x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For the quarterly period ended September 30, 2013
|
|
OR
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the transition period from
|
to
|
|
Commission file number: 1-3247
|
|
CORNING INCORPORATED
|
|
(Exact name of registrant as specified in its charter)
|
New York
|
16-0393470
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
One Riverfront Plaza, Corning, New York
|
14831
|
|
(Address of principal executive offices)
|
(Zip Code)
|
|
607-974-9000
|
|
(Registrant’s telephone number, including area code)
|
Yes
|
x
|
No
|
¨
|
Yes
|
x
|
No
|
¨
|
Large accelerated filer
|
x
|
Accelerated filer
|
¨
|
|||
Non-accelerated filer
|
¨
|
Smaller reporting company
|
¨
|
Yes
|
¨
|
No
|
x
|
Class
|
Outstanding as of October 15, 2013
|
|
Corning’s Common Stock, $0.50 par value per share
|
1,447,201,901 shares
|
PART I – FINANCIAL INFORMATION
|
||
Page
|
||
Item 1. Financial Statements
|
||
Consolidated Statements of Income (Unaudited) for the three and nine months ended September 30, 2013 and 2012
|
3
|
|
Consolidated Statements of Comprehensive Income (Unaudited) for the three and nine months ended September 30, 2013 and 2012
|
4
|
|
Consolidated Balance Sheets (Unaudited) at September 30, 2013 and December 31, 2012
|
5
|
|
Consolidated Statements of Cash Flows (Unaudited) for the nine months ended September 30, 2013 and 2012
|
6
|
|
Notes to Consolidated Financial Statements (Unaudited)
|
7
|
|
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
39
|
|
Item 3. Quantitative and Qualitative Disclosures About Market Risk
|
69
|
|
Item 4. Controls and Procedures
|
69
|
|
PART II – OTHER INFORMATION
|
||
Item 1. Legal Proceedings
|
70
|
|
Item 1A. Risk Factors
|
70
|
|
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
|
71
|
|
Item 6. Exhibits
|
72
|
|
Signatures
|
73
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
||||||||||
2013
|
2012
|
2013
|
2012
|
||||||||
Net sales
|
$
|
2,067
|
$
|
2,038
|
$
|
5,863
|
$
|
5,866
|
|||
Cost of sales
|
1,166
|
1,149
|
3,309
|
3,345
|
|||||||
Gross margin
|
901
|
889
|
2,554
|
2,521
|
|||||||
Operating expenses:
|
|||||||||||
Selling, general and administrative expenses
|
265
|
289
|
790
|
848
|
|||||||
Research, development and engineering expenses
|
184
|
182
|
541
|
551
|
|||||||
Amortization of purchased intangibles
|
8
|
4
|
23
|
13
|
|||||||
Asbestos litigation charge
|
5
|
3
|
13
|
9
|
|||||||
Operating income
|
439
|
411
|
1,187
|
1,100
|
|||||||
Equity in earnings of affiliated companies (Note 9)
|
138
|
240
|
477
|
717
|
|||||||
Interest income
|
1
|
3
|
5
|
10
|
|||||||
Interest expense
|
(28)
|
(32)
|
(92)
|
(76)
|
|||||||
Other (expense) income, net (Note 1)
|
(1)
|
5
|
329
|
42
|
|||||||
Income before income taxes
|
549
|
627
|
1,906
|
1,793
|
|||||||
Provision for income taxes (Note 5)
|
(141)
|
(94)
|
(366)
|
(312)
|
|||||||
Net income attributable to Corning Incorporated
|
$
|
408
|
$
|
533
|
$
|
1,540
|
$
|
1,481
|
|||
Earnings per common share attributable to Corning Incorporated:
|
|||||||||||
Basic (Note 6)
|
$
|
0.28
|
$
|
0.36
|
$
|
1.05
|
$
|
0.99
|
|||
Diluted (Note 6)
|
$
|
0.28
|
$
|
0.36
|
$
|
1.04
|
$
|
0.98
|
|||
Dividends declared per common share
|
$
|
0.10
|
$
|
0.075
|
$
|
0.29
|
$
|
0.225
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
||||||||||
2013
|
2012
|
2013
|
2012
|
||||||||
Net income attributable to Corning Incorporated
|
$
|
408
|
$
|
533
|
$
|
1,540
|
$
|
1,481
|
|||
Other comprehensive income (loss), net of tax (Note 16)
|
313
|
231
|
(431)
|
183
|
|||||||
Comprehensive income attributable to Corning Incorporated
|
$
|
721
|
$
|
764
|
$
|
1,109
|
$
|
1,664
|
September 30,
2013
|
December 31,
2012
|
||||
Assets
|
|||||
Current assets:
|
|||||
Cash and cash equivalents
|
$
|
4,560
|
$
|
4,988
|
|
Short-term investments, at fair value (Note 7)
|
886
|
1,156
|
|||
Total cash, cash equivalents and short-term investments
|
5,446
|
6,144
|
|||
Trade accounts receivable, net of doubtful accounts and allowances - $30 and $26
|
1,392
|
1,302
|
|||
Inventories (Note 8)
|
1,275
|
1,051
|
|||
Deferred income taxes (Note 5)
|
309
|
579
|
|||
Other current assets
|
706
|
619
|
|||
Total current assets
|
9,128
|
9,695
|
|||
Investments (Note 9)
|
5,160
|
4,915
|
|||
Property, net of accumulated depreciation - $7,897 and $7,652 (Note 11)
|
9,977
|
10,625
|
|||
Goodwill and other intangible assets, net (Note 12)
|
1,551
|
1,496
|
|||
Deferred income taxes (Note 5)
|
2,403
|
2,343
|
|||
Other assets
|
495
|
301
|
|||
Total Assets
|
$
|
28,714
|
$
|
29,375
|
|
Liabilities and Equity
|
|||||
Current liabilities:
|
|||||
Current portion of long-term debt (Note 4)
|
$
|
23
|
$
|
76
|
|
Accounts payable
|
640
|
779
|
|||
Other accrued liabilities (Note 3)
|
915
|
1,101
|
|||
Total current liabilities
|
1,578
|
1,956
|
|||
Long-term debt (Note 4)
|
2,816
|
3,382
|
|||
Postretirement benefits other than pensions
|
917
|
930
|
|||
Other liabilities (Note 3)
|
1,605
|
1,574
|
|||
Total liabilities
|
6,916
|
7,842
|
|||
Commitments and contingencies (Note 3)
|
|||||
Shareholders’ equity:
|
|||||
Common stock – Par value $0.50 per share; Shares authorized 3.8 billion; Shares issued: 1,658 million and 1,649 million
|
829
|
825
|
|||
Additional paid-in capital
|
13,215
|
13,146
|
|||
Retained earnings
|
11,017
|
9,932
