20. Reportable Segments

Our reportable segments are as follows:

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

·	Telecommunications – manufactures optical fiber and cable and hardware and equipment components for the telecommunications industry.

Environmental Technologies – manufactures ceramic substrates and filters for automotive and diesel applications. This reportable segment is an aggregation of our Automotive and Diesel operating segments as these two segments share similar economic characteristics, products, customer types, production processes and distribution methods.

·	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 consumables for scientific applications.

All other reportable segments that do not meet the quantitative threshold for separate reporting have been grouped as "All Other." This group is primarily comprised of development projects and results for new product lines.

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		Telecom- munications		Environmental Technologies		Specialty Materials		Life Sciences		All Other		Total
For the year ended December 31, 2011
Net sales	$	3,145	$	2,072	$	998	$	1,074	$	595	$	6	$	7,890
Depreciation (1)	$	511	$	123	$	107	$	156	$	34	$	12	$	943
Amortization of purchased intangibles			$	7			$	1	$	7			$	15
Research, development and engineering expenses (2)	$	91	$	125	$	96	$	137	$	19	$	98	$	566
Restructuring, impairment and other (credits) charges (3)			$	(1)			$	130					$	129
Equity in earnings of affiliated companies	$	1,027	$	3	$	1	$	4			$	15	$	1,050
Income tax (provision) benefit	$	(501)	$	(82)	$	(58)	$	24	$	(29)	$	39	$	(607)
Net income (loss) (5)	$	2,349	$	195	$	121	$	(36)	$	61	$	(78)	$	2,612
Investment in affiliated companies, at equity	$	3,132	$	19	$	31	$	4			$	243	$	3,429
Segment assets (6)	$	10,387	$	1,201	$	1,089	$	1,455	$	363	$	396	$	14,891
Capital expenditures	$	1,304	$	195	$	174	$	348	$	57	$	116	$	2,194

For the year ended December 31, 2010
Net sales	$	3,011	$	1,712	$	816	$	578	$	508	$	7	$	6,632
Depreciation (1)	$	513	$	118	$	105	$	72	$	32	$	12	$	852
Amortization of purchased intangibles			$	1					$	7			$	8
Research, development and engineering expenses (2)	$	90	$	115	$	96	$	87	$	16	$	114	$	518
Restructuring, impairment and other credits (3)	$	(324)	$	(3)			$	(2)					$	(329)
Equity in earnings of affiliated companies (4)	$	1,452	$	3	$	5					$	45	$	1,505
Income tax (provision) benefit	$	(618)	$	(46)	$	(20)	$	13	$	(30)	$	50	$	(651)
Net income (loss) (5)	$	2,993	$	98	$	43	$	(32)	$	60	$	(75)	$	3,087
Investment in affiliated companies, at equity	$	2,766	$	19	$	34					$	238	$	3,057
Segment assets (6)	$	9,138	$	988	$	915	$	869	$	302	$	240	$	12,452
Capital expenditures	$	497	$	69	$	65	$	143	$	31	$	43	$	848

For the year ended December 31, 2009
Net sales	$	2,426	$	1,677	$	590	$	331	$	366	$	5	$	5,395
Depreciation (1)	$	479	$	130	$	98	$	46	$	20	$	13	$	786
Amortization of purchased intangibles			$	10									$	10
Research, development and engineering expenses (2)	$	81	$	94	$	107	$	58	$	12	$	125	$	477
Restructuring, impairment and other charges	$	31	$	42	$	28	$	17	$	8	$	4	$	130
Equity in earnings (loss) of affiliated companies	$	1,102	$	(3)	$	7					$	32	$	1,138
Income tax (provision) benefit	$	(279)	$	(19)	$	24	$	28	$	(19)	$	45	$	(220)
Net income (loss) (5)	$	1,992	$	19	$	(42)	$	(54)	$	39	$	(80)	$	1,874
Investment in affiliated companies, at equity	$	2,618	$	18	$	34					$	206	$	2,876
Segment assets (6)	$	8,699	$	967	$	874	$	319	$	229	$	206	$	11,294
Capital expenditures	$	552	$	65	$	51	$	33	$	26	$	14	$	741

(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)

In 2011, Corning recorded a $130 million impairment charge in the Specialty Materials segment related to certain assets located in Japan used for the production of large cover glass. In 2010, Corning recorded $324 million on the settlement of business interruption and property damage insurance claims in the Display Technologies segment resulting from earthquake activity near the Shizuoka, Japan facility and a power disruption at the Taichung, Taiwan facility in 2009.

(4)	In 2010, equity in earnings of affiliated companies in the Display Technologies segment included a $61 million credit for our share of a revised Samsung Corning Precision tax holiday calculation agreed to by the Korean National Tax service.

(5)

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..

(6)	Segment assets include inventory, accounts receivable, property and associated equity companies and cost investments.

For the year ended December 31, 2011, 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, four customers accounted for 77% of total segment sales.

·	In the Telecommunications segment, one customer accounted for 12% of total segment sales.

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

·	In the Specialty Materials segment, two customers accounted for 42% of total segment sales.

