Corning Reports Second-Quarter Results; 10th Consecutive Quarterly Sales Increase.CORNING Corning, city (1990 pop. 11,938), Steuben co., S N.Y., on the Chemung River, in a dairy and vineyard region; settled 1788, inc. as a city 1890. The glass industry for which the city is famous began in 1868. , N.Y. -- Corning Incorporated Corning Incorporated NYSE: GLW is an American manufacturer of glass, ceramics and related materials, primarily for industrial and scientific applications. The company was known until 1989 as Corning Glass Works. (NYSE NYSE See: New York Stock Exchange : GLW GLW Glasgow Airport (UK) GLW Gross Laden Weight GLW Good Lady Wife (Australia) ) today announced second-quarter sales of $1.141 billion, with net income of $165 million, or $0.11 per share. Net income includes net special charges of $141 million, or $0.09 per share. Excluding these net charges, Corning's earnings per share (EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. ) would have been $0.20, exceeding the company's previously announced EPS guidance range of $0.17 to $0.19. This EPS is a non-GAAP financial measure. This and all non-GAAP financial measures are reconciled rec·on·cile v. rec·on·ciled, rec·on·cil·ing, rec·on·ciles v.tr. 1. To reestablish a close relationship between. 2. To settle or resolve. 3. on the company's investor relations Investor relations The process by which the corporation communicates with its investors. Web site and in attachments to this news release. "We are pleased with our second-quarter performance and our 10th consecutive quarterly sales increase driven by the strong growth in our Display Technologies segment," Wendell Wendell is a name that has many uses: Places
Second-Quarter Operating Results Corning's second-quarter sales of $1.141 billion increased 17 percent over last year's second-quarter sales of $971 million, and increased 9 percent over the previous quarter's sales of $1.05 billion. Gross margin for the second quarter improved to 42 percent versus 41 percent in the first quarter. The second-quarter gross margin exceeded the company's expectation of 40 percent and was its highest since the first quarter of 2001. The gross-margin improvement is primarily the result of stronger overall performance in the Display Technologies segment, brought on by increased demand for larger-size glass substrates and strong manufacturing performance. Equity earnings for the second quarter were $172 million, compared to the first quarter's equity earnings of $166 million. Corning's equity earnings from Dow Corning Dow Corning is a multinational corporation headquartered in Midland, Michigan, USA. Dow Corning specializes in silicon and silicone-based technology, offering more than 7,000 products and services. Dow Corning is equally owned by The Dow Chemical Company and Corning, Inc. Corporation were $77 million, including an $11 million non-recurring gain in the second quarter, versus $68 million in the first quarter. Corning's Display Technologies segment achieved record sales of $415 million in the second quarter, a 30-percent increase over first-quarter sales of $320 million and a 50-percent sales increase over second-quarter 2004 sales of $277 million. The sequential One after the other in some consecutive order such as by name or number. quarterly sales increase was the result of a 32-percent volume increase and flat overall pricing. Exchange rates in the quarter had a 3-percent negative impact on sales. Segment gross margins increased from 60 percent in the first quarter to 65 percent in the second quarter. Samsung Corning Precision Glass  The of this article or section may be compromised by "peacock terms".You can help Wikipedia by removing peacock terms. Co., Ltd., a 50-percent equity venture in Korea Korea (kôrē`ə, kə–), Korean Hanguk or Choson, region and historic country (85,049 sq mi/220,277 sq km), E Asia. , increased its sequential glass volume by 27 percent. Strong volume gains at Samsung Corning Precision were offset by a number of nonrecurring Non`re`cur´ring a. 1. Nonrecurrent; as, the costs of a layoff are considered as a nonrecurring expense s>. items and the negative impact of exchange rates in the second quarter. Equity earnings from Samsung Corning Precision were up 6 percent in the second quarter at $85 million versus $80 million in the first quarter. Net income for the Display Technologies segment, which includes Corning's wholly owned business and equity earnings from Samsung Corning Precision, grew 51 percent from $161 million in the first quarter to $243 million in the second quarter. The increase was due to strong sales and gross margin improvement, as well as the nonrecurrence of a $20 million after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. foreign exchange loss incurred in the first quarter, offset by a higher tax rate and lower-than-expected earnings growth at Samsung Corning Precision. "Market demand for flat panel desk top monitors, notebook computers A laptop computer that weighs in a range from five to seven pounds. The term originated when laptops were routinely more than 10 pounds, and those that became lighter were placed in a special "notebook" category. In practice, notebook computer and laptop computer are synonymous. and flat screen televisions continue to fuel the growth of our liquid crystal display liquid crystal display (LCD) Optoelectronic device used in displays for watches, calculators, notebook computers, and other electronic devices. Current passed through specific portions of the liquid crystal solution causes the crystals to align, blocking the passage of light. (LCD (Liquid Crystal Display) A display technology that uses rod-shaped molecules (liquid crystals) that flow like liquid and bend light. Unenergized, the crystals direct light through two polarizing filters, allowing a natural background color to show. ) business," Weeks said. "In fact," he said, "our second-quarter sales of glass substrates were larger than our total Display Technologies segment sales for 2002." He added that retail pricing declines and a movement to larger sizes have resulted in greater-than-expected penetration The successful unauthorized breach of a security perimeter. See penetration test. of LCD desktop monitors in the market. Weeks said, "Our preliminary estimates indicate that LCD monitor A flat panel display that uses liquid crystals. Although laptops have used LCDs as their flat panel technology almost exclusively, LCD is also the most popular for flat panel desktop monitors. Toward the end of 2003, sales of LCD