|
|||
Treasury stock, at cost; Shares held: 211 million and 179 million
|
(3,237)
|
(2,773)
|
|||
Accumulated other comprehensive (loss) income
|
(75)
|
356
|
|||
Total Corning Incorporated shareholders’ equity
|
21,749
|
21,486
|
|||
Noncontrolling interests
|
49
|
47
|
|||
Total equity
|
21,798
|
21,533
|
|||
Total Liabilities and Equity
|
$
|
28,714
|
$
|
29,375
|
Nine months ended
September 30,
|
|||||
2013
|
2012
|
||||
Cash Flows from Operating Activities:
|
|||||
Net income
|
$
|
1,540
|
$
|
1,481
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|||||
Depreciation
|
730
|
717
|
|||
Amortization of purchased intangibles
|
23
|
13
|
|||
Stock compensation charges
|
40
|
56
|
|||
Undistributed earnings of affiliated companies in excess of dividends received
|
(256)
|
(140)
|
|||
Deferred tax provision
|
141
|
65
|
|||
Restructuring payments
|
(30)
|
(3)
|
|||
Employee benefit payments less than (in excess of) expense
|
34
|
(57)
|
|||
Unrealized gains on translated earnings contracts
|
(166)
|
||||
Changes in certain working capital items:
|
|||||
Trade accounts receivable
|
(139)
|
(149)
|
|||
Inventories
|
(238)
|
(31)
|
|||
Other current assets
|
14
|
(65)
|
|||
Accounts payable and other current liabilities
|
(278)
|
(42)
|
|||
Other, net
|
88
|
121
|
|||
Net cash provided by operating activities
|
1,503
|
1,966
|
|||
Cash Flows from Investing Activities:
|
|||||
Capital expenditures
|
(682)
|
(1,275)
|
|||
Acquisitions of business, net of cash received
|
(66)
|
||||
Investment in affiliates
|
(24)
|
(111)
|
|||
Short-term investments – acquisitions
|
(1,183)
|
(1,859)
|
|||
Short-term investments – liquidations
|
1,449
|
1,618
|
|||
Premium on purchased collars
|
(107)
|
||||
Realized gains on translated earning contracts
|
33
|
||||
Other, net
|
5
|
6
|
|||
Net cash used in investing activities
|
(575)
|
(1,621)
|
|||
Cash Flows from Financing Activities:
|
|||||
Retirement of long-term debt
|
(498)
|
||||
Net repayments of short-term borrowings and current portion of long-term debt
|
(69)
|
(24)
|
|||
Principal payments under capital lease obligations
|
(2)
|
(1)
|
|||
Proceeds from issuance of long-term debt, net
|
1,030
|
||||
Proceeds received for incentives
|
82
|
||||
Payments to settle interest rate hedges
|
(18)
|
||||
Payments to acquire noncontrolling interest
|
(47)
|
||||
Proceeds from the exercise of stock options
|
54
|
26
|
|||
Repurchases of common stock for treasury
|
(441)
|
(580)
|
|||
Dividends paid
|
(426)
|
(339)
|
|||
Net cash (used in) provided by financing activities
|
(1,347)
|
94
|
|||
Effect of exchange rates on cash
|
(9)
|
(148)
|
|||
Net (decrease) increase in cash and cash equivalents
|
(428)
|
291
|
|||
Cash and cash equivalents at beginning of period
|
4,988
|
4,661
|
|||
Cash and cash equivalents at end of period
|
$
|
4,560
|
$
|
4,952
|
Three months ended September 30, 2013
|
||||||||
Previous
accounting
method
|
Reported
|
Effect of
accounting
change
|
||||||
Cost of sales
|
$
|
1,179
|
$
|
1,166
|
$
|
(13)
|
||
Gross margin
|
888
|
901
|
13
|
|||||
Selling, general and administrative expenses
|
272
|
265
|
(7)
|
|||||
Research, development and engineering expenses
|
188
|
184
|
(4)
|
|||||
Operating income
|
415
|
439
|
24
|
|||||
Income before income taxes
|
525
|
549
|
24
|
|||||
Provision for income taxes
|
(132)
|
(141)
|
(9)
|
|||||
Net income attributable to Corning Incorporated
|
$
|
393
|
$
|
408
|
$
|
15
|
||
Earnings per common share attributable to Corning Incorporated – Basic
|
$
|
0.27
|
$
|
0.28
|
$
|
0.01
|
||
Earnings per common share attributable to Corning Incorporated – Diluted
|
$
|
0.27
|
$
|
0.28
|
$
|
0.01
|
Three months ended September 30, 2012
|
||||||||
Previously
reported
(before
accounting
change)
|
Revised
(after
accounting
change)
|
Effect of
accounting
change
|
||||||
Cost of sales
|
$
|
1,159
|
$
|
1,149
|
$
|
(10)
|
||
Gross margin
|
879
|
889
|
10
|
|||||
Selling, general and administrative expenses
|
295
|
289
|
(6)
|
|||||
Research, development and engineering expenses
|
185
|
182
|
(3)
|
|||||
Operating income
|
392
|
411
|
19
|
|||||
Income before income taxes
|
608
|
627
|
19
|
|||||
Provision for income taxes
|
(87)
|
(94)
|
(7)
|
|||||
Net income attributable to Corning Incorporated
|
$
|
521
|
$
|
533
|
$
|
12
|
||
Earnings per common share attributable to Corning Incorporated – Basic
|
$
|
0.35
|
$
|
0.36
|
$
|
0.01
|
||
Earnings per common share attributable to Corning Incorporated – Diluted
|
$
|
0.35
|
$
|
0.36
|
$
|
0.01
|
Nine months ended September 30, 2013
|
||||||||
Previous
accounting
method
|
Reported
|
Effect of
accounting
change
|
||||||
Cost of sales
|
$
|
3,349
|
$
|
3,309
|
$
|
(40)
|
||
Gross margin
|
2,514
|
2,554
|
40
|
|||||
Selling, general and administrative expenses
|
810
|
790
|
(20)
|
|||||
Research, development and engineering expenses
|
553
|
541
|
(12)
|
|||||
Operating income
|
1,115
|
1,187
|
72
|
|||||
Income before income taxes
|
1,834
|
1,906
|
72
|
|||||
Provision for income taxes
|
(340)
|
(366)
|
(26)
|
|||||
Net income attributable to Corning Incorporated
|
$
|
1,494
|
$
|
1,540
|
$
|
46
|
||
Earnings per common share attributable to Corning Incorporated – Basic
|
$
|
1.02
|
$
|
1.05
|
$
|
0.03
|
||
Earnings per common share attributable to Corning Incorporated – Diluted
|
$
|
1.01
|
$
|
1.04
|
$
|
0.03
