CORNING INC /NY [GLW] Filings

10-Q 1 glw20210930_10q.htm FORM 10-Q glw20210930_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 September 30, 2021

☐	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		GLW		New York Stock Exchange (NYSE)

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 and posted 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.

Yes

☐

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 October 22, 2021
	Corning’s Common Stock, $0.50 par value per share		853,408,459 shares

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INDEX

PART I – FINANCIAL INFORMATION
	Page
Item 1. Financial Statements

Consolidated Statements of Income (Unaudited) for the three and nine months ended September 30, 2021 and 2020	3

Consolidated Statements of Comprehensive Income (Unaudited) for the three and nine months ended September 30, 2021 and 2020	4

Consolidated Balance Sheets at September 30, 2021 (Unaudited) and December 31, 2020	5

Consolidated Statements of Cash Flows (Unaudited) for the nine months ended September 30, 2021 and 2020	6

Consolidated Statements of Changes to Shareholders’ Equity (Unaudited) for the three and nine months ended September 30, 2021 and 2020	7

Notes to Consolidated Financial Statements (Unaudited)	9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	30

Item 3. Quantitative and Qualitative Disclosures About Market Risk	51

Item 4. Controls and Procedures	51

PART II – OTHER INFORMATION

Item 1. Legal Proceedings	52

Item 1A. Risk Factors	52

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	53

Item 6. Exhibits	54

Signatures	55

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CORNING INCORPORATED AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited; in millions, except per share amounts)

	Three months ended						Nine months ended
	September 30,						September 30,
	2021			2020			2021			2020
Net sales	$	3,615		$	3,001		$	10,406		$	7,953
Cost of sales		2,294			2,000			6,614			5,635

Gross margin		1,321			1,001			3,792			2,318

Operating expenses:
Selling, general and administrative expenses		486			480			1,351			1,276
Research, development and engineering expenses		251			231			715			922
Amortization of purchased intangibles		32			33			97			87

Operating income		552			257			1,629			33

Equity in earnings (losses) of affiliated companies		16			(76	)		31			17
Interest income		3			3			8			12
Interest expense		(72	)		(70	)		(227	)		(201	)
Translated earnings contract (loss) gain, net (Note 12)		(13	)		(100	)		262			5
Transaction-related gain, net (Note 3)					498						498
Other (expense) income, net		(6	)		(62	)		118			(71	)

Income before income taxes		480			450			1,821			293
Provision for income taxes (Note 5)		(109	)		(23	)		(402	)		(33	)

Net income attributable to Corning Incorporated	$	371		$	427		$	1,419		$	260

Earnings per common share available to common shareholders:
Basic (Note 6)	$	0.44		$	0.53		$	0.72		$	0.25
Diluted (Note 6)	$	0.43		$	0.48		$	0.71		$	0.24

Reconciliation of net income attributable to Corning Incorporated versus net income available to common shareholders:

Net income attributable to Corning Incorporated	$	371		$	427		$	1,419		$	260

Series A convertible preferred stock dividend								(24	)		(73	)
Excess consideration paid for redemption of preferred shares ⁽¹⁾								(803	)

Net income available to common shareholders	$	371		$	427		$	592		$	187

⁽¹⁾	Refer to Note 6 (Earnings per Share) and Note 14 (Shareholders' Equity) to the consolidated financial statements for additional information.

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

‎

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CORNING INCORPORATED AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited; in millions)

	Three months ended					Nine months ended
	September 30,					September 30,
	2021			2020		2021			2020
Net income attributable to Corning Incorporated	$	371		$	427	$	1,419		$	260

Foreign currency translation adjustments and other (Note 14)		(192	)		283		(515	)		76
Unamortized gains (losses) and prior service credits (costs) for postretirement benefit plans					4		(1	)		(8	)
Net unrealized (losses) gains on designated hedges		(15	)		11		(3	)		(31	)
Other comprehensive (loss) income, net of tax		(207	)		298		(519	)		37

Comprehensive income attributable to Corning Incorporated	$	164		$	725	$	900		$	297

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

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CORNING INCORPORATED AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(In millions, except share and per share amounts)

