CORNING INC /NY [GLW] Filings

10-Q 1 glw20240630_10q.htm FORM 10-Q glw20240630_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission file number: 1-3247

CORNING INCORPORATED

(Exact name of registrant as specified in its charter)

	New York		16-0393470
	(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

	One Riverfront Plaza, Corning, New York		14831
	(Address of principal executive offices)		(Zip Code)

607-974-9000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.50 par value per share	GLW	New York Stock Exchange
3.875% Notes due 2026	GLW26	New York Stock Exchange
4.125% Notes due 2031	GLW31	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes

☒

☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes

☒

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	☒	Accelerated Filer	☐
Non-Accelerated Filer	☐	Smaller Reporting Company	☐
		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act. ☐

If securities are registered pursuant to Section 12(b) of the Exchange Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes

☐

☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

	Class		Outstanding as of July 25, 2024
	Corning’s Common Stock, $0.50 par value per share		855,700,821 shares

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INDEX

PART I – FINANCIAL INFORMATION
	Page
Item 1. Financial Statements

Consolidated Statements of Income	3

Consolidated Statements of Comprehensive (Loss) Income	4

Consolidated Balance Sheets	5

Consolidated Statements of Cash Flows	6

Consolidated Statements of Changes in Shareholders’ Equity	7

Notes to Consolidated Financial Statements	8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3. Quantitative and Qualitative Disclosures About Market Risk	40

Item 4. Controls and Procedures	40

PART II – OTHER INFORMATION

Item 1. Legal Proceedings	41

Item 1A. Risk Factors	41

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	42

Item 5. Other Information	42

Item 6. Exhibits	43

Signatures	44

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Consolidated Statements of Income	Corning Incorporated and Subsidiary Companies
(Unaudited; in millions, except per share amounts)

	Three months ended						Six months ended
	June 30,						June 30,
	2024			2023			2024			2023
Net sales	$	3,251		$	3,243		$	6,226		$	6,421
Cost of sales		2,302			2,230			4,284			4,405

Gross margin		949			1,013			1,942			2,016

Operating expenses:
Selling, general and administrative expenses		471			440			922			861
Research, development and engineering expenses		262			263			520			517
Amortization of purchased intangibles		30			31			60			62

Operating income		186			279			440			576

Interest income		10			8			22			15
Interest expense		(84	)		(81	)		(167	)		(157	)
Translated earnings contract gain, net (Note 12)		27			116			66			108
Other income, net		33			87			107			95

Income before income taxes		172			409			468			637
Provision for income taxes (Note 4)		(50	)		(106	)		(121	)		(143	)

Net income		122			303			347			494

Net income attributable to non-controlling interest		(18	)		(22	)		(34	)		(37	)

Net income attributable to Corning Incorporated	$	104		$	281		$	313		$	457

Earnings per common share available to common shareholders:
Basic (Note 5)	$	0.12		$	0.33		$	0.37		$	0.54
Diluted (Note 5)	$	0.12		$	0.33		$	0.36		$	0.53

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

‎

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Consolidated Statements of Comprehensive (Loss) Income	Corning Incorporated and Subsidiary Companies
(Unaudited; in millions)

	Three months ended						Six months ended
	June 30,						June 30,
	2024			2023			2024			2023
Net income	$	122		$	303		$	347		$	494

Foreign currency translation adjustments and other		(222	)		(318	)		(552	)		(402	)
Unamortized gain (losses) and prior service costs for postretirement benefit plans		37			(4	)		39			(8	)
Realized and unrealized (losses) gains on derivatives		(32	)		20			(31	)		41
Other comprehensive loss, net of tax		(217	)		(302	)		(544	)		(369	)

Comprehensive (loss) income		(95	)		1			(197	)		125

Comprehensive income attributable to non-controlling interest		(18	)		(22	)		(34	)		(37	)

Comprehensive (loss) income attributable to Corning Incorporated	$	(113	)	$	(21	)	$	(231	)	$	88

