Sales growth of 16%, significant margin expansion, and
improved full-year outlook
CORNING, N.Y.; OCTOBER 23, 2018 - Corning
Incorporated (NYSE: GLW) today announced results for its
third-quarter 2018 ended Sept. 30, 2018.
News Summary:
· Excellent
third-quarter results with year-over-year sales and profit growth
in each of the company's businesses
- GAAP
and Core sales of $3 billion, up 15% and 16% respectively year over
year
- GAAP
EPS of $0.67, up 72% year over year
- Core
EPS of $0.51, up 28% year over year
· All
businesses contributed to strong third-quarter growth and margin
expansion
- Highlights included
year-over-year sales increases of 22% for Optical Communications;
19% for Environmental Technologies; and 23% for Specialty
Materials
- Display Technologies
sales and profits grew year over year as glass pricing remained
moderate, reaching the important milestone of a mid-single-digit
percentage decline year-over-year, and the Gen 10.5 capacity ramp
continued successfully
- As expected, core
gross margin expanded to 42%, a significant improvement over the
first half of 2018 and last year; GAAP gross margin was 41%.
· Company now
expects sales to exceed $11.3 billion for the full year and 42%
gross margin in the fourth quarter as strength continues in all
businesses
· Returned an
additional $542 million to shareholders, raising total
distributions to $11.4 billion since the Strategy & Capital
Allocation Framework was announced in October 2015
"We had an excellent quarter, with 16% sales
growth and 28% EPS growth," said Wendell P. Weeks, chairman, chief
executive officer, and president. "These results demonstrate a step
change in our earnings power created by investments in innovation
and capacity. Our annualized sales run rate now exceeds $12
billion, growth is accelerating, and our margins are expanding.
Execution across the company is outstanding."
Strategy and Capital Allocation
Framework Progress
Corning's Framework outlines the company's 2016-2019 leadership
priorities. Under the Framework, Corning plans to deliver more than
$12.5 billion to shareholders while investing $10 billion in
growth opportunities. Since the Framework was announced in October
2015, the company has returned $11.4 billion to shareholders,
including $542 million in the third quarter.
Corning continues to make excellent progress on its focused
portfolio objectives, keeping the company on track to fully achieve
its Strategy and Capital Allocation Framework goals. Highlights of
the company's progress include:
· Increased
customer commitments in Optical Communications that support
accelerated capacity expansion and share growth; business continued
to progress faster than expected toward goal of
$5 billion in annual sales by 2020
· Extended
cover glass market leadership with successful launch and adoption
of Corning®
Gorilla® Glass 6,
expanded use of Gorilla Glass for fronts and backs of devices, and
innovations in wearables and other new device categories across the
global mobile consumer electronics industry
· Sustained
leadership in gasoline particulate filters and glass innovation to
help auto manufacturers transform their industry
- Successfully partnered
with majority of leading automakers to equip vehicles with gasoline
particulate filters to meet European regulations now in effect;
announced supply agreement with Changan Automobile, one of the
largest Chinese automakers, for gasoline particulate filters to
meet upcoming China regulations
- Strong alignment with
efforts to make cars more connected, efficient, and autonomous
resulted in increased pull for collaboration from leading OEMs,
with Corning Gorilla Glass for Automotive having been awarded more
than 50 platforms globally to date
· Increased
shipments of Corning Valor® Glass
threefold over last year as multiple customers pursue trials for
certification of Valor Glass
· Delivered
stable returns in Display: extended market leadership and exceeded
display glass market growth with successful ramp of Gen 10.5
facility; pricing continued to improve and reached the important
milestone of a mid-single-digit percentage decline year-over-year,
and company expects its full-year 2019 price declines to further
improve from 2018
Third-quarter 2018 Results and
Comparisons
(In millions, except per-share amounts)
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Q3 2018 |
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Q2 2018 |
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%
change |
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Q3 2017 |
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%
change |
GAAP
Net Sales |
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$ |
3,008 |
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$ |
2,747 |
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10% |
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$ |
2,607 |
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15% |
GAAP
Net Income |
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$ |
625 |
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$ |
738 |
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(15%) |
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$ |
390 |
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60% |
GAAP
EPS |
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$ |
0.67 |
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$ |
0.78 |
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(14%) |
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$ |
0.39 |
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72% |
Core
Sales* |
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$ |
3,045 |
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$ |
2,759 |
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10% |
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$ |
2,635 |
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16% |
Core
Earnings* |
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$ |
476 |
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$ |
359 |
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33% |
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$ |
403 |
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18% |
Core EPS* |
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$ |
0.51 |
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$ |
0.38 |
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34% |
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$ |
0.40 |
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28% |
*Core performance measures 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 website.
Segment Results and
Outlook
"In the third quarter, all businesses delivered excellent results,
with year-over-year sales and profit growth in each. We expect very
strong performance again for the fourth quarter and full year, and
now expect to exceed $11.3 billion in sales for 2018. Having passed
an inflection point, we are gaining momentum and plan to build on
that going forward," said Tony Tripeny, senior vice president and
chief financial officer. "Putting it all together, we are now
seeing our four-year, $10 billion, investment drive growth and
extend our leadership. We are also rewarding investors by returning
more than $12.5 billion, which compounds the benefit of our future
growth for long-term shareholders."
