Corning Incorporated (NYSE:GLW) today announced results for the
fourth quarter and full year 2007, and its first-quarter 2008
guidance. Fourth-Quarter Highlights Sales reached $1.58 billion, up
16% year over year. Earnings per share were $0.45. Excluding
special items, earnings per share were $0.40.* Display Technologies
glass volume increased 31% and Samsung Corning Precision Glass Co.
Ltd.�s volume increased 38% year over year. Both had volume
increases of more than 6% over the third quarter.
Telecommunications sales increased 6% year over year and, as
expected, declined 9% sequentially. Year-over-year growth was 16%*,
excluding the impact of the divestiture of the company�s submarine
cabling business in the second quarter. First-Quarter Outlook
Highlights Sales are expected in the range of $1.59 billion to
$1.62 billion, up more than 20% compared to first quarter last
year. Earnings per share, excluding special items, are expected in
the range of $0.41 to $0.43*, about 50% higher than last year�s
first quarter. Display LCD glass volume is expected to remain
strong throughout the quarter, and increase about 45% year over
year. Full-Year Highlights Sales increased 13% to $5.86 billion.
Net income was $2.15 billion, or $1.34 per share. Excluding special
items, net income was $2.26 billion* or $1.41 per share*, a 27%
increase over 2006. Display Technologies glass volume increased 38%
year over year, and pricing declined only 11%. Volume at Samsung
Corning Precision increased 39%, with pricing down 15%.
Environmental Technologies sales increased 23% year over year to
$757 million, with diesel product sales increasing more than 50%.
�Our strong fourth-quarter performance contributed to an
outstanding year for Corning,� Wendell P. Weeks, chairman and chief
executive officer, said. �We delivered all-time records in gross
margin percent, net income, EPS and operating cash flow in 2007.
Our 38% annual volume growth in display and continued leadership in
developing innovative solutions such as EAGLE XG�, Jade� glass for
advanced displays and Vita�, an OLED sealing solution for the flat
panel industry, were highlights of the year.� �Additionally, we saw
a greater than 50% increase in diesel product sales and a record
level of automotive product sales in 2007. We also placed our first
Epic� Systems with pharmaceutical and research companies, and
introduced ClearCurve�, our revolutionary new ultra-bendable fiber
solution.� Quarter Four Financial Comparisons � � Q4 2007 � Q3 2007
� % Change � Q4 2006 � % Change Net Sales in millions � $ 1,582 � $
1,553 � 2% � $ 1,369 � 16% Net Income in millions � $ 717 � $ 617 �
16% � $ 646 � 11% GAAP EPS � $ 0.45 � $ 0.38 � 18% � $ 0.41 � 10%
Non-GAAP EPS* � $ 0.40 � $ 0.38 � 5% � $ 0.31 � 29% Full-Year 2007
Financial Comparisons � � 2007 � 2006 � % Change Net Sales in
millions � $ 5,860 � $ 5,174 � 13% Net Income in millions � $ 2,150
� $ 1,855 � 16% GAAP EPS � $ 1.34 � $ 1.16 � 16% Non-GAAP EPS* � $
1.41 � $ 1.12 � 26% * These are non-GAAP financial measures. The
reconciliation between GAAP and non-GAAP measures is provided in
the tables following this news release, as well as on the company�s
investor relations website. Fourth-Quarter Segment Results
Fourth-quarter sales for Corning�s Display Technologies segment
were $774 million, a 10% sequential increase, and a 25% increase
over fourth-quarter 2006. The display segment results were
positively influenced by continued strong global demand for LCD
televisions and notebook computers and positive foreign exchange
rate movements in the fourth quarter. Sequential price declines
were moderate again this quarter. Telecommunications segment sales
for the quarter were $430 million, a 9% decline sequentially. The
sequential decline was the result of normal seasonal slowdowns.
Environmental Technologies segment sales for the fourth quarter
were $189 million, a 5% sequential decline but a 22% increase over
the fourth quarter of 2006. The environmental segment continued to
have stronger-than-expected automotive products sales. Corning�s
Life Sciences segment sales were $75 million for the quarter.
Corning�s equity earnings from Dow Corning were $83 million for the
quarter, compared to $81 million in the third quarter and $83
million a year ago. First-Quarter Outlook �We have good momentum in
our display business heading into the first quarter,� James B.
Flaws, vice chairman and chief financial officer, said. �We believe
first-quarter panel maker inventory levels are lower this year than
last year. We expect panel makers to maintain high utilization
rates throughout the first quarter, which will drive continued
strong glass demand. Looking forward, we anticipate the LCD glass
supply and demand balance will remain tight throughout the year,
absent the impact of any potential downturn in the economy.�
Corning expects first-quarter sales to be in the range of $1.59
billion to $1.62 billion and earnings per share, before special
items, in the range of $0.41 to $0.43*, compared to $1.31 billion
in sales and $0.28* in earnings per share, excluding special items,
in the first quarter of 2007. Business Highlights First-quarter
sales volume in the Display Technologies segment is expected to be
consistent with the fourth quarter as both Corning and Samsung
Corning Precision are expected to run at full capacity. Corning
anticipates continued moderate sequential price declines.
