Corning Incorporated (NYSE:GLW) today announced first-quarter sales
of $1.26 billion, with net income of $257 million, or $0.16 per
share. Corning's first-quarter results included special charges
totaling $168 million, or $0.11 per share. Excluding these charges,
Corning's first-quarter net income would have been $425 million, or
$0.27 per share. These are non-GAAP financial measures. These and
all non-GAAP financial measures are reconciled on the company's
investor relations Web site and in attachments to this news
release. The company's first-quarter results exceeded its sales
guidance range of $1.2 billion to $1.25 billion and significantly
exceeded its guidance for earnings. Corning began expensing stock
options in the first quarter of 2006. First-quarter results
included $0.01 per share of expense related to stock options. "Our
first-quarter results were very satisfying," Wendell P. Weeks,
president and chief executive officer, said. "We continue to be
pleased with the growth we experienced in our Display Technologies
segment. We also saw improved performance in our
Telecommunications, Life Sciences and Environmental Technologies
segments versus the fourth quarter." Corning's first-quarter
results were impacted by the following non-cash items: -- A $185
million pretax and after-tax net charge primarily reflecting the
increase in market value of Corning common stock to be contributed
to settle the asbestos litigation related to the Pittsburgh Corning
Corporation. -- A $38 million reduction in income tax expense
related to the release of the valuation allowance on certain
deferred tax assets in Germany. -- A $21 million reduction in
equity earnings related to the impairment of long-lived assets at
Samsung Corning Company, Ltd., Corning's 50-percent owned equity
venture in Korea, which manufactures glass panels and funnels for
cathode ray tubes for televisions and computer monitors.
First-Quarter Operating Results Corning's first-quarter sales of
$1.26 billion increased 5 percent over fourth-quarter sales of $1.2
billion, and increased 20 percent over last year's first-quarter
sales of $1.05 billion. Gross margin of 45 percent for the first
quarter was consistent with the fourth quarter. Equity earnings for
the first quarter were $200 million, including the $21 million
impairment charge at Samsung Corning. Absent this charge, equity
earnings reflect strong operating results at Dow Corning
Corporation and Samsung Corning Precision Glass Co., Ltd., (SCP),
Corning's 50-percent owned equity venture in Korea, which
manufactures liquid crystal display (LCD) glass substrates.
Corning's equity earnings from Dow Corning were $69 million in the
first quarter, a 38-percent increase over fourth-quarter results.
First-quarter equity earnings include about $15 million of
non-recurring gains. First-quarter sales for Corning's Display
Technologies segment were $547 million, a 71-percent increase over
2005 first-quarter sales of $320 million. First-quarter
year-over-year LCD glass volume more than doubled. Sequentially,
first-quarter sales increased 6 percent over fourth-quarter sales
of $518 million. Stronger-than-expected volume growth of 15 percent
was partially offset by the anticipated upper single-digit price
declines. Samsung Corning Precision's first-quarter volume
increased 10 percent sequentially and 87 percent year-over-year.
Equity earnings from SCP were $140 million in the first quarter,
compared to $129 million in the previous quarter. Total volume in
the Display Technologies segment, including both Corning's wholly
owned business and SCP, increased 13 percent sequentially in the
first quarter. Net income for the Display Technologies segment was
$417 million, up 13 percent compared to $368 million in the fourth
quarter. First-quarter Telecommunications segment sales increased 4
percent to $397 million versus $383 million last quarter, primarily
due to higher fiber and cable sales in North America.
Fiber-to-the-premises (FTTP) sales in the first quarter increased
slightly over fourth-quarter results. The Environmental
Technologies segment had sales of $155 million in the first
quarter, compared to $142 million in the fourth quarter of last
year, a 9-percent increase. The increase was driven by an
improvement in global automotive sales. The company also saw a
14-percent sequential sales increase in its Life Sciences segment
of $72 million versus $63 million in the previous quarter. Cash
Flow/Liquidity Update Corning ended the first quarter with $2.48
billion in cash and short-term investments, an increase from $2.4
billion in the previous quarter. The company's debt level remained
at $1.8 billion. James B. Flaws, vice chairman and chief financial
officer, said, "We were delighted that Standard & Poor's Rating
Services raised its credit rating on Corning to BBB from the
previous grade of BBB minus in early April. While we ended the
quarter with a negative $176 million of free cash flow, it was the
result of seasonally higher first-quarter working capital
expenditures, our continued capital spending in Display
Technologies, and our equity investment in SCP early in the first
quarter. We remain on track to be free cash flow positive for the
full year." Free cash flow is a non-GAAP financial measure.
Restatement of 2003 Pittsburgh Corning Settlement Corning has
determined that its accounting for the 2003 Pittsburgh Corning
Corporation (PCC) asbestos litigation settlement was not in
compliance with generally accepted accounting principles (GAAP).
