UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

 

 

 

 

 

CORNING INCORPORATED

(Exact name of registrant as specified in its charter)

 

 

 

 

 

(607) 974-9000

(Registrant’s telephone number, including area code)

 

N/A

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

 

 

 

 

Item 2.02. Results of Operations and Financial Condition

 

The Corning Incorporated press release dated January 26, 2010 regarding its financial results for the fourth quarter ended December 31, 2009 and its first quarter 2010 earnings guidance is attached hereto as Exhibit 99.

 

The information in this report, being furnished pursuant to Item 2.02 of Form 8-K, shall not be deemed to be “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, and is not incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.

 

Item 9.01. Financial Statements and Exhibits

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

 

 

 

 

 

Exhibit 99

 

 

FOR RELEASE –– JANUARY 26, 2010

 

 

 

Corning Announces Fourth-Quarter and Full-Year Results

 

Sees continued strength in LCD sales

To host annual investor meeting on Feb. 5

 

CORNING, N.Y. — Corning Incorporated (NYSE:GLW) today announced its results for the fourth quarter and full year 2009.

 

Fourth-Quarter Highlights

 

Full-Year Highlights

 

*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.

 

 

Corning Announces Fourth-Quarter and Full-Year Results

Page Two

 

Quarter Four Financial Comparisons

 

 

Full-Year Financial Comparisons

*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.

 

“We began 2009 with a high degree of uncertainty and were not surprised with the slow start we saw in quarter one. Momentum picked up in the second quarter and our performance improved each quarter thereafter,” Wendell P. Weeks, chairman and chief executive officer, said. “The second half of the year was particularly strong for LCD glass demand as consumers continued purchasing LCD televisions, laptop computers, and other electronic devices that use our glass. In addition, we saw a resurgence in demand for Corning’s emissions control products as the auto industry rebuilt supply. We were pleased by the continued strength of telecom sales in China throughout the year. The growing popularity of Corning Gorilla® glass as a protective covering for handheld electronic devices was much better than we expected, and our equity investments contributed strong earnings this past year.

 

“With our solid 2009 performance, we exceeded our $5 billion sales target, achieved very strong free cash flow* results, and maintained a strong balance sheet. We improved our competitive position with the introduction of several new products, such as our industry-leading Gen 10 LCD glass, ClearCurve® multimode fiber and LANscape® Pretium® EDGE solution for improved data center performance, advanced DuraTrap® AC product for heavy-duty diesel filters, and new IT applications for Corning Gorilla glass. I believe Corning is a financially stronger and better positioned company now than a year ago,” Weeks said.

 

 

 

 

 

Corning Announces Fourth-Quarter and Full-Year Results

Page Three

 

Fourth-Quarter Segment Results

Sales in the Display Technologies segment were $717 million, increasing 6% sequentially and 84% year over year. The sequential increase was driven by continued robust retail demand for LCD products and panel makers’ outlook for 2010. The year-over-year gain also reflects these factors but was amplified in comparison to a weak fourth quarter in 2008 when the supply chain was shrinking inventories. Sales also benefited from favorable foreign exchange rates. Sequential glass prices for the quarter were flat and volume increased moderately.

 

Telecommunications segment sales were $405 million, down 10% sequentially and similar to the fourth quarter of 2008. An expected slowdown in fiber-to-the-home sales and normal seasonal declines in North America contributed to the lower quarterly sales. This was partially offset by continued strong demand for private network products in North America and optical fiber sales in China.

 

Environmental Technologies segment sales were $181 million, an increase of 8% sequentially and 41% versus last year. The increase was driven by strong demand for automotive emissions control products as the industry rebuilds its inventory. Diesel sales improved slightly in Corning’s light-duty diesel business.

 

Specialty Materials segment sales were $110 million, an increase of 22% sequentially and 31% from a year ago. The increase is reflected by improvements in the segment’s advanced optics product sales and continued expansion of Corning Gorilla glass sales. Corning Gorilla glass is now being used by more than 15 major brands and is designed into more than 65 devices.

 

Life Sciences segment sales were $117 million, compared to $92 million in the third quarter and $75 million a year ago. The sales increases were 27% sequentially and 56% year over year. Fourth-quarter results reflect the first full-quarter reporting of Axygen Bioscience, Inc.’s sales of $36 million.

 

Corning’s equity earnings were $461 million compared to $418 million in the previous quarter and $288 million a year ago. These represent 10% sequential and 60% year-over-year gains. Equity earnings from Dow Corning Corporation were $133 million, including special gains of $29 million attributed primarily to tax credits. These earnings represent a sequential gain of 45% and a year-over-year increase of 55%. Equity earnings from Samsung Corning Precision were $318 million, a slight increase sequentially and 67% increase year over year.

 

Looking Forward

“Our economic assumptions for 2010 include a mild recovery in the developed world economies and continued growth in China. Clearly we don’t have a crystal ball that can guarantee this outlook will come true, so we will be cautious on spending and prepared to be nimble if we see changes,” James B. Flaws, vice chairman and chief financial officer, said.

 

“We expect the overall display glass market to be up in the first quarter versus our original expectation of lower seasonal demand,” he said. “And, we believe the supply chain will need to continue to expand to support another year of good retail growth for LCD products.”

