Corning Incorporated (NYSE: GLW) today announced its results for
the first quarter 2010.
First-Quarter Highlights
- Sales were $1.55 billion, an
increase of 1% sequentially and 57% year over year.
- Earnings per share were $0.52.
Excluding special items, EPS was also $0.52*, a gain of 18% over
the fourth-quarter results and 420% year over year.
- Display Technologies' wholly
owned business volume was up 12% sequentially and 127% year over
year. Samsung Corning Precision Glass Co., Ltd., volume was
consistent with the previous quarter and up 64% year over
year.
- Gross margin improved
significantly to 47% from 42% in the previous quarter, and over
last year’s first quarter of 27%.
- Equity earnings were $469
million. This represents a slight increase over the previous
quarter’s $461 million. Year-over-year equity earnings improved by
141%.
Quarter One Financial
Comparisons
Q1 2010
Q4 2009 % Change
Q1 2009 %
Change
Net Sales inmillions
$1,553
$1,532 1%
$989 57%
Net Income inmillions
$816 $740
10% $14
5,729%
Non-GAAPNet Incomein millions*
$818 $696
18% $150
445%
GAAP EPS
$0.52 $0.47
11% $0.01
5,100%
Non-GAAPEPS*
$0.52 $0.44
18% $0.10
420%
*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 Web site.
Wendell P. Weeks, chairman and chief executive officer, said,
“Our first quarter was outstanding, driven by excellent results
across nearly all of our major business units. We were particularly
pleased with the performance in Display Technologies where we were
essentially sold out. We are also encouraged by the growing market
demand for Corning® Gorilla® glass for handheld and other
electronic devices.”
First-Quarter Segment Results
Sales in the Display Technologies segment were $782 million,
increasing 9% sequentially and 119% year over year. Glass prices
for the quarter were down slightly and in line with expectations.
Corning benefited from improved display manufacturing
performance.
Telecommunications segment sales were $364 million, a sequential
decline of 10% and in line with the company’s previous
expectations. Year-over-year sales declined 5% in the quarter.
Despite the quarterly sales decline, the company saw improved
profitability in this segment as it began realizing operational
improvements from restructuring actions taken last year. Corning
had a telecommunications restructuring charge in last year’s fourth
quarter.
Environmental Technologies segment sales were $192 million, an
increase of 6% sequentially and 75% from a year ago. Sales were
better than expected, resulting from higher-than-anticipated demand
for auto emissions products around the world, particularly in North
America and China. Profitability in the quarter was negatively
impacted by higher transportation costs and manufacturing
inefficiencies associated with restarting production to meet the
increased demand.
Specialty Materials segment sales of $96 million decreased 13%
sequentially, but increased 60% year over year. The business
benefited by the continued popularity of Gorilla glass, now
designed into 80 consumer devices across 17 major brands.
Life Sciences segment sales were $118 million, consistent with
the previous quarter and a 55% improvement year over year.
First-quarter 2009 sales do not reflect results from Axygen
Bioscience, Inc., which Corning acquired in September of last
year.
Corning’s equity earnings totaled $469 million compared to $461
million in the previous quarter and $195 million a year ago. Equity
earnings from Dow Corning Corporation were $112 million versus $133
million last quarter and $5 million in the first quarter of 2009.
Equity earnings included special gains of $21 million in the first
quarter of 2010 and $29 million in the fourth quarter of 2009, due
primarily to tax credits. Equity earnings for Samsung Corning
Precision were $350 million, a sequential increase of 10% and a
year-over-year improvement of 87%.
Corning’s first-quarter results were also positively impacted by
the company’s decision to repatriate approximately $1 billion of
current year earnings from certain foreign subsidiaries. This
decision allows Corning to record the benefit of excess foreign tax
credits which reduced the company’s effective tax rate in the
quarter to 2% versus an original expectation of 10%. The difference
between the new rate and the expected rate was worth approximately
$64 million. Corning expects its full-year effective tax rate to be
2% as well.
James B. Flaws, vice chairman and chief financial officer, said,
“We were very pleased with our first-quarter results. Even
without the lower tax rate, EPS was significantly better than Wall
Street’s expectations.” Corning generated $472 million of free cash
flow* after capital expenditures of $173 million in the first
quarter, versus break even a year ago. “Historically, the first
quarter of the year is Corning’s worst for free cash flow, so we
are delighted with this result,” he added.