displays for desktops overtook CRTs for the first time. sales reached 67 percent of total monitor sales in the second quarter, compared to 60 percent in the first quarter of this year." Telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. segment sales declined 3 percent sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen to $415 million versus $427 million in the first quarter of this year. The sales decline was due to lower fiber-to-the-premises (FTTP (Fiber To The Premises) The installation of optical fiber from the carrier directly into the home or office. Also called "fiber to the home" (FTTH). See PON and FTTC. See also FTP. ) hardware and equipment sales, which were, in turn, primarily the result of supply chain inventory declines during the second quarter. The decline in FTTP product sales was almost offset by seasonal increases in demand. Optical fiber volume and pricing were essentially flat with first-quarter results. The segment incurred a net loss of $13 million compared to net income of $9 million in the first quarter. The second-quarter loss includes an $8 million charge to adjust prior years' restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). reserves. Weeks said, "The FTTP market continues to be a growth opportunity for us, particularly for sales of our hardware and equipment products. While we did experience a second-quarter sales decline, we believe this is the result of customer inventory reduction and not a slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. in FTTP deployment Installing, setting up, testing and running. This military term, which means the placement of troops and equipment in the field, is widely used with computers as an alternate to the word "implementation. ." Second-quarter Environmental Technologies segment sales were $146 million compared to $148 million in the first quarter. The Life Sciences segment had second-quarter sales of $75 million, basically flat with first-quarter sales of $74 million. Special Items Corning's second-quarter results included net special charges totaling $141 million after-tax and minority interest, of which $137 million was a pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern and after-tax charge to reflect the increase in market value of Corning common stock to be contributed to settle the asbestos asbestos, mineral asbestos, common name for any of a variety of silicate minerals within the amphibole and serpentine groups that are fibrous in structure and more or less resistant to acid and fire. litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. related to Pittsburgh Pittsburgh (pĭts`bərg), city (1990 pop. 369,879), seat of Allegheny co., SW Pa., at the confluence of the Allegheny and the Monongahela rivers, which there form the Ohio River; inc. 1816. Corning Corporation. In addition, the company recognized a $12 million pretax and after-tax loss on the repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. of debt, a $1 million pretax gain ($3 million after-tax and minority interest charge) to adjust restructuring reserves, and the previously discussed $11 million nonrecurring gain at Dow Corning. Cash Flow/Liquidity Update Corning ended the second quarter with $2.1 billion in cash and short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investments, an increase of $568 million from the previous quarter's balance of $1.5 billion. The increase was largely the result of the receipt of $212 million of customer deposits in the Display Technologies segment and net cash proceeds of $323 million from the issuance of 20 million shares of common stock. These proceeds will primarily be used to fund the anticipated fourth-quarter repurchase of the company's outstanding zero-coupon convertible Zero-Coupon Convertible A zero-coupon bond issued by a corporation that can be converted into that corporation's common stock. Also known as a split coupon bond. Notes: debentures. James James, person in the Bible James, in the Gospel of St. Luke, kinsman of St. Jude. The original does not specify the relationship. James, rivers, United States James. B. Flaws, vice chairman and chief financial officer, said, "We have made excellent progress in restoring Corning to sound financial health. During the quarter, we reduced our debt by an additional $183 million, and we attained at·tain v. at·tained, at·tain·ing, at·tains v.tr. 1. To gain as an objective; achieve: attain a diploma by hard work. 2. investment-grade investment-grade Of, relating to, or being a bond suitable for purchase by institutions under the prudent man rule. Investment-grade is restricted to those bonds graded BBB and above by Standard & Poor's and graded Baa3 and above by Moody's. credit ratings from two of the three rating agencies. We are carefully balancing our capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. with our need to protect the financial health of the company." Third-Quarter Outlook Corning said that it expects third-quarter sales to be in the range of $1.14 billion to $1.19 billion and EPS in the range of $0.20 to $0.22 before special items. This EPS estimate is a non-GAAP financial measure and excludes any possible special items. This and all non-GAAP financial measures are reconciled on the company's investor relations Web site and in attachments to this news release. The company expects its gross margin to be between 41 percent and 42 percent, comparable to the second quarter. Corning expects that the third-quarter tax rate will be in the 20 percent to 25 percent range. In the Display Technologies segment, the company is anticipating that third-quarter sequential volume growth for its wholly owned business and Samsung Corning Precision will be in the range of 10 percent to 20 percent both individually and in the aggregate. Pricing in the third quarter is expected to be flat to down slightly. "Corning's third-quarter volume growth will be largely dependent upon our ability to continue to bring on additional large generation LCD glass melting and finishing capacity, and our customers' ability to ramp up Ramp Up To increase a company's operations in anticipation of increased demand. Notes: A company might 'ramp up' operations if they just signed a contract creating substantially more demand for their product. See also: Demand, Economies of Scale their new large-size generation fabs to meet the increasing industry demand," Weeks said. He added that Samsung Corning Precision has been shipping Gen 7 glass to the Samsung Electronics Samsung Electronics (SEC, Hangul:삼성전자; KSE: 005930, KSE: 005935, LSE: SMSN, LSE: SMSD) is a South Korean multinational corporation and the world's largest and leading electronics and information technology company. and Sony SONY Standard Oil of New York (common, but untrue; it's an urban legend) equity venture and has begun manufacturing Gen 7.5 glass substrates for LG. Philips (company) Philips - A Dutch multinational electronics company. It produces washing machines, consumer electronics, integrated circuits and light bulbs. Together with Sony they set the Compact Disc standard, especially Green Book CD-ROM. . "And our construction of Gen 8 size glass capacity in Japan is underway," he added. Corning noted that it continues to believe that the global LCD glass market volume remains on track to grow in excess of 50 percent this year. Weeks said that the growth of LCD televisions continues to meet the expectations of the industry and the company continues to expect overall LCD television penetration will reach 10 percent of the TV market this year. "We have seen a 40-percent decline in the retail price of an LCD television year-over-year, and this has helped fuel demand," he said. Corning's Telecommunications segment third-quarter sales are expected to be in the range of flat to down 5 percent from second-quarter sales. The company's third-quarter fiber volume is expected to be flat to down 5 percent, with fiber pricing down less than 5 percent. Corning believes that its FTTP sales will be consistent with the second quarter. The company expects equity earnings from Dow Corning to be $50 million to $60 million in the third quarter, consistent with prior guidance, Flaws said. "Dow Corning had a very strong first half of the year, and it typically experiences slightly weaker performance in the second half due to seasonality. Also, Dow Corning will be doing a maintenance shutdown shut·down n. A cessation of operations or activity, as at a factory. shutdown Noun the closing of a factory, shop, or other business Verb shut down at one of its major facilities in the fall." Weeks said, "Corning had an excellent first half of the year. We believe that we are well positioned for success through the remainder of the year." During the company's investor conference call on Wednesday Wednesday: see week. morning, Flaws will remind investors about the company's plan, which was discussed at its annual investor meeting in February February: see month. , to contribute up to 10 million shares of common stock during the second half of the year to fund Corning's U.S. pension plan. He also will provide further detail on the company's plan to adopt the new accounting rules for stock-based compensation, which will result in additional expense of up to $90 million in 2006. This amount is higher than the original estimate of $60 million the company provided earlier. The company also announced that it will be meeting with Boston Boston, town, England Boston, town (1991 pop. 26,495), E central England, on the Witham River. Boston's fame as a port dates from the 13th cent., when it was a Hanseatic port trading wool and wine. Having recovered from a decline in the 18th and 19th cent. area investors on August 1 and will host a luncheon at 12:30 p.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT at the Boston Harbor harbor: see port. Hotel. Investors interested in attending should contact Corning's investor relations department at (607) 974-8764. Second-Quarter Conference Call Information The company will host a second-quarter conference call at 8:30 a.m. EDT on Wednesday, July July: see month. 27. To access the call, dial (773) 681-5826. The password A secret word or code used to serve as a security measure against unauthorized access to data. It is normally managed by the operating system or DBMS. However, the computer can only verify the legitimacy of the password, not the legitimacy of the user. See NCSC. is RESULTS. A replay of the call will begin at approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 10:30 a.m. EDT, and will run through 5:00 p.m. EDT, Wednesday, August 10. To listen, dial (203) 369-1382, no pass code is required. To listen to a live audio webcast of the call, please go to Corning's Web site and follow the instructions: http://www.corning.com/investor_relations. The audio webcast will be archived for one year following the call. Presentation of Information in this News Release Non-GAAP financial measures are not in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with, or an alternative to, GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). . Corning's non-GAAP net income and EPS measures exclude restructuring, impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. 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 resulting from the impairment of equity or cost method investments and gains or losses recognized in equity earnings from restructuring, impairment or other charges or credits taken by equity method companies. The company believes presenting non-GAAP net income and EPS measures is helpful to analyze an·a·lyze v. 1. To examine methodically by separating into parts and studying their interrelations. 2. To separate a chemical substance into its constituent elements to determine their nature or proportions. 3. financial performance without the impact of unusual items that may obscure OBSCURE - "A Formal Description of the Specification Language OBSCURE", J. Loeckx, TR A85/15, U Saarlandes, Saarbrucken, 1985. trends in the company's underlying performance. These non-GAAP measures are reconciled on the company's Web site at www.corning.com/investor_relations and accompany To go along with; to go with or to attend as a companion or associate. A motor vehicle statute may require beginning drivers or drivers under a certain age to be accompanied by a licensed adult driver whenever operating an automobile. this news release. About Corning Incorporated Corning Incorporated (www.corning.com) is a diversified diversified (di·verˑ·s technology company that concentrates its efforts on high-impact growth opportunities. Corning combines its expertise in specialty A contract under seal. A specialty is a written document that has been sealed and delivered and is given as security for the payment of a specifically indicated debt. glass, ceramic This article is about ceramic materials. For the fine art, see Ceramic art. The word ceramic is derived from the Greek word κεραμικός (keramikos). materials, polymers and the manipulation Manipulation Dealing in a security to create a false appearance of active trading, in order to