	September 30,			December 31,
	2021			2020
	(unaudited)
Assets

Current assets:
Cash and cash equivalents	$	2,212		$	2,672
Trade accounts receivable, net of doubtful accounts - $43 and $46		2,114			2,133
Inventories, net (Note 7)		2,463			2,438
Other current assets		890			761
Total current assets		7,679			8,004

Property, plant and equipment, net of accumulated depreciation - $13,857 and $13,663		15,383			15,742
Goodwill, net		2,425			2,460
Other intangible assets, net		1,192			1,308
Deferred income taxes (Note 5)		1,062			1,121
Other assets		1,965			2,140

Total Assets	$	29,706		$	30,775

Liabilities and Equity

Current liabilities:
Current portion of long-term debt and short-term borrowings (Note 9)	$	50		$	156
Accounts payable		1,396			1,174
Other accrued liabilities (Note 8 and Note 11)		2,891			2,437
Total current liabilities		4,337			3,767

Long-term debt (Note 9)		7,019			7,816
Postretirement benefits other than pensions (Note 10)		729			727
Other liabilities (Note 8 and Note 11)		5,266			5,017
Total liabilities		17,351			17,327

Commitments and contingencies (Note 11)
Shareholders’ equity (Note 14):
Convertible preferred stock, Series A – Par value $100 per share; Shares authorized 10 million; Shares issued: 0 and 2,300					2,300
Common stock – Par value $0.50 per share; Shares authorized 3.8 billion; Shares issued: 1.8 billion and 1.7 billion		907			863
Additional paid-in capital – common stock		16,398			14,642
Retained earnings		16,110			16,120
Treasury stock, at cost; Shares held: 963 million and 961 million		(20,011	)		(19,928	)
Accumulated other comprehensive loss		(1,259	)		(740	)
Total Corning Incorporated shareholders’ equity		12,145			13,257
Non-controlling interests		210			191
Total equity		12,355			13,448

Total Liabilities and Equity	$	29,706		$	30,775

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

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CORNING INCORPORATED AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in millions)

	Nine months ended
	September 30,
	2021			2020
Cash Flows from Operating Activities:
Net income	$	1,419		$	260
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		1,005			1,041
Amortization of purchased intangibles		97			87
Loss on disposal of assets		8			107
Severance charges					141
Severance payments		(24	)		(126	)
Share-based compensation expense		117			127
Equity in earnings of affiliated companies		(31	)		(17	)
Translation (gain) loss on Japanese yen-denominated debt		(127	)		50
Deferred tax provision (benefit)		68			(96	)
Pension plan contributions					(80	)
Customer deposits and government incentives		168			184
Translated earnings contract gain		(262	)		(5	)
Unrealized translation losses (gains) on transactions		65			(54	)
Tax assessment refunds					101
Asset impairment					217
Transaction-related gain, net					(498	)
Changes in certain working capital items:
Trade accounts receivable		(146	)		(281	)
Inventories		(72	)		240
Other current assets		(210	)		(19	)
Accounts payable and other current liabilities		425			(139	)
Other, net		(111	)		166
Net cash provided by operating activities		2,389			1,406

Cash Flows from Investing Activities:
Capital expenditures		(1,014	)		(986	)
Proceeds from sale or disposal of assets		17			27
Proceeds from sale of business		102
Proceeds from and investment in unconsolidated entities, net		87			(7	)
Realized gains on translated earnings contract		30			10
Other, net		(25	)		24
Net cash used in investing activities		(803	)		(932	)

Cash Flows from Financing Activities:
Repayments of short-term borrowings		(144	)
Repayments of long-term debt		(716	)
Proceeds from issuance of long-term debt		19			212
Payment for redemption of preferred stock		(507	)
Payments of employee withholding tax on stock awards		(57	)		(10	)
Proceeds from exercise of stock options		91			49
Purchases of common stock for treasury		(22	)		(105	)
Dividends paid		(659	)		(587	)
Other, net		5			26
Net cash used in financing activities		(1,990	)		(415	)
Effect of exchange rates on cash		(56	)		21
Net (decrease) increase in cash and cash equivalents		(460	)		80
Cash and cash equivalents at beginning of period		2,672			2,434
Cash and cash equivalents at end of period	$	2,212		$	2,514

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

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CORNING INCORPORATED AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited; in millions)