Specifically, two components of the settlement liability -
Corning's investment in Pittsburgh Corning Europe (PCE) and the
proceeds of certain insurance policies to be assigned - were
accounted for at book value rather than at estimated fair value, as
required by GAAP. The company also incorrectly suspended
recognition of equity earnings from Pittsburgh Corning Europe at
that time. Corning management and its audit committee have
concluded that the company will restate its historical financial
statements to reflect the appropriate accounting. The primary
impact of this restatement will be to increase the asbestos
settlement liability by $94 million pretax, ($50 million after-tax)
in the first quarter of 2003, and to increase the deferred tax
valuation allowance recorded in the third quarter of 2004 by about
$50 million. The restatement will have no impact on 2005 reported
earnings per share. Corning will continue to recognize changes in
the fair value of all components of the liability until a
settlement occurs. Details of the restatement will be included in a
Form 8-K to be filed today. Flaws said, "We would like to emphasize
to investors that this restatement is non-cash and solely relates
to our accounting for the asbestos settlement liability and our
investment in Pittsburgh Corning Europe. Additionally, there has
been no change to the accounting for our contribution of Corning
common stock as part of the proposed settlement. We are awaiting
the bankruptcy court's ruling on the proposed settlement." The
company said that it will continue to have full access to its $975
million revolving credit agreement. As a result of the planned
restatement, the company's previously issued consolidated financial
statements, including those contained in its 2005 Form 10-K and its
first, second and third quarter 2005 Form 10-Qs, can no longer be
relied upon. Corning intends to file an amended 2005 Form 10-K and
its first quarter 2006 Form 10-Q by May 10, 2006. Second-Quarter
Outlook Flaws said that the company expects second-quarter sales to
be in the range of $1.29 billion to $1.33 billion, and EPS in the
range of $0.24 to $0.26 before special items. This EPS estimate is
a non-GAAP financial measure and excludes special items. The gross
margin percentage for the second quarter is expected to be in the
range of 42 percent to 44 percent. Corning expects that the
second-quarter corporate tax rate will be between 15 percent and 20
percent. In the Display Technologies segment, Corning anticipates
that its second-quarter sequential volume growth for its wholly
owned business will be in the range of flat to a 5 percent increase
following very strong first-quarter volume growth. Year-over-year
volume growth for the second quarter is expected to be greater than
60 percent. Samsung Corning Precision expects sequential volume
growth in a range from flat to up 5 percent and year-over-year
volume growth greater than 50 percent. Corning said that it expects
pricing declines in the second quarter to be lower than
first-quarter price declines. Corning expects its Display segment
sales to be consistent with the first quarter. Flaws said, "Some of
the strong LCD demand that we experienced last quarter may have
contributed to an inventory buildup in the supply channel late in
the quarter. This is contributing to Corning's slightly lower
sequential growth rate. In early April, a lightning strike to a
utility line caused a temporary power outage at our Shizuoka, Japan
LCD plant. This will result in slightly lower second-quarter
manufacturing volumes and unusually high equipment repair expenses.
These two items will result in lower Display segment earnings in
the second quarter." Corning anticipates that no material customer
supply disruptions will result from the equipment repair. Corning's
Telecommunications segment second-quarter sales growth is expected
to be in the range of 10 percent to 15 percent, driven primarily by
hardware and equipment sales. Second-quarter sales in the company's
Environmental Technologies segment are expected to be down slightly
from the first quarter. Any weakness in the second quarter would be
driven primarily by the U.S. auto market. The company anticipates
second-quarter equity earnings to be lower than the first quarter,
due primarily to the non recurring gains in the first quarter.
Equity earnings from Dow Corning are expected to be consistent with
the first quarter. Weeks said, "We believe the LCD market will
continue to be strong over the course of the year, driven primarily
by the growing acceptance of LCD technology in the television
market. As we have told investors a number of times, supply chain
issues could impact our results in any given quarter. However, we
have not changed our view that the LCD industry will grow between
40 percent and 50 percent this year and that Corning's Display
segment will grow at a rate faster than the industry." Meeting
Investors The company also announced that it will be meeting
investors on Tuesday, May 2 at the Merrill Lynch Technology
conference in New York. Annual Shareholders Meeting Corning will
hold its annual meeting of shareholders on Thursday, April 27, 2006
beginning at 11 a.m. EDT at the Corning Museum of Glass auditorium
in Corning, N.Y. First-Quarter Conference Call Information The
company will host a first-quarter conference call at 8:30 a.m. EDT
on Wednesday, April 26. To access the call, dial (210) 234-0007.
The password is RESULTS. The leader is SOFIO. A replay of the call
will begin at approximately 10:30 a.m. EDT, and will run through 5
p.m. EDT, Wednesday, May 10. To listen, dial (203) 369-1253, no
pass code is required. To listen to a live audio webcast of the
call, please go to Corning's Web site:
http://www.corning.com/investor_relations, and follow the
instructions. The audio webcast will be archived for one year
following the call. Presentation of Information in this News
Release Non-GAAP financial measures are not in accordance with, or
an alternative to, GAAP. Corning's non-GAAP net income and EPS
measure excludes restructuring, impairment and other charges and
adjustments to prior estimates for such charges. Additionally, the
company's non-GAAP measure excludes adjustments to asbestos
settlement reserves required by movements in Corning's common stock
price, gains and losses arising from debt retirements, charges
resulting from the impairment of equity or cost method investments,
or adjustments to deferred tax assets, and gains or losses
recognized in equity earnings from restructuring, impairment or
other charges or credits taken by equity method companies.
