flow hedges with gross notional amounts of $780 million and fair value hedges of leased precious metals with a gross notional amount of 7,559 troy ounces. Other assets include designated derivatives pertaining to precious metals lease contracts in the amounts of $64 million and $5 million as of December 31, 2022 and 2021, respectively.

92

14.  Hedging Activities (Continued)

The following tables summarize the effect in the consolidated statements of income relating to Corning’s derivative financial instruments (in millions). The accumulated derivative gain included in accumulated other comprehensive loss on the consolidated balance sheets as of December 31, 2022 and 2021 is $19 million and $52 million, respectively. 

Derivatives hedging relationships		Gain (loss) recognized in other comprehensive income (OCI)											Location of gain (loss) reclassified from accumulated OCI into income		Gain (loss) reclassified from accumulated OCI into income
for cash flow and fair value hedges		2022				2021				2020			effective (ineffective)		2022				2021				2020
													Net sales		$	52			$	14			$	(6	)
													Cost of sales			32				39				13
Foreign exchange and precious metals lease contracts		$	52			$	47			$	(19	)	Other income (expense), net (1)			(3	)			(1	)			(14	)
Total cash flow and fair value hedges		$	52			$	47			$	(19	)			$	81			$	52			$	(7	)

			Gain (loss) recognized in income
Undesignated derivatives	Location of gain (loss) recognized in income		2022				2021				2020
Foreign exchange contracts	Other income (expense), net		$	46			$	38			$	(93	)
Translated earnings contracts	Translated earnings contract gain (loss), net			351				354				(38	)
Total undesignated			$	397			$	392			$	(131	)

(1)	A loss of $14 million was reclassified from accumulated other comprehensive loss into other income (expense), net, resulting from the de-designation of certain cash flow hedges during the year ended December 31, 2020.

15.  Fair Value Measurements

The following table provides the fair value measurement information for the Company’s major categories of financial assets and liabilities measured on a recurring basis (in millions):

						Fair value measurements at reporting date																Fair value measurements at reporting date
		December 31,																December 31,
		2022				Level 1				Level 2				Level 3				2021				Level 1				Level 2				Level 3
Current assets:
Other current assets (1)		$	505			$	2			$	454			$	49			$	352			$	10			$	336			$	6
Non-current assets:
Other assets (1)		$	225							$	224			$	1			$	175							$	164			$	11
Current liabilities:
Other accrued liabilities (1)		$	174							$	174							$	144							$	144
Non-current liabilities:
Other liabilities (1)		$	34							$	34							$	66							$	66

(1)	Derivative assets and liabilities include foreign exchange and precious metals lease contracts which are measured using observable inputs for similar assets and liabilities.

Assets and Liabilities Measured on a Non-Recurring Basis

There were no significant financial assets or liabilities measured on a nonrecurring basis as of December 31, 2022 and 2021.

93

16.  Shareholders’ Equity

Common Stock Dividends 

On February 8, 2023, Corning’s Board of Directors declared a $0.28 per share common stock dividend.

Fixed Rate Cumulative Convertible Preferred Stock, Series A

The Company had 2,300 outstanding shares of Fixed Rate Cumulative Convertible Preferred Stock, Series A (the “Preferred Stock”) as of December 31, 2020. On January 16, 2021, the Preferred Stock became convertible into 115 million common shares. On April 5, 2021 Corning and Samsung Display Co., Ltd. (“SDC”) executed the Share Repurchase Agreement (“SRA”), and the Preferred Stock was fully converted as of April 8, 2021. Immediately following the conversion, Corning repurchased and retired 35 million of the common shares held by SDC for an aggregate purchase price of approximately $1.5 billion, of which approximately $507 million was paid on both April 8, 2022 and 2021. The remaining payment of approximately $507 million will be paid on April 8, 2023. The 35 million common shares repurchased by Corning were excluded from the weighted-average common shares outstanding for the calculation of the Company’s basic and diluted earnings per share starting on April 8, 2021.

The remaining 80 million common shares were accounted for as a conversion of Preferred Stock and resulted in an increase of common stock and additional paid-in-capital based on the carrying value of the Preferred Stock. These common shares were included in the weighted-average common shares outstanding for the calculation of the Company’s basic and diluted earnings per share.