bring in more traders. Illegal. of the properties of light, with strong process and manufacturing capabilities to develop, engineer and commercialize significant innovative products for the telecommunications, flat panel display A thin display screen for computer and TV usage. The first flat panels appeared on laptop computers in the mid-1980s, and the LCD technology became the standard. Stand-alone LCD screens became available for desktop computers in the mid-1990s and exceeded sales of CRTs for the first time , environmental, semiconductor, and life sciences industries. Forward-Looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. and Cautionary Statements This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that involve a variety of business risks and other uncertainties that could cause actual results to differ materially. These risks and uncertainties include the possibility of changes or fluctuations in global economic and political conditions; tariffs This is a list of tariffs and trade legislation:
The earliest stage of a new business venture. costs; possible disruption disruption /dis·rup·tion/ (dis-rup´shun) a morphologic defect resulting from the extrinsic breakdown of, or interference with, a developmental process. in commercial activities due to terrorist activity, armed conflict, political instability instability /in·sta·bil·i·ty/ (-stah-bil´i-te) lack of steadiness or stability. detrusor instability or major health concerns; ability to obtain financing and capital on commercially reasonable terms; adequacy and availability of insurance; capital resource and cash flow activities; capital spending; equity company activities; interest costs; acquisition and divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). activities; the level of excess or obsolete inventory Obsolete Inventory Term that refers to inventory that is at the end of its product life cycle and has not seen any sales or usage for a set period of time usually determined by the industry. This type of inventory has to be written down and can cause large losses for a company. ; the rate of technology change; the ability to enforce patents; product and components performance issues; changes in key personnel; stock price fluctuations; and adverse litigation or regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. developments. These and other risk factors are identified in Corning's filings with the Securities and Exchange Commission. Forward-looking statements speak only as of the day that they are made, and Corning undertakes no obligation to update them in light of new information or future events.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; in millions, except per share amounts)
Three months Six months
ended June 30, ended June 30,
----------------- -----------------
2005 2004 2005 2004
-------- -------- -------- --------
Net sales $ 1,141 $ 971 $ 2,191 $ 1,815
Cost of sales 658 625 1,279 1,169
-------- -------- -------- --------
Gross margin 483 346 912 646
Operating expenses:
Selling, general and
administrative expenses 191 166 375 326
Research, development and
engineering expenses 104 85 202 169
Amortization of purchased
intangibles 3 9 8 19
Restructuring, impairment and
other charges and (credits)
(Note 1) (1) (34) 18
Asbestos settlement (Note 2) 137 47 121 66
-------- -------- -------- --------
Operating income 49 73 188 66
Interest income 13 4 23 10
Interest expense (28) (37) (65) (73)
Loss on repurchases and retirement
of debt, net (Note 3) (12) (9) (12) (32)
Other income, net 20 5 11 1
-------- -------- -------- --------
Income (loss) before income taxes 42 36 145 (28)
Provision for income taxes
(Note 4) (44) (24) (63) (12)
-------- -------- -------- --------
(Loss) income before minority
interests and equity earnings (2) 12 82 (40)
Minority interests (5) (11) (6) (11)
Equity in earnings of associated
companies (Note 5) 172 107 338 214
-------- -------- -------- --------
Net income $ 165 $ 108 $ 414 $ 163
======== ======== ======== ========
Basic earnings per common share $ 0.11 $ 0.08 $ 0.29 $ 0.12
======== ======== ======== ========
Diluted earnings per common share $ 0.11 $ 0.07 $ 0.28 $ 0.11
======== ======== ======== ========
Shares used in computing per share
amounts for:
Basic earnings per common share 1,438 1,383 1,422 1,371
======== ======== ======== ========
Diluted earnings per common
share 1,517 1,495 1,508 1,446
======== ======== ======== ========
See accompanying notes to these financial statements.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(Unaudited; in millions, except share and per share amounts)
June 30, December 31,
2005 2004
------------ ------------
Assets
Current assets:
Cash and cash equivalents $ 1,301 $ 1,009
Short-term investments, at fair value 814 872
------------ ------------
Total cash, cash equivalents and
short-term investments 2,115 1,881
Trade accounts receivable, net 645 585
Inventories 552 535
Deferred income taxes 93 94
Other current assets 223 188
------------ ------------
Total current assets 3,628 3,283
Investments 1,546 1,484
Property, net 4,220 3,941
Goodwill and other intangible assets, net 383 398
Deferred income taxes 464 472
Other assets 156 166
------------ ------------
Total Assets $ 10,397 $ 9,744
============ ============
Liabilities and Shareholders' Equity
Current liabilities:
Short-term borrowings, including current
portion of long-term debt $ 288 $ 478
Accounts payable 609 682
Other accrued liabilities 1,214 1,178
------------ ------------
Total current liabilities 2,111 2,338
Long-term debt 1,915 2,214
Postretirement benefits other than pensions 593 600
Other liabilities 887 747
------------ ------------
Total liabilities 5,506 5,899
------------ ------------
Commitments and contingencies
Minority interests 28 29
Shareholders' equity:
Preferred stock - Par value $100.00 per
share; Shares authorized: 10 million
Series C mandatory convertible
preferred stock - Shares issued: 5.75
million; Shares outstanding: 616 thousand
and 637 thousand 62 64
Common stock - Par value $0.50 per share;
Shares authorized: 3.8 billion; Shares
issued: 1,487 million and 1,424 million 743 712
Additional paid-in capital 11,043 10,363
Accumulated deficit (6,895) (7,309)
Treasury stock, at cost; Shares held:
16 million (158) (162)
Accumulated other comprehensive income 68 148
------------ ------------
Total shareholders' equity 4,863 3,816
------------ ------------
Total Liabilities and Shareholders' Equity $ 10,397 $ 9,744
============ ============
Certain amounts for 2004 were reclassified to conform to 2005
classifications.