Corning's free cash flow financial measures are also non-GAAP
measures. The company believes presenting non-GAAP free cash flow,
net income and EPS measures are helpful to analyze financial
performance without the impact of unusual items that may obscure
trends in the company's underlying performance. These non-GAAP
measures are reconciled on the company's Web site at
www.corning.com/investor_relations and accompany this news release.
About Corning Incorporated Corning Incorporated (www.corning.com)
is a diversified technology company that concentrates its efforts
on high-impact growth opportunities. Corning combines its expertise
in specialty glass, ceramic materials, polymers and the
manipulation of the properties of light, with strong process and
manufacturing capabilities to develop, engineer and commercialize
significant innovative products for the telecommunications, flat
panel display, environmental, semiconductor, and life sciences
industries. Forward-Looking and Cautionary Statements This press
release contains forward-looking statements that involve a variety
of business risks and other uncertainties that could cause actual
results to differ materially. These risks and uncertainties include
the possibility of changes or fluctuations in global economic and
political conditions; tariffs, import duties and currency
fluctuations; product demand and industry capacity; competitive
products and pricing; manufacturing efficiencies; cost reductions;
availability and costs of critical components and materials; new
product development and commercialization; order activity and
demand from major customers; capital spending by larger customers
in the liquid crystal display industry and other businesses;
changes in the mix of sales between premium and non-premium
products; facility expansions and new plant start-up costs;
possible disruption in commercial activities due to terrorist
activity, armed conflict, political instability or major health
concerns; ability to obtain financing and capital on commercially
reasonable terms; adequacy and availability of insurance; capital
resource and cash flow activities; capital spending; equity company
activities; interest costs; acquisition and divestiture activities;
the level of excess or obsolete inventory; the rate of technology
change; the ability to enforce patents; product and components
performance issues; changes in key personnel; stock price
fluctuations; and adverse litigation or regulatory developments.
These and other risk factors are identified in Corning's filings
with the Securities and Exchange Commission. Forward-looking
statements speak only as of the day that they are made, and Corning
undertakes no obligation to update them in light of new information
or future events. -0- *T CORNING INCORPORATED AND SUBSIDIARY
COMPANIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited; in
millions, except per share amounts) Three months ended March 31,
------------------- 2005 As 2006 Restated -------- ---------- Net
sales $ 1,262 $ 1,050 Cost of sales 689 621 -------- -------- Gross
margin 573 429 Operating expenses: Selling, general and
administrative expenses 223 184 Research, development and
engineering expenses 124 98 Amortization of purchased intangibles 3
5 Restructuring, impairment and other charges 6 19 Asbestos
settlement (Note 2) 185 (12) -------- -------- Operating income 32
135 Interest income 24 10 Interest expense (20) (35) Loss on
repurchases and retirement of debt, net (9) Other income (expense),
net 20 -------- -------- Income before income taxes 56 101 Benefit
(provision) for income taxes (Note 3) 2 (19) -------- --------
Income before minority interests and equity earnings 58 82 Minority
interests (1) (1) Equity in earnings of associated companies, net
of impairments (Note 4) 200 169 -------- -------- Net income $ 257
$ 250 ======== ======== Basic earnings per common share (Note 5) $
0.17 $ 0.18 ======== ======== Diluted earnings per common share
(Note 5) $ 0.16 $ 0.17 ======== ======== See accompanying notes to
these financial statements. CORNING INCORPORATED AND SUBSIDIARY
COMPANIES CONSOLIDATED BALANCE SHEETS (Unaudited; in millions,
except per share amounts) December 31, March 31, 2005 As 2006
Restated ---------- ------------ Assets Current assets: Cash and
cash equivalents $ 1,262 $ 1,342 Short-term investments, at fair
value 1,216 1,092 ---------- ---------- Total cash, cash
equivalents and short- term investments 2,478 2,434 Trade accounts
receivable, net 696 629 Inventories 616 570 Deferred income taxes
65 44 Other current assets 189 183 ---------- ---------- Total
current assets 4,044 3,860 Investments 1,929 1,729 Property, net
4,816 4,675 Goodwill and other intangible assets, net 336 338
Deferred income taxes 50 10 Other assets 582 595 ----------
---------- Total Assets $ 11,757 $ 11,207 ========== ==========
Liabilities and Shareholders' Equity Current liabilities:
Short-term borrowings, including current portion of long-term debt
$ 23 $ 18 Accounts payable 661 690 Other accrued liabilities 1,699
1,662 ---------- ---------- Total current liabilities 2,383 2,370
Long-term debt 1,788 1,789 Postretirement benefits other than
pensions 593 593 Other liabilities 907 925 ---------- ----------
Total liabilities 5,671 5,677 ---------- ---------- Commitments and
contingencies Minority interests 46 43 Shareholders' equity:
Preferred stock - Par value $100.00 per share; Shares authorized:
10 million Common stock - Par value $0.50 per share; Shares
authorized: 3.8 billion; Shares issued: 1,564 million and 1,552
million 786 776 Additional paid-in capital 11,808 11,548