Pursuant to the SRA, with respect to the 80 million common shares outstanding held by SDC:

•

SDC has the option to sell an additional 22 million common shares to Corning in specified tranches from time to time in calendar years 2024 through 2027. Corning may, at its sole discretion, elect to repurchase such common shares. If Corning elects not to repurchase the common shares and SDC sells the common shares on the open market, Corning will be required to pay SDC a make-whole payment, subject to a 5% cap of the repurchase proceeds that otherwise would have been paid by Corning. As of December 31, 2022 and 2021, the fair value of the option was $17 million, when measured using significant other observable inputs.

•	The remaining 58 million shares of common shares are subject to a seven-year lock-up period expiring in 2027.

Share Repurchase Program

In 2019, the Board authorized the repurchase of up to $5.0 billion of additional common stock upon the completion of the 2018 repurchase plan (“2019 Authorization”).

In addition to the common shares repurchased under the SRA as discussed above, the Company repurchased 6.0 million, 7.3 million and 4.1 million shares of common stock under its 2019 Authorization for approximately $221 million, $274 million and $105 million, respectively, during the years ended December 31, 2022, 2021 and 2020, respectively.

As of December 31, 2022, approximately $3.3 billion remains available under the Company’s 2019 Authorization.

94

16.  Shareholders’ Equity (Continued)

The following table presents changes in capital stock (in millions):

		Common stock								Treasury stock
		Shares				Par value				Shares				Cost
Balance as of December 31, 2019			1,718			$	859				(956	)		$	(19,812	)
Shares issued to benefit plans and for option exercises			8				4
Shares purchased for treasury											(4	)			(105	)
Other, net (1)											(1	)			(11	)
Balance as of December 31, 2020			1,726			$	863				(961	)		$	(19,928	)
Shares issued to benefit plans and for option exercises			9				4
Shares purchased for treasury											(7	)			(274	)
Conversion of preferred stock to common stock			115				58
Repurchase of converted common stock			(35	)			(18	)
Other, net (1)											(2	)			(61	)
Balance as of December 31, 2021			1,815			$	907				(970	)		$	(20,263	)
Shares issued to benefit plans and for option exercises			5				3
Shares purchased for treasury											(6	)			(221	)
Other, net (1)											(1	)			(48	)
Balance as of December 31, 2022			1,820			$	910				(977	)		$	(20,532	)

(1)	Includes the deemed surrender to the Company of common stock to satisfy employee tax withholding obligations

95

16.  Shareholders’ Equity (Continued)

Accumulated Other Comprehensive Loss 

The following table presents the changes in the components of accumulated other comprehensive loss, including the proportionate share of equity method investee’s accumulated other comprehensive loss (in millions) (1):

		Foreign currency translation adjustments and other				Unamortized actuarial gains (losses) and prior service (costs) credits				Net unrealized losses on investments				Realized and unrealized (losses) gains on derivatives				Accumulated other comprehensive loss
Balance as of December 31, 2019		$	(857	)		$	(362	)		$	(3	)		$	51			$	(1,171	)
Other comprehensive income (loss) before reclassifications (2)		$	511			$	(106	)						$	(14	)		$	391
Amounts reclassified from accumulated other comprehensive income (5)							18								5				23
Equity method affiliates (6)			17																17
Net current-period other comprehensive income (loss)			528				(88	)			—				(9	)			431
Balance as of December 31, 2020		$	(329	)		$	(450	)		$	(3	)		$	42			$	(740	)
Other comprehensive (loss) income before reclassifications (3)		$	(582	)		$	178							$	43			$	(361	)
Amounts reclassified from accumulated other comprehensive loss (5)															(52	)			(52	)
Equity method affiliates (6)			(22	)															(22	)
Net current-period other comprehensive (loss) income			(604	)			178				—				(9	)			(435	)
Balance as of December 31, 2021		$	(933	)		$	(272	)		$	(3	)		$	33			$	(1,175	)
Other comprehensive (loss) income before reclassifications (4)		$	(762	)		$	151							$	31			$	(580	)
Amounts reclassified from accumulated other comprehensive income (loss) (5)							3								(61	)			(58	)
Equity method affiliates (6)			(17	)															(17	)
Net current-period other comprehensive (loss) income			(779	)			154				—				(30	)			(655	)
Balance as of December 31, 2022		$	(1,712	)		$	(118	)		$	(3	)		$	3			$	(1,830	)

(1)	All amounts are after tax. Amounts in parentheses indicate debits to accumulated other comprehensive loss.