First-quarter sales are also expected to benefit from a lower
Japanese-yen-to-U.S.-dollar exchange rate. Corning�s
Telecommunications segment sales are expected to increase about 5%
sequentially. Environmental Technologies segment sales are expected
to increase about 5% sequentially due to strength in the European
and Asian auto market and improved heavy-duty diesel product sales.
Sales in the Life Sciences segment are expected to be up slightly.
Equity earnings from Dow Corning Corporation are expected to
decline 5% to 10% sequentially. �We feel good about our strong
start to 2008, and believe we will have excellent first-quarter
performance,� Flaws said. �As of today, we have not seen any
significant impact from a potential slowing of the U.S. economy
other than the slowdown in the trucking industry, which will
negatively impact our diesel product sales. However, we are closely
monitoring each of our businesses for any signs that would indicate
a slowdown and will promptly notify investors of any significant
change.� Corning will hold its annual investor relations meeting in
New York on Friday, Feb. 8 at the Mandarin Oriental Hotel.
Attendees can register online at the company�s investor relations
web site. Company executives will also be presenting at the Goldman
Sachs Technology Investment Symposium in Las Vegas on Feb. 26.
Fourth-Quarter Conference Call Information The company will host a
fourth-quarter conference call on Jan. 28 at 8:30 a.m. ET. To
access the call, dial (210) 234-0060 approximately 10-15 minutes
prior to the start of the call. The password is QUARTER FOUR. The
leader is SOFIO. To listen to a live audio webcast of the call, go
to Corning's Web site at http://www.corning.com/investor_relations
and follow the instructions. A replay of the call will begin at
approximately 10:30 a.m. ET, and will run through 5 p.m. ET,
Monday, Feb. 11. To listen, dial (203) 369-2019. No pass code is
required. The audio webcast will be archived for one year following
the call. Presentation of Information in this News Release Non-GAAP
financial measures are indicated with an ASTERISK and not in
accordance with, or an alternative to, GAAP. Corning�s non-GAAP net
income and EPS measures exclude restructuring, impairment and other
charges and adjustments to prior estimates for such charges.
Additionally, the company�s non-GAAP measures exclude adjustments
to asbestos settlement reserves required by movements in Corning�s
common stock price, gains and losses arising from debt retirements,
charges or credits arising from adjustments to the valuation
allowance against deferred tax assets, equity method charges
resulting from impairments of equity method investments or
restructuring, impairment or other charges taken by equity method
companies, and gains from discontinued operations. The company
believes presenting non-GAAP net income and EPS measures is 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
accompanies this news release. About Corning Incorporated Corning
Incorporated (www.corning.com) is the world leader in specialty
glass and ceramics. Drawing on more than 150 years of materials
science and process engineering knowledge, Corning creates and
makes keystone components that enable high-technology systems for
consumer electronics, mobile emissions control, telecommunications
and life sciences. Our products include glass substrates for LCD
televisions, computer monitors and laptops; ceramic substrates and
filters for mobile emission control systems; optical fiber, cable,
hardware & equipment for telecommunications networks; optical
biosensors for drug discovery; and other advanced optics and
specialty glass solutions for a number of industries including
semiconductor, aerospace, defense, astronomy and metrology.