|
Nine months ended September 30, 2012
|
||||||||
Previously
reported
(before
accounting
change)
|
Revised
(after
accounting
change)
|
Effect of
accounting
change
|
||||||
Cost of sales
|
$
|
3,376
|
$
|
3,345
|
$
|
(31)
|
||
Gross margin
|
2,490
|
2,521
|
31
|
|||||
Selling, general and administrative expenses
|
865
|
848
|
(17)
|
|||||
Research, development and engineering expenses
|
560
|
551
|
(9)
|
|||||
Operating income
|
1,043
|
1,100
|
57
|
|||||
Income before income taxes
|
1,736
|
1,793
|
57
|
|||||
Provision for income taxes
|
(291)
|
(312)
|
(21)
|
|||||
Net income attributable to Corning Incorporated
|
$
|
1,445
|
$
|
1,481
|
$
|
36
|
||
Earnings per common share attributable to Corning Incorporated – Basic
|
$
|
0.96
|
$
|
0.99
|
$
|
0.03
|
||
Earnings per common share attributable to Corning Incorporated – Diluted
|
$
|
0.95
|
$
|
0.98
|
$
|
0.03
|
Three months ended September 30, 2013
|
||||||||
Previous
accounting
method
|
Reported
|
Effect of
accounting
change
|
||||||
Net income attributable to Corning Incorporated
|
$
|
393
|
$
|
408
|
$
|
15
|
||
Other comprehensive income, net of tax
|
326
|
313
|
(13)
|
|||||
Comprehensive income attributable to Corning Incorporated
|
$
|
719
|
$
|
721
|
$
|
2
|
Three months ended September 30, 2012
|
||||||||
Previously
reported
(before
accounting
change)
|
Revised
(after
accounting
change)
|
Effect of
accounting
change
|
||||||
Net income attributable to Corning Incorporated
|
$
|
521
|
$
|
533
|
$
|
12
|
||
Other comprehensive income, net of tax
|
241
|
231
|
(10)
|
|||||
Comprehensive income attributable to Corning Incorporated
|
$
|
762
|
$
|
764
|
$
|
2
|
Nine months ended September 30, 2013
|
||||||||
Previous
accounting
method
|
Reported
|
Effect of
accounting
change
|
||||||
Net income attributable to Corning Incorporated
|
$
|
1,494
|
$
|
1,540
|
$
|
46
|
||
Other comprehensive loss, net of tax
|
(390)
|
(431)
|
(41)
|
|||||
Comprehensive income attributable to Corning Incorporated
|
$
|
1,104
|
$
|
1,109
|
$
|
5
|
Nine months ended September 30, 2012
|
||||||||
Previously
reported
(before
accounting
change)
|
Revised
(after
accounting
change)
|
Effect of
accounting
change
|
||||||
Net income attributable to Corning Incorporated
|
$
|
1,445
|
$
|
1,481
|
$
|
36
|
||
Other comprehensive income, net of tax
|
194
|
183
|
(11)
|
|||||
Comprehensive income attributable to Corning Incorporated
|
$
|
1,639
|
$
|
1,664
|
$
|
25
|
September 30, 2013
|
||||||||
Previous
accounting
method
|
Reported
|
Effect of
accounting
change
|
||||||
Retained earnings
|
$
|
11,632
|
$
|
11,017
|
$
|
(615)
|
||
Accumulated other comprehensive loss
|
$
|
(690)
|
$
|
(75)
|
$
|
615
|
December 31, 2012
|
||||||||
Previously
reported
(before
accounting
change)
|
Revised
(after
accounting
change)
|
Effect of
accounting
change
|
||||||
Retained earnings
|
$
|
10,588
|
$
|
9,932
|
$
|
(656)
|
||
Accumulated other comprehensive (loss) income
|
$
|
(300)
|
$
|
356
|
$
|
656
|
Nine months ended September 30, 2013
|
||||||||
Previous
accounting
method
|
Reported
|
Effect of
accounting
change
|
||||||
Cash flows from operating activities:
|
||||||||
Net income
|
$
|
1,494
|
$
|
1,540
|
$
|
46
|
||
Deferred tax provision
|
$
|
115
|
$
|
141
|
$
|
26
|
||
Employee benefit payments less than expense
|
$
|
106
|
$
|
34
|
$
|
(72)
|
Nine months ended September 30, 2012
|
||||||||
Previously
reported
(before
accounting
change)
|
Revised
(after
accounting
change)
|
Effect of
accounting
change
|
||||||
Cash flows from operating activities:
|
||||||||
Net income
|
$
|
1,445
|
$
|
1,481
|
$
|
36
|
||
Deferred tax provision
|
$
|
44
|
$
|
65
|
$
|
21
|
||
Employee benefit payments in excess of expense
|
$
|
(57)
|
$
|
(57)
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
||||||||||
2013
|
2012
|
2013
|
2012
|
||||||||
Royalty income from Samsung Corning Precision
|
$
|
14
|
$
|
20
|
$
|
43
|
$
|
63
|
|||
Foreign currency exchange and hedge (losses) gains, net
|
(33)
|
(1)
|
248
|
4
|
|||||||
Net loss attributable to noncontrolling interests
|
1
|
1
|
4
|
||||||||
Other, net
|
18
|
(15)
|
37
|
(29)
|
|||||||
Total
|
$
|
(1)
|
$
|
5
|
$
|
329
|
$
|
42
|
Reserve at
January 1,
2013
|
Net
charges/
(reversals)
|
Cash
payments
|
Reserve at
September 30,
2013
|
||||||||
Restructuring:
|
|||||||||||
Employee-related costs
|
$
|
38
|
$
|
(1)
|
$
|
(27)
|
$
|
10
|
|||
Other charges
|
4
|
(3)
|
1
|
||||||||
Total restructuring activity
|
$
|
42
|
$
|
(1)
|
$
|
(30)
|
$
|
11
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
||||||||||
2013
|
2012
|
2013
|
2012
|
||||||||
Provision for income taxes (1)
|
$
|
(141)
|
$
|
(94)
|
$
|
(366)
|
$
|
(312)
|
|||
Effective tax rate (1)
|
25.7%
|
15.0%
|
19.2%
|
17.4%
|
(1)
|
Results for 2012 include the impact of defined benefit pension plan methodology change implemented in the first quarter of 2013 and retrospectively applied to prior periods. See Note 1 of Notes to Consolidated Financial Statements for a discussion of the change and the impacts of the change for the three and nine months ended September 30, 2012.
|
·
|
Rate differences on income (loss) of consolidated foreign companies;
|
·
|
The impact of equity in earnings of nonconsolidated affiliates reported in the financials, net of tax; and
|
·
|
The benefit of tax incentives in foreign jurisdictions, primarily Taiwan.