Looking Forward
Flaws said higher-than-expected retail demand for LCD
televisions, laptops, and desktop computers in quarter one, along
with an improved outlook for these consumer electronic products
through the remainder of the year, “have led us to increase our
expectations for the annual growth of the LCD glass market. We now
forecast a range of 2.9 billion square feet to 3.1 billion square
feet of glass this year, up from our original expectation of 2.8
billion to 3.0 billion square feet.” This represents a
year-over-year growth rate of 18% to 27%.
In its Display Technologies segment, Corning expects
second-quarter volume will increase in the mid-single digits for
both its wholly owned business and SCP. Glass price declines in the
quarter should be similar to the first quarter. The company said it
plans on running all available capacity by the end of quarter two
to meet panel maker demand.
The company anticipates its second-quarter Telecommunications
segment sequential sales will increase by 10% to 15%. Optical fiber
and cable sales are expected to show strength across North America
and China throughout the quarter. Sales of hardware and equipment
and private network products are also expected to remain
strong.
Environmental Technologies segment sequential sales will be
comparable to the first quarter. Specialty Materials segment sales
are anticipated to increase in the range of 15% to 25%
sequentially, driven by continued growth in Gorilla glass. In the
Life Sciences segment sequential sales are expected to be up
5%.
Equity earnings are expected to be down 3% to 5% in the second
quarter, excluding the Dow Corning tax gain. Dow Corning’s equity
earnings will be comparable to the first quarter despite higher
costs, which include amounts for the start up of their new China
operations. Samsung Corning Precision’s equity earnings could be
lower by about 5% in the quarter due to fluctuations in foreign
exchange rates.
The company’s second-quarter results could be affected by
changes in the Japanese yen to U.S. dollar exchange rate. A
one-point move in the yen is worth approximately $9 million in net
profit after tax.
Corning has increased its forecast of capital expenditures to $1
billion for 2010 from the previously announced level of $600
million to $700 million. The company has restarted expansion at its
Taichung (Taiwan) LCD glass facility, which was halted in late 2008
as a result of an industry-wide slowdown. Additionally, Corning is
preparing to retrofit a section of its Shizuoka (Japan) LCD glass
plant to meet the emerging demand for LCD TV cover glass. “We
expect to secure our first customer agreement in the second quarter
for this new product,” Flaws said.
“We are off to a very good start in 2010,” Flaws said. “However,
we will remain cautious and continue to exercise tight control over
spending. Our strategy of protecting the company’s long-term
financial health and maintaining a high level of investment in our
future through research and development has us well-positioned to
capitalize on the economic recovery that appears to be taking
shape,” he concluded.
Upcoming Meetings
Corning will present at 8:40 a.m. at the 38th annual J.P. Morgan
Global Technology, Media and Telecom Conference on May 17 at the
Westin Boston Waterfront hotel, Boston, Mass.
First-Quarter Conference Call Information
The company will host a first-quarter conference call on
Wednesday, April 28 at 8:30 a.m. ET. To participate, please call
toll free (800) 230-1059 or for international access call (612)
234-9959 approximately 10-15 minutes prior to the start of the
call. The password is ‘QUARTER ONE’. The host is ‘SOFIO’. To listen
to a live audio webcast of the call, go to Corning’s Web site at
www.corning.com/investor_relations and click Investor Events on the
left. A replay will be available beginning at 10:30 a.m. ET and
will run through 5:00 p.m. ET, Wednesday, May 12, 2010. To listen,
dial (800) 475-6701 or for international access call (320)
365-3844. The access code is 152579. The 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
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, 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. Reconciliation of these non-GAAP measures can be found
on the company’s Web site by going to
www.corning.com/investor_relations and clicking Financial Reports
on the left. Reconciliation also accompanies this news release.
Forward-Looking and Cautionary Statements
This press release contains “forward-looking statements” (within
the meaning of the Private Securities Litigation Reform Act of
1995), which are based on current expectations and assumptions
about Corning’s financial results and business operations, that
involve substantial risks and uncertainties that could cause actual
results to differ materially. These risks and uncertainties
include: the effect of global political, economic and business
conditions; conditions in the financial and credit
markets; currency fluctuations; tax rates; product demand
and industry capacity; competition; reliance on a concentrated
customer base; manufacturing efficiencies; cost reductions;
availability of critical components and materials; new product
commercialization; pricing fluctuations and changes in
the mix of sales between premium and non-premium products; new
plant start-up or restructuring costs; possible
disruption in commercial activities due to terrorist activity,
armed conflict, political or financial instability, natural
disasters, adverse weather conditions, 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; retention of key
personnel; stock price fluctuations; and adverse litigation or
regulatory developments. These and other risk factors
are detailed 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.