(In millions)	Convertible preferred stock			Common stock		Additional paid-in capital common		Retained earnings			Treasury stock			Accumulated other comprehensive loss			Total Corning Incorporated shareholders' equity			Non-controlling interests			Total
Balance, December 31, 2020	$	2,300		$	863	$	14,642	$	16,120		$	(19,928	)	$	(740	)	$	13,257		$	191		$	13,448
Net income									599									599			2			601
Other comprehensive loss															(352	)		(352	)		(1	)		(353	)
Shares issued to benefit plans and for option exercises					1		80											81						81
Common dividends ($0.24 per share)									(187	)								(187	)					(187	)
Preferred dividends ($10,625 per share)									(24	)								(24	)					(24	)
Other, net ⁽¹⁾									1			(6	)					(5	)		(3	)		(8	)
Balance, March 31, 2021	$	2,300		$	864	$	14,722	$	16,509		$	(19,934	)	$	(1,092	)	$	13,369		$	189		$	13,558
Net income									449									449			5			454
Other comprehensive income															40			40			1			41
Redemption of preferred stock ⁽²⁾		(700	)						(803	)								(1,503	)					(1,503	)
Conversion of preferred stock to common stock ⁽³⁾		(1,600	)		40		1,560											—						—
Purchase of common stock for treasury												(1	)					(1	)					(1	)
Shares issued to benefit plans and for option exercises					3		70											73						73
Common dividends ($0.48 per share)									(416	)								(416	)					(416	)
Other, net ⁽¹⁾												(51	)					(51	)		(13	)		(64	)
Balance, June 30, 2021	$	—		$	907	$	16,352	$	15,739		$	(19,986	)	$	(1,052	)	$	11,960		$	182		$	12,142
Net income									371									371			13			384
Other comprehensive loss															(207	)		(207	)		(1	)		(208	)
Purchase of common stock for treasury												(24	)					(24	)					(24	)
Shares issued to benefit plans and for option exercises							46											46						46
Other, net												(1	)					(1	)		16			15
Balance, September 30, 2021	$	—		$	907	$	16,398	$	16,110		$	(20,011	)	$	(1,259	)	$	12,145		$	210		$	12,355

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CORNING INCORPORATED AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited; in millions)

(In millions)	Convertible preferred stock		Common stock		Additional paid-in capital common		Retained earnings			Treasury stock			Accumulated other comprehensive loss			Total Corning Incorporated shareholders' equity			Non-controlling interests			Total
Balance, December 31, 2019	$	2,300	$	859	$	14,323	$	16,408		$	(19,812	)	$	(1,171	)	$	12,907		$	90		$	12,997
Net loss								(96	)								(96	)					(96	)
Other comprehensive loss														(326	)		(326	)		(1	)		(327	)
Purchase of common stock for treasury											(105	)					(105	)					(105	)
Shares issued to benefit plans and for option exercises						17											17						17
Common dividends ($0.22 per share)								(168	)								(168	)					(168	)
Preferred dividends ($10,625 per share)								(24	)								(24	)					(24	)
Other, net								(6	)		(1	)					(7	)					(7	)
Balance, March 31, 2020	$	2,300	$	859	$	14,340	$	16,114		$	(19,918	)	$	(1,497	)	$	12,198		$	89		$	12,287
Net (loss) income								(71	)								(71	)		6			(65	)
Other comprehensive income														65			65						65
Shares issued to benefit plans and for option exercises				1		58											59						59
Common dividends ($0.22 per share)								(171	)								(171	)					(171	)
Preferred dividends ($10,625 per share)								(25	)								(25	)					(25	)
Other, net											(6	)					(6	)		(11	)		(17	)
Balance, June 30, 2020	$	2,300	$	860	$	14,398	$	15,847		$	(19,924	)	$	(1,432	)	$	12,049		$	84		$	12,133
Net income								427									427			5			432
Other comprehensive income														298			298			1			299
Shares issued to benefit plans and for option exercises				1		96											97						97
Common dividends ($0.22 per share)								(171	)								(171	)					(171	)
Preferred dividends ($10,625 per share)								(24	)								(24	)					(24	)
Non-controlling interest in HSG ⁽⁴⁾																				102			102
Other, net								(14	)		(2	)					(16	)		5			(11	)
Balance, September 30, 2020	$	2,300	$	861	$	14,494	$	16,065		$	(19,926	)	$	(1,134	)	$	12,660		$	197		$	12,857