Accumulated deficit (6,591) (6,847) Treasury stock, at cost; Shares
held: 17 million (181) (168) Accumulated other comprehensive income
218 178 ---------- ---------- Total shareholders' equity 6,040
5,487 ---------- ---------- Total Liabilities and Shareholders'
Equity $ 11,757 $ 11,207 ========== ========== See accompanying
notes to these financial statements. CORNING INCORPORATED AND
SUBSIDIARY COMPANIES CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in millions) Three months ended March 31,
----------------- 2005 As 2006 Restated ------- --------- Cash
Flows from Operating Activities: Net income $ 257 $ 250 Adjustments
to reconcile net income to net cash provided by operating
activities: Depreciation 141 120 Amortization of purchased
intangibles 3 5 Asbestos settlement 185 (12) Restructuring,
impairment and other charges 6 19 Stock compensation charges 32 6
Undistributed earnings of associated companies (77) (26) Deferred
taxes (62) 3 Restructuring payments (4) (9) Customer deposits (8)
20 Employee benefit payments less than expense 15 16 Changes in
certain working capital items: Trade accounts receivable (65) (54)
Inventories (46) (39) Other current assets (8) (16) Accounts
payable and other current liabilities, net of restructuring
payments (195) (151) Other, net 7 10 ------- ------- Net cash
provided by operating activities 181 142 ------- ------- Cash Flows
from Investing Activities: Capital expenditures (280) (323)
Investment in affiliate companies (77) Short-term investments -
acquisitions (858) (314) Short-term investments - liquidations 735
486 Other, net 2 ------- ------- Net cash used in investing
activities (480) (149) ------- ------- Cash Flows from Financing
Activities: Repayments of short-term borrowings and current portion
of long-term debt (4) (192) Proceeds from issuance of long-term
debt, net 48 Retirements of long-term debt (2) Proceeds from
issuance of common stock, net 6 12 Proceeds from the exercise of
stock options 219 9 Other, net (2) (5) ------- ------- Net cash
provided by (used in) financing activities 219 (130) -------
------- Effect of exchange rates on cash (25) ------- ------- Net
decrease in cash and cash equivalents (80) (162) Cash and cash
equivalents at beginning of period 1,342 1,009 ------- ------- Cash
and cash equivalents at end of period $1,262 $ 847 ======= =======
Certain amounts for 2005 were reclassified to conform to 2006
classifications. CORNING INCORPORATED AND SUBSIDIARY COMPANIES
SEGMENT RESULTS (Unaudited; in millions) Our reportable operating
segments include Display Technologies, Telecommunications,
Environmental Technologies and Life Sciences. Environ- Display
mental Tech- Telecom- Tech- Life All nologies munications nologies
Sciences Other Total -------- ----------- -------- -------- -----
------- Three months ended March 31, 2006 Net sales $ 547 $ 397 $
155 $ 72 $ 91 $1,262 Depreciation (1) $ 62 $ 42 $ 20 $ 5 $ 10 $ 139
Amortization of purchased intangibles $ 3 $ 3 Research, development
and engineering expenses (2) $ 30 $ 20 $ 30 $ 13 $ 8 $ 101
Restructuring, impairment and other charges (before-tax and
minority interest) $ 6 $ 6 Income tax provision $ (29) $ (6) $ (3)
$ (38) Income (loss) before minority interests and equity earnings
(loss) (3) $ 275 $ (2) $ (5) $ 2 $ 270 Minority interests $ 1 $ (2)
$ (1) Equity in earnings (loss) of associated companies (4) 142 2
(1) (13) 130 ------- -------- ------- ------- ----- ------- Net
income (loss) $ 417 $ 1 $ (1) $ (5) $(13) $ 399 ======= ========
======= ======= ===== ======= Three months ended March 31, 2005 -
Restated Net sales $ 320 $ 427 $ 148 $ 74 $ 81 $1,050 Depreciation
(1) $ 41 $ 46 $ 17 $ 5 $ 9 $ 118 Amortization of purchased
intangibles $ 5 $ 5 Research, development and engineering expenses
(2) $ 21 $ 17 $ 23 $ 8 $ 7 $ 76 Income tax provision $ (8) $ (8) $
(3) $ (1) $ (2) $ (22) Earnings before minority interest and equity
earnings (3) $ 119 $ 18 $ 9 $ 4 $ 3 $ 153 Minority interests $ (2)
$ (2) Equity in earnings of associated companies 81 17 98 -------
-------- ------- ------- ----- ------- Net income $ 200 $ 18 $ 9 $
4 $ 18 $ 249 ======= ======== ======= ======= ===== ======= (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 includes direct project spending which is
identifiable to a segment. (3) 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. (4) Includes a $21 million charge (net of tax) for Corning's
share of an impairment charge for Samsung Corning Co., Ltd. CORNING
INCORPORATED AND SUBSIDIARY COMPANIES SEGMENT RESULTS (Unaudited;
in millions) A reconciliation of reportable segment net income
(loss) to consolidated net income (loss) follows (in millions):
Three months ended March 31, ----------------- 2005 As 2006
Restated ------- --------- Net income of reportable segments $ 399
$ 249 Unallocated amounts: Net financing costs (1) (8) (37)
Stock-based compensation expense (32) (6) Exploratory research (21)
(19) Corporate contributions (8) (5) Equity in earnings of
associated companies, net of impairments 70 71 Asbestos settlement
(2) (185) 12 Other corporate items (3) 42 (15) ------- ------- Net
income $ 257 $ 250 ======= ======= (1) Net financing costs include
interest expense, interest income, and interest costs and
investment gains associated with benefit plans. (2) The asbestos
settlement arrangement to be incorporated into the Pittsburgh
Corning Corporation (PCC) reorganization plan, when the
reorganization plan becomes effective, will require Corning to
relinquish its equity interest in PCC, contribute its equity
interest in Pittsburgh Corning Europe (PCE), and 25 million shares