(2)	Amounts are net of total tax expense of $22 million, primarily driven by $55 million related to foreign currency translation adjustments; embedded in this number are positive impacts of $5 million related to the hedging component and $28 million related to retirement plans.

(3)	Amounts are net of total tax expense of $4 million, primarily driven by $51 million related to retirement plans, offset by positive impacts of $44 million and $3 million related to foreign currency translation adjustments and the hedging component, respectively.

(4)	Amounts are net of total tax benefit of $22 million, primarily driven by $29 million and $24 million related to foreign currency translation adjustments and the hedging component, respectively, offset by negative impacts of $31 million related to retirement plans.

(5)	Tax effect of reclassifications are disclosed separately within the footnote.
(6)	Tax effects related to equity method affiliates are not significant in the reported periods.

96

16.  Shareholders’ Equity (Continued)

The following table presents reclassifications out of accumulated other comprehensive income (“AOCI”) by component (in millions) (1):

		Amount reclassified from AOCI												Affected line item
		Year ended December 31,												in the consolidated
Details about AOCI Components		2022				2021				2020				statements of income
Amortization of net actuarial loss		$	(4	)		$	(3	)		$	(23	)		(2)
Amortization of prior service credit							3							(2)
			(4	)			—				(23	)		Total before tax
			1								5			Tax benefit
		$	(3	)		$	—			$	(18	)		Net of tax
Realized gains (losses) on designated hedges		$	52			$	14			$	(6	)		Sales
			32				39				13			Cost of sales
			(3	)							(14	)		Other expense, net
			81				53				(7	)		Total before tax
			(20	)			(1	)			2			Tax (expense) benefit
		$	61			$	52			$	(5	)		Net of tax
Total reclassifications for the period		$	58			$	52			$	(23	)		Net of tax

(1)	Amounts in parentheses indicate debits to the statement of income.

(2)	These accumulated other comprehensive loss components are included in net periodic pension cost. Refer to Note 12 (Employee Retirement Plans) in the notes to the consolidated financial statements for additional details.

97

17.  Earnings Per Common Share

Basic earnings per common share are computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per common share assumes the issuance of common shares for all potentially dilutive securities outstanding.

The following table presents the reconciliation of the amounts used to compute basic and diluted earnings per common share from operations (in millions, except per share amounts):

		Year ended December 31,
		2022				2021				2020
Net income attributable to Corning Incorporated		$	1,316			$	1,906			$	512
Less: Series A convertible preferred stock dividend							24				98
Less: Excess consideration paid for redemption of preferred shares (1)							803
Net income available to common shareholders - basic			1,316				1,079				414
Net income available to common shareholders - diluted		$	1,316			$	1,079			$	414
Weighted-average common shares outstanding - basic			843				828				761
Effect of dilutive securities:
Stock options and other dilutive securities			14				16				11
Weighted-average common shares outstanding - diluted			857				844				772
Basic earnings per common share		$	1.56			$	1.30			$	0.54
Diluted earnings per common share		$	1.54			$	1.28			$	0.54
Anti-dilutive potential shares excluded from diluted earnings per common share:
Series A convertible preferred stock dividend (1)(2)							31				115
Employee stock options and awards			1								2
Total			1				31				117

(1)	Refer to Note 16 (Shareholders’ Equity) in the notes to the consolidated financial statements for more information.
(2)	For the years ended December 31, 2021 and 2020, the Preferred Stock was anti-dilutive and therefore excluded from the calculation of diluted earnings per share.

98

18.  Share-Based Compensation

The following table presents share-based compensation cost and the unrecognized compensation cost by award type (in millions):

		Amount of share-based compensation cost recognized												Unrecognized compensation cost				Weighted-average remaining term in years
		Year ended December 31,												December 31,
		2022				2021				2020				2022
Time-based restricted stock and restricted stock units		$	111			$	94			$	95			$	150				2.7
Performance-based restricted stock units			52				79				81				17				1.4
Stock Options			7				9				23				2				0.4
Other			5				8				8
Total share-based compensation cost (1)		$	175			$	190			$	207

(1)	The income tax benefit realized from share-based compensation was $16 million, $37 million and $12 million, respectively, for the years ended December 31, 2022, 2021 and 2020.