Display Technologies:
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Q3 2018 |
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Q2 2018 |
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%
change |
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Q3 2017 |
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%
change |
Net
Sales |
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$ |
852 |
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$ |
780 |
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9% |
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$ |
795 |
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7% |
Net
Income Before Tax |
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$ |
275 |
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$ |
243 |
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13% |
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$ |
267 |
|
3% |
Net Income |
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$ |
218 |
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$ |
192 |
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14% |
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$ |
211 |
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3% |
Third-quarter Display Technologies net sales were
$852 million and net income was $218 million, both up sequentially
and year over year. Corning reached the important milestone of
annual display glass price declines improving to a mid-single digit
percentage in the third quarter. The company expects the pricing
improvement trend to continue in the fourth quarter, and expects
its full-year 2019 price declines to further improve from 2018.
Corning expects fourth-quarter display glass
market volume to grow by a low-single-digit percentage
sequentially, and full-year glass market volume growth of a
mid-single-digit percentage, as television screen size growth
continues. The company expects its display glass volume to grow
faster than the market in the fourth quarter and the full year,
driven by the Gen 10.5 ramp up.
Optical Communications:
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Q3 2018 |
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Q2 2018 |
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%
change |
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Q3 2017 |
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%
change |
Net
Sales |
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$ |
1,117 |
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$ |
1,023 |
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9% |
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$ |
917 |
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22% |
Net
Income Before Tax |
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$ |
214 |
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$ |
191 |
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12% |
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$ |
167 |
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28% |
Net Income |
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$ |
168 |
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$ |
150 |
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12% |
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$ |
132 |
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27% |
Optical Communications third-quarter net sales
were up 22% year over year and exceeded $1 billion for the second
consecutive quarter. Sales growth was driven by strong demand from
both data center and carrier customers, and the acquisition of 3M's
Communication Markets Division. Net income was up 27% year over
year, as capital investments yielded clear benefits.
Strong growth is expected to continue in the
fourth quarter, as additional capacity ramps, and the company
supplies large projects underway at multiple customers in both the
carrier and data center businesses. Fourth quarter sales are
expected to be up by a low-single digit percentage sequentially,
resulting in year-over-year sales growth slightly better than the
third quarter. For full-year 2018, sales are expected to increase
by a high-teens percentage over last year, with organic growth in
the low teens and approximately $200 million in sales from the
acquisition of 3M's Communication Markets Division.
Specialty Materials:
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Q3 2018 |
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Q2 2018 |
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%
change |
|
Q3 2017 |
|
%
change |
Net
Sales |
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$ |
459 |
|
$ |
343 |
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34% |
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$ |
373 |
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23% |
Net
Income Before Tax |
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$ |
147 |
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$ |
81 |
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81% |
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$ |
108 |
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36% |
Net Income |
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$ |
116 |
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$ |
64 |
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81% |
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$ |
86 |
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35% |
In Specialty Materials, third-quarter net sales
were $459 million, up 23% year over year and ahead of company
expectations, driven by strong pull for glass innovations. Net
income was $116 million, up 35% year over year.
Fourth-quarter sales are expected to be consistent
with the fourth quarter of 2017, which was Specialty Materials'
highest sales quarter last year. For the full year, Specialty
Materials sales are expected to grow by a mid-single digit
percentage year over year, after an exceptionally strong year of
25% growth in 2017.
Environmental
Technologies:
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Q3 2018 |
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Q2 2018 |
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%
change |
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Q3 2017 |
|
%
change |
Net
Sales |
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$ |
331 |
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$ |
317 |
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4% |
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$ |
277 |
|
19% |
Net
Income Before Tax |
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$ |
76 |
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$ |
68 |
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12% |
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$ |
51 |
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49% |
Net Income |
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$ |
60 |
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$ |
54 |
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11% |
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$ |
40 |
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50% |
Environmental Technologies third-quarter net sales
were $331 million, up 19% year over year. Third-quarter net income
grew more than sales. Results benefited from volume growth in all
product categories as well as strong performance in manufacturing
operations.
This strong performance is expected to continue in
the fourth quarter, with sales growth up by a high-single digit
percentage year over year. For full-year 2018, Environmental
Technologies sales are expected to be up by a mid-teens percentage
over last year.
Life Sciences:
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Q3 2018 |
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Q2 2018 |
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%
change |
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Q3 2017 |
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%
change |
Net
Sales |
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$ |
231 |
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$ |
245 |
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(6%) |
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$ |
223 |
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4% |
Net
Income Before Tax |
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$ |
38 |
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$ |
39 |
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(3%) |
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$ |
32 |
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19% |
Net Income |
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$ |
30 |
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$ |
31 |
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(3%) |
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$ |
25 |
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20% |
In Life Sciences, third-quarter 2018 net sales
increased 4% and net income grew 20% year over year.