of Corning common stock to a trust. Corning also agreed to make
cash payments over the six years from the effective date of the
settlement and to assign certain insurance policy proceeds from its
primary insurance and a portion of its excess insurance at the time
of the settlement. The asbestos liability requires adjustment to
fair value based upon movements in Corning's common stock price
prior to contribution of the shares to the trust as well as change
in the estimated fair value of the other components of the
settlement offer. In the first quarter of 2006 and 2005, Corning
recorded a charge of $182 million and a credit of $16 million,
respectively, to reflect the movement in Corning's common stock
price in each year and charges of $3 million and $4 million,
respectively, to reflect changes in the estimated fair value of
other components of the settlement offer. (3) Other corporate items
include the tax impact of the unallocated amounts and, in the first
quarter of 2005, an impairment charge of $19 million for the
other-than-tempoary decline in our investment in Avanex below its
cost basis. CORNING INCORPORATED AND SUBSIDIARY COMPANIES NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Description of
Restatement The Company and its audit committee concluded, on April
21, 2006, that the Company will restate previously issued
historical financial statements to properly account for the
asbestos settlement charges and liability and for its investment in
and equity earnings of Pittsburgh Corning Europe (PCE) from March
31, 2003, through December 31, 2005. The Company will also change
the classification of accretion on a portion of the liability to be
paid in cash from interest expense to asbestos settlement charge
for the same time period. The restatement adjustments will have no
impact on previously reported revenue, cash balances, or compliance
with any debt covenants. On March 28, 2003, we announced that we
had reached agreement with the representatives of asbestos
claimants for the settlement of all current and future asbestos
claims against us and Pittsburgh Corning Corporation (PCC), which
might arise from PCC products or operations. The proposed
settlement, when the plan becomes effective, will require Corning
to relinquish its equity interest in PCC, contribute its equity
interest in Pittsburgh Corning Europe N.V. (PCE), a Belgian
corporation, and 25 million shares of Corning common stock. Corning
also agreed to make cash payments with a value of $131 million, in
March 2003, over six years from the effective date of the
settlement and to assign insurance policy proceeds from its primary
insurance and a portion of its excess insurance at the time of the
settlement. Between March 31, 2003, and December 31, 2005, the
following errors occurred: -- Corning's asbestos settlement charges
and the related liability for the asbestos settlement did not
reflect the estimated fair value at initial recognition or
subsequent changes in fair value, of certain components of the
proposed settlement offer. As a result, asbestos settlement charges
for the years 2005, 2004, and 2003 were understated by $13 million,
$24 million, and $117 million, respectively, and for the quarter
ended March 31, 2005 were understated $6 million. -- Corning
incorrectly suspended recording equity earnings of PCE between
March 31, 2003, and December 31, 2005. As a result, equity in
earnings of associated companies for the years 2005, 2004, and 2003
was understated by $13 million, $11 million, and $7 million,
respectively, and for the quarter ended March 31, 2005 was
understated $2 million. -- Accretion on the cash portion of the
asbestos settlement offer was incorrectly recorded as interest
expense resulting in both an overstatement of interest expense and
an understatement of asbestos settlement expense for the years
2005, 2004, and 2003, by $8 million, $8 million, and $5 million,
respectively, and for the quarter ended March 31, 2005 was
understated $2 million. In the restated financial statements, the
higher asbestos settlement charges will be tax-effected in 2003 and
the first half of 2004. As Corning provided a valuation allowance
on most of its deferred tax assets in the third quarter of 2004,
that quarter will reflect an increase in the valuation allowance of
$55 million for the deferred tax assets related to the higher
asbestos settlement charges. The restatement adjustments are
expected to impact Corning's reported net income and diluted
earnings per share as follows (in millions, except per share
amounts): Year ended December 31, Three months
------------------------------ ended 2005 2004 2003 March 31, 2005
--------- --------- -------- --------------- As reported: Net
income (loss) $ 585 $ (2,165) $ (223) $ 249 Basic earnings (loss)
per share $ 0.40 $ (1.56) $ (0.18) $ 0.18 Diluted earnings (loss)
per share $ 0.38 $ (1.56) $ (0.18) $ 0.17 As restated: Net income
(loss) $ 585 $ (2,231) $ (280) $ 250 Basic earnings (loss) per
share $ 0.40 $ (1.61) $ (0.22) $ 0.18 Diluted earnings (loss) per
share $ 0.38 $ (1.61) $ (0.22) $ 0.17 These adjustments are not
expected to change previously reported basic and diluted earnings
per share for the quarters ended September 30, 2005, June 30, 2005
and March 31, 2005. The cumulative effect of these adjustments to
Corning's balance sheet as of December 31, 2005, is expected to
result in an increase in investments in affiliated companies of $32
million, an increase to other long-term liabilities of $154
million, an increase to accumulated deficit of $123 million, and an
increase to accumulated other comprehensive income of $1 million.