|
·
|
Rate differences on income (loss) of consolidated foreign companies;
|
·
|
The impact of equity in earnings of nonconsolidated affiliates reported in the financials, net of tax;
|
·
|
The expiration of favorable U.S. tax provisions; and
|
·
|
The benefit of tax incentives in foreign jurisdictions, primarily Taiwan.
|
Three months ended September 30,
|
|||||||||||
2013
|
2012
|
||||||||||
Net
income
attributable
to Corning
Incorporated
|
Weighted-
average
shares
|
Per
share
amount
|
Net
income
attributable
to Corning
Incorporated
|
Weighted-
average
shares
|
Per
share
amount
|
||||||
Basic earnings per common share
|
$408
|
1,454
|
$0.28
|
$533
|
1,483
|
$0.36
|
|||||
Effect of dilutive securities:
|
|||||||||||
Stock options and other dilutive securities
|
9
|
11
|
|||||||||
Diluted earnings per common share
|
$408
|
1,463
|
$0.28
|
$533
|
1,494
|
$0.36
|
Nine months ended September 30,
|
|||||||||||
2013
|
2012
|
||||||||||
Net
income
attributable
to Corning
Incorporated
|
Weighted-
average
shares
|
Per
share
amount
|
Net
income
attributable
to Corning
Incorporated
|
Weighted-
average
shares
|
Per
share
amount
|
||||||
Basic earnings per common share
|
$1,540
|
1,465
|
$1.05
|
$1,481
|
1,502
|
$0.99
|
|||||
Effect of dilutive securities:
|
|||||||||||
Stock options and other dilutive securities
|
9
|
12
|
|||||||||
Diluted earnings per common share
|
$1,540
|
1,474
|
$1.04
|
$1,481
|
1,514
|
$0.98
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
||||||
2013
|
2012
|
2013
|
2012
|
||||
Stock options and other dilutive securities excluded from the calculation of diluted earnings per common share
|
36
|
44
|
40
|
43
|
Amortized cost
|
Fair value
|
||||||||||
September 30,
2013
|
December 31,
2012
|
September 30,
2013
|
December 31,
2012
|
||||||||
Bonds, notes and other securities:
|
|||||||||||
U.S. government and agencies
|
$
|
884
|
$
|
1,153
|
$
|
886
|
$
|
1,156
|
|||
Total short-term investments
|
$
|
884
|
$
|
1,153
|
$
|
886
|
$
|
1,156
|
|||
Asset-backed securities
|
$
|
47
|
$
|
51
|
$
|
39
|
$
|
40
|
|||
Total long-term investments
|
$
|
47
|
$
|
51
|
$
|
39
|
$
|
40
|
Less than one year
|
$634
|
Due in 1-5 years
|
252
|
Due in 5-10 years
|
|
Due after 10 years (1)
|
39
|
Total
|
$925
|
(1)
|
Includes $39 million of asset-backed securities that mature over time and are being reported at their final maturity dates.
|
September 30, 2013
|
|||||||||||||
12 months or greater
|
Total
|
||||||||||||
Number of
securities
in a loss
position
|
Fair
value
|
Unrealized
losses
|
Fair
value
|
Unrealized
losses (1)
|
|||||||||
Asset-backed securities
|
20
|
$
|
38
|
$
|
(8)
|
$
|
38
|
$
|
(8)
|
||||
Total long-term investments
|
20
|
$
|
38
|
$
|
(8)
|
$
|
38
|
$
|
(8)
|
(1)
|
Unrealized losses in securities less than 12 months were not significant.
|
December 31, 2012
|
|||||||||||||
12 months or greater
|
Total
|
||||||||||||
Number of
securities
in a loss
position
|
Fair
value
|
Unrealized
losses (1)
|
Fair
value
|
Unrealized
losses
|
|||||||||
Asset-backed securities
|
22
|
$
|
40
|
$
|
(11)
|
$
|
40
|
$
|
(11)
|
||||
Total long-term investments
|
22
|
$
|
40
|
$
|
(11)
|
$
|
40
|
$
|
(11)
|
(1)
|
Unrealized losses in securities less than 12 months were not significant.
|
September 30,
2013
|
December 31,
2012
|
||||
Finished goods
|
$
|
487
|
$
|
392
|
|
Work in process
|
225
|
168
|
|||
Raw materials and accessories
|
329
|
271
|
|||
Supplies and packing materials
|
234
|
220
|
|||
Total inventories
|
$
|
1,275
|
$
|
1,051
|
Ownership
interest (1)
|
September 30,
2013
|
December 31,
2012
|
|||||||
Affiliated companies accounted for by the equity method
|
|||||||||
Samsung Corning Precision Materials Co., Ltd.
|
50%
|
$
|
3,506
|
$
|
3,346
|
||||
Dow Corning Corporation
|
50%
|
1,260
|
1,191
|
||||||
All other
|
20%
|
to
|
50%
|
376
|
375
|
||||
5,142
|
4,912
|
||||||||
Other investments
|
18
|
3
|
|||||||
Total
|
$
|
5,160
|
$
|
4,915
|
(1)
|
Amounts reflect Corning’s direct ownership interests in the respective affiliated companies. Corning does not exercise voting control nor control the operations of any of these entities.
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
||||||||||
2013
|
2012
|
2013
|
2012
|
||||||||
Related Party Transactions:
|
|||||||||||
Corning sales to affiliated companies
|
$
|
3
|
$
|
10
|
$
|
9
|
$
|
38
|
|||
Corning purchases from affiliated companies
|
$
|
33
|
$
|
49
|
$
|
170
|
$
|
117
|
|||
Corning transfers of assets, at cost, to affiliated companies
|
$
|
12
|
$
|
11
|
$
|
25
|
$
|
36
|
|||
Dividends received from affiliated companies
|
$
|
39
|
$
|
56
|
$
|
221
|
$
|
577
|
|||
Royalty income from affiliated companies
|
$
|
15
|
$
|
20
|
$
|
45
|
$
|
64
|
|||
Corning services to affiliates
|
$
|
6
|
$
|
2
|
$
|
22
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
||||||||||
2013
|
2012
|
2013
|
2012
|
||||||||
Statement of Operations:
|
|||||||||||
Net sales
|
$
|
541
|
$
|
783
|
$
|
1,790
|
$
|
2,352
|
|||
Gross profit
|
$
|
286
|
$
|
534
|
$
|
1,034
|
$
|
1,598
|
|||
Net income attributable to Samsung Corning Precision
|
$
|
154
|
$
|
367
|
$
|
650
|
$
|
1,140
|
|||
Corning’s equity in earnings of Samsung Corning Precision
|
$
|
74
|
$
|
186
|
$
|
319
|
$
|
562
|
|||
Related Party Transactions:
|
|||||||||||
Corning purchases from Samsung Corning Precision
|
$
|
27
|
$
|
31
|
$
|
150
|
$
|
83
|
|||
Dividends received from Samsung Corning Precision
|
$
|
518
|
|||||||||
Royalty income from Samsung Corning Precision
|
$
|
14
|
$
|
20
|
$
|
43
|
$
|
63
|
|||
Corning transfers of machinery and equipment to Samsung Corning Precision at cost (1)
|
$
|
12
|
$
|
13
|
$
|
25
|
$
|
53
|
(1)
|
Corning purchases machinery and equipment on behalf of Samsung Corning Precision to support its capital expansion initiatives. The machinery and equipment are transferred to Samsung Corning Precision at our cost basis.