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 in global economic and political
conditions; currency fluctuations; product demand and industry
capacity; competition; manufacturing efficiencies; cost reductions;
availability of critical components and materials; new product
commercialization; changes in the mix of sales between premium and
non-premium products; new plant start-up costs; possible disruption
in commercial activities due to terrorist activity, armed conflict,
political instability or major health concerns; adequacy of
insurance; equity company activities; 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; stock price fluctuations; and
adverse litigation or regulatory developments. Additional 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. � CORNING
INCORPORATED AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENTS OF
OPERATIONS (Unaudited; in millions, except per share amounts) � � �
� � � Three months Year ended ended December 31, December 31, 2007
2006 2007 2006 � Net sales $ 1,582 $ 1,369 $ 5,860 $ 5,174 Cost of
sales � 825 � � 766 � � 3,111 � � 2,891 � � Gross margin 757 603
2,749 2,283 � Operating expenses: Selling, general and
administrative expenses 257 222 912 857 Research, development and
engineering expenses 153 138 565 517 Amortization of purchased
intangibles 3 3 10 11 Restructuring, impairment and other (credits)
and charges (2 ) 41 (4 ) 54 Asbestos settlement charge (credit)
(Note 1) � 15 � � (139 ) � 185 � � (2 ) � Operating income 331 338
1,081 846 � Interest income 35 36 145 118 Interest expense (20 )
(20 ) (82 ) (76 ) Loss on repurchases and retirement of debt, net
(15 ) (11 ) Other income, net � 44 � � 23 � � 162 � � 84 � � Income
before income taxes 390 377 1,291 961 Benefit (provision) for
income taxes (Note 2) � 61 � � � � (80 ) � (55 ) � Income before
minority interest and equity earnings 451 377 1,211 906 Minority
interests (1 ) (3 ) (3 ) (11 ) Equity in earnings of affiliated
companies, net of impairments (Note 3) � 267 � � 272 � � 942 � �
960 � � Net income $ 717 � $ 646 � $ 2,150 � $ 1,855 � � Basic
earnings per common share (Note 4) $ 0.46 � $ 0.42 � $ 1.37 � $
1.20 � Diluted earnings per common share (Note 4) $ 0.45 � $ 0.41 �
$ 1.34 � $ 1.16 � Dividends declared per common share $ 0.05 � $
0.10 � � See accompanying notes to these financial statements. �
CORNING INCORPORATED AND SUBSIDIARY COMPANIES CONSOLIDATED BALANCE
SHEETS (Unaudited; in millions, except per share amounts) � �
December 31, 2007 2006 Assets � Current assets: Cash and cash
equivalents $ 2,216 $ 1,157 Short-term investments, at fair value �
1,300 � � 2,010 � Total cash, cash equivalents and short-term
investments 3,516 3,167 Trade accounts receivable, net 856 719
Inventories 631 639 Deferred income taxes 54 47 Other current
assets � 237 � � 226 � Total current assets 5,294 4,798 �
Investments 3,036 2,522 Property, net of accumulated depreciation
5,986 5,193 Goodwill and other intangible assets, net 308 316
Deferred income taxes 202 114 Other assets � 389 � � 122 � � Total
Assets $ 15,215 � $ 13,065 � � Liabilities and Shareholders� Equity
� Current liabilities: Current portion of long-term debt $ 23 $ 20
Accounts payable 609 631 Other accrued liabilities � 1,880 � �
1,668 � Total current liabilities 2,512 2,319 � Long-term debt
1,514 1,696 Postretirement benefits other than pensions 744 739
Other liabilities � 903 � � 1,020 � Total liabilities � 5,673 � �
5,774 � � Commitments and contingencies Minority interests 46 45
Shareholders� equity: � Common stock - Par value $0.50 per share;
Shares authorized: 3.8 billion; Shares issued: 1,598 million and
1,582 million 799 791 Additional paid-in capital 12,281 12,008
Accumulated deficit (3,002 ) (4,992 ) Treasury stock, at cost;
Shares held: 30 million and 17 million (492 ) (201 ) Accumulated
other comprehensive loss � (90 ) � (360 ) Total shareholders�
equity � 9,496 � � 7,246 � � Total Liabilities and Shareholders�
Equity $ 15,215 � $ 13,065 � � See accompanying notes to these
financial statements. � Certain amounts for 2006 were reclassified
to conform with the 2007 presentation. � � CORNING INCORPORATED AND