As a result of the restatement adjustments, the Company's
previously issued consolidated financial statements, including
those contained in the following filings, should no longer be
relied upon: Annual Report on Form 10-K for the fiscal year ended
December 31, 2005; Quarterly Reports on Form 10-Q for the quarters
ended September 30, 2005, June 30, 2005 and March 31, 2005. The
Company plans to file an amended Annual Report on Form 10-K for the
fiscal year ended December 31, 2005 and its Quarterly Report on
Form 10-Q for the quarter ended March 31, 2006, by May 10, 2006.
The financial information included in this earnings release has
been restated to reflect the impact of the items described above.
Corning has not yet completed its evaluation of internal controls
relating to this restatement. 2. Asbestos Settlement As a result of
the proposed asbestos settlement, any changes in the estimated fair
value of the components of the proposed settlement agreement will
be recognized in our quarterly results until the date of the
contribution to the settlement trust. In the first quarter of 2006,
we recorded a charge of $185 million (pretax and after-tax)
including a mark-to-market charge of $182 million reflecting the
increase in Corning's common stock from December 31, 2005 to March
31, 2006 and a $3 million charge to adjust the estimated fair value
of certain other components of the proposed asbestos settlement.
Beginning with the first quarter of 2003, we have recorded total
net charges of $1,003 million to reflect the estimated fair value
of our asbestos liability. 3. Provision for Income Taxes In the
first quarter of 2006, we recorded a $38 million tax benefit from
the release of our valuation allowance on Germany trade taxes due
to sustained profitability of certain of our German entities. 4.
Equity in Earnings of Associated Companies In the first quarter of
2006, equity in earnings of associated companies includes a $21
million charge (net of tax) for the impairment of certain
long-lived assets of Samsung Corning Co., Ltd., a South Korea-based
manufacturer of glass panels and funnels for cathode ray tube
television and display monitors. 5. Weighted Average Shares
Outstanding Our weighted average shares outstanding are as follows
(in millions): Three months Three months ended ended March 31,
December 31, 2005 -------------------- ----------------- 2005 As
2006 Restated As Restated --------- ---------- -----------------
Basic 1,541 1,411 1,524 Diluted 1,592 1,503 1,524 Dilued used for
non-GAAP measures 1,592 1,510 1,571 CORNING INCORPORATED AND
SUBSIDIARY COMPANIES QUARTERLY SALES INFORMATION (Unaudited; in
millions) 2006 2005 ------- ---------------------------------------
Q1 Q1 Q2 Q3 Q4 Total ------- ------- ------- ------- -------
------- Display Technologies $ 547 $ 320 $ 415 $ 489 $ 518 $1,742
Telecommunications Fiber and cable 205 212 213 216 193 834 Hardware
and equipment 192 215 202 182 190 789 ------- ------- -------
------- ------- ------- 397 427 415 398 383 1,623 Environmental
Technologies Automotive 121 127 125 121 109 482 Diesel 34 21 21 23
33 98 ------- ------- ------- ------- ------- ------- 155 148 146
144 142 580 Life Sciences 72 74 75 70 63 282 Other 91 81 90 87 94
352 ------- ------- ------- ------- ------- ------- Total $1,262
$1,050 $1,141 $1,188 $1,200 $4,579 ======= ======= ======= =======
======= ======= The above supplemental information is intended to
facilitate analysis of Corning's businesses. CORNING INCORPORATED
AND SUBSIDIARY COMPANIES RECONCILIATION OF NON-GAAP FINANCIAL
MEASURE TO GAAP FINANCIAL MEASURE Three Months Ended March 31, 2006
(Unaudited; amounts in millions, except per share amounts)
----------------------------------------------------------------------
Corning's net income and earnings per share (EPS) excluding special
items for the first quarter of 2006 are non-GAAP financial measures
within the meaning of Regulation G of the Securities and Exchange
Commission. Non-GAAP financial measures are not in accordance with,
or an alternative to, generally accepted accounting principles
(GAAP). The company believes presenting non-GAAP net income and EPS
is helpful to analyze financial performance without the impact of
unusual items that may obscure trends in the company's underlying
performance. A detailed reconciliation is provided below outlining
the differences between these non-GAAP measures and the directly
related GAAP measures.