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

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Consolidated Balance Sheets	Corning Incorporated and Subsidiary Companies
(Unaudited; in millions, except share and per share amounts)

	June 30,			December 31,
	2024			2023
Assets

Current assets:
Cash and cash equivalents	$	1,419		$	1,779
Trade accounts receivable, net of doubtful accounts - $31 and $30		1,721			1,572
Inventories (Note 6)		2,682			2,666
Other current assets		1,299			1,195
Total current assets		7,121			7,212

Property, plant and equipment, net of accumulated depreciation - $14,562 and $14,553		13,742			14,630
Goodwill		2,365			2,380
Other intangible assets, net		836			905
Deferred income taxes (Note 4)		1,134			1,153
Other assets		1,981			2,220

Total Assets	$	27,179		$	28,500

Liabilities and Equity

Current liabilities:
Current portion of long-term debt and short-term borrowings	$	376		$	320
Accounts payable		1,466			1,466
Other accrued liabilities (Notes 7 and 11)		2,684			2,533
Total current liabilities		4,526			4,319

Long-term debt (Note 8)		6,908			7,206
Postretirement benefits other than pensions (Note 9)		360			398
Other liabilities (Notes 7 and 11)		4,458			4,709
Total liabilities		16,252			16,632

Commitments and contingencies (Note 11)
Shareholders’ equity (Note 13):
Common stock – Par value $0.50 per share; Shares authorized 3.8 billion; Shares issued: 1.8 billion and 1.8 billion		919			916
Additional paid-in capital – common stock		17,081			16,929
Retained earnings		15,976			16,391
Treasury stock, at cost; Shares held: 985 million and 980 million		(20,799	)		(20,637	)
Accumulated other comprehensive loss		(2,592	)		(2,048	)
Total Corning Incorporated shareholders’ equity		10,585			11,551
Non-controlling interest		342			317
Total equity		10,927			11,868

Total Liabilities and Equity	$	27,179		$	28,500

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

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Consolidated Statements of Cash Flows	Corning Incorporated and Subsidiary Companies
(Unaudited; in millions)

	Six months ended
	June 30,
	2024			2023
Cash Flows from Operating Activities:
Net income	$	347		$	494
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		614			622
Amortization of purchased intangibles		60			62
Loss on disposal of assets, net		126			23
Share-based compensation expense		126			111
Translation gain on Japanese yen-denominated debt		(135	)		(127	)
Deferred tax provision (benefit)		1			(10	)
Translated earnings contract gain, net		(66	)		(108	)
Tax deposit refund					99
Changes in assets and liabilities:
Trade accounts receivable		(284	)		(64	)
Inventories		(89	)		58
Other current assets		(16	)		(49	)
Accounts payable and other current liabilities		(52	)		(416	)
Customer deposits and government incentives		(18	)		(6	)
Deferred income		(70	)		(24	)
Other, net		73			(95	)
Net cash provided by operating activities		617			570

Cash Flows from Investing Activities:
Capital expenditures		(494	)		(770	)
Proceeds from sale of equipment to related party					67
Realized gains on translated earnings contracts and other		168			177
Other, net		(12	)		11
Net cash used in investing activities		(338	)		(515	)

Cash Flows from Financing Activities:
Repayments of debt		(42	)		(73	)
Proceeds from issuance of debt					20
Proceeds from issuance of euro bonds					918
Proceeds from other financing arrangements					54
Proceeds from cross currency swap		68
Payment for redemption of preferred stock					(507	)
Payments of employee withholding tax on stock awards		(58	)		(99	)
Proceeds from exercise of stock options		34			35
Purchases of common stock for treasury		(105	)
Dividends paid		(495	)		(495	)
Other, net		(14	)		(17	)
Net cash used in financing activities		(612	)		(164	)
Effect of exchange rates on cash		(27	)		(24	)
Net decrease in cash and cash equivalents		(360	)		(133	)
Cash and cash equivalents at beginning of period		1,779			1,671
Cash and cash equivalents at end of period	$	1,419		$	1,538