SUBSIDIARY COMPANIES CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in millions) � � � Year ended Three months ended
December 31, Dec. 31,2007 Sept. 30,2007 2007 2006 Cash Flows from
Operating Activities: Net income $ 717 $ 617 $ 2,150 $ 1,855
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation 151 147 597 580 Amortization of
purchased intangibles 3 2 10 11 Asbestos settlement 15 (16 ) 185 (2
) Restructuring, impairment and other (credits) charges (2 ) (4 )
54 Loss on repurchases and retirement of debt 15 11 Stock
compensation charges 38 29 138 127 Gain on sale of business (19 )
Undistributed earnings of affiliated companies (125 ) (159 ) (452 )
(597 ) Deferred tax (benefit) provision (116 ) 18 (98 ) (101 )
Restructuring payments (9 ) (10 ) (39 ) (15 ) Customer deposits,
net of (credits) issued (62 ) 2 (126 ) 45 Employee benefit payments
(in excess of) less than expense (4 ) 10 (85 ) 27 Changes in
certain working capital items: Trade accounts receivable 29 (50 )
(128 ) (105 ) Inventories 42 31 5 (65 ) Other current assets (6 )
63 (27 ) (10 ) Accounts payable and other current liabilities, net
of restructuring payments 134 3 10 (85 ) Other, net � (73 ) � (10 )
� (55 ) � 73 � Net cash provided by operating activities � 732 � �
677 � � 2,077 � � 1,803 � � Cash Flows from Investing Activities:
Capital expenditures (391 ) (405 ) (1,262 ) (1,182 ) Acquisitions
of businesses, net of cash received (4 ) (16 ) Net proceeds
(payments) from sale or disposal of assets 5 (5 ) 12 Net increase
in long-term investments and other long-term assets (77 )
Short-term investments - acquisitions (570 ) (633 ) (2,152 ) (2,894
) Short-term investments - liquidations � 721 � � 511 � � 2,862 � �
1,976 � Net cash used in investing activities � (235 ) � (527 ) �
(561 ) � (2,181 ) � Cash Flows from Financing Activities: Net
repayments of short-term borrowings and current portion of
long-term debt (2 ) (8 ) (20 ) (14 ) Proceeds from issuance of
long-term debt, net 246 Retirements of long-term debt (238 ) (368 )
Proceeds from issuance of common stock, net 4 4 21 26 Proceeds from
the exercise of stock options 20 20 109 303 Repurchases of common
stock (125 ) (125 ) (250 ) Dividends paid (79 ) (79 ) (158 ) Other,
net � (1 ) � (2 ) � (3 ) � (13 ) Net cash (used in) provided by
financing activities � (183 ) � (190 ) � (539 ) � 180 � Effect of
exchange rates on cash � 24 � � 44 � � 82 � � 13 � Net increase
(decrease) in cash and cash equivalents 338 4 1,059 (185 ) Cash and
cash equivalents at beginning of period � 1,878 � � 1,874 � � 1,157
� � 1,342 � � Cash and cash equivalents at end of period $ 2,216 �
$ 1,878 � $ 2,216 � $ 1,157 � � Certain amounts for prior periods
were reclassified to conform to 2007 classifications. � CORNING
INCORPORATED AND SUBSIDIARY COMPANIES SEGMENT RESULTS (Unaudited;
in millions) � � � � � Our reportable operating segments include
Display Technologies, Telecommunications, Environmental
Technologies and Life Sciences. � � � � � � Display Tech-nologies
Telecom-munications Environ-�mental Tech-nologies LifeSciences
AllOther Total � Three months ended December 31, 2007 Net sales $
774 $ 430 $ 189 $ 75 $ 114 $ 1,582 Depreciation (1) $ 85 $ 29 $ 23
$ 5 $ 9 $ 151 Amortization of purchased intangibles $ 3 $ 3
Research, development and engineering expenses (2) $ 36 $ 22 $ 33 $
16 $ 9 $ 116 Restructuring, impairment and other credits $ (2 ) $
(2 ) Income tax provision $ (45 ) $ (1 ) $ (46 ) Earnings (loss)
before minority interest and equity earnings (loss) (3) $ 403 $ 11
$ 22 $ (5 ) $ 1 $ 432 Minority interests $ (1 ) $ (1 ) Equity in
earnings (loss) of affiliated companies $ 177 � $ 1 � $ 1 � � � $
(4 ) $ 175 � Net income (loss) $ 580 � $ 12 � $ 23 � $ (5 ) $ (4 )
$ 606 � � � Three months ended December 31, 2006 Net sales $ 619 $
404 $ 155 $ 72 $ 119 $ 1,369 Depreciation (1) $ 77 $ 36 $ 21 $ 5 $
8 $ 147 Amortization of purchased intangibles $ 3 $ 3 Research,
development and engineering expenses (2) $ 30 $ 24 $ 30 $ 12 $ 11 $
107 Restructuring, impairment and other charges (3) $ 42 $ 1 $ 43
Income tax (provision) benefit � $ (45 ) $ 3 $ 1 $ 1 $ 2 $ (38 )
Earnings (loss) before minority interest and equity earnings (4) $
311 $ (53 ) $ (8 ) $ (2 ) $ 10 $ 258 Minority interests $ (2 ) $ (1
