20.

Reportable Segments

Our reportable segments are as follows:

●	Display Technologies – manufactures glass substrates for flat panel liquid crystal displays.

●	Optical Communications – manufactures carrier network and enterprise network components for the telecommunications industry.

●	Environmental Technologies – manufactures ceramic substrates and filters for automotive and diesel applications.

●	Specialty Materials – manufactures products that provide more than 150 material formulations for glass, glass ceramics and fluoride crystals to meet demand for unique customer needs.

●	Life Sciences – manufactures glass and plastic labware, equipment, media and reagents to provide workflow solutions for scientific applications.

All other segments that do not meet the quantitative threshold for separate reporting have been grouped as “All Other.” This group is primarily comprised of the results of Corning’s Pharmaceutical Technologies business, our non-LCD glass business

, new product lines and development projects, as well as certain corporate investments such as Eurokera and Keraglass equity affiliates.

We prepared the financial results for our reportable segments on a basis that is consistent with the manner in which we internally disaggregate financial information to assist in making internal operating decisions. We included the earnings of equity affiliates that are closely associated with our reportable segments in the respective segment’s net income. We have allocated certain common expenses among reportable segments differently than we would for stand-alone financial information. Segment net income

may

not be consistent with measures used by other companies. The accounting policies of our reportable segments are the same as those applied in the Consolidated Financial Statements.

The following provides historical segment information as described above:

Segment Information

(in millions)

	Display Technologies			Optical Communications			Environmental Technologies			Specialty Materials			Life Sciences			All Other			Total
For the year ended December 31, 2016
Net sales	$	3,238		$	3,005		$	1,032		$	1,124		$	839		$	152		$	9,390
Depreciation (1)	$	598		$	175		$	129		$	109		$	58		$	50		$	1,119
Amortization of purchased intangibles				$	35								$	20		$	8		$	63
Research, development and engineering expenses (2)	$	45		$	147		$	102		$	126		$	24		$	191		$	635
Restructuring, impairment and other charges	$	4		$	5		$	5		$	12		$	3		$	40		$	69
Equity in earnings (loss) of affiliated companies	$	1														$	(6	)	$	(5	)
Income tax (provision) benefit	$	(372	)	$	(129	)	$	(65	)	$	(85	)	$	(28	)	$	114		$	(565	)
Net income (loss) (3)	$	935		$	245		$	133		$	174		$	58		$	(240	)	$	1,305
Investment in affiliated companies, at equity	$	41		$	(1	)	$	32								$	252		$	324
Segment assets (4)	$	8,032		$	2,010		$	1,267		$	1,604		$	504		$	750		$	14,167
Capital expenditures	$	464		$	245		$	97		$	120		$	39		$	56		$	1,021

For the year ended December 31, 2015
Net sales	$	3,086		$	2,980		$	1,053		$	1,107		$	821		$	64		$	9,111
Depreciation (1)	$	605		$	163		$	125		$	112		$	60		$	43		$	1,108
Amortization of purchased intangibles				$	32								$	20		$	1		$	53
Research, development and engineering expenses (2)	$	105		$	138		$	93		$	113		$	23		$	186		$	658
Equity in earnings (loss) of affiliated companies	$	(9	)													$	17		$	8
Income tax (provision) benefit	$	(499	)	$	(115	)	$	(78	)	$	(85	)	$	(30	)	$	89		$	(718	)
Net income (loss) (3)	$	1,095		$	237		$	161		$	167		$	61		$	(202	)	$	1,519
Investment in affiliated companies, at equity	$	43		$	1		$	32								$	261		$	337
Segment assets (4)	$	8,344		$	1,783		$	1,288		$	1,407		$	514		$	738		$	14,074
Capital expenditures	$	594		$	171		$	117		$	88		$	32		$	57		$	1,059

For the year ended December 31, 2014
Net sales	$	3,851		$	2,652		$	1,092		$	1,205		$	862		$	53		$	9,715
Depreciation (1)	$	676		$	154		$	119		$	113		$	60		$	31		$	1,153
Amortization of purchased intangibles				$	10								$	22					$	32
Research, development and engineering expenses (2)	$	138		$	141		$	91		$	140		$	22		$	177		$	709
Restructuring, impairment and other charges	$	50		$	17								$	1					$	68
Equity in earnings (loss) of affiliated companies	$	(20	)				$	2								$	18
Income tax (provision) benefit	$	(608	)	$	(111	)	$	(89	)	$	(75	)	$	(33	)	$	83		$	(833	)
Net income (loss) (3)	$	1,396		$	194		$	178		$	138		$	67		$	(198	)	$	1,775
Investment in affiliated companies, at equity	$	63		$	2		$	32								$	214		$	311
Segment assets (4)	$	8,863		$	1,737		$	1,297		$	1,288		$	553		$	518		$	14,256
Capital expenditures	$	492		$	145		$	173		$	104		$	30		$	101		$	1,045

(1)	Depreciation expense for Corning’s reportable segments includes an allocation of depreciation of corporate property not specifically identifiable to a segment.