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.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF
INCOME
(Unaudited; in millions, except
per share amounts)
Three months ended March 31, 2010 2009
Net sales $ 1,553 $ 989 Cost of sales 822
719 Gross margin 731 270 Operating
expenses: Selling, general and administrative expenses 235 207
Research, development and engineering expenses 145 151 Amortization
of purchased intangibles 2 3 Restructuring, impairment and other
(credits) and charges (2 ) 165 Asbestos litigation (credit) charge
(Note 1) (52 ) 4 Operating income
(loss) 403 (260 ) Equity in earnings of affiliated companies
(Note 2) 469 195 Interest income 3 7 Interest expense (26 ) (14 )
Other-than-temporary impairment (OTTI) losses: Total OTTI
losses (5 ) Portion of OTTI losses recognized in other
comprehensive income (before taxes) 5
Net OTTI losses recognized in earnings 0 Other income, net
64 20 Income (loss) before
income taxes 913 (52 ) (Provision) benefit for income taxes (Note
3) (97 ) 66 Net income attributable to
Corning Incorporated $ 816 $ 14 Earnings per
common share attributable to Corning Incorporated: Basic (Note 4) $
0.52 $ 0.01 Diluted (Note 4) $ 0.52 $ 0.01
Dividends declared per common share $ 0.05 $ 0.05
See accompanying notes to these financial statements.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE
SHEETS
(Unaudited; in millions, except
per share amounts)
March 31, December 31, 2010 2009
Assets
Current assets: Cash and cash equivalents $ 3,075 $ 2,541
Short-term investments, at fair value 798
1,042 Total cash, cash equivalents and short-term
investments 3,873 3,583 Trade accounts receivable, net of doubtful
accounts and allowances 860 753 Inventories 604 579 Deferred income
taxes 392 235 Other current assets 323 371
Total current assets 6,052 5,521 Investments 4,296
3,992 Property, net of accumulated depreciation 7,847 7,995
Goodwill and other intangible assets, net 674 676 Deferred income
taxes 2,733 2,982 Other assets 125 129
Total Assets $ 21,727 $ 21,295
Liabilities and Equity Current liabilities: Current
portion of long-term debt $ 23 $ 74 Accounts payable 459 550 Other
accrued liabilities 796 915 Total
current liabilities 1,278 1,539 Long-term debt 1,919 1,930
Postretirement benefits other than pensions 866 858 Other
liabilities 1,311 1,373 Total
liabilities 5,374 5,700
Commitments and contingencies Shareholders’ equity: Common stock -
Par value $0.50 per share; Shares authorized: 3.8 billion; Shares
issued: 1,621 million and 1,617 million 811 808 Additional paid-in
capital 12,759 12,707 Retained earnings 4,374 3,636 Treasury stock,
at cost; Shares held: 65 million and 64 million (1,223 ) (1,207 )
Accumulated other comprehensive loss (419 ) (402 )
Total Corning Incorporated shareholders' equity 16,302
15,543 Noncontrolling interests 51
52 Total equity 16,353
15,595
Total Liabilities and Equity $ 21,727
$ 21,295 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, 2010 2009
Cash
Flows from Operating Activities: Net income $ 816 $ 14
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation 206 175
Amortization of purchased intangibles 2 3
Asbestos litigation (credits) charges (52 ) 4
Restructuring, impairment and other (credits) charges (2 ) 165
Stock compensation charges 29 35
Earnings of affiliated companies (in excess of) less than dividends
received (241 ) 208
Deferred tax provision (benefit) 50 (119 )
Restructuring payments (31 ) (12 )
Credits issued against customer deposits (30 ) (103 )
Employee benefit expense, net of payments 26 17
Changes in certain working capital items: Trade accounts receivable
(120 ) (111 )
Inventories (31 ) 39
Other current assets 32 (23 )
Accounts payable and other current liabilities, net of
restructuring payments (74 ) (89 )
Other, net 63 61
Net cash provided by operating activities 643
264
Cash Flows from Investing Activities: Capital
expenditures (173 ) (276 )
Net proceeds from sale or disposal of assets 12 Short-term
investments - acquisitions (224 ) (104 ) Short-term investments -
liquidations 472 242 Other, net 2
Net cash provided by (used in) investing activities
77 (126 )
Cash Flows from Financing Activities: Net repayments
of short-term borrowings and current portion of long-term debt (58
) (63 )
Principal payments under capital lease obligations (9 )
Proceeds from issuance of common stock, net 4 5
Proceeds from exercise of stock options 21 1
Dividends paid (78 ) (78 ) Other, net 1
Net cash used in financing activities (111 )
(143 )
Effect of exchange rates on cash (75 ) (88 )
Net increase (decrease) in cash and cash equivalents 534 (93 )
Cash and cash equivalents at beginning of period 2,541
1,873
Cash and cash equivalents at end of period $ 3,075
$ 1,780
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
SEGMENT RESULTS
(Unaudited; in millions)
Our reportable operating segments include Display
Technologies, Telecommunications, Environmental Technologies,
Specialty Materials and Life Sciences.