As of  December 31, 2022, there were approximately 32 million unissued common shares available for future grants authorized under the Plans.

Incentive Stock Plans

Time-Based Restricted Stock and Restricted Stock Units

The following table summarizes the changes in non-vested time-based restricted stock and restricted stock units during the year ended  December 31, 2022:

		Number of shares (in thousands)				Weighted-average grant-date fair value
Non-vested shares and share units as of December 31, 2021			10,594			$	25.83
Granted			4,680				33.82
Vested			(3,626	)			25.44
Forfeited			(349	)			28.44
Non-vested shares and share units as of December 31, 2022			11,299			$	29.19

The total fair value of time-based restricted stock and restricted stock units that vested during the years ended December 31, 2022, 2021 and 2020 was approximately $93 million, $88 million and $38 million, respectively. 

99

18.  Share-Based Compensation (Continued)

Performance-Based Restricted Stock Units

The following table summarizes the changes in non-vested performance-based restricted stock units during the year ended December 31, 2022:

		Number of shares (in thousands)				Weighted-average grant-date fair value
Non-vested share units as of December 31, 2021			3,684			$	34.17
Granted			1,764				40.74
Vested			(140	)			32.21
Performance adjustments			(556	)			38.77
Forfeited			(56	)			34.50
Non-vested share units as of December 31, 2022			4,696			$	35.41

The total fair value of performance-based restricted stock units that vested during the years ended December 31, 2022 and 2021 was approximately $5 million and $3 million, respectively. For the year ended December 31, 2020, there were no performance-based restricted stock units that vested.

Stock Options

The following table summarizes information concerning stock options as of December 31, 2022 and the related activity for the year ended December 31, 2022:

		Number of shares (in thousands)				Weighted-average exercise price				Weighted-average remaining contractual term in years				Aggregate intrinsic value (in thousands)
Options Outstanding as of December 31, 2021			11,904			$	22.31
Exercised			(2,010	)			19.80
Forfeited and expired			(229	)			18.66
Options outstanding as of December 31, 2022			9,665				22.92				5.78			$	89,986
Options expected to vest as of December 31, 2022			9,650				22.92				5.78				89,805
Options exercisable as of December 31, 2022			7,895				23.65				5.43				68,233

The aggregate intrinsic value (market value of stock less option exercise price) in the preceding table represents the total pre-tax intrinsic value, based on the Company’s closing stock price as of  December 30, 2022, which would have been received by the option holders had all option holders exercised their “in-the-money” options as of that date. 

There were no options granted in 2022 or 2021.  The weighted-average grant-date fair value for options granted during the year ended  December 31, 2020 was $3.67.  The total fair value of options that vested during the years ended December 31, 2022, 2021 and 2020 was approximately $20 million, $16 million and $31 million, respectively. 

Proceeds received from the exercise of stock options were $40 million, with a corresponding realized tax benefit of $5 million, for the year ended December 31, 2022. The total intrinsic value of options exercised for the years ended December 31, 2022, 2021 and 2020 was approximately $36 million, $100 million and $99 million, respectively.

100

18.  Share-Based Compensation (Continued)

The following inputs were used for the valuation of option grants under the stock option plans awarded during 2020:

Expected volatility and Weighted-average volatility			32.9	%
Expected dividends			4.48	%
Risk-free rate and Average risk-free rate			0.5	%
Expected term (in years)			7.4
Pre-vesting executive departure rate			0.6	%
Pre-vesting non-executive departure rate			2.5	%

19.  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.

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

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

•	Environmental Technologies – manufactures ceramic substrates and filters for emission control systems.

•	Life Sciences – manufactures glass and plastic 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. The net sales for this group are primarily attributable to HSG, which is 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.

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 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 the euro, as applicable to the segment. The most significant constant-currency adjustment relates to the Japanese yen exposure within the Display Technologies segment. Management utilizes constant-currency reporting based on internally-derived rates, as detailed below, which are closely aligned with the currencies we have hedged. 

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. Further, it reflects the underlying economics of the translated earnings contracts used to mitigate the impact of changes in currency exchange rates on our earnings and cash flows.