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
||||||||||
2013
|
2012
|
2013
|
2012
|
||||||||
Statement of Operations:
|
|||||||||||
Net sales
|
$
|
1,427
|
$
|
1,545
|
$
|
4,120
|
$
|
4,638
|
|||
Gross profit (1)
|
$
|
265
|
$
|
382
|
$
|
868
|
$
|
1,114
|
|||
Net income attributable to Dow Corning
|
$
|
117
|
$
|
97
|
$
|
267
|
$
|
288
|
|||
Corning’s equity in earnings of Dow Corning
|
$
|
57
|
$
|
48
|
$
|
137
|
$
|
144
|
|||
Related Party Transactions:
|
|||||||||||
Corning purchases from Dow Corning
|
$
|
5
|
$
|
6
|
$
|
16
|
$
|
18
|
|||
Dividends received from Dow Corning
|
$
|
31
|
$
|
50
|
$
|
69
|
$
|
50
|
(1)
|
Gross profit for the three months ended September 30, 2013 includes R&D cost of $59 million (2012: $73 million) and selling expenses of $4 million (2012: $4 million). Gross profit for the nine months ended September 30, 2013 includes R&D cost of $186 million (2012: $211 million) and selling expenses of $10 million (2012: $11 million).
|
Inventory and other current assets
|
$
|
74
|
Fixed Assets
|
81
|
|
Other intangible assets
|
279
|
|
Net tangible and intangible assets
|
$
|
434
|
Purchase price
|
739
|
|
Goodwill (1)
|
$
|
305
|
(1)
|
The goodwill recognized is partly deductible for U.S. income tax purposes. The goodwill was allocated to the Life Sciences segment.
|
September 30,
2013
|
December 31,
2012
|
||||
Land
|
$
|
115
|
$
|
112
|
|
Buildings
|
4,218
|
4,324
|
|||
Equipment
|
12,402
|
12,571
|
|||
Construction in progress
|
1,139
|
1,270
|
|||
17,874
|
18,277
|
||||
Accumulated depreciation
|
(7,897)
|
(7,652)
|
|||
Total
|
$
|
9,977
|
$
|
10,625
|
Telecom-
munications
|
Display
Technologies
|
Specialty
Materials
|
Life
Sciences
|
Total
|
||||||||||
Balance at December 31, 2012
|
$
|
209
|
$
|
9
|
$
|
150
|
$
|
606
|
$
|
974
|
||||
Acquired goodwill (1)
|
32
|
32
|
||||||||||||
Measurement period adjustment (2)
|
(4)
|
(4)
|
||||||||||||
Foreign currency translation adjustment
|
(1)
|
(1)
|
||||||||||||
Balance at September 30, 2013
|
$
|
240
|
$
|
9
|
$
|
150
|
$
|
602
|
$
|
1,001
|
(1)
|
The company recorded a small acquisition and consolidated an equity company due to a change in control in the second quarter of 2013.
|
(2)
|
The Company recorded the acquisition of the Discovery Labware business of Becton Dickinson and Company in the fourth quarter of 2012. In the second quarter of 2013, Corning recorded measurement period adjustments.
|
September 30, 2013
|
December 31, 2012
|
||||||||||||||||
Gross
|
Accumulated
amortization
|
Net
|
Gross
|
Accumulated
amortization
|
Net
|
||||||||||||
Amortized intangible assets:
|
|||||||||||||||||
Patents, trademarks, and trade names
|
$
|
290
|
$
|
(135)
|
$
|
155
|
$
|
282
|
$
|
(128)
|
$
|
154
|
|||||
Customer lists and other
|
437
|
(42)
|
395
|
394
|
(26)
|
368
|
|||||||||||
Total
|
$
|
727
|
$
|
(177)
|
$
|
550
|
$
|
676
|
$
|
(154)
|
$
|
522
|
Pension benefits
|
Postretirement benefits
|
||||||||||||||||||||||
Three months ended
September 30,
|
Nine months ended
September 30,
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
||||||||||||||||||||
2013
|
2012
|
2013
|
2012
|
2013
|
2012
|
2013
|
2012
|
||||||||||||||||
Service cost
|
$
|
16
|
$
|
16
|
$
|
53
|
$
|
46
|
$
|
3
|
$
|
3
|
$
|
10
|
$
|
9
|
|||||||
Interest cost
|
33
|
38
|
99
|
114
|
10
|
11
|
29
|
33
|
|||||||||||||||
Expected return on plan assets (1)
|
(42)
|
(41)
|
(126)
|
(123)
|
|||||||||||||||||||
Amortization of net loss (1)
|
3
|
4
|
11
|
12
|
|||||||||||||||||||
Amortization of prior service cost
|
1
|
1
|
3
|
3
|
(1)
|
(1)
|
(4)
|
(3)
|
|||||||||||||||
Recognition of actuarial gain
|
(41)
|
||||||||||||||||||||||
Total pension and postretirement benefit expense (1)
|
$
|
8
|
$
|
14
|
$
|
(12)
|
$
|
40
|
$
|
15
|
$
|
17
|
$
|
46
|
$
|
51
|
(1)
|
Amounts for 2012 were revised for the change in our method of recognizing pension expense. See Note 1 of Notes to Consolidated Financial Statements for a discussion of the change and the impacts of the change for the three and nine months ended September 30, 2012.
|
·
|
Financial instruments and transactions denominated in foreign currencies, which impact earnings; and
|
·
|
The translation of net assets in foreign subsidiaries for which the functional currency is not the U.S. dollar, which impacts our net equity.