Fourth-quarter sales are expected to grow by a
low-to-mid single digit percentage year over year. For the
full-year 2018, sales are expected to grow by a mid-to-high single
digit percentage over last year, continuing to outpace overall
market growth.
Upcoming Investor
Events
On Nov. 27, Corning will attend the Credit Suisse Technology,
Media, and Telecom Conference in Scottsdale. And, on Dec. 6 Corning
will attend the Barclays Global Technology, Media and
Telecommunications Conference in San Francisco.
Third-Quarter Conference Call
Information
The company will host its third-quarter conference call on Tuesday,
Oct. 23, at 8:30 a.m. EDT. To participate, please call toll free
(800) 230-1074 or for international access call (612) 234-9960
approximately 10-15 minutes prior to the start of the call. The
leader is Ann Nicholson. To listen to a live audio webcast of the
call, go to Corning's investor relations website at
investor.corning.com, click on "Events and Presentations" under the
"News and Events" tab and select the third-quarter conference call.
A webcast replay will be available 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 financial measures exclude
the impact of items that are driven by general economic conditions
and events that do not reflect the underlying fundamentals and
trends in the company's operations. The company believes
presenting non-GAAP financial measures assists in analyzing
financial performance without the impact of items that may obscure
trends in the company's underlying performance. Detailed
reconciliations outlining the differences between these non-GAAP
measures and the most directly comparable GAAP measure can be found
on Corning's investor relations website at investor.corning.com, by
clicking "Quarterly Results" under the "Financials" tab. These
reconciliations also accompany this news release.
Caution Concerning
Forward-Looking 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 effects of acquisitions, dispositions and other
similar transactions by the Company, the effect of global business,
financial, economic and political conditions; tariffs and import
duties; currency fluctuations between the U.S. dollar and other
currencies, primarily the Japanese yen, New Taiwan dollar, euro,
Chinese yuan, and South Korean won; product demand and industry
capacity; competitive products and pricing; availability and costs
of critical components and materials; new product development and
commercialization; order activity and demand from major customers;
the amount and timing of our cash flows and earnings and other
conditions, which may affect our ability to pay our quarterly
dividend at the planned level or to repurchase shares at planned
levels; possible disruption in commercial activities due to
terrorist activity, cyber-attack, armed conflict, political or
financial instability, natural disasters, or major health concerns;
unanticipated disruption to equipment, facilities, IT systems or
operations; effect of regulatory and legal developments; ability to
pace capital spending to anticipated levels of customer demand;
rate of technology change; ability to enforce patents and protect
intellectual property and trade secrets; adverse litigation;
product and components performance issues; retention of key
personnel; customer ability, most notably in the Display
Technologies segment, to maintain profitable operations and obtain
financing to fund their ongoing operations and manufacturing
expansions and pay their receivables when due; loss of significant
customers; changes in tax laws and regulations including the Tax
Cuts and Jobs Act of 2017; and the potential impact of legislation,
government regulations, and other government action and
investigations.
For a complete listing of risks and other factors,
please reference the risk factors and forward-looking statements
described in our annual reports on Form 10-K and quarterly reports
on Form 10-Q. 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.
Web Disclosure
In accordance with guidance provided by the SEC regarding the use
of company websites and social media channels to disclose material
information, Corning Incorporated ("Corning") wishes to notify
investors, media, and other interested parties that it uses its
website
(http://www.corning.com/worldwide/en/about-us/news-events.html) to
publish important information about the company, including
information that may be deemed material to investors, or
supplemental to information contained in this or other press
releases. The list of websites and social media channels that the
company uses may be updated on Corning's media and website from
time to time. Corning encourages investors, media, and other
interested parties to review the information Corning may publish
through its website and social media channels as described above,
in addition to the company's SEC filings, press releases,
conference calls, and webcasts.
About Corning
Incorporated
Corning (www.corning.com) is one of the world's leading innovators
in materials science, with a more than 165-year track record of
life-changing inventions. Corning applies its unparalleled
expertise in glass science, ceramic science, and optical physics
along with its deep manufacturing and engineering capabilities to
develop category-defining products that transform industries and
enhance people's lives. Corning succeeds through sustained
investment in RD&E, a unique combination of material and
process innovation, and deep, trust-based relationships with
customers who are global leaders in their industries.
Corning's capabilities are versatile and synergistic, which allows
the company to evolve to meet changing market needs, while also
helping our customers capture new opportunities in dynamic
industries. Today, Corning's markets include optical
communications, mobile consumer electronics, display technology,
automotive, and life sciences vessels. Corning's industry-leading
products include damage-resistant cover glass for mobile devices;
precision glass for advanced displays; optical fiber, wireless
technologies, and connectivity solutions for state-of-the-art
communications networks; trusted products to accelerate drug
discovery and delivery; and clean-air technologies for cars and
trucks.
Media Relations
Contact:
M. Elizabeth Dann
(607)
974-4989
dannme@corning.com
Investor Relations
Contact:
Ann H.S. Nicholson
(607) 974-6716
nicholsoas@corning.com
Q3 2018 Financial Tables
This
announcement is distributed by West Corporation on behalf of West
Corporation clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Corning Incorporated via Globenewswire
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