Note 3 - Revenue

9 Months Ended

Sep. 30, 2022

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

3. Revenue

Revenue Disaggregation Table

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

Revenues by product category were as follows (in millions):

	Three months ended				Nine months ended
	September 30,				September 30,
	2022		2021		2022		2021
Telecommunication products	$	1,317	$	1,131	$	3,828	$	3,143
Display products		558		936		2,223		2,758
Specialty glass products		516		556		1,494		1,490
Environmental substrate and filter products		393		382		1,130		1,233
Life science products		297		304		908		917
Polycrystalline silicon and all other products		407		306		1,200		865
Total net sales	$	3,488	$	3,615	$	10,783	$	10,406
Impact of constant currency reporting (1)		178		24		389
Net sales of reportable segments and Hemlock and Emerging Growth Businesses	$	3,666	$	3,639	$	11,172	$	10,406

⁽¹⁾ This amount represents the impact of foreign currency adjustments primarily in the Display Technologies segment. Refer to Note 15 (Reportable Segments) for additional information.

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 contract 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 advance payments. Customer deposits are predominately related to Display products and deferred revenue is predominately related to Hemlock. Other advance payments are not significant to operations and are classified as part of other accrued liabilities in the consolidated financial statements. 

Customer Deposits

As of September 30, 2022 and December 31, 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.

Customer deposits used were $24 million and $155 million for the three and nine months ended September 30, 2022, respectively, and $59 million and $182 million for the three and nine months ended September 30, 2021, respectively.  As of September 30, 2022 and December 31, 2021, $1.1 billion were classified as other long-term liabilities.  The remaining $166 million and $223 million as of September 30, 2022 and December 31, 2021, respectively, were classified as other accrued liabilities. 

Deferred Revenue

As of September 30, 2022 and December 31, 2021, Corning had deferred revenue of approximately $902 million and $912 million, respectively.  The deferred revenue was primarily related to the performance obligations of non-refundable consideration previously received by Hemlock from its customers under long-term supply agreements.  The 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.  

As of September 30, 2022 and December 31, 2021, $732 million and $764 million, respectively, were classified as other long-term liabilities and $170 million and $148 million, respectively, were classified as other accrued liabilities.