|
U.S. Dollar
|
Asset derivatives
|
Liability derivatives
|
|||||||||||||
Gross notional amount
|
Balance
sheet location
|
Fair value
|
Balance
sheet location
|
Fair value
|
|||||||||||
Sept. 30,
2013
|
Dec. 31,
2012
|
Sept. 30,
2013
|
Dec. 31,
2012
|
Sept. 30,
2013
|
Dec. 31,
2012
|
||||||||||
Derivatives designated as hedging instruments
|
|||||||||||||||
Foreign exchange contracts
|
$ 308
|
$ 719
|
Other current assets
|
$ 28
|
$ 57
|
Other accrued liabilities
|
$ (2)
|
$ (3)
|
|||||||
Interest rate contracts
|
$ 1,300
|
$ 550
|
Other assets
|
$ 40
|
Other liabilities
|
$(22)
|
|||||||||
Derivatives not designated as hedging instruments
|
|||||||||||||||
Foreign exchange contracts
|
$ 591
|
$1,939
|
Other current assets
|
$ 8
|
$109
|
Other accrued liabilities
|
$ (8)
|
$(10)
|
|||||||
Translated earnings contracts
|
$ 8,174
|
Other current assets
|
$172
|
Other accrued liabilities
|
$(13)
|
||||||||||
Other assets
|
$ 95
|
Other liabilities
|
$ (9)
|
||||||||||||
Total derivatives
|
$10,373
|
$3,208
|
$343
|
$166
|
$(54)
|
$(13)
|
Effect of derivative instruments on the consolidated financial statements
for the three months ended September 30 (2)
|
|||||||||
Derivatives in hedging relationships
|
Gain/(loss)
recognized in other
comprehensive income
(OCI)
|
Location of gain
reclassified from
accumulated OCI into
income (effective)
|
Gain reclassified from
accumulated OCI into
income (effective) (1)
|
||||||
2013
|
2012
|
2013
|
2012
|
||||||
-
|
Sales
|
$1
|
|||||||
Interest rate contracts
|
$3
|
Cost of sales
|
$ 9
|
3
|
|||||
Foreign exchange contracts
|
(3)
|
$(3)
|
Royalties
|
17
|
|
||||
Total cash flow hedges
|
$0
|
$(3)
|
$26
|
$4
|
(1)
|
The amount of hedge ineffectiveness for the three months ended September 30, 2013 and 2012 was insignificant.
|
(2)
|
Certain amounts for prior periods were reclassified to conform to the current year presentation.
|
Effect of derivative instruments on the consolidated financial statements
for the nine months ended September 30 (2)
|
|||||||||
Derivatives in hedging relationships
|
Gain recognized in other
comprehensive income
(OCI)
|
Location of gain
reclassified from
accumulated OCI into
income (effective)
|
Gain reclassified from
accumulated OCI into
income (effective) (1)
|
||||||
2013
|
2012
|
2013
|
2012
|
||||||
-
|
Sales
|
$ 1
|
|||||||
Interest rate contracts
|
$40
|
$15
|
Cost of sales
|
$28
|
9
|
||||
Foreign exchange contracts
|
48
|
29
|
Royalties
|
48
|
6
|
||||
Total cash flow hedges
|
$88
|
$44
|
$76
|
$16
|
(1)
|
The amount of hedge ineffectiveness for the nine months ended September 30, 2013 and 2012 was insignificant.
|
(2)
|
Certain amounts for prior periods were reclassified to conform to the current year presentation.
|
Undesignated derivatives
|
Location of gain/(loss)
recognized in income
|
Gain/(loss) recognized in income
|
|||||||
Three months ended
September 30,
|
Nine months ended
September 30,
|
||||||||
2013
|
2012
|
2013
|
2012
|
||||||
Foreign exchange contracts
|
Other income, net
|
$ 14
|
$(61)
|
$219
|
$73
|
||||
Translated earnings contracts
|
Other income, net
|
(46)
|
205
|
||||||
Total undesignated
|
$(32)
|
$(61)
|
$424
|
$73
|
Fair value measurements at reporting date using
|
||||||||||
September 30,
2013
|
Quoted prices in
active markets for
identical assets
(Level 1)
|
Significant other
observable
inputs
(Level 2)
|
Significant
unobservable
inputs
(Level 3)
|
|||||||
Current assets:
|
||||||||||
Short-term investments
|
$
|
886
|
$
|
886
|
||||||
Other current assets (1)
|
$
|
208
|
$
|
208
|
||||||
Non-current assets:
|
||||||||||
Other assets (1)(2)
|
$
|
174
|
$
|
174
|
||||||
Current liabilities:
|
||||||||||
Other accrued liabilities (1)
|
$
|
23
|
$
|
23
|
||||||
Non-current liabilities:
|
||||||||||
Other liabilities (1)
|
$
|
31
|
$
|
31
|
(1)
|
Derivative assets and liabilities include foreign exchange contracts, interest rate contracts, and translated earnings contracts which are measured using observable quoted prices for similar assets and liabilities.
|
(2)
|
Other assets include asset-backed securities which are measured using observable quoted prices for similar assets.
|
Fair value measurements at reporting date using
|
||||||||||
December 31,
2012
|
Quoted prices in
active markets for
identical assets
(Level 1)
|
Significant other
observable
inputs
(Level 2)
|
Significant
unobservable
inputs
(Level 3)
|
|||||||
Current assets:
|
||||||||||
Short-term investments
|
$
|
1,156
|
$
|
1,156
|
||||||
Other current assets (1)
|
$
|
166
|
$
|
166
|
||||||
Non-current assets:
|
||||||||||
Other assets (2)
|
$
|
40
|
$
|
40
|
||||||
Current liabilities:
|
||||||||||
Other accrued liabilities (1)
|
$
|
13
|
$
|
13
|
(1)
|
Derivative assets and liabilities include foreign exchange contracts which are measured using observable quoted prices for similar assets and liabilities.
|
(2)
|
Other assets include asset-backed securities which are measured using observable quoted prices for similar assets.
|
Changes in Accumulated Other Comprehensive (Loss) Income by Component (1)
for the three months ended September 30, 2013
|
||||||||||||||
Foreign
currency
translation
adjustment
and other
|
Unamortized
actuarial
losses and
prior service
costs
|
Net
unrealized
gains
(losses) on
investments
|
Net
unrealized
gains
(losses) on
designated
hedges
|
Accumulated
other
comprehensive
income (loss)
|
||||||||||
Balance at June 30, 2013
|
$
|
373
|
$
|
(790)
|
$
|
(14)
|
$
|
43
|
$
|
(388)
|
||||
Other comprehensive income before reclassifications (2)
|
76
|
1
|
77
|
|||||||||||
Amounts reclassified from accumulated other comprehensive income (3)
|
1
|
(17)
|
(16)
|
|||||||||||
Equity method affiliates (4)
|
241
|
12
|
(1)
|
252
|
||||||||||
Net current-period other comprehensive income (loss)
|
317
|
14
|
(1)
|
(17)
|
313
|
|||||||||
Balance at September 30, 2013
|
$
|
690
|
$
|
(776)
|
$
|
(15)
|
$
|
26
|
$
|
(75)
|
(1)
|
All amounts are after tax. Amounts in parentheses indicate debits to accumulated other comprehensive income.
|
(2)
|
Amounts are net of total tax benefit of $2 million, including $1 million related to the hedges component and $1 million related to the investments component.