⁽¹⁾	Treasury stock includes the deemed surrender to the Company of common stock to satisfy employee tax withholding obligations.
⁽²⁾	Refer to Note 6 (Earnings per Share) and Note 14 (Shareholders' Equity) to the consolidated financial statements for additional information.
⁽³⁾	Refer to Note 14 (Shareholders' Equity) to the consolidated financial statements for additional information.
⁽⁴⁾	Refer to Note 3 (HSG Transactions) to the consolidated financial statements for more information.

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. Significant Accounting Policies

Basis of Presentation

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

The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) for interim financial information. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been omitted or condensed. These interim consolidated financial statements should be read in conjunction with Corning’s consolidated financial statements and notes thereto included in its Annual Report on Form 10-K for the year ended December 31, 2020 (“2020 Form 10-K”).

The unaudited consolidated financial statements reflect all adjustments which, in the opinion of management, are necessary for a fair statement of the results of operations, financial position and cash flows for the interim periods presented. All such adjustments are of a normal recurring nature. The results for interim periods are not necessarily indicative of results which may be expected for any other interim period or for the full year.

The equity method of accounting is used for investments in affiliated companies that are not controlled by Corning and in which the Company’s interest is generally between 20% and 50% and we have significant influence over the entity.

On September 9, 2020, Hemlock Semiconductor Group (“HSG”) redeemed the entire ownership interest of DuPont de Nemours, Inc. (“DuPont”) in HSG with a value of $250 million ("Redemption"). Upon completion of the Redemption, the Company obtained a 100% interest in Hemlock Semiconductor LLC ("HS LLC") and an 80.5% interest in Hemlock Semiconductor Operations LLC ("HSO LLC"), which are affiliated entities within HSG. HSG's results have been consolidated in “All Other”. Refer to Note 3 (HSG Transactions) to the consolidated financial statements for additional information.

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. Actual results could differ from those estimates. The novel coronavirus (“COVID-19”) pandemic and the resulting adverse impacts to global economic conditions may impact future estimates including, but not limited to, inventory valuations, fair value measurements, goodwill and long-lived asset impairments, the effectiveness of the Company’s hedging instruments, deferred tax valuation allowances, actuarial losses on retirement benefit plans and discount rate assumptions.

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

New Accounting Standards

During the first quarter of 2021, Corning early adopted ASU 2020-06. This simplifies an issuer’s accounting for convertible instruments by eliminating separate accounting for beneficial and cash conversion features under ASC 470-20. The ASU clarifies the settlement assessment that entities are required to perform to determine whether a contract qualifies for equity classification under ASC 815-40. Entities are required to use the if-converted method for all convertible instruments in the diluted earnings per share calculation, to include the effect of potential share settlement if the effect is more dilutive, for instruments that may be settled in cash or shares under ASC 260. The adoption of ASU 2020-06 did not have any impact on Corning’s consolidated financial statements.

Other Accounting Standards

No other accounting standards, newly issued or adopted as of September 30, 2021, had a material impact on Corning’s financial statements or disclosures.

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2. Restructuring, Impairment and Other Charges and Credits

2021

There was no material restructuring, impairment and other charges and credits activity for the first nine months of 2021. As of September 30, 2021, Corning had unpaid severance liabilities of $17 million, and payment is expected to be complete in less than twelve months.

2020

In the first nine months of 2020, and in response to uncertain global economic conditions, Corning undertook actions to transform the Company’s cost structure and improve operational efficiency.

During the three and nine months ended September 30, 2020, $171 million and $733 million were recorded, respectively, in restructuring, impairment and other charges and credits. Severance charges of $6 million and $141 million, respectively, were primarily related to a reduction in workforce to facilitate realignment of capacity in the Asia regions for our Display Technologies segment, optimize our Optical Communications segment and certain corporate costs. Asset impairment losses of $22 million and $217 million, respectively, were incurred for an asset group related to the reassessment of research and development programs within "All Other". Charges of $143 million and $375 million, respectively, primarily included accelerated depreciation, asset disposals and other related exit costs in our Display Technologies and Specialty Materials segments.