) $ (3 ) Equity in earnings of affiliated companies (5) $ 150 � $ 1
� � � � � $ 31 � $ 182 � Net income (loss) $ 461 � $ (54 ) $ (8 ) $
(2 ) $ 40 � $ 437 � � � Year ended December 31, 2007 Net sales $
2,613 $ 1,779 $ 757 $ 307 $ 404 $ 5,860 Depreciation (1) $ 326 $
123 $ 89 $ 19 $ 34 $ 591 Amortization of purchased intangibles $ 10
$ 10 Research, development and engineering expenses (2) $ 125 $ 82
$ 126 $ 55 $ 42 $ 430 Restructuring, impairment and other credits $
(4 ) $ (4 ) Income tax provision $ (135 ) $ (44 ) $ (18 ) $ (1 ) $
(198 ) Earnings (loss) before minority interest and equity earnings
(3) $ 1,404 $ 105 $ 58 $ (4 ) $ (9 ) $ 1,554 Minority interests $
(1 ) $ (2 ) $ (3 ) Equity in earnings (loss) of affiliated
companies $ 582 � $ 4 � $ 2 � � � $ (9 ) $ 579 � Net income (loss)
$ 1,986 � $ 108 � $ 60 � $ (4 ) $ (20 ) $ 2,130 � � � Year ended
December 31, 2006 Net sales $ 2,133 $ 1,729 $ 615 $ 287 $ 410 $
5,174 Depreciation (1) $ 276 $ 157 $ 80 $ 20 $ 37 $ 570
Amortization of purchased intangibles $ 11 $ 11 Research,
development and engineering expenses (2) $ 126 $ 82 $ 121 $ 49 $ 36
$ 414 Restructuring, impairment and other charges (3) $ 44 $ 6 $ 6
$ 56 Income tax (provision) benefit $ (117 ) $ (27 ) $ (5 ) $ 1 $
(3 ) $ (151 ) Earnings (loss) before minority interest and equity
earnings (loss) (4) $ 1,052 $ 9 $ 8 $ (17 ) $ 12 $ 1,064 Minority
interests $ (7 ) $ (4 ) $ (11 ) Equity in earnings (loss) of
affiliated companies (5) $ 565 � $ 5 � $ (1 ) � � $ 39 � $ 608 �
Net income (loss) $ 1,617 � $ 7 � $ 7 � $ (17 ) $ 47 � $ 1,661 � �
(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 ) In the three
months and year ended December 31, 2006, restructuring, impairment
and other charges and (credits) includes a charge of $44 million
for certain assets in our Telecommunications segment. � (4 ) 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. � (5 ) Equity in
earnings (loss) of affiliated companies, net of impairments
includes the following restructuring and impairment charges: � --
In the three months and year ended December 31, 2007, net charges
of $14 million and $40 million, respectively, related to
impairments and other charges and credits for Samsung Corning is
included in All Other. � -- In the three months and year ended
December 31, 2006, net credits of $28 million and $7 million,
respectively, related to impairments and other charges and credits
for Samsung Corning is included in All Other. � � � CORNING
INCORPORATED AND SUBSIDIARY COMPANIES SEGMENT RESULTS (Unaudited;
in millions) � A reconciliation of reportable segment net income to
consolidated net income follows (in millions): � Three months ended
Year ended December 31, December 31, 2007 2006 2007 2006 Net income
of reportable segments $ 606 $ 437 $ 2,130 $ 1,661 Unallocated
amounts: Net financing costs (1) 8 6 36 1 Stock-based compensation
expense (38 ) (32 ) (138 ) (127 ) Exploratory research (2) (34 )
(27 ) (122 ) (89 ) Corporate contributions (6 ) (6 ) (32 ) (30 )
Equity in earnings of affiliated companies, net of impairments (3)
92 90 363 352 Asbestos settlement (4) (15 ) 139 (185 ) 2 Other
corporate items (5) � 104 � � 39 � � 98 � � 85 � Net income $ 717 �
$ 646 � $ 2,150 � $ 1,855 � � (1 ) Net financing costs include
interest expense, interest income, and interest costs and
investment gains associated with benefit plans. � (2 ) Exploratory
research includes $15 million and $49 million of spending in the
three months and year ended December 31, 2007, respectively, and $6
million and $22 million for the three months and year ended
December 31, 2006, respectively, on developmental programs such as
silicon on glass, green lasers and micro-reactors. � (3 ) Equity in
earnings of affiliated companies, net of impairments in the year
ended December 31, 2006, includes a $33 million gain representing
our share of a tax settlement relating to an IRS examination at Dow
Corning. � (4 ) The asbestos settlement arrangement to be
incorporated into the Pittsburgh Corning Corporation (PCC)
reorganization plan, if 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 settlement 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
settlement value of the other components of the settlement offer.