See accompanying notes to these financial statements.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in millions)
Six months ended
Three months ended June 30,
------------------- -------------------
June 30, March 31,
2005 2005 2005 2004
--------- --------- --------- ---------
Cash Flows from Operating
Activities:
Net income $ 165 $ 249 $ 414 $ 163
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 126 120 246 240
Amortization of
purchased intangibles 3 5 8 19
Restructuring,
impairment and other
charges and (credits) (1) 19 18
Asbestos settlement 137 (16) 121 66
Loss on repurchases and
retirement of debt,
net 12 12 32
Undistributed earnings
of associated
companies (103) (23) (126) (92)
Minority interests, net
of dividends paid 5 1 6 11
Deferred taxes 4 3 7 (35)
Restructuring payments (7) (9) (16) (56)
Customer deposits, net 212 20 232
Changes in certain
working capital items:
Trade accounts
receivable (35) (54) (89) (43)
Inventories (39) (39) (33)
Other current
assets (24) (16) (40) 7
Accounts payable
and other current
liabilities, net
of restructuring
payments 22 (151) (129) (6)
Other, net 27 33 60 34
--------- --------- --------- ---------
Net cash provided by operating
activities 543 142 685 307
--------- --------- --------- ---------
Cash Flows from Investing
Activities:
Capital expenditures (375) (323) (698) (302)
Net proceeds from sale or
disposal of assets 16 1 17 35
Short-term investments -
acquisitions (389) (314) (703) (1,102)
Short-term investments -
liquidations 276 486 762 745
Other, net 9 1 10 5
--------- --------- --------- ---------
Net cash used in investing
activities (463) (149) (612) (619)
--------- --------- --------- ---------
Cash Flows from Financing
Activities:
Repayments of short-term
borrowings and current
portion of long-term debt (3) (192) (195) (9)
Proceeds from issuance of
long-term debt, net 99 48 147 396
Repayments of long-term debt (100) (2) (102) (150)
Proceeds from issuance of
common stock, net 332 12 344 24
Proceeds from exercise of
stock options 50 9 59 27
Other, net (1) (5) (6) (5)
--------- --------- --------- ---------
Net cash provided by (used in)
financing activities 377 (130) 247 283
--------- --------- --------- ---------
Effect of exchange rates on
cash (3) (25) (28) (5)
--------- --------- --------- ---------
Net increase (decrease) in cash
and cash equivalents 454 (162) 292 (34)
Cash and cash equivalents at
beginning of period 847 1,009 1,009 688
--------- --------- --------- ---------
Cash and cash equivalents at
end of period $ 1,301 $ 847 $ 1,301 $ 654
========= ========= ========= =========
Certain amounts for 2004 were reclassified to conform to 2005
classifications.