----------------------------------------------------------------------
Income Per Before Net Share Income Taxes Income ---------
------------- --------- Earnings per share (EPS) and net income,
excluding special items $ 0.27 $ 241 $ 425 Special items: Asbestos
settlement (a) (0.12) (185) (185) Provision for income taxes (b)
0.02 38 Equity in earnings of associated companies (c) (0.01) (21)
--------- ------- ------- Total EPS and net income $ 0.16 $ 56 $
257 ========= ======= ======= (a) As a result of Corning's proposed
asbestos settlement, any changes in the estimated fair value of the
components of the proposed settlement agreement will be recognized
in our quarterly results until the date of the contribution to the
settlement trust. In the first quarter of 2006, Corning recorded a
charge of $185 million (before- and after-tax) including $182
million for the change in its common stock price of $26.92 at March
31, 2006, compared to $19.66 at December 31, 2005 and $3 million
for the change in estimated fair value of certain other components
of the proposed asbestos settlement liability. (b) Amount reflects
a $38 million tax benefit from the release of our valuation
allowance on certain deferred tax assets in Germany. (c) Amount
reflects a charge of $21 million to reflect Corning's share of an
impairment charge at Samsung Corning Co., Ltd., a South Korea-based
manufacturer of glass panels and funnels for cathode ray tube
television and display monitors. CORNING INCORPORATED AND
SUBSIDIARY COMPANIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURE
TO GAAP FINANCIAL MEASURE Three Months Ended December 31, 2005, As
Restated (Unaudited; amounts in millions, except per share amounts)
----------------------------------------------------------------------
Corning's net income and earnings per share (EPS) excluding special
items for the fourth quarter of 2005 are non-GAAP financial
measures within the meaning of Regulation G of the Securities and
Exchange Commission. Non-GAAP financial measures are not in
accordance with, or an alternative to, generally accepted
accounting principles (GAAP). The company believes presenting
non-GAAP net income and EPS is helpful to analyze financial
performance without the impact of unusual items that may obscure
trends in the company's underlying performance. A detailed
reconciliation is provided below outlining the differences between
these non-GAAP measures and the directly related GAAP measure.
----------------------------------------------------------------------
Income Before Net Per Income Income Share Taxes (Loss) --------
--------- -------- Earnings per share (EPS) and net income,
excluding special items $ 0.22 $ 198 $ 344 Special items:
Restructuring, impairment and other (charges) and credits (a) 0.05
84 84 Asbestos settlement (b) (0.01) (14) (14) Loss on repurchases
and retirement of debt, net (c) (4) (4) Provision for taxes (d)
(0.28) (443) -------- ------- ------- Total EPS and net income
(loss) $ (0.02) $ 264 $ (33) ======== ======= ======= (a) Corning
recorded a gain of $84 million (before- and after-tax) for the
reversal of the cumulative translation account of a wholly-owned
foreign subsidiary that was substantially liquidated. (b) As a
result of Corning's proposed asbestos settlement, any changes in
the estimated fair value of the components of the proposed
settlement agreement will be recognized in our quarterly results
until the date of the contribution to the settlement trust. In the
fourth quarter of 2005, Corning recorded a charge of $14 million
(before- and after-tax), including $8 million for the change in its
common stock price of $19.66 at December 31, 2005 compared to
$19.33 the common stock price at September 30, 2005 and $6 million
for the change in estimated fair value of certain other components
of the proposed asbestos settlement liability. (c) Corning recorded
a loss of $4 million (before- and after-tax) for the cash
redemption of $277 million principal amount of zero- coupon
convertible debentures. (d) Amount reflects a net $443 million
charge to tax expense in 2005 which was primarily to increase the
valuation allowance against deferred tax assets resulting from our
conclusion that the sale of an appreciated asset no longer met the
criteria for a viable tax planning strategy. CORNING INCORPORATED
AND SUBSIDIARY COMPANIES RECONCILIATION OF NON-GAAP FINANCIAL
MEASURE TO GAAP FINANCIAL MEASURE Three Months and Year Ended March
31, 2006 (Unaudited; amounts in millions)
----------------------------------------------------------------------
Corning's free cash flow financial measures for the three months
ended March 31, 2006 and December 31, 2005 are non-GAAP financial
measures within the meaning of Regulation G of the Securities and
Exchange Commission. Non-GAAP financial measures are not in
accordance with, or an alternative to, generally accepted
accounting principles (GAAP). The company believes presenting
non-GAAP financial measures is helpful to analyze financial
performance without the impact of unusual items that may obscure
trends in the company's underlying performance. A detailed
reconciliation is provided below outlining the differences between
these non-GAAP measures and the directly related GAAP measures.