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

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Consolidated Statements of Changes in Shareholders’ Equity	Corning Incorporated and Subsidiary Companies
(Unaudited; in millions, except per share amounts)

	Common stock		Additional paid-in capital common		Retained earnings			Treasury stock			Accumulated other comprehensive loss			Total Corning Incorporated shareholders' equity			Non-controlling interest			Total
Balance as of December 31, 2023	$	916	$	16,929	$	16,391		$	(20,637	)	$	(2,048	)	$	11,551		$	317		$	11,868
Net income						209									209			16			225
Other comprehensive loss												(327	)		(327	)		(1	)		(328	)
Shares issued to benefit plans and for option exercises		1		69											70						70
Common dividends ($0.28 per share)						(242	)								(242	)					(242	)
Other, net (1)									(35	)					(35	)		1			(34	)
Balance as of March 31, 2024	$	917	$	16,998	$	16,358		$	(20,672	)	$	(2,375	)	$	11,226		$	333		$	11,559
Net income						104									104			18			122
Other comprehensive loss												(217	)		(217	)					(217	)
Purchase of common stock for treasury									(103	)					(103	)					(103	)
Shares issued to benefit plans and for option exercises		2		83											85						85
Common dividends ($0.56 per share)						(486	)								(486	)					(486	)
Other, net (1)									(24	)					(24	)		(9	)		(33	)
Balance as of June 30, 2024	$	919	$	17,081	$	15,976		$	(20,799	)	$	(2,592	)	$	10,585		$	342		$	10,927

	Common stock		Additional paid-in capital common		Retained earnings			Treasury stock			Accumulated other comprehensive loss			Total Corning Incorporated shareholders' equity			Non-controlling interest			Total
Balance as of December 31, 2022	$	910	$	16,682	$	16,778		$	(20,532	)	$	(1,830	)	$	12,008		$	267		$	12,275
Net income						176									176			15			191
Other comprehensive loss												(67	)		(67	)					(67	)
Shares issued to benefit plans and for option exercises		1		64											65						65
Common dividends ($0.28 per share)						(241	)								(241	)					(241	)
Other, net (1)									(16	)					(16	)					(16	)
Balance as of March 31, 2023	$	911	$	16,746	$	16,713		$	(20,548	)	$	(1,897	)	$	11,925		$	282		$	12,207
Net income						281									281			22			303
Other comprehensive loss												(302	)		(302	)		(1	)		(303	)
Shares issued to benefit plans and for option exercises		4		71											75						75
Common dividends ($0.56 per share)						(485	)								(485	)					(485	)
Other, net (1)									(82	)					(82	)		(5	)		(87	)
Balance as of June 30, 2023	$	915	$	16,817	$	16,509		$	(20,630	)	$	(2,199	)	$	11,412		$	298		$	11,710

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

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

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CORNING INCORPORATED AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

In these notes, the terms “Corning,” “Company,” “we,” “us,” or “our” mean Corning Incorporated and its subsidiary companies.

The consolidated financial statements include the consolidated accounts of Corning Incorporated and its subsidiaries consolidated in conformity with accounting principles generally accepted in the United States of America (“GAAP”). In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments, which include normal recurring adjustments, necessary to state fairly the financial position, results of operations and cash flows for the periods presented. All intercompany accounts, transactions and profits have been eliminated. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). These consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (“2023 Form 10-K”). The results of operations for the interim periods are not necessarily indicative of results which may be expected for any other interim period or for the full year.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, 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 require the exercise of judgment. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be different from these estimates.

The non-controlling interest as recorded in the consolidated financial statements represents amounts attributable to the minority shareholders of Hemlock Semiconductor Group (“HSG”) and other less-than-wholly-owned consolidated subsidiaries.

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

2. Restructuring, Impairment and Other Charges and Credits

During the three and six months ended June 30, 2024, we recorded $138 million and $129 million, respectively, in restructuring, impairment and other charges and credits, of which $141 million and $121 million, respectively, were reflected in cost of sales in the consolidated statements of income, primarily relating to asset write-offs in Q2 associated with the closure of a display manufacturing plant. Should the entity be substantially liquidated, the Company expects to recognize approximately $72 million of non-cash foreign currency translation losses.