|
(3)
|
Amounts are net of total tax benefit of $7 million, including $9 million related to the hedges component and $(2) million related to the retirement plans component.
|
(4)
|
Tax effects related to equity method affiliates are not significant.
|
Changes in Accumulated Other Comprehensive (Loss) Income by Component (1)
for the nine months ended September 30, 2013
|
||||||||||||||
Foreign
currency
translation
adjustment
and other
|
Unamortized
actuarial
losses and
prior service
costs
|
Net
unrealized
gains
(losses) on
investments
|
Net
unrealized
gains
(losses) on
designated
hedges
|
Accumulated
other
comprehensive
income (loss)
|
||||||||||
Balance at December 31, 2012
|
$
|
1,174
|
$
|
(820)
|
$
|
(16)
|
$
|
18
|
$
|
356
|
||||
Other comprehensive income before reclassifications (2)
|
(477)
|
15
|
56
|
(406)
|
||||||||||
Amounts reclassified from accumulated other comprehensive income (3)
|
6
|
(49)
|
(43)
|
|||||||||||
Equity method affiliates (4)
|
(7)
|
23
|
1
|
1
|
18
|
|||||||||
Net current-period other comprehensive (loss) income
|
(484)
|
44
|
1
|
8
|
(431)
|
|||||||||
Balance at September 30, 2013
|
$
|
690
|
$
|
(776)
|
$
|
(15)
|
$
|
26
|
$
|
(75)
|
(1)
|
All amounts are after tax. Amounts in parentheses indicate debits to accumulated other comprehensive income.
|
(2)
|
Amounts are net of total tax expense of $(40) million, including $(32) million related to the hedges component and $(8) million related to the retirement plans component.
|
(3)
|
Amounts are net of total tax benefit of $23 million, including $27 million related to the hedges component and $(4) million related to the retirement plans component.
|
(4)
|
Tax effects related to equity method affiliates are not significant.
|
Changes in Accumulated Other Comprehensive (Loss) Income by Component (1)
for the three months ended September 30, 2012
|
||||||||||||||
Foreign
currency
translation
adjustment
and other
|
Unamortized
actuarial
losses and
prior service
costs
|
Net
unrealized
gains
(losses) on
investments
|
Net
unrealized
gains
(losses) on
designated
hedges
|
Accumulated
other
comprehensive
income (loss)
|
||||||||||
Balance at June 30, 2012
|
$
|
1,268
|
$
|
(809)
|
$
|
(24)
|
$
|
(7)
|
$
|
428
|
||||
Other comprehensive income before reclassifications (2)
|
106
|
4
|
(2)
|
108
|
||||||||||
Amounts reclassified from accumulated other comprehensive income (3)
|
3
|
(2)
|
1
|
|||||||||||
Equity method affiliates (4)
|
111
|
8
|
2
|
1
|
122
|
|||||||||
Net current-period other comprehensive income (loss)
|
217
|
11
|
6
|
(3)
|
231
|
|||||||||
Balance at September 30, 2012
|
$
|
1,485
|
$
|
(798)
|
$
|
(18)
|
$
|
(10)
|
$
|
659
|
(1)
|
All amounts are after tax. Amounts in parentheses indicate debits to accumulated other comprehensive income.
|
(2)
|
Amounts are net of total tax expense of $(2) million, including $1 million related to the hedges component and $(3) million related to the investments component.
|
(3)
|
Amounts include tax benefit of $2 million related to the hedges component and tax expense of $(2) million related to the retirement plans component.
|
(4)
|
Tax effects related to equity method affiliates are not significant.
|
Changes in Accumulated Other Comprehensive (Loss) Income by Component (1)
for the nine months ended September 30, 2012
|
||||||||||||||
Foreign
currency
translation
adjustment
and other
|
Unamortized
actuarial
losses and
prior service
costs
|
Net
unrealized
gains
(losses) on
investments
|
Net
unrealized
gains
(losses) on
designated
hedges
|
Accumulated
other
comprehensive
income (loss)
|
||||||||||
Balance at December 31, 2011
|
$
|
1,353
|
$
|
(819)
|
$
|
(29)
|
$
|
(29)
|
$
|
476
|
||||
Other comprehensive income before reclassifications (2)
|
(37)
|
1
|
10
|
28
|
2
|
|||||||||
Amounts reclassified from accumulated other comprehensive income (3)
|
7
|
(7)
|
(10)
|
(10)
|
||||||||||
Equity method affiliates (4)
|
169
|
13
|
8
|
1
|
191
|
|||||||||
Net current-period other comprehensive income
|
132
|
21
|
11
|
19
|
183
|
|||||||||
Balance at September 30, 2012
|
$
|
1,485
|
$
|
(798)
|
$
|
(18)
|
$
|
(10)
|
$
|
659
|
(1)
|
All amounts are after tax. Amounts in parentheses indicate debits to accumulated other comprehensive income.
|
(2)
|
Amounts are net of total tax expense of $(22) million, including $(16) million related to the hedges component and $(6) million related to the investments component.
|
(3)
|
Amounts are net of total tax benefit of $4 million, including $6 million related to the hedges component, $3 million related to the investments component and $(5) million related to the retirement plans component.
|
(4)
|
Tax effects related to equity method affiliates are not significant.
|
Reclassifications Out of Accumulated Other Comprehensive Income (AOCI) by Component (1)
|
|||||||||||||
Details about AOCI Components
|
Amount reclassified from AOCI
|
Affected line item
in the consolidated
statements of income
|
|||||||||||
Three months ended
September 30,
|
Nine months ended
September 30,
|
||||||||||||
2013
|
2012
|
2013
|
2012
|
||||||||||
Amortization of net actuarial loss
|
$
|
(3)
|
$
|
(5)
|
$
|
(11)
|
$
|
(12)
|
(2)
|
||||
Amortization of prior service cost
|
1
|
(2)
|
|||||||||||
(3)
|
(5)
|
(10)
|
(12)
|
Total before tax
|
|||||||||
2
|
2
|
4
|
5
|
Tax benefit
|
|||||||||
$
|
(1)
|
$
|
(3)
|
$
|
(6)
|
$
|
(7)
|
Net of tax
|
|||||
Realized gains on investments
|
$
|
10
|
Other income, net
|
||||||||||
(3)
|
Tax expense
|
||||||||||||
7
|
Net of tax
|
||||||||||||
Realized gains on designated hedges
|
$
|
1
|
$
|
1
|
Sales
|
||||||||
$
|
9
|
3
|
$
|
28
|
9
|
Cost of sales
|
|||||||
17
|
48
|
6
|
Royalties
|
||||||||||
26
|
4
|
76
|
16
|
Total before tax
|
|||||||||
(9)
|
(2)
|
(27)
|
(6)
|
Tax expense
|
|||||||||
17
|
2
|
49
|
10
|
Net of tax
|
|||||||||
Total reclassifications for the period
|
$
|
16
|
$
|
(1)
|
$
|
43
|
$
|
10
|
Net of tax
|
(1)
|
Amounts in parentheses indicate debits to the statement of income.