In the fourth quarter of 2007 and 2006, Corning recorded credits of
$17 million and $143 million, respectively, to reflect the movement
in Corning�s common stock price and charges of $32 million and $4
million, respectively, to reflect changes in the estimated
settlement value of the other components of the settlement
offer.�In the twelve months ended December 31, 2007 and 2006,
Corning recorded charges of $132 million and a credit of $24
million, respectively, to reflect the movement in Corning�s common
stock price and charges of $53 million and $22 million,
respectively, to reflect changes in the estimated settlement value
of other components of the settlement offer. � (5 ) Other corporate
items include the tax impact of the unallocated amounts and the
following significant items: � -- In the year ended December 31,
2007, a loss of $15 million from the repurchase of $223 million
principal amount of our 6.25% Euro notes due 2010. In addition, in
the three months and year ended December 31, 2007, a tax benefit of
$103 million from the release of a valuation allowance on certain
deferred tax assets in Germany. � -- In the three months and year
ended December 31, 2006, tax benefits of $35 million and $83
million, respectively, from the release of valuation allowances for
certain foreign locations. � CORNING INCORPORATED AND SUBSIDIARY
COMPANIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) �
� � � � � � � � 1. Asbestos Settlement � On March 28, 2003, Corning
announced that it had reached agreement with the representatives of
asbestos claimants for the settlement of all current and future
asbestos claims against Corning and Pittsburgh Corning Corporation
(PCC), which might arise from PCC products or operations. The
proposed settlement, if approved, 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 contribute 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. � As a result of the proposed asbestos
settlement, any changes in the estimated settlement value of the
components of the proposed settlement agreement will be recognized
in Corning�s quarterly results until the date of the contribution
to the settlement trust. In the fourth quarter of 2007, Corning
recorded a charge of $15 million (pretax and after-tax) including a
mark-to-market credit of $17 million reflecting the decrease in
Corning�s common stock from September 30, 2007 to December 31, 2007
and a $32 million charge to adjust the estimated settlement value
of certain other components of the proposed asbestos settlement. �
Beginning with the first quarter of 2003, Corning has recorded
total net charges of $1.0 billion to reflect the estimated
settlement value of our asbestos liability. � 2. Provision for
Income Taxes � In the fourth quarter of 2007, Corning recorded a
$103 million tax benefit from the release of a valuation allowance
on certain deferred tax assets in Germany. � 3. Equity in Earnings
of Affiliated Companies � In the fourth quarter of 2007, equity in
earnings of affiliated companies includes a $14 million charge (net
of tax) for Corning�s share of restructuring, impairment and other
charges at Samsung Corning Co. Ltd. (Samsung Corning). On December
31, 2007, Samsung Corning Precision Glass Co. Ltd. (Samsung Corning
Precision) acquired all of the assets of Samsung Corning. Corning�s
50% interest in Samsung Corning Precision was unchanged by this
transaction. � 4. Weighted Average Shares Outstanding � Weighted
average shares outstanding are as follows (in millions): Three
months ended Year ended December 31, December 31, 2007 2006 2007
2006 Basic 1,567 1,557 1,566 1,550 Diluted 1,602 1,596 1,603 1,594
Diluted used for non-GAAP measures 1,602 1,596 1,603 1,594 �
CORNING INCORPORATED AND SUBSIDIARY COMPANIES QUARTERLY SALES
INFORMATION (Unaudited; in millions) � � � � � � 2007 Q1 Q2 Q3 Q4
Total � Display Technologies $ 524 $ 610 $ 705 $ 774 $ 2,613 �
Telecommunications Fiber and cable 211 219 237 213 880 Hardware and
equipment � 228 � 219 � 235 � 217 � 899 439 438 472 430 1,779 �
Environmental Technologies Automotive 123 128 126 131 508 Diesel �
56 � 63 � 72 � 58 � 249 179 191 198 189 757 Life Sciences 76 78 78
75 307 Other � 89 � 101 � 100 � 114 � 404 Total $ 1,307 $ 1,418 $
1,553 $ 1,582 $ 5,860 � 2006 Q1 Q2 Q3 Q4 Total � Display
Technologies $ 547 $ 461 $ 506 $ 619 $ 2,133 � Telecommunications
Fiber and cable 205 234 241 197 877 Hardware and equipment � 192 �
238 � 215 � 207 � 852 397 472 456 404 1,729 � Environmental
Technologies Automotive 121 113 112 105 451 Diesel � 34 � 39 � 41 �
50 � 164 155 152 153 155 615 � Life Sciences 72 75 68 72 287 Other
� 91 � 101 � 99 � 119 � 410 � Total $ 1,262 $ 1,261 $ 1,282 $ 1,369
$ 5,174 � 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 December 31,
2007 (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 2007 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. � �
� � � � Per Share � Income (Loss) Before Income Taxes � Net Income
(Loss) � Earnings per share (EPS) and net income, excluding special
items $ 0.40 $ 466 $ 643 � Special items: Asbestos settlement (a)
(0.01 ) (15 ) (15 ) � Provision for income taxes (b) 0.07 103 �
Equity in earnings of affiliated companies (c) � (0.01 ) � � � (14
) � Total EPS and net income $ 0.45 � $ 451 � $ 717 � � (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 Corning�s quarterly
results until the date of the contribution to the settlement trust.
In the fourth quarter of 2007, Corning recorded a charge of $15
million (before- and after-tax) including a credit of $17 million
for the change in Corning�s common stock price of $23.99 at
December 31, 2007, compared to $24.65 at September 30, 2007 and a
$32 million charge for the change in the estimated fair value of
certain other components of the proposed asbestos settlement
liability. � (b) Amount reflects a $103 million tax benefit from
the release of our valuation allowance on certain deferred tax
assets in Germany. � (c) Amount reflects Corning�s share of the
following items associated with Samsung Corning: an impairment
charge for certain long-lived assets; dividend withholding tax; and
a gain on metal and scrap sales. These items decreased Corning�s
equity earnings by $14 million (net) in the fourth quarter of 2007.