Display
Telecom- Environmental Specialty Life All
Technologies
munications Technologies Materials Sciences Other Total
Three months ended March 31, 2010 Net sales $ 782 $
364 $ 192 $ 96 $ 118 $ 1 $ 1,553 Depreciation (1) $ 128 $ 30 $ 26 $
11 $ 8 $ 3 $ 206 Amortization of purchased intangibles $ 1 $ 1 $ 2
Research, development and engineering expenses (2) $ 23 $ 29 $ 23 $
16 $ 4 $ 28 $ 123 Restructuring, impairment and other credits $ (2
) $ (2 ) Equity in earnings of affiliated companies $ 344 $ 3 $ 11
$ 358 Income tax (provision) benefit $ (132 ) $ (4 ) $ (5 ) $ 3
$ (8 ) $ 11 $ (135 ) Net income (loss) (3) $ 703
$ 8 $ 11 $ (7 ) $ 17 $ (15 ) $ 717
Three months ended March 31, 2009 Net
sales $ 357 $ 385 $ 110 $ 60 $ 76 $ 1 $ 989 Depreciation (1) $ 104
$ 31 $ 24 $ 10 $ 4 $ 3 $ 176 Amortization of purchased intangibles
$ 3 $ 3 Research, development and engineering expenses (2) $ 22 $
23 $ 30 $ 11 $ 3 $ 36 $ 125 Restructuring, impairment and other
charges $ 34 $ 15 $ 19 $ 18 $ 7 $ 4 $ 97 Equity in earnings (loss)
of affiliated companies $ 180 $ (4 ) $ 2 $ 12 $ 190 Income tax
(provision) benefit $ (7 ) $ 1 $ 14 $ 10
$ 7 $ 25 Net income (loss) (3) $ 218
$ (1 ) $ (44 ) $ (27 ) $ 8 $ (29 ) $ 125
(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 expense 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.
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
March 31,
2010
2009 Net income of reportable segments $ 732 $ 154
Non-reportable segments (15 ) (29 ) Unallocated amounts: Net
financing costs (1) (46 ) (20 ) Stock-based compensation expense
(29 ) (35 ) Exploratory research (15 ) (20 ) Corporate
contributions (12 ) (9 ) Equity in earnings of affiliated
companies, net of impairments (2) 111 5 Asbestos litigation (3) 52
(4 ) Other corporate items (4) 38
(28 ) Net income $ 816 $
14
(1) Net financing costs include
interest income, interest expense, and interest costs and
investment gains associated with benefit plans.
(2) Primarily represents the
equity earnings of Dow Corning Corporation. In the first quarter of
2010, equity earnings of affiliated companies, net of impairments,
includes a credit of $21 million for our share of U.S. advanced
energy manufacturing tax credits at Dow Corning Corporation. In the
first quarter of 2009, equity earnings of affiliated companies, net
of impairments includes a charge of $29 million representing our
share of restructuring charges at Dow Corning Corporation.
(3) In the first quarter of 2010,
Corning recorded a net credit of $52 million primarily reflecting
the change in the terms of the proposed asbestos settlement. In the
first quarter of 2009, Corning recorded charges of $4 million to
adjust the asbestos liability for the change in value of certain
components of the Amended PCC Plan and the estimated liability for
non-PCC asbestos claims.