See accompanying notes to these financial statements.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
SEGMENT RESULTS
(Unaudited; in millions)
Environ- Un- Con-
Display Tele- mental allocated soli-
Tech- communi- Tech- Life and dated
nologies cations nologies Sciences Other Total
--------- -------- --------- -------- ---------- -------
Three months
ended June
30, 2005
Net sales $ 415 $ 415 $ 146 $ 75 $ 90 $1,141
Research,
development
and
engineering
expenses (1) $ 27 $ 22 $ 29 $ 12 $ 14 $ 104
Restructuring,
impairment
and other
charges and
(credits) $ 8 $ (9) $ (1)
Interest
expense (2) $ 12 $ 8 $ 4 $ 1 $ 3 $ 28
(Provision)
benefit for
income taxes $ (47) $ 1 $ 2 $ 2 $ (2) $ (44)
Income (loss)
before
minority
interests and
equity
earnings (3) $ 156 $ (13) $ (4) $ (4) $ (137) $ (2)
Minority
interests (4) (5) (5)
Equity in
earnings of
associated
companies 87 85 172
--------- -------- --------- -------- ---------- -------
Net income
(loss) $ 243 $ (13) $ (4) $ (4) $ (57) $ 165
========= ======== ========= ======== ========== =======
Three months
ended June
30, 2004
Net sales $ 277 $ 392 $ 141 $ 79 $ 82 $ 971
Research,
development
and
engineering
expenses (1) $ 19 $ 23 $ 21 $ 9 $ 13 $ 85
Restructuring,
impairment
and other
charges and
(credits) $ (1) $ (33) $ (34)
Interest
expense (2) $ 11 $ 16 $ 5 $ 2 $ 3 $ 37
(Provision)
benefit for
income taxes $ (32) $ 11 $ (2) $ (2) $ 1 $ (24)
Income (loss)
before
minority
interests and
equity
earnings (3) $ 64 $ (21) $ 4 $ 5 $ (40) $ 12
Minority
interests (4) (11) (11)
Equity in
earnings of
associated
companies 71 36 107
--------- -------- --------- -------- ---------- -------
Net income
(loss) $ 135 $ (21) $ 4 $ 5 $ (15) $ 108
========= ======== ========= ======== ========== =======
Six months
ended June
30, 2005
Net sales $ 735 $ 842 $ 294 $ 149 $ 171 $2,191
Research,
development
and
engineering
expenses (1) $ 52 $ 44 $ 55 $ 23 $ 28 $ 202
Restructuring,
impairment
and other
charges and
(credits) $ 8 $ 10 $ 18
Interest
expense (2) $ 28 $ 19 $ 10 $ 2 $ 6 $ 65
(Provision)
benefit for
income taxes $ (64) $ (1) $ 2 $ 2 $ (2) $ (63)
Income (loss)
before
minority
interests and
equity
earnings (3) $ 236 $ (4) $ (6) $ (6) $ (138) $ 82
Minority
interests (4) (6) (6)
Equity in
earnings of
associated
companies 168 170 338
--------- -------- --------- -------- ---------- -------
Net income
(loss) $ 404 $ (4) $ (6) $ (6) $ 26 $ 414
========= ======== ========= ======== ========== =======
Six months
ended June
30, 2004
Net sales $ 507 $ 704 $ 282 $ 158 $ 164 $1,815
Research,
development
and
engineering
expenses (1) $ 35 $ 48 $ 41 $ 18 $ 27 $ 169
Restructuring,
impairment
and other
charges and
(credits) $ (5) $ 5
Interest
expense (2) $ 22 $ 32 $ 10 $ 3 $ 6 $ 73
(Provision)
benefit for
income taxes $ (58) $ 34 $ (5) $ (5) $ 22 $ (12)
Income (loss)
before
minority
interests and
equity
earnings (3) $ 117 $ (68) $ 10 $ 10 $ (109) $ (40)
Minority
interests (4) 1 (12) (11)
Equity in
earnings of
associated
companies 136 3 75 214
--------- -------- --------- -------- ---------- -------
Net income
(loss) $ 253 $ (64) $ 10 $ 10 $ (46) $ 163
========= ======== ========= ======== ========== =======
(1) Non-direct research, development and engineering expenses are
allocated based upon direct project spending for each segment.
(2) Interest expense is allocated to segments based on a percentage of
segment net operating assets. Consolidated subsidiaries with
independent capital structures do not receive additional
allocations of interest expense.
(3) Many of Corning's administrative and staff functions are performed
on a centralized basis. Where practicable, Corning charges these
expenses to segments based upon the extent to which each business
uses a centralized function. Other staff functions, such as
corporate finance, human resources and legal, are allocated to
segments, primarily as a percentage of sales.
(4) For the three and six months ended June 30, 2005, minority
interests include gains of $4 million for adjustments to prior
years' restructuring and impairment reserves associated with
Corning Asahi Video Products (CAV). For the three and six months
ended June 30, 2004, minority interests include gains of $13 and
$14, respectively, from the sale of CAV assets in excess of
assumed salvage value.
A reconciliation of reportable segment net income to consolidated net
income follows (in millions):
Three months Six months
ended June 30, ended June 30,
------------------- -------------------
2005 2004 2005 2004
--------- --------- --------- ---------
Net income of reportable
segments $ 222 $ 123 $ 388 $ 209
Non-reportable operating
segments net income (1) 13 19 23 1
Unallocated amounts:
Non-segment loss and
other (2) (1) (4) (3) (7)
Non-segment restructuring,
impairment and other
(charges) and credits (3) (6) 4 (25) 4
Asbestos settlement (137) (47) (121) (66)
Interest income 13 4 23 10
Loss on repurchases of debt (12) (9) (12) (32)
Benefit for income taxes (4) (4) 1 (4) 3
Equity in earnings of
associated companies (5) 77 17 145 41
--------- --------- --------- ---------
Net income $ 165 $ 108 $ 414 $ 163
========= ========= ========= =========
(1) Non-reportable operating segments net income includes the results
of non-reportable operating segments.
(2) Non-segment loss and other includes the results of non-segment
operations and other corporate activities.
(3) For the three and six months ended June 30, 2005, non-segment
restructuring, impairment and other (charges) and credits includes
impairment charges for the other than temporary decline in the
market value of Avanex shares. Refer to Note 1 (Restructuring,
Impairment and Other Charges and (Credits)).
(4) Benefit for income taxes includes taxes associated with non-
segment restructuring, impairment and other (charges) and credits.