There were no material restructuring, impairment and other charges and credits for the three and six months ended June 30, 2023.

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3. Revenue

Disaggregated Revenue

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

	Three months ended				Six months ended
	June 30,				June 30,
	2024		2023		2024		2023
Telecommunication products	$	1,113	$	1,066	$	2,043	$	2,191
Display products		704		725		1,336		1,334
Specialty glass products		497		420		947		824
Environmental substrate and filter products		404		433		831		840
Life science products		237		222		462		469
Polycrystalline silicon products		199		258		415		535
All other products		97		119		192		228
Total revenue	$	3,251	$	3,243	$	6,226	$	6,421

Customer Deposits

As of June 30, 2024 and December 31, 2023, Corning had customer deposits of approximately $1.2 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, generally over a period of up to ten years. As products are delivered to customers, Corning will recognize revenue and reduce the amount of the customer deposit liability.

For the three months ended June 30, 2024 and 2023, customer deposits recognized were $11 million and $12 million, respectively. For the six months ended June 30, 2024 and 2023, customer deposits recognized were $91 million and $82 million, respectively.

Refer to Note 7 (Other Liabilities) for additional information.

Deferred Revenue

As of June 30, 2024 and December 31, 2023, Corning had deferred revenue of approximately $790 million and $860 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 delivered compared to the remaining contractual units. For the three and six months ended June 30, 2024 and 2023, the amount of deferred revenue recognized in the consolidated statements of income was not material.

Refer to Note 7 (Other Liabilities) for additional information.

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4. Income Taxes

The following table presents the provision for income taxes and the related effective tax rate (in millions, except percentages):

	Three months ended						Six months ended
	June 30,						June 30,
	2024			2023			2024			2023
Provision for income taxes	$	(50	)	$	(106	)	$	(121	)	$	(143	)
Effective tax rate		29.1	%		25.9	%		25.9	%		22.4	%

For the three and six months ended June 30, 2024, the effective tax rate differed from the United States (“U.S.”) statutory rate of 21%, primarily due to certain pre-tax losses with no corresponding expected tax benefit. These losses were mostly driven by asset write-offs associated with the closure of a display manufacturing plant. Refer to Note 2 (Restructuring, Impairment and Other Charges and Credits) for additional information.

For the three and six months ended June 30, 2023, the effective tax rate differed from the U.S. statutory rate of 21%, primarily due to changes in valuation allowance assessments, partially offset by differences arising from foreign earnings, adjustments to share-based compensation, and a net benefit due to foreign derived intangible income.

Corning Precision Materials, a South Korean subsidiary, is currently appealing certain tax assessments and tax refund claims for tax years 2010 through 2019. The Company was required to deposit the disputed tax amounts with the South Korean government as a condition of its appeal of any tax assessment. During the second quarter of 2023, $99 million was no longer under dispute and was refunded to the Company. The non-current receivable balance was $256 million and $261 million as of June 30, 2024 and December 31, 2023, respectively, for the amount on deposit with the South Korean government. Corning believes that it is more likely than not the Company will prevail in the appeals process relating to these matters.

5. Earnings Per Common Share

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

	Three months ended				Six months ended
	June 30,				June 30,
	2024		2023		2024		2023
Net income attributable to Corning Incorporated	$	104	$	281	$	313	$	457

Weighted-average common shares outstanding – basic		853		848		853		846
Effect of dilutive securities:
Stock options and other awards		11		11		12		13
Weighted-average common shares outstanding – diluted		864		859		865		859
Basic earnings per common share	$	0.12	$	0.33	$	0.37	$	0.54
Diluted earnings per common share	$	0.12	$	0.33	$	0.36	$	0.53

Anti-dilutive potential shares excluded from diluted earnings per common share:
Stock options and other awards		3		3		4		3