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

(3)

Many of Corning’s administrative and staff functions are performed on a centralized basis. Where practicable, Corning charges these expenses to segments based upon the extent to which each business uses a centralized function. Other staff functions, such as corporate finance, human resources and legal are allocated to segments, primarily as a percentage of sales.

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

A reconciliation of reportable segment net income (loss) to consolidated net income follows (in millions):

	Years ended December 31,
	2016			2015			2014
Net income of reportable segments	$	1,545		$	1,721		$	1,973
Net loss of All Other		(240	)		(202	)		(198	)
Unallocated amounts:
Net financing costs (1)		(107	)		(111	)		(113	)
Share-based compensation expense		(42	)		(46	)		(58	)
Exploratory research		(107	)		(109	)		(102	)
Corporate contributions		(49	)		(52	)		(43	)
Gain on realignment of equity investment		2,676
Equity in earnings of affiliated companies, net of impairments (2)		292			291			269
Unrealized (loss) gain on translated earnings contracts		(649	)		(573	)		1,095
Resolution of Department of Justice investigation		(98	)
Income tax benefit (provision)		573			568			(267	)
Other corporate items		(99	)		(148	)		(84	)
Net income	$	3,695		$	1,339		$	2,472

(1)	Net financing costs include interest income, interest expense, and interest costs and investment gains and losses associated with benefit plans.

(2)	Primarily represents the equity earnings of Hemlock Semiconductor Group in 2016, and Dow Corning in 2015 and 2014.

A reconciliation of reportable segment assets to consolidated total assets follows (in millions):

	December 31,
	2016		2015		2014
Total assets of reportable segments	$	13,417	$	13,336	$	13,738
Non-reportable segments		750		738		518
Unallocated amounts:
Current assets (1)		6,070		5,488		7,402
Investments (2)		12		1,638		1,490
Property, plant and equipment, net (3)		1,681		1,692		1,657
Other non-current assets (4)		5,969		5,635		5,258
Total assets	$	27,899	$	28,527	$	30,063

(1)	Includes current corporate assets, primarily cash, short-term investments, current portion of long-term derivative assets and deferred taxes.

(2)	Primarily represents the equity earnings of Dow Corning.

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

(4)	Includes non-current corporate assets, pension assets, long-term derivative assets and deferred taxes.

For the year ended

December

31,

2016,

the following number of customers, which individually accounted for

10%

or more of each segment’s sales, represented the following concentration of segment sales:

●	In the Display Technologies segment, three customers accounted for 65% of total segment sales.

●	In the Optical Communications segment, one customer accounted for 15% of total segment sales.

●	In the Environmental Technologies segment, three customers accounted for 85% of total segment sales.

●	In the Specialty Materials segment, three customers accounted for 56% of total segment sales.

●	In the Life Sciences segment, two customers accounted for 46% of total segment sales.

Selected financial information concerning the Company’s product lines and reportable segments follow (in millions):

	Years Ended December 31,
Revenues from External Customers	2016		2015		2014
Display Technologies	$	3,238	$	3,086	$	3,851

Optical Communications
Carrier network		2,274		2,194		2,036
Enterprise network		731		786		616

Total Optical Communications		3,005		2,980		2,652

Environmental Technologies
Automotive and other		585		528		528
Diesel		447		525		564

Total Environmental Technologies		1,032		1,053		1,092

Specialty Materials
Corning Gorilla Glass		807		810		846
Advanced optics and other specialty glass		317		297		359

Total Specialty Materials		1,124		1,107		1,205

Life Sciences
Labware		512		512		536
Cell culture products		327		309		326

Total Life Science		839		821		862

All Other		152		64		53
	$	9,390	$	9,111	$	9,715

Information concerning principal geographic areas was as follows (in millions):

	2016				2015				2014
	Net sales (2)		Long- lived assets (1)		Net sales (2)		Long- lived assets (1)		Net sales (2)		Long- lived assets (1)

North America
United States	$	2,625	$	6,473	$	2,719	$	8,241	$	2,275	$	7,998
Canada		282		142		244		144		311
Mexico		50		134		37		135		35		50
Total North America		2,957		6,749		3,000		8,520		2,621		8,048

Asia Pacific
Japan		450		1,008		440		1,160		608		1,311
Taiwan		840		2,347		841		2,301		1,092		2,005
China		2,083		1,140		1,869		1,036		1,893		1,115
Korea		1,444		3,413		1,501		3,552		1,882		3,595
Other		363		167		331		98		308		109
Total Asia Pacific		5,180		8,075		4,982		8,147		5,783		8,135

Europe
Germany		363		154		326		189		397		217
France		83		266		90		263		81		277
United Kingdom		182		41		164		47		187		47
Other		352		1,047		311		987		369		1,109
Total Europe		980		1,508		891		1,486		1,034		1,650

All Other		273		44		238		36		277		55
Total	$	9,390	$	16,376	$	9,111	$	18,189	$	9,715	$	17,888

(1)	Long-lived assets primarily include investments, plant and equipment, goodwill and other intangible assets. In 2014 and 2015, assets in the U.S. include the investment in Dow Corning.

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