 

 

Corning Announces Fourth-Quarter and Full-Year Results

Page Four

 

The company’s wholly owned business is expected to see a quarterly volume increase of 8% to 12% sequentially, while SCP sequential volume should be flat to up slightly in the first quarter. Corning expects moderate price declines in the quarter at its wholly owned business and SCP.

 

The company anticipates its first-quarter Telecommunications business segment sequential sales to be down 10% to 15% due to lower private network and fiber demand in China.

 

Environmental Technologies segment sequential sales are expected to remain strong at least through the first half of the quarter but may decline for the full quarter as the rebuild of auto inventories nears completion.

 

Specialty Materials segment sales are anticipated to be down 10% to 15% sequentially due to lower advanced optics sales. Corning Gorilla glass sales are expected to be up in quarter one.

 

In the Life Sciences segment sequential sales are expected to be comparable or up 5% for the quarter.

 

Equity earnings from Dow Corning in the first quarter are expected to be down about 20% driven by seasonally lower sales in Hemlock Semiconductor Corporation.

 

Flaws concluded by noting, “We were delighted with our fourth-quarter performance. This gives us strong momentum heading into 2010.”

 

Upcoming Meetings

Corning will provide more information on its 2010 outlook at its annual investor relations meeting in New York on Friday, Feb. 5 at 9 a.m. ET at the Times Center. The company’s exhibit hall will open at 7:45 a.m. where investors can view new product displays. Attendees can register online at the company’s investor relations Web site. A live audio and video cast will also be available through the company’s investor relations Web site.

 

Fourth-Quarter Conference Call Information

The company will host a fourth-quarter conference call on Tuesday, Jan. 26 at 8:30 a.m. ET. To participate, please call toll free (800) 230-1085 or for international access call (612) 288-0340 approximately 10-15 minutes prior to the start of the call. The password is ‘QUARTER FOUR’. 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, Tuesday, Feb. 9, 2010. To listen, dial (800) 475-6701 or for international access call (320) 365-3844. The access code is 140609. The webcast will be archived for one year following the call.

 

 

 

 

 

Corning Announces Fourth-Quarter and Full-Year Results

Page Five

 

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 instability or major health concerns; adequacy of insurance; equity company activities; acquisition and divestiture activities; the level of excess or obsolete inventory; the rate of technology change; the ability to enforce patents; product and components performance issues; stock price fluctuations; and adverse litigation or regulatory developments. 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)

 

 

 

See accompanying notes to these financial statements.

 

Certain amounts for 2008 were reclassified to conform to the 2009 presentation.

 

CORNING INCORPORATED AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited; in millions, except per share amounts)

 

 

See accompanying notes to these financial statements.

 

Certain amounts for 2008 were reclassified to conform to the 2009 presentation.

 

CORNING INCORPORATED AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in millions)

 

 

Certain amounts for 2008 were reclassified to conform with the 2009 presentation.

 

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.

 

 

 

CORNING INCORPORATED AND SUBSIDIARY COMPANIES

SEGMENT RESULTS

(Unaudited; in millions)

 

A reconciliation of reportable segment net income to consolidated net income follows (in millions):

 

 

 

 

CORNING INCORPORATED AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

 

In the fourth quarter of 2009, we 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.

 

 

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 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. As a result, the estimated asbestos litigation liability is no longer impacted by movements in the value of Corning common stock. 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.

 

In the fourth quarter of 2009, we recorded charges of $5 million ($3 million after-tax) to adjust the asbestos litigation liability for the change in value of the components of the Amended PCC Plan.

 

 

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.

 

 

In the fourth quarter of 2009, we 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.

 

 

Weighted average shares outstanding are as follows (in millions):

 

 

 

CORNING INCORPORATED AND SUBSIDIARY COMPANIES

QUARTERLY SALES INFORMATION

(Unaudited; in millions)

 

 

 

 

 

The above supplemental information is intended to facilitate analysis of Corning’s businesses.

 

CORNING INCORPORATED AND SUBSIDIARY COMPANIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURE TO GAAP FINANCIAL MEASURE

Three Months Ended December 31, 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.

 

 

 

 

 

 

 

CORNING INCORPORATED AND SUBSIDIARY COMPANIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURE TO GAAP FINANCIAL MEASURE

Three Months Ended December 31, 2008

(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 2008 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.

 

 

 

 

 

 

 

CORNING INCORPORATED AND SUBSIDIARY COMPANIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURE TO GAAP FINANCIAL MEASURE

Three Months Ended September 30, 2009

(Unaudited; amounts in millions, except per share amounts)

 

Corning’s net income and earnings per share (EPS) excluding special items for the third 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.

 

 

 

 

 

CORNING INCORPORATED AND SUBSIDIARY COMPANIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURE TO GAAP FINANCIAL MEASURE

Year 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 year ended 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 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.

 

 

 

 

 

 

 

 

CORNING INCORPORATED AND SUBSIDIARY COMPANIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURE TO GAAP FINANCIAL MEASURE

Year Ended December 31, 2008

(Unaudited; amounts in millions, except per share amounts)

 

Corning’s net income and earnings per share (EPS) excluding special items for the year ended December 31, 2008 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.

 

 

 

 

 

 

 

 

 

 

 

CORNING INCORPORATED AND SUBSIDIARY COMPANIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURE TO GAAP FINANCIAL MEASURE

Three Months and Year Ended December 31, 2009

(Unaudited; amounts in millions)

 

Corning’s free cash flow financial measure for the three months and year ended December 31, 2009 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.