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 labware, equipment, media and reagents to provide workflow solutions 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, 2012
Net sales	$	2,909	$	2,130	$	964	$	1,346	$	657	$	6	$	8,012
Depreciation (1)	$	514	$	130	$	117	$	153	$	44	$	14	$	972
Amortization of purchased intangibles			$	9					$	10			$	19
Research, development and engineering expenses (2)	$	103	$	138	$	100	$	144	$	22	$	124	$	631
Restructuring, impairment and other charges (3)	$	21	$	39	$	3	$	54	$	2			$	119
Equity in earnings of affiliated companies (4)	$	692			$	1					$	17	$	710
Income tax (provision) benefit	$	(367)	$	(58)	$	(57)	$	(69)	$	(14)	$	52	$	(513)
Net income (loss) (5)	$	1,602	$	155	$	115	$	142	$	31	$	(98)	$	1,947
Investment in affiliated companies, at equity	$	3,262	$	17	$	30	$	4			$	262	$	3,575
Segment assets (6)	$	9,953	$	1,435	$	1,103	$	1,707	$	552	$	351	$	15,101
Capital expenditures	$	845	$	311	$	154	$	93	$	47	$	52	$	1,502

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 (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 charges (3)	$	(324)	$	(3)			$	(2)					$	(329)
Equity in earnings (loss) 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

(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 2012, Corning recorded a $44 million impairment charge in the Specialty Materials segment related to certain assets located in Japan used for the production of large cover glass. 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 2012, equity in earnings of affiliated companies in the Display Technologies segment included a $18 million restructuring charge for our share of costs for headcount reductions and asset write-offs. 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 Materials 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, 2012, 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 63% 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 86% of total segment sales.

·	In the Specialty Materials segment, two customers accounted for 54% of total segment sales.

·	In the Life Sciences segment, two customers accounted for 38% 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,
	2012		2011		2010
Net income of reportable segments	$	2,045	$	2,690	$	3,162
Net loss of All Other		(98)		(78)		(75)
Unallocated amounts:
Net financing costs (1)		(196)		(190)		(183)
Stock-based compensation expense		(70)		(86)		(92)
Exploratory research		(89)		(79)		(59)
Corporate contributions		(44)		(48)		(33)
Equity in earnings of affiliated companies, net of impairments (2)		82		421		453
Asbestos litigation (3)		(14)		(24)		49
Other corporate items (4)		112		199		336
Net income	$	1,728	$	2,805	$	3,558

(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 2012, restructuring and impairment charges in the amount of $87 million ($81 million after tax) for our share of a charge related to workforce reductions and asset write-offs at Dow Corning, and a $10 million ($9 million after tax) credit for Corning's share of Dow Corning's settlement of a dispute related to long term supply agreements.

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

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.

(3)

In 2012, Corning recorded charges of $14 million to adjust the asbestos liability for the change in value of the components of the Amended PCC Plan. 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.

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

In 2012, Corning recorded a $52 million translation gain on the liquidation of a foreign subsidiary; a loss of $26 million ($17 million after tax) from the repurchase of $13 million principal amount of our 8.875% senior unsecured notes due 2021, $11 million of our 8.875% senior unsecured notes due 2016, and $51 million principal amount of our 6.75% senior unsecured notes due 2013; and a $37 million tax expense resulting from the delay of the passage of the American Taxpayer Relief Act of 2012 until Jan. 2013, that will be reversed in the first quarter of 2013.

·	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.

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


	Years ended December 31,
	2012		2011		2010
Total assets of reportable segments	$	14,750	$	14,495	$	12,212
Non-reportable segments		351		396		240
Unallocated amounts:
Current assets (1)		7,300		6,602		7,152
Investments (2)		1,340		1,298		1,315
Property, net (3)		1,494		1,283		1,255
Other non-current assets (4)		4,140		3,774		3,659
Total assets	$	29,375	$	27,848	$	25,833

(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.

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


	2012				2011					2010
	Net sales		Long- lived assets (1)		Net sales		Long- lived assets (1)			Net sales		Long- lived assets (1)

North America
United States	$	1,859	$	6,771	$	1,676	$		6,087	$	1,564	$	4,969
Canada		246				229					199
Mexico		24		87		26			78		42		95
Total North America		2,129		6,858		1,931			6,165		1,805		5,064

Asia Pacific
Japan		751		1,949		1,252			2,210		1,068		2,368
Taiwan		1,708		2,836		1,850			3,341		1,891		2,850
China		2,103		1,215		1,550			764		756		314
Korea		94		3,342		101			3,357		72		2,946
Other		243		84		145			11		127		11
Total Asia Pacific	4,899			9,426		4,898			9,683		3,914		8,489

Europe
Germany		264		139		318			134		270		121
France		57		267		65			197		54		195
United Kingdom		134		14		124					118		4
Other		274		550		263			273		239		241
Total Europe		729		970		770			604		681		561

Latin America
Brazil		29		1		29			1		28
Other		33		6		25			6		25
Total Latin America		62		7		54			7		53

All Other		193		35		237			25		179		25
Total	$	8,012	$	17,296	$	7,890	$	16,484		$	6,632	$	14,139

(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 Materials.