� � � CORNING INCORPORATED AND SUBSIDIARY COMPANIES RECONCILIATION
OF NON-GAAP FINANCIAL MEASURE TO GAAP FINANCIAL MEASURE Three
Months Ended December 31, 2006 (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 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. � � � � � � Per Share � Income (Loss) Before Income Taxes
� Net Income (Loss) � Earnings per share (EPS) and net income,
excluding special items $ 0.31 $ 282 $ 488 � Special items:
Restructuring, impairment, and other (charges) and credits (a)
(0.03 ) (44 ) (44 ) � Asbestos settlement (b) 0.09 139 139 �
Provision for income taxes (c) 0.02 35 � Equity in earnings of
associated companies (d) � 0.02 � � � � 28 � � Total EPS and net
income $ 0.41 � $ 377 � $ 646 � � (a) Amount represents a $44
million asset impairment charge for certain long-lived assets in
our Telecommunications segment � (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 Corning�s quarterly results until the date of the
contribution to the settlement trust. In the fourth quarter of
2006, Corning recorded a credit of $139 million (before- and
after-tax) including a credit of $143 million for the change in
Corning�s common stock price of $18.71 at December 31, 2006,
compared to $24.41 at September 30, 2006 and a $4 million charge
for the change in the estimated fair value of certain other
components of the proposed asbestos settlement liability. � (c)
Amount reflects a $35 million tax benefit from the release of our
valuation allowance on certain deferred tax assets in Germany. �
(d) Amount reflects Corning�s share of the following items
associated with Samsung Corning: an impairment charge for certain
long-lived assets; the impact of establishing a valuation allowance
against certain deferred tax assets; and a gain on the sale of
land. These items increased Corning�s equity earnings by $28
million (net) in the fourth quarter of 2006. � CORNING INCORPORATED
AND SUBSIDIARY COMPANIES RECONCILIATION OF NON-GAAP FINANCIAL
MEASURE TO GAAP FINANCIAL MEASURE Year Ended December 31, 2007
(Unaudited; amounts in millions, except per share amounts) � � � �
� � � � � � � � � � Corning�s net income and earnings per share
(EPS) excluding special items for the year ended December 31, 2007
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. � � � � Per Share � Income (Loss) Before Income Taxes �
Net Income (Loss) � Earnings per share (EPS) and net income,
excluding special items $ 1.41 $ 1,392 $ 2,260 � Special items:
Asbestos settlement (a) (0.12 ) (185 ) (185 ) � Loss on repurchases
of debt, net (b) (0.01 ) (15 ) (15 ) � Gain on sale of business,
net (c) 0.01 19 19 � Provision for income taxes (d) 0.07 103 �
Equity in earnings of affiliated companies (e) � (0.02 ) � � � (32
) � Total EPS and net income $ 1.34 � $ 1,211 � $ 2,150 � � � (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 Corning�s quarterly
results until the date of the contribution to the settlement trust.
For 2007, Corning recorded a charge of $185 million (before- and
after-tax) including a charge of $132 million for the change in
Corning�s common stock price of $23.99 at December 31, 2007,
compared to $18.71 at December 31, 2006 and a $53 million charge
for the change in estimated fair value of certain other components
of the proposed asbestos settlement liability. � (b) Amount
reflects a $15 million loss on the repurchase of $223 million
principal amount of our 6.25% Euro notes due 2010. � (c) Amount
reflects a $19 million gain on the sale of the European submarine
cabling business. � (d) Amount reflects a $103 million tax benefit
from the release of our valuation allowance on certain deferred tax
assets in Germany. � (e) In 2007, equity in earnings of affiliated
companies includes a $32 million charge (net of tax) for Corning�s
share of restructuring, impairment and other charges at Samsung
Corning Co. Ltd. (Samsung Corning). � CORNING INCORPORATED AND
SUBSIDIARY COMPANIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURE
TO GAAP FINANCIAL MEASURE Year Ended December 31, 2006 (Unaudited;
amounts in millions, except per share amounts) � � � � � � � � � �
� � � � Corning�s net income and earnings per share (EPS) excluding
special items for the year ended December 31, 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. � �
� � � Per Share � Income (Loss) Before Income Taxes � Net Income
(Loss) � Earnings per share (EPS) and net income, excluding special
items $ 1.12 $ 1,014 $ 1,785 � Special items: Restructuring,
impairment, and other (charges) and credits (a) (0.03 ) (44 ) (44 )
� Asbestos settlement (b) 2 2 � Loss on repurchases of debt, net
(0.01 ) (11 ) (11 ) � Provision for income taxes (c) 0.05 83 �
Equity in earnings of affiliated companies (d) � 0.03 � � � � 40 �
� Total EPS and net income $ 1.16 � $ 961 � $ 1,855 � (a) Amount
represents a $44 million asset impairment charge for certain
long-lived assets in our Telecommunications segment. � (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 Corning�s quarterly
results until the date of the contribution to the settlement trust.