(4) In the first quarter of 2010,
other corporate items included a tax charge of $56 million from the
reversal of the deferred tax asset associated with a Medicare
subsidy. In the first quarter of 2009, other corporate items
included $68 million ($44 million after-tax) of restructuring
charges.
CORNING INCORPORATED AND
SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Unaudited)
1. Asbestos
Litigation
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 2003
Plan). On December 21, 2006, the Bankruptcy Court issued an order
denying confirmation of the 2003 Plan. On January 10, 2008, some of
the parties in the proceeding advised the Bankruptcy Court that
they had made substantial progress on an amended plan of
reorganization (the Amended PCC Plan) that resolved issues raised
by the Court in denying the confirmation of the 2003 Plan.
As a result of progress in the parties’ continuing negotiations,
Corning believes the Amended PCC Plan, modified as indicated below,
now represents the most probable outcome of this matter and the
probability that the 2003 plan will become effective has
diminished. The proposed settlement under the Amended PCC Plan
requires Corning to contribute its equity interest in PCC and
Pittsburgh Corning Europe, N.V. (PCE) and to contribute a fixed
series of cash payments recorded at present value. Corning will
have the option to contribute shares rather than cash, but the
liability is fixed by dollar value and not number of shares. The
Amended PCC Plan does not include non-PCC asbestos claims that may
be or have been raised against Corning. Corning has recorded an
additional amount for such claims in its estimated asbestos
litigation liability.
Several of the parties in the bankruptcy proceedings are
anticipating that they will file a modification of the Amended PCC
Plan with the Bankruptcy Court which will reduce the amount of cash
expected to be contributed to the settlement. In the first quarter
of 2010, we recorded a net credit of $52 million ($33 million
after-tax) due largely to the change in terms of the proposed
settlement.
2. Equity in Earnings of Affiliated Companies
In the first quarter of 2010, equity in earnings of affiliated
companies included a credit of $21 million ($20 million after-tax)
primarily for Corning’s share of advanced energy manufacturing tax
credits at Dow Corning Corporation.
3. Provision for Income Taxes
In the first quarter of 2010, we recorded a $56 million tax
charge from the reversal of the deferred tax asset associated with
a Medicare subsidy.
4. Weighted Average Shares Outstanding
Weighted average shares outstanding are as follows (in
millions):
Three months ended
Three months ended March 31,
December 31, 2010 2009
2009 Basic 1,555 1,548 1,552 Diluted 1,579 1,559
1,576
Diluted used for non-GAAP
measures
1,579 1,559 1,576
CORNING INCORPORATED AND SUBSIDIARY
COMPANIES
QUARTERLY SALES
INFORMATION
(Unaudited; in millions)
2010 2009
Q1 Q1 Q2 Q3 Q4 Total
Display Technologies $ 782 $ 357 $ 673 $ 679 $ 717 $
2,426
Telecommunications Fiber and cable 190 192 235
251 231 909 Hardware and equipment 174 193 202
199 174 768 364 385 437 450 405 1,677
Environmental Technologies Automotive 117 64 85 103 108 360
Diesel 75 46 47 64 73 230
192 110 132 167 181 590
Specialty Materials 96 60 71
90 110 331
Life Sciences 118 76 81 92 117 366
Other 1 1 1 1 2 5
Total $ 1,553 $ 989 $ 1,395 $ 1,479 $ 1,532 $ 5,395
The above supplemental information is intended to facilitate
analysis of Corning’s businesses.
CORNING INCORPORATED AND
SUBSIDIARY COMPANIESRECONCILIATION OF NON-GAAP FINANCIAL
MEASURE TO GAAP FINANCIAL MEASUREThree Months Ended March
31, 2010(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
2010 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 Income Before
Net Share Income Taxes Income
Earnings per share (EPS) and net income, excluding special items $
0.52 $ 838 $ 818 Special items: Restructuring, impairment,
and other charges (a) 0.00 2 1 Asbestos settlement (b) 0.02
52 33 Equity in earnings of affiliated companies (c) 0.01 21
20 Provision for income taxes (d) (0.03 )
(56 ) Total EPS and net income $ 0.52 $
913 $ 816
(a) In the first quarter of 2010,
Corning recorded a credit of $2 million ($1 million after-tax) for
adjustments to restructuring reserves.