For the three and nine months ended September 30, 2020, total restructuring, impairment and other charges and credits were reflected on the consolidated statements of income as follows:

	Three months ended
	September 30, 2020
			Selling,		Research,
			general		development
			and		and
	Gross		administrative		engineering
	margin (1)		expenses		expenses		Other		Total
Severance	$	3	$	3					$	6
Asset impairment				6	$	16				22
Capacity realignment		95				1				96
Other charges and credits		26		12		1	$	8		47
Total restructuring, impairment and other charges and credits	$	124	$	21	$	18	$	8	$	171

⁽¹⁾	Activity reflected in cost of sales.

	Nine months ended
	September 30, 2020
			Selling,		Research,
			general		development
			and		and
	Gross		administrative		engineering
	margin (1)		expenses		expenses		Other		Total
Severance	$	79	$	34	$	28			$	141
Asset impairment				6		211				217
Capacity realignment		243				2				245
Other charges and credits		61		51		2	$	16		130
Total restructuring, impairment and other charges and credits	$	383	$	91	$	243	$	16	$	733

⁽¹⁾	Activity reflected in cost of sales.

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3. HSG Transactions

In 2016, Corning realigned its ownership interest in Dow Corning Corporation ("Dow Corning"), exchanging its 50% interest in the joint venture between Corning and The Dow Chemical Corporation ("Dow") for a newly formed company that held a 49.9% interest in HS LLC and a 40.25% interest in HSO LLC, which were recorded as equity method investments of Corning and are affiliated companies of HSG. DuPont subsequently undertook Dow's ownership interest in HSG. HSG manufactures polysilicon products for the semiconductor and solar industries, and is one of the world’s leading providers of ultra-pure polycrystalline silicon to the semiconductor industry.

2020

On September 9, 2020, HSG entered into a series of agreements with DuPont resulting in a change in control and consolidation for Corning.

HSG acquired DuPont’s TCS manufacturing assets, which were determined to be a business and recorded as a business combination. The fair value of the purchase price was $255 million. In conjunction with this acquisition, HSG settled the pre-existing TCS relationship (“TCS Settlement”) for a contractual amount of $175 million, which was determined to have a fair value of $200 million. HSG is paying for the TCS Settlement over three years with equal annual payments of approximately $58 million. Corning’s share of the pre-tax loss related to the TCS Settlement was $81 million and was recorded in equity in earnings of affiliated companies in the consolidated statements of income (loss).

HSG also completed the Redemption, redeeming Dupont’s entire ownership of HSG with a value of $250 million. The Redemption was funded with HSG’s existing cash on-hand of $75 million and its newly obtained third-party debt of $175 million, maturing on September 8, 2021. Debt repayments have been recorded as a financing activity on Corning's consolidated statements of cash flows. As of September 30, 2021, the third-party debt has been fully repaid.

Upon completion of the Redemption, Corning obtained a 100% interest in HS LLC and an 80.5% interest in HSO LLC. Corning accounted for the Redemption under the acquisition method of accounting in accordance with business combinations without the transfer of net cash consideration. The Redemption price of $250 million approximated the fair value of Corning’s equity interest in HSG immediately preceding the Redemption.

The net gain on previously owned equity was calculated as follows (in millions):

Fair value of previously held equity investment	$	250
Equity investment liability balance as of acquisition date		(248	)
Corning's gain on previously held equity investment	$	498

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The following table summarizes the amounts of recorded assets acquired and liabilities assumed as of September 9, 2020, which includes the TCS assets and liabilities acquired by HSG immediately prior to the Redemption and the consolidation by Corning. Recognized amounts of identified assets and liabilities recorded at fair value (in millions):

Inventory	$	503
Property, plant and equipment		651
Intangible assets		285
Other current and non-current assets ⁽¹⁾		173
Short-term borrowings		(178	)
Trade payables and other accrued liabilities		(329	)
Other liabilities		(1,261	)
Total identified net liabilities		(156	)
Non-controlling interests ⁽²⁾		(102	)
Total fair value of Corning's previously held equity investment ⁽²⁾		(250	)
Goodwill ⁽³⁾	$	508

⁽¹⁾	The other current and non-current assets included a contingent consideration asset of $20 million at fair value for a cost adjustment contract related to the TCS Transaction. Refer to Note 13 (Fair Value Measurements) to the consolidated financial statements for additional information.
⁽²⁾	The purchase price being used to measure the goodwill of the Redemption is $352 million, including the fair value of Corning’s previously held equity interest and non-controlling interest, of $250 million and $102 million, respectively.
⁽³⁾	The goodwill recognized is not deductible for U.S. income tax purposes. The goodwill was allocated to “All Other” within segment reporting as disclosed in Note 16 (Reportable Segments) to the consolidated financial statements.