(5) Equity in earnings of associated companies includes amounts
derived from Dow Corning.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Restructuring, Impairment and Other Charges and (Credits) In the second quarter of 2005, we recorded net credits of $1 million (net charge of $3 million after-tax and minority interest) included in restructuring, impairment and other charges and (credits). A summary of these credits and charges follows: --We recorded net credits of $7 million ($3 million after-tax and minority interest), primarily for adjustments to prior years' restructuring and impairment reserves. --We recorded an additional impairment charge of $6 million for an other than temporary decline in the fair value of our investment in Avanex Corporation (Avanex) below its adjusted cost basis. Our investment in Avanex is accounted for as an available-for-sale security under Financial Accounting Standards Board Financial Accounting Standards Board (FASB) Board composed of independent members who create and interpret Generally Accepted Accounting Principles (GAAP). Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities." At June June: see month. 30, 2005, shares of Avanex stock were trading at $0.90 per share compared to our adjusted cost basis of $1.30 per share (after adjusting for the first quarter 2005 impairment charge). We intend to sell our shares of Avanex and, subject to restrictions and the trading volume Trading volume The number of shares transacted every day. As there is a seller for every buyer, one can think of the trading volume as half of the number of shares transacted. That is, if A sells 100 shares to B, the volume is 100 shares. in Avanex stock, we expect to complete this activity in early 2006. As we do not expect the market value of the Avanex shares to recover in this timeframe, the additional impairment in the second quarter was required. 2. Asbestos Settlement On March 28, 2003, we announced that we had reached agreement with the representatives of asbestos claimants for the settlement of all current and future asbestos claims against us and Pittsburgh Corning Corporation (PCC PCC prothrombin complex concentrate. ), which might arise from PCC products or operations. Accordingly, we recorded a charge of $298 million in the first quarter of 2003. The charge included the value of 25 million shares of Corning common stock that we will contribute as part of the settlement if the PCC plan of reorganization The process of carrying out, through agreements and legal proceedings, a business plan for winding up the affairs of, or foreclosing a mortgage upon, the property of a corporation that has become insolvent. is approved and becomes effective. Also at that time, we indicated that any changes in the value of our common stock contribution would be recognized in our quarterly results through the date of contribution to the settlement trust. As required, we recorded a mark-to-market Mark-to-market Adjustment of the book value or collateral value of a security to reflect current market value. charge of $137 million in the second quarter of 2005 reflecting the increase in Corning's common stock from March 31 to June 30, 2005. Beginning with the first quarter of 2003, we have recorded total net charges of $567 million to reflect the initial settlement and to mark-to-market the value of our common stock. 3. Loss on Repurchases and Retirement of Debt, net In the second quarter of 2005, we redeemed re·deem tr.v. re·deemed, re·deem·ing, re·deems 1. To recover ownership of by paying a specified sum. 2. To pay off (a promissory note, for example). 3. for cash the $100 million principal amount of our 7% debentures due March 15, 2007. We recognized a $12 million loss upon the early redemption The liberation of an estate in real property from a mortgage. Redemption is the process by which land that has been mortgaged or pledged is bought back or reclaimed. It is accomplished through a payment of the debt owed or a fulfillment of the other conditions. of these debentures. 4. Provision for Income Taxes For the three months ended June 30, 2005, the tax provision reflected the impact of maintaining a valuation allowance on the majority of our net deferred tax assets. As a result, U.S. (federal, state and local) and certain foreign income taxes attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to pretax income pretax income Reported income before the deduction of income taxes. Pretax income is sometimes considered a better measure of a firm's performance than aftertax income because taxes in one period may be influenced by activities in earlier periods. or losses were not provided. The most significant item for which a U.S. tax benefit was not provided was the asbestos settlement charge. Such items increased our effective tax rate from 23% to 105%. 5. Equity in Earnings of Associated Companies associated company associate n → Partnerfirma f associated company n → società collegata In the second quarter of 2005, Dow Corning Corporation recorded a gain on the issuance of subsidiary stock. Our equity earnings included $11 million related to this gain.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
QUARTERLY SALES INFORMATION
(Unaudited; in millions)
2005
-----------------------------
Three Six
Months Ended Months
------------------- Ended
March 31 June 30 June 30
--------- --------- ---------
Display Technologies $ 320 $ 415 $ 735
Telecommunications
Fiber and cable 212 213 425
Hardware and
equipment 215 202 417
--------- --------- ---------
427 415 842
Environmental
Technologies
Automotive 127 125 252
Diesel 21 21 42
--------- --------- ---------
148 146 294
Life Sciences 74 75 149
Other 81 90 171
--------- --------- ---------
Total $ 1,050 $ 1,141 $ 2,191
========= ========= =========
2004
-------------------------------------------------
Three Months Ended
---------------------------------------
March 31 June 30 Sept. 30 Dec. 31 Total
--------- --------- --------- --------- ---------
Display Technologies $ 230 $ 277 $ 295 $ 311 $ 1,113
Telecommunications
Fiber and cable 149 192 202 212 755
Hardware and
equipment 163 200 210 211 784
--------- --------- --------- --------- ---------
312 392 412 423 1,539
Environmental
Technologies
Automotive 125 121 119 114 479
Diesel 16 20 17 16 69
--------- --------- --------- --------- ---------
141 141 136 130 548
Life Sciences 79 79 75 71 304
Other 82 82 88 98 350
--------- --------- --------- --------- ---------
Total $ 844 $ 971 $ 1,006 $ 1,033 $ 3,854
========= ========= ========= ========= =========
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 June 30, 2005
(Unaudited; amounts in millions, except per share amounts)
Corning's net income and earnings per share (EPS) excluding special items for the second quarter of 2005 are non-GAAP financial measures within the meaning of Regulation G of the Securities and Exchange Commission. Non-GAAP financial measures are not in accordance with, or an alternative to, generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP). The company believes presenting non-GAAP net income and EPS is helpful to analyze financial performance without the impact of unusual items that may obscure trends in the company's underlying performance. A detailed reconciliation is provided below outlining the differences between these non-GAAP measures and the directly related GAAP measure.