Constant-currency rates are as follows and are applied to all periods presented:

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

101

19.  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 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 (1)				Total
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 (2)		$	249			$	547			$	155			$	128			$	60			$	146			$	1,285
Research, development and engineering expenses (3)		$	230			$	124			$	222			$	98			$	37			$	163			$	874
Income tax provision (4)		$	(180	)		$	(203	)		$	(90	)		$	(78	)		$	(40	)		$	(24	)		$	(615	)
Net income		$	661			$	769			$	340			$	292			$	153			$	39			$	2,254
Investment in affiliated companies, at equity		$	3			$	102			$	8							$	4			$	144			$	261
Segment assets (5)		$	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 (2)		$	224			$	605			$	161			$	139			$	52			$	134			$	1,315
Research, development and engineering expenses (3)		$	216			$	110			$	208			$	111			$	33			$	160			$	838
Income tax (provision) benefit (4)		$	(152	)		$	(249	)		$	(99	)		$	(72	)		$	(51	)		$	11			$	(612	)
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 (5)		$	3,183			$	8,672			$	2,328			$	2,150			$	791			$	2,024			$	19,148
Capital expenditures		$	301			$	710			$	183			$	228			$	128			$	149			$	1,699
For the year ended December 31, 2020
Segment net sales		$	3,563			$	3,172			$	1,884			$	1,370			$	998			$	465			$	11,452
Depreciation (2)		$	242			$	548			$	162			$	132			$	50			$	81			$	1,215
Research, development and engineering expenses (3)		$	204			$	99			$	155			$	100			$	26			$	170			$	754
Income tax (provision) benefit (4)		$	(101	)		$	(190	)		$	(113	)		$	(52	)		$	(37	)		$	58			$	(435	)
Net income (loss)		$	366			$	717			$	423			$	197			$	139			$	(214	)		$	1,628
Investment in affiliated companies, at equity		$	3			$	107			$	4							$	2			$	142			$	258
Segment assets (5)		$	2,868			$	8,842			$	2,571			$	1,986			$	683			$	2,157			$	19,107
Capital expenditures		$	127			$	311			$	125			$	159			$	83			$	123			$	928

(1)	Corning obtained a controlling interest in HSG during the third quarter of 2020 and has consolidated results in Hemlock and Emerging Growth Businesses since September 9, 2020. Refer to Note 3 (HSG Transactions and Acquisitions) in the notes to the consolidated financial statements for additional information.
(2)	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.

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

(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.

102

19.  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,
		2022				2021				2020
Net sales of reportable segments		$	13,143			$	12,877			$	10,987
Net sales of Hemlock and Emerging Growth Businesses (1)			1,662				1,243				465
Impact of constant currency reporting (2)			(616	)			(38	)			(44	)
Cumulative adjustment related to customer contract (3)											(105	)
Consolidated net sales		$	14,189			$	14,082			$	11,303

(1)	Corning obtained a controlling interest in HSG during the third quarter of 2020 and has consolidated results in Hemlock and Emerging Growth Businesses since September 9, 2020. Refer to Note 3 (HSG Transactions and Acquisitions) in the notes to the consolidated financial statements for more information.
(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 recorded during the first quarter of 2020 to reduce revenue in the amount of $105 million. 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.

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

		Year ended December 31,
		2022				2021				2020
Net income of reportable segments		$	2,215			$	2,347			$	1,842
Net income (loss) of Hemlock and Emerging Growth Businesses (1)			39				(51	)			(214	)
Unallocated amounts:
Impact of constant currency reporting not included in segment net income (loss)			(480	)			(87	)			(22	)
Gain (loss) on foreign currency hedges related to translated earnings			348				354				(46	)
Translation gain (loss) on Japanese yen-denominated debt			191				180				(86	)
Litigation, regulatory and other legal matters			(100	)			(16	)			(144	)
Research, development, and engineering expense (2)(3)			(163	)			(151	)			(150	)
Transaction-related gain, net (4)											498
Amortization of intangibles			(123	)			(129	)			(121	)
Interest expense, net			(237	)			(265	)			(261	)
Income tax benefit			204				120				324
Pension mark-to-market			(11	)			(32	)			(31	)
Cumulative adjustment related to customer contract (5)											(105	)
Severance (charges) credits (3)			(70	)			13				(148	)
Asset impairment (3)											(217	)
Capacity realignment and other charges and credits (3)			(344	)			(123	)			(462	)
Bond redemption loss (6)							(31	)			(22	)
Gain (loss) on investments (7)			8				(23	)			107
Gain on sale of business			53				54
Other corporate items			(214	)			(254	)			(230	)
Net income		$	1,316			$	1,906			$	512

(1)	Corning obtained a controlling interest in HSG during the third quarter of 2020 and has consolidated results in Hemlock and Emerging Growth Businesses since September 9, 2020. Refer to Note 3 (HSG Transactions and Acquisitions) in the notes to the consolidated financial statements for additional information.