For 2006, Corning recorded a credit of $2 million (before- and
after-tax) including a credit of $24 million for the change in
Corning�s common stock price of $18.71 at December 31, 2006,
compared to $19.66 at December 31, 2005 and a $22 million charge
for the change in estimated fair value of certain other components
of the proposed asbestos settlement liability. � (c) Amount
reflects a $73 million tax benefit from the release of our
valuation allowance on certain deferred tax assets in Germany and a
$10 million tax benefit from the release of our valuation allowance
on Australian tax benefits. � (d) Amount reflects the following
items which increased Corning�s equity earnings by $40 million
(net) in 2006: an impairment charge for certain long-lived assets
of Samsung Corning; the impact of Samsung Corning�s establishment
of a valuation allowance against certain deferred tax assets; a
gain on the sale of land at Samsung Corning; and Corning�s share of
a favorable tax settlement from the completion of an IRS
examination at Dow Corning. � CORNING INCORPORATED AND SUBSIDIARY
COMPANIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURE TO GAAP
FINANCIAL MEASURE Three Months and Year Ended December 31, 2007
(Unaudited; amounts in millions) � � � � � � � � � � � Corning�s
free cash flow financial measure for the three months and year
ended December 31, 2007 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 financial measures are
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. � � Three months ended December 31, 2007 Year
ended December 31, 2007 � Cash flows from operating activities $
732 $ 2,077 � Less: Cash flows from investing activities (235 )
(561 ) � Plus: Short-term investments - acquisitions 570 2,152 �
Less: Short-term investments - liquidations � (721 ) � (2,862 ) �
Free cash flow $ 346 � $ 806 � � CORNING INCORPORATED AND
SUBSIDIARY COMPANIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURE
TO GAAP FINANCIAL MEASURE Telecommunications Segment (Unaudited;
amounts in millions) � � � � � � � � � � � � � � � � Corning�s
comment, �Year-over-year growth was 16% excluding the impact of the
divestiture of the Company�s submarine cabling business in the
second quarter.� includes 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 this non-GAAP improvement in
segment sales 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. � Fourth Quarter
Sales Dec. 31, Dec. 31, % 2007 2006 Change � Telecommunications
segment sales excluding sales from the Company's European submarine
cabling business $ 430 $ 371 16% � Sales of the European submarine
cabling business � � � 33 � Telecommunications segment sales $ 430
$ 404 6% � CORNING INCORPORATED AND SUBSIDIARY COMPANIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE TO GAAP FINANCIAL
MEASURE Three Months Ended March 31, 2007 (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 2007 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. � � � � Per Share � Income (Loss) Before
Income Taxes � Net Income (Loss) � Earnings per share (EPS) and net
income, excluding special items $ 0.28 $ 292 $ 452 � Special items:
Asbestos settlement (a) (0.07 ) (110 ) (110 ) � Loss on repurchase
of debt, net (b) � (0.01 ) � (15 ) � (15 ) � Total EPS and net
income $ 0.20 � $ 167 � $ 327 � (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 Corning�s quarterly results until the date of the
contribution to the settlement trust. In the first quarter of 2007,
Corning recorded a charge of $110 million (before- and after-tax)
including a charge of $101 million for the change in Corning�s
common stock price of $22.74 at March 31, 2007, compared to $18.71
at December 31, 2006 and a $9 million charge for the change in the
estimated fair value of certain other components of the proposed
asbestos settlement liability. � (b) Amount reflects a $15 million
loss on the repurchase of $223 million principal amount of our
6.25% Euro notes due 2010. � CORNING INCORPORATED AND SUBSIDIARY
COMPANIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURE TO GAAP
FINANCIAL MEASURE Three Months Ended March 31, 2008 (Unaudited;
amounts in millions, except per share amounts) � � � � � � � �
Corning�s earnings per share (EPS) excluding special items for the
first quarter of 2008 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 $ 0.41 $ 0.43 � 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,
if the reorganization plan is approved, 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 first quarter of 2008, Corning will record a charge or credit
for the change in its common stock price as of March 31, 2008
compared to $23.99, the common stock price at December 31, 2007. In
addition, Corning will record an adjustment to the asbestos
liability to reflect the change in settlement 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 2008 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.
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