Income
Before
Per Income Net
Share Taxes Income
---------- ---------- ----------
EPS and net income, excluding special
items $ 0.20 $ 190 $ 306
Special items:
Restructuring, impairment and other
(charges) and credits (a) 1 (3)
Asbestos settlement (b) (0.09) (137) (137)
Loss on repurchases and retirement
of debt, net (c) (0.01) (12) (12)
Equity in earnings of associated
companies (d) 0.01 11
---------- ---------- ----------
Total EPS and net income $ 0.11 $ 42 $ 165
========== ========== ==========
(a) In the second quarter of 2005, Corning recorded net credits of $1
million (net charge of $3 million after-tax and minority interest)
included in restructuring, impairment and other charges and
(credits). A summary of these credits and charges follows:
-- We recorded net credits of $7 million ($3 million after-tax
and minority interest), primarily for adjustments to prior
years' restructuring and impairment reserves.
-- We recorded an additional impairment charge of $6 million
(pretax and after-tax) for an other than temporary decline in
the fair value of our investment in Avanex Corporation
(Avanex) below its adjusted cost basis. Our investment in
Avanex is accounted for as an available-for-sale security
under SFAS No. 115, "Accounting for Certain Investments in
Debt and Equity Securities." At June 30, 2005, shares of
Avanex stock were trading at $0.90 per share compared to our
adjusted cost basis of $1.30 per share (after adjusting for
the first quarter of 2005 impairment charge). We intend to
sell our shares of Avanex and, subject to restrictions and the
trading volume in Avanex stock, we expect to complete this
activity in early 2006. As we do not expect the market value
of the Avanex shares to recover in this timeframe, the
additional impairment in the second quarter was required.
(b) As part of Corning's asbestos settlement arrangement to be
incorporated into the Pittsburgh Corning Corporation plan of
reorganization, Corning will contribute, if the reorganization
plan becomes effective, 25 million shares of Corning common stock
to a trust. This portion of the asbestos liability requires
quarterly adjustment based upon movements in Corning's common
stock price prior to contribution of the shares to the trust. In
the second quarter of 2005, Corning recorded a charge of $137
million for the change in its common stock price of $16.62 at June
30, 2005 compared to $11.13, the common stock price at March 31,
2005.
(c) In the second quarter of 2005, we redeemed for cash the $100
million principal amount of our 7% debentures due March 15, 2007.
We recognized a $12 million loss upon the early redemption of
these debentures.
(d) In the second quarter of 2005, Dow Corning Corporation recorded a
gain on the issuance of subsidiary stock. Our equity earnings
included $11 million related to this gain.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE TO GAAP FINANCIAL MEASURE
Three Months Ended June 30, 2005
(Unaudited; amounts in millions)
Corning's free cash flow financial measure for the three months ended June 30, 2005 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
June 30, 2005
--------------
Cash flows from operating activities $ 543
Less: Cash flows from investing activities (463)
Plus: Short-term investments - acquisitions 389
Less: Short-term investments - liquidations (276)
--------------
Free cash flow $ 193
==============
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE TO GAAP FINANCIAL MEASURE
Three Months Ended September 30, 2005
(Unaudited; amounts in millions, except per share amounts)
Corning's earnings per share (EPS) excluding special items for the third quarter of 2005 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 $ 0.20 $ 0.22
Special items:
Restructuring, impairment and other (charges)
and credits (a)
Asbestos settlement (b)
(Loss) gain on repurchases and retirements of
debt, net (c)
-------- --------
EPS
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 years' 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 plan of
reorganization, Corning will contribute, if the reorganization
plan becomes effective, 25 million shares of Corning common stock
to a trust. This portion of the asbestos liability requires
adjustment based upon movements in Corning's common stock price
prior to contribution of the shares to the trust. In the third
quarter of 2005, Corning will record a charge or credit for the
change in its common stock price as of September 30, 2005 compared
to $16.62, the common stock price at June 30, 2005.
(c) From time to time, Corning may repurchase or retire debt, which
could result in a gain or loss during the quarter.
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 third quarter 2005 guidance. This schedule contains forward looking statements within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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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