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

(3)	Refer to Note 2 (Restructuring, Impairment and Other Charges and Credits) in the notes to the consolidated financial statements for additional information on restructuring activities and impairment.
(4)	Amount represents the pre-tax gain recorded on Corning’s previously held equity investment in HSG recorded in 2020. Refer to Note 3 (HSG Transactions and Acquisitions) in the notes to the consolidated financial statements for additional information.

(5)	Amount represents the negative impact of a cumulative adjustment to reduce revenue in the amount of $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.

(6)	Refer to Note 11 (Debt) in the notes to the consolidated financial statements for additional information.

(7)	Amount for the year ended December 31, 2020 primarily represents the gain recognized from the initial public offering of an investment.

103

19.  Reportable Segments (Continued)

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

		December 31,
		2022				2021				2020
Total assets of reportable segments		$	16,741			$	17,124			$	16,950
Total assets of Hemlock and Emerging Growth Businesses			2,136				2,024				2,157
Unallocated amounts:
Current assets (1)			2,823				3,163				3,434
Investments (2)			99				54				177
Property, plant and equipment, net (3)			1,385				1,426				1,463
Other non-current assets (4)			6,315				6,363				6,594
Total assets		$	29,499			$	30,154			$	30,775

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

(2)	Represents other corporate investments. HSG became a fully consolidated subsidiary of Corning on September 9, 2020.

(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.

104

19.  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		2022				2021				2020
Optical Communications
Carrier network		$	3,760			$	3,200			$	2,612
Enterprise network			1,263				1,149				951
Total Optical Communications			5,023				4,349				3,563
Display Technologies			3,306				3,700				3,172
Specialty Materials
Corning® Gorilla® Glass			1,331				1,403				1,420
Advanced optics and other specialty glass			671				605				464
Total Specialty Materials			2,002				2,008				1,884
Environmental Technologies
Automotive and other			934				936				883
Diesel			650				650				487
Total Environmental Technologies			1,584				1,586				1,370
Life Sciences
Labware			657				671				552
Cell culture products			571				563				446
Total Life Science			1,228				1,234				998
Hemlock and Emerging Growth Businesses
Polycrystalline Silicon			1,191				892				194
Other			471				351				271
Total Hemlock and Emerging Growth Businesses			1,662				1,243				465
Net sales of reportable segments			13,143				12,877				10,987
Net sales of Hemlock and Emerging Growth Businesses			1,662				1,243				465
Impact of constant currency reporting (1)			(616	)			(38	)			(44	)
Cumulative adjustment related to customer contract (2)											(105	)
Consolidated net sales		$	14,189			$	14,082			$	11,303

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

(2)	Amount represents the negative impact of a cumulative adjustment recorded during the first quarter of 2020 to reduce revenue in the amount of $105 million. 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 is exiting its production of LCD panels.

105

19.  Reportable Segments (Continued)

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

		2022								2021								2020
		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		$	5,149			$	8,937			$	4,539			$	8,600			$	3,412			$	8,718
Canada			503				99				472				114				274				121
Mexico			96				180				93				289				75				239
Total North America			5,748				9,216				5,104				9,003				3,761				9,078
Asia Pacific:
Japan			617				429				780				496				505				583
Taiwan			813				1,696				983				1,923				887				2,247
China			4,435				4,794				4,495				4,966				3,734				4,469
Korea			514				3,294				640				3,479				748				3,597
Other			729				81				459				84				340				83
Total Asia Pacific			7,108				10,294				7,357				10,948				6,214				10,979
Europe:
Germany			539				459				462				500				378				579
Other			1,116				937				925				910				838				931
Total Europe			1,655				1,396				1,387				1,410				1,216				1,510
All Other			294				67				272				68				261				83
Total		$	14,805			$	20,973			$	14,120			$	21,429			$	11,452			$	21,650

(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.