·	In the Life Sciences segment, two customers accounted for 39% of total segment sales.

A significant amount of specialized manufacturing capacity for our Display Technologies segment is concentrated in Asia. It is at least reasonably possible that the use of a facility located outside of an entity's home country could be disrupted. Due to the specialized nature of the assets, it would not be possible to find replacement capacity quickly. Accordingly, loss of these facilities could produce a near-term severe impact to our display business and the Company as a whole.

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


	Years ended December 31,
	2011		2010		2009
Net income of reportable segments	$	2,690	$	3,162	$	1,954
Net loss of All Other		(78)		(75)		(80)
Unallocated amounts:
Net financing costs (1)		(190)		(183)		(122)
Stock-based compensation expense		(86)		(92)		(127)
Exploratory research		(79)		(59)		(61)
Corporate contributions		(48)		(33)		(27)
Equity in earnings of affiliated companies, net of impairments (2)		421		453		297
Asbestos litigation (3)		(24)		49		(20)
Other corporate items (4)		199		336		194
Net income	$	2,805	$	3,558	$	2,008

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

(2)	Equity in earnings of affiliated companies, net of impairments, is primarily equity in earnings of Dow Corning, which includes the following items:

·	In 2011, an $89 million credit for our share of Dow Corning's settlement of a dispute related to long term supply agreements.

In 2010, a $21 million credit for our share of U.S. advanced energy manufacturing tax credits and a $26 million credit for our share of a release of valuation allowances on foreign deferred tax assets. Corning also recorded a $16 million credit for our share of excess foreign tax credits from foreign dividends.

·	In 2009, a $29 million credit primarily for our share of excess foreign tax credits from foreign dividends and a $29 million charge for our share of restructuring charges.

(3)

In 2011, Corning recorded charges of $24 million to adjust the asbestos liability for the change in value of the components of the Amended PCC Plan. In 2010, Corning recorded a net credit of $49 million primarily reflecting the change in the terms of the proposed asbestos settlement. In 2009, Corning recorded charges of $20 million to adjust the asbestos liability for the change in value of certain components of the amended PCC Plan and the estimated liability for non-PCC asbestos claims.

(4)	Other corporate items include the tax impact of the unallocated amounts and the following significant items:

·	In 2011, Corning recorded a $41 million tax benefit from the filing of an amended 2006 U.S. Federal Tax return to claim foreign tax credits.

·	In 2010, Corning recorded a loss of $30 million ($19 million after tax) from the repurchase of $126 million principal amount of our 6.2% senior unsecured notes due March 15, 2016 and $100 million principal amount of our 5.9% senior unsecured notes due March 15, 2014.

In 2009, Corning recorded $10 million of additional valuation allowance due to a change in judgment about the realizability of U.S. and United Kingdom deferred tax assets in future years; a $41 million tax benefit to reflect a deferred tax asset associated with Medicare Part D subsidies; a $27 million U.S. tax credit for research and experimentation expenses incurred from 2005 to 2008; and $98 million of restructuring charges.

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


	Years ended December 31,
	2011		2010		2009
Total assets of reportable segments	$	14,495	$	12,212	$	11,088
Non-reportable segments		396		240		206
Unallocated amounts:
Current assets (1)		6,602		7,152		4,203
Investments (2)		1,298		1,315		1,116
Property, net (3)		1,283		1,255		895
Other non-current assets (4)		3,774		3,659		3,787
Total assets	$	27,848	$	25,833	$	21,295

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

(2)	Represents corporate investments in affiliated companies, at both cost and equity (primarily Dow Corning Corporation).

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

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

In our 2010 Form 10-K, reported sales in our geographic disclosures from Japan for the year ended December 31, 2010 excluded sales in the amount of approximately $365 million.

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


	2011		2010		2009
	Net sales	Long- lived assets (1)	Net sales	Long- lived assets (1)	Net sales	Long- lived assets (1)

North America
United States	$1,676	$ 6,087	$1,564	$ 4,969	$1,298	$ 4,625
Canada	229		199		110
Mexico	26	78	42	95	44	64
Total North America	1,931	6,165	1,805	5,064	1,452	4,689

Asia Pacific
Japan	1,252	2,210	1,068	2,368	667	2,095
Taiwan	1,850	3,341	1,891	2,850	1,732	2,518
China	1,550	764	756	314	633	400
Korea	101	3,357	72	2,946	61	2,766
Other	145	11	127	11	103	10
Total Asia Pacific	4,898	9,683	3,914	8,489	3,196	7,789

Europe
Germany	318	134	270	121	188	57
France	65	197	54	195	47	125
United Kingdom	124		118	4	92
Other	263	273	239	241	260	63
Total Europe	770	604	681	561	587	245

Latin America
Brazil	29	1	28		19
Other	25	6	25		15
Total Latin America	54	7	53		34

All Other	237	25	179	25	126	26
Total	$7,890	$16,484	$6,632	$14,139	$5,395	$12,749

(1)	Long-lived assets primarily include investments, plant and equipment, goodwill and other intangible assets. Assets in the U.S. and Korea include investments in Dow Corning Corporation and Samsung Corning Precision.