Upon completion of the Redemption and resulting consolidation, Corning recorded the values of assets acquired and liabilities assumed from HSG, including a customer deposit liability and deferred revenue. Refer to Note 4 (Revenue) to the consolidated financial statements for additional information.

The goodwill is primarily related to other intangibles and synergies of the acquired business which do not qualify for separate recognition. Intangible assets consist primarily of $215 million of developed technologies and know-how, and $70 million of other intangibles that are amortized over the weighted-average useful life of approximately 20 and 15 years, respectively.

HSG's revenue and net income have been consolidated in “All Other” in Corning’s consolidated statements of income.

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4. 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 point in time when control transfers to the customer.

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

	Three months ended				Nine months ended
	September 30,				September 30,
	2021		2020		2021		2020
Display products	$	936	$	834	$	2,758	$	2,211

Telecommunication products		1,131		909		3,143		2,587

Specialty glass products		556		570		1,490		1,339

Environmental substrate and filter products		382		369		1,233		891

Life science products		304		220		917		707

All Other ⁽¹⁾		306		99		865		218
Total revenue	$	3,615	$	3,001	$	10,406	$	7,953
Impact of foreign currency movements ⁽²⁾		24		6				66
Cumulative adjustment related to customer contract ⁽³⁾								105
Net sales of reportable segments and All Other	$	3,639	$	3,007	$	10,406	$	8,124

⁽¹⁾	The Company obtained a controlling interest in HSG during the third quarter of 2020 and has consolidated results in "All Other" as of September 9, 2020.
⁽²⁾	This amount primarily represents the impact of foreign currency adjustments in the Display Technologies segment.
⁽³⁾	Amount represents the negative impact of a cumulative adjustment to reduce revenue by $105 million recorded during the first quarter of 2020. The adjustment was associated with a previously recorded commercial benefit asset, reflected as a prepayment, to a customer with a long-term supply agreement that substantially exited its production of LCD panels.

Refer to Note 16 (Reportable Segments) to the consolidated financial statements 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 deferred revenue, other advance payments and customer deposits. Other advance payments are not significant to operations and are classified as part of other accrued liabilities in the consolidated financial statements. Customer deposits and deferred revenue are predominately related to Display products and Corning's controlling interest in HSG, respectively.

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Customer Deposits

As of September 30, 2021 and December 31, 2020, Corning had customer deposits of approximately $1.3 billion and $1.4 billion, respectively. Most of these customer deposits were non-refundable and allowed customers to secure rights to glass produced by Corning under long-term supply agreements. The duration of these long-term supply agreements ranges up to 10 years. As glass is shipped to customers, Corning will recognize revenue and reduce the amount of the customer deposit liability.

Customer deposits used were $59 million and $182 million, respectively, and $34 million and $107 million, respectively, in the three and nine months ended September 30, 2021 and 2020. As of September 30, 2021 and December 31, 2020, $1.1 billion was recorded as other long-term liabilities. The remaining $224 million and $211 million, respectively, were classified as other current liabilities.

Deferred Revenue

As of September 30, 2021 and December 31, 2020, Corning had deferred revenue of approximately $932 million and $1.0 billion, respectively. The deferred revenue was related to the performance obligations of non-refundable consideration previously received by HSG 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, 2021 and December 31, 2020, $792 million and $872 million, respectively, were classified as long-term liabilities and $140 million and $152 million, respectively, were classified as current liabilities.

Refer to Note 3 (HSG Transactions) to the consolidated financial statements for additional information.

5. Income Taxes

The provision for income taxes and the related effective income tax rates are as follows (in millions):

Three months ended

Nine months ended

September 30,

2021

2020