----------------------------------------------------------------------
Three months ended Three months ended March 31, 2006 December 31,
2005 ------------------ ------------------ Operating cash flow $
181 $ 659 Less: Investing cash flow (480) (516) Plus: Short-term
investments - acquisitions 858 355 Less: Short-term investments -
liquidations (735) (289) --------- ----------- Free cash flow $
(176) $ 209 ========= =========== CORNING INCORPORATED AND
SUBSIDIARY COMPANIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURE
TO GAAP FINANCIAL MEASURE Three Months Ended March 31, 2005, As
Restated (Unaudited; amounts in millions, except per share amounts)
----------------------------------------------------------------------
Corning's net income and earnings per share (EPS) excluding special
items for the first quarter of 2005 are non-GAAP financial measures
within the meaning of Regulation G of the Securities and Exchange
Commission. Non-GAAP financial measures are not in accordance with,
or an alternative to, generally accepted accounting principles
(GAAP). The company believes presenting non-GAAP net income and EPS
is helpful to analyze financial performance without the impact of
unusual items that may obscure trends in the company's underlying
performance. A detailed reconciliation is provided below outlining
the differences between these non-GAAP measures and the directly
related GAAP measure.
----------------------------------------------------------------------
Income Before Per Income Net Share Taxes Income -------- --------
-------- Earnings per share (EPS) and net income, excluding special
items $ 0.17 $ 108 $ 257 Special items: Restructuring, impairment
and other (charges) and credits (a) (0.01) (19) (19) Asbestos
settlement (b) 0.01 12 12 -------- ------- ------- Total EPS and
net income $ 0.17 $ 101 $ 250 ======== ======= ======= (a) In the
first quarter of 2005, Corning recorded an impairment charge of $19
million for an other than temporary decline in the fair value of
its investment in Avanex Corporation (Avanex). At March 31, 2005,
shares of Avanex were trading at $1.30 per share compared to
Corning's average cost basis of $2.40 per share. Corning believes
it will not recover its cost basis in Avanex shares given the
significant decline in its stock price. (b) As part of Corning's
asbestos settlement arrangement to be incorporated into the
Pittsburgh Corning Corporation reorganization plan, Corning will
contribute, if the reorganization plan becomes effective, 25
million shares of Corning common stock to a trust. This portion of
the asbestos liability requires quarterly adjustment based upon
movements in Corning's common stock price prior to contribution of
the shares to the trust. In the first quarter of 2005, Corning
recorded a credit of $16 million for the change in its common stock
price of $11.13 at March 31, 2005 offset by $4 million for the
change in estimated fair value of certain other components of the
proposed asbestos settlement liability. CORNING INCORPORATED AND
SUBSIDIARY COMPANIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURE
TO GAAP FINANCIAL MEASURE Three Months Ended June 30, 2006
(Unaudited; amounts in millions, except per share amounts)
----------------------------------------------------------------------
Corning's earnings per share (EPS) excluding special items for the
second quarter of 2006 is a non-GAAP financial measure within the
meaning of Regulation G of the Securities and Exchange Commission.
Non-GAAP financial measures are not in accordance with, or an
alternative to, generally accepted accounting principles (GAAP).
The company believes presenting non-GAAP EPS is helpful to analyze
financial performance without the impact of unusual items that may
obscure trends in the company's underlying performance. A detailed
reconciliation is provided below outlining the differences between
this non-GAAP measure and the directly related GAAP measure.
----------------------------------------------------------------------
Range ----------------- Guidance: EPS excluding special items $
0.24 $ 0.26 Special items: Restructuring, impairment and other
(charges) and credits (a) Asbestos settlement (b) ------ -------
Earnings per share
----------------------------------------------------------------------
This schedule will be updated as additional announcements occur.
----------------------------------------------------------------------
(a) From time to time, Corning may need to make adjustments to
estimates used in the determination of prior year restructuring and
impairment charges, which could result in a gain or loss during the
quarter. (b) As part of Corning's asbestos settlement arrangement
to be incorporated into the Pittsburgh Corning Corporation
reorganization plan, Corning will contribute, when the
reorganization plan becomes effective, 25 million shares of Corning
common stock to a trust. The common stock will be contributed to
the trust, after the plan has been approved by the asbestos
claimants and bankruptcy court. The portion of the asbestos
liability to be settled in common stock requires adjustment each
quarter based upon movements in Corning's common stock price prior
to contribution of the shares to the trust. In the second quarter
of 2006, Corning will record a charge or credit for the change in
its common stock price as of June 30, 2006 compared to $26.92, the
common stock price at March 31, 2006. In addition, Corning will
record an adjustment to the asbestos liability to reflect the
change in fair value of any of the other components of the proposed
asbestos settlement. Please note that the company may pursue other
financing, restructuring and divestiture activities at any time in
the future, and that the potential impact of these events is not
included within Corning's first quarter 2006 guidance. This
schedule contains forward looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Such forward
looking statements are based on current expectations and involve
certain risks and uncertainties. Actual results may differ from
those projected in the forward looking statements. Additional
information concerning factors that could cause actual results to
materially differ from those in the forward looking statements is
contained in the Securities and Exchange Commission filings of this
Company. *T
Corning (NYSE:GLW)
Gráfico Histórico do Ativo
De Jun 2024 até Jul 2024
Corning (NYSE:GLW)
Gráfico Histórico do Ativo
De Jul 2023 até Jul 2024