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6. Inventories

Inventories consisted of the following (in millions):

	June 30,		December 31,
	2024		2023
Finished goods	$	1,303	$	1,242
Work in process		546		551
Raw materials and accessories		426		445
Supplies and packing materials		407		428
Inventories	$	2,682	$	2,666

7. Other Liabilities

Other liabilities consisted of the following (in millions):

	June 30,		December 31,
	2024		2023
Current liabilities:
Wages and employee benefits	$	569	$	609
Income taxes		67		69
Derivative instruments (Note 12)		179		66
Dividend payable (Note 13)		261		21
Deferred revenue (Note 3)		193		181
Customer deposits (Note 3)		178		148
Short-term operating leases		92		112
Other current liabilities		1,145		1,327
Other accrued liabilities	$	2,684	$	2,533

Non-current liabilities:
Defined benefit pension plan liabilities	$	724	$	721
Derivative instruments (Note 12)		156		31
Deferred revenue (Note 3)		597		679
Customer deposits (Note 3)		986		1,083
Deferred tax liabilities		167		218
Long-term operating leases		821		846
Other non-current liabilities		1,007		1,131
Other liabilities	$	4,458	$	4,709

8. Debt

Based on borrowing rates currently available to us for loans with similar terms and maturities, the fair value of long-term debt was $6.5 billion and $7.0 billion as of June 30, 2024 and December 31, 2023, respectively, compared to the carrying value of $6.9 billion and $7.2 billion as of June 30, 2024 and December 31, 2023, 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.

In Q2 2024, the Company entered into a ¥23 billion, or $215 million, fixed rate, three-year cross currency swap contract to economically lock in unrealized foreign exchange gains relating to a portion of the Company’s Japanese yen-denominated debt due in 2027. Refer to Note 12 (Financial Instruments) for additional information.

On May 15, 2023, the Company issued €300 million 3.875% Notes due 2026 (“2026 Notes”) and €550 million 4.125% Notes due 2031 (“2031 Notes”). The proceeds from the 2026 Notes and 2031 Notes were received in euros and converted to U.S. dollars on the date of issuance. The net proceeds received were approximately $918 million and will be used for general corporate purposes. As of June 30, 2024, the U.S. dollar equivalent carrying value of the euro-denominated long-term debt was $903 million. The full amounts of the 2026 Notes and 2031 Notes have been designated as net investment hedges against our investments in certain European subsidiaries with euro functional currencies. Refer to Note 12 (Financial Instruments) for additional information.

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9. Employee Retirement Plans

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

	Pension benefits												Postretirement benefits
	Three months ended						Six months ended						Three months ended						Six months ended
	June 30,						June 30,						June 30,						June 30,
	2024			2023			2024			2023			2024			2023			2024			2023
Service cost	$	25		$	27		$	48		$	50		$	1		$	2		$	2		$	3
Interest cost		46			43			92			88			5			5			10			11
Expected return on plan assets		(48	)		(46	)		(96	)		(92	)
Amortization of actuarial net gain														(7	)		(6	)		(12	)		(11	)
Amortization of prior service cost (credit)		2			1			3			3			(2	)		(1	)		(4	)		(2	)
Special termination benefit charge		3			5			3			5
Total pension and postretirement benefit expense (income)	$	28		$	30		$	50		$	54		$	(3	)	$	—		$	(4	)	$	1

10. Leases

On March 12, 2024, Corning entered into a synthetic lease (“Facility Lease”) for a solar manufacturing facility in Hemlock, Michigan (the “Facility”), for which the Company is the construction agent on behalf of the lessor, with an estimated construction cost of approximately $835 million.

The Facility Lease will commence upon completion of construction of the Facility, which is expected to be in the later part of 2025, and has a lease term of five years with options to renew the lease or purchase the facility. The Facility Lease is expected to be classified as a finance lease and the amount of right-of-use asset and lease liability will be determined and recorded upon lease commencement. The estimated undiscounted lease payments, inclusive of a residual value guarantee, are approximately $1.1 billion, of which $35 million, $103 million, $99 million and $96 million is to be paid in 2025, 2026, 2027 and 2028, respectively, and $780 million is to be paid thereafter.