(b) In the first quarter of 2010,
Corning recorded a net credit of $52 million ($33 million
after-tax) primarily reflecting the change in estimate of our
asbestos settlement liability.
(c) In the first quarter of 2010,
equity in earnings of affiliated companies included a credit of $21
million ($20 million after-tax) primarily for Corning’s share of
advanced energy manufacturing tax credits at Dow Corning
Corporation.
(d) In the first quarter of 2010,
Corning recorded a $56 million tax charge from the reversal of the
deferred tax asset associated with a Medicare subsidy.
CORNING INCORPORATED AND
SUBSIDIARY COMPANIESRECONCILIATION OF NON-GAAP FINANCIAL
MEASURE TO GAAP FINANCIAL MEASUREThree Months Ended March
31, 2009(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
2009 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 (Loss) Per
Before Net Share Income Taxes
Income Earnings per share (EPS) and net income,
excluding special items $ 0.10 $ 146 $ 150 Special items:
Restructuring charges (a) (0.07 ) (165 ) (107 ) Asbestos
litigation (b) (4 ) (2 ) Equity in earnings of affiliated
companies (c) (0.02 ) (29 ) (27 ) Total
EPS and net income $ 0.01 $ (52 ) $ 14
(a) In the first quarter of 2009,
Corning recorded a charge of $165 million ($107 million after-tax),
which was comprised primarily of severance costs, special
termination benefits and outplacement services for a corporate-wide
restructuring plan.
(b) In the first quarter of 2009,
Corning recorded a charge of $4 million ($2 million after-tax) to
adjust the asbestos liability for change in value of the components
of the Amended PCC Plan.
(c) In the first quarter of 2009,
equity in earnings of affiliated companies included a charge of $29
million ($27 million after-tax) for our share of the restructuring
charges at Dow Corning Corporation.
CORNING INCORPORATED AND
SUBSIDIARY COMPANIESRECONCILIATION OF NON-GAAP FINANCIAL
MEASURE TO GAAP FINANCIAL MEASUREThree Months Ended December
31, 2009(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
2009 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 Loss Before
Net Share Income Taxes
Income Earnings per share (EPS) and net income,
excluding special items $ 0.44 $ 733 $ 696 Special items:
Restructuring, impairment, and other charges (a) (0.03 ) (53 ) (38
) Asbestos settlement (b) -- (5 ) (3 ) Equity in
earnings of affiliated companies (c) 0.02 29 27 Provision
for income taxes (d) 0.04 -- 58
Total EPS and net income $ 0.47 $ 704 $
740
(a) In the fourth quarter of 2009,
Corning recorded a charge of $53 million ($38 million after-tax) as
part of the Company’s corporate-wide restructuring plan in response
to lower sales in 2009.
(b) In the fourth quarter of 2009,
Corning recorded a charge of $5 million ($3 million after-tax) to
adjust the asbestos liability for the change in value of certain
components of the Amended PCC Plan and the estimated liability for
non-PCC asbestos claims.
(c) In the fourth quarter of 2009,
equity in earnings of affiliated companies included a credit of $29
million ($27 million after-tax) primarily for Corning’s share of
excess foreign tax credits from foreign dividends at Dow Corning
Corporation.
(d) In the fourth quarter of 2009,
Corning recorded a $58 million tax benefit which included the
following items: a $27 million U.S. tax credit for research and
experimentation expenses; a $41 million tax benefit to reflect a
deferred tax asset associated with a non-taxable Medicare subsidy;
and a $10 million valuation allowance due to a change in judgment
about the realizability of U.S. and U.K. deferred tax assets in
future years.
CORNING INCORPORATED AND
SUBSIDIARY COMPANIESRECONCILIATION OF NON-GAAP FINANCIAL
MEASURE TO GAAP FINANCIAL MEASUREThree Months Ended March
31, 2010 and December 31, 2009(Unaudited; amounts in
millions)
Corning’s free cash flow financial
measure for the three months ended March 31, 2010 and December 31,
2009 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 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
measures.
Three Three
months ended months ended March 31, 2010
December 31, 2009 Cash flows from operating
activities $ 643 $ 913 Less: Cash flows from investing
activities 77 (231 ) Plus: Short-term investments -
acquisitions 224 496 Less: Short-term investments -
liquidations (472 ) (422 ) Free cash flow $
472 $ 756
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