In conjunction with the Facility Lease, Corning entered into an equipment lease (“Equipment Lease”) on June 17, 2024, with an estimated purchase and installation cost of $365 million, for the equipment to be installed and operated within the Facility. The Company is the procurement and installation agent on behalf of the lessor.

The Equipment Lease will commence upon completion of the equipment installation, which is expected to be in the later part of 2025, and has a lease term of five years with obligations to purchase the equipment at lease maturity. The Equipment Lease is expected to be classified as a finance lease and the amount of right-of-use asset and lease liability will be determined and recorded upon lease commencement. The estimated undiscounted lease payments are approximately $446 million, of which $25 million, $100 million, $95 million and $89 million is to be paid in 2025, 2026, 2027 and 2028, respectively, and $137 million is to be paid thereafter.

The transaction agreements for both the Facility Lease and Equipment Lease contain covenants that are consistent with our Revolving Credit Agreement as disclosed in the 2023 Form 10-K.

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11. Commitments and Contingencies

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. In January 2024, we entered into an agreement to settle the Dow Corning Chapter 11 Related Matters and the settlement amount was not material.

Dow Corning Environmental Claims

Beginning 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. Subject to certain conditions and limits, Corning may be required to indemnify Dow for up to 50% of such losses. As of June 30, 2024, Corning has determined a potential liability for these environmental matters is probable and the amount reserved was 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 June 30, 2024 and December 31, 2023, Corning had accrued approximately $83 million and $88 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.

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12. Financial Instruments

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

	June 30, 2024							December 31, 2023
	Notional amount		Fair value asset (1)		Fair value liability (1)			Notional amount		Fair value asset (1)		Fair value liability (1)
Derivatives designated as hedging instruments (2):
Foreign exchange and precious metals lease contracts (3)	$	721	$	179	$	(19	)	$	241	$	287

Derivatives not designated as hedging instruments:
Foreign exchange contracts		1,964		22		(34	)		1,988		20	$	(17	)
Translated earnings contracts		5,437		406		(207	)		5,042		324		(80	)
Cross currency swap contracts		215				(75	)
Total derivatives	$	8,337	$	607	$	(335	)	$	7,271	$	631	$	(97	)

Current			$	520	$	(179	)			$	501	$	(66	)
Non-current				87		(156	)				130		(31	)
Total derivatives			$	607	$	(335	)			$	631	$	(97	)

(1)	All of the Company’s derivative contracts are measured at fair value and are classified as Level 2 within the fair value hierarchy. Derivative assets are presented in Other current assets or Other assets. Derivative liabilities are presented in Other current liabilities or Other liabilities.
(2)	The amounts above do not include €850 million of euro-denominated debt ($903 million carrying value as of June 30, 2024), which is a non-derivative financial instrument designated as a net investment hedge.
(3)	As of June 30, 2024 and December 31, 2023, derivatives designated as hedging instruments include foreign exchange cash flow hedges with total notional amounts of $721 million and $241 million, respectively, and fair value hedges of leased precious metals with total notional amounts of 13,762 troy ounces and 20,160 troy ounces, respectively. Fair value assets include designated derivatives pertaining to precious metals lease contracts in the amounts of $146 million and $229 million as of June 30, 2024 and December 31, 2023, respectively.

The following table summarizes the total gross notional values for translated earnings contracts (in millions):

	June 30,		December 31,
	2024		2023
Average rate forward contracts:
Chinese yuan-denominated	$	748	$	684
Japanese yen-denominated		358		463
South Korean won-denominated		1,301		1,609
New Taiwan dollar-denominated		423		198
Other foreign currencies (1)		336
Option contracts:
Japanese yen-denominated (2)		2,271		2,088
Total notional amount for translated earnings contracts	$	5,437	$	5,042

(1)	Denominational currencies for other average rate forward con