|
(2)
|
These accumulated other comprehensive income components are included in net periodic pension cost. See Note 13 – Employee Retirement Plans for additional details.
|
Number
of Shares
(in thousands)
|
Weighted-
Average
Exercise
Price
|
Weighted-
Average
Remaining
Contractual
Term in
Years
|
Aggregate
Intrinsic
Value
(in thousands)
|
||||
Options Outstanding as of December 31, 2012
|
64,061
|
$16.63
|
|||||
Granted
|
4,430
|
14.34
|
|||||
Exercised
|
(6,688)
|
7.99
|
|||||
Forfeited and Expired
|
(1,666)
|
13.23
|
|||||
Options Outstanding as of September 30, 2013
|
60,137
|
17.52
|
4.99
|
$81,887
|
|||
Options Expected to Vest as of September 30, 2013
|
59,951
|
17.53
|
4.99
|
81,617
|
|||
Options Exercisable as of September 30, 2013
|
46,445
|
18.41
|
3.94
|
64,678
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
||||||||||||||
2013
|
2012
|
2013
|
2012
|
||||||||||||
Expected volatility
|
46.6
|
-
|
47.0%
|
47.8
|
-
|
48.1%
|
46.6
|
-
|
47.4%
|
47.8
|
-
|
48.9%
|
|||
Weighted-average volatility
|
46.7
|
-
|
46.7%
|
48.1
|
-
|
48.1%
|
46.7
|
-
|
47.3%
|
48.1
|
-
|
48.5%
|
|||
Expected dividends
|
2.68
|
-
|
2.68%
|
2.59
|
-
|
2.59%
|
2.68
|
-
|
3.02%
|
2.28
|
-
|
2.59%
|
|||
Risk-free rate
|
1.8
|
-
|
2.2%
|
1.0
|
-
|
1.3%
|
0.8
|
-
|
2.2%
|
0.9
|
-
|
1.3%
|
|||
Average risk-free rate
|
2.2
|
-
|
2.2%
|
1.2
|
-
|
1.2%
|
1.1
|
-
|
2.2%
|
1.2
|
-
|
1.3%
|
|||
Expected term (in years)
|
5.8
|
-
|
7.2
|
5.7
|
-
|
7.1
|
5.8
|
-
|
7.1
|
5.7
|
-
|
7.1
|
|||
Pre-vesting departure rate
|
0.4
|
-
|
4.1%
|
0.4
|
-
|
4.2%
|
0.4
|
-
|
4.1%
|
0.4
|
-
|
4.2%
|
Shares
(000’s)
|
Weighted
Average
Grant-Date
Fair Value
|
|||
Non-vested shares and share units at December 31, 2012
|
5,363
|
$
|
15.97
|
|
Granted
|
2,580
|
13.45
|
||
Vested
|
(1,693)
|
17.57
|
||
Forfeited
|
(96)
|
15.45
|
||
Non-vested shares and share units at September 30, 2013
|
6,154
|
$
|
14.48
|
·
|
Display Technologies – manufactures liquid crystal display (LCD) glass for flat panel displays.
|
·
|
Telecommunications – manufactures optical fiber and cable, and hardware and equipment components for the telecommunications industry.
|
·
|
Environmental Technologies – manufactures ceramic substrates and filters for automotive and diesel applications. This reportable segment is an aggregation of our Automotive and Diesel operating segments, as these two segments share similar economic characteristics, products, customer types, production processes and distribution methods.
|
·
|
Specialty Materials – manufactures products that provide more than 150 material formulations for glass, glass ceramics and fluoride crystals to meet demand for unique customer needs.
|
·
|
Life Sciences – manufactures glass and plastic labware, equipment, media and reagents to provide workflow solutions for scientific applications.
|
Display
Technologies
|
Telecom-
munications
|
Environmental
Technologies
|
Specialty
Materials
|
Life
Sciences
|
All
Other
|
Total
|
||||||||||||||
Three months ended
September 30, 2013
|
||||||||||||||||||||
Net sales
|
$
|
648
|
$
|
650
|
$
|
225
|
$
|
326
|
$
|
215
|
$
|
3
|
$
|
2,067
|
||||||
Depreciation (1)
|
$
|
121
|
$
|
38
|
$
|
30
|
$
|
30
|
$
|
14
|
$
|
4
|
$
|
237
|
||||||
Amortization of purchased intangibles
|
$
|
3
|
$
|
5
|
$
|
8
|
||||||||||||||
Research, development and engineering expenses (2)
|
$
|
23
|
$
|
37
|
$
|
23
|
$
|
33
|
$
|
5
|
$
|
33
|
$
|
154
|
||||||
Equity in earnings of affiliated companies
|
$
|
73
|
$
|
1
|
$
|
4
|
$
|
78
|
||||||||||||
Income tax (provision) benefit
|
$
|
(86)
|
$
|
(32)
|
$
|
(16)
|
$
|
(32)
|
$
|
(10)
|
$
|
16
|
$
|
(160)
|
||||||
Net income (loss) (3)
|
$
|
318
|
$
|
62
|
$
|
32
|
$
|
65
|
$
|
20
|
$
|
(32)
|
$
|
465
|
Display
Technologies
|
Telecom-
munications
|
Environmental
Technologies
|
Specialty
Materials
|
Life
Sciences
|
All
Other
|
Total
|
||||||||||||||
Three months ended
September 30, 2012
|
||||||||||||||||||||
Net sales
|
$
|
763
|
$
|
523
|
$
|
233
|
$
|
363
|
$
|
155
|
$
|
1
|
$
|
2,038
|
||||||
Depreciation (1)
|
$
|
123
|
$
|
34
|
$
|
30
|
$
|
40
|
$
|
11
|
$
|
5
|
$
|
243
|
||||||
Amortization of purchased intangibles
|
$
|
2
|
$
|
2
|
$
|
4
|
||||||||||||||
Research, development and engineering expenses (2)(4)
|
$
|
24
|
$
|
35
|
$
|
23
|
$
|
27
|
$
|
5
|
$
|
35
|
$
|
149
|
||||||
Equity in earnings of affiliated companies
|
$
|
187
|
$
|
1
|
$
|
1
|
$
|
189
|
||||||||||||
Income tax (provision) benefit (4)
|
$
|
(83)
|
$
|
(17)
|
$
|
(13)
|
$
|
(29)
|
$
|
(4)
|
$
|
15
|
$
|
(131)
|
||||||
Net income (loss) (3)(4)
|
$
|
441
|
$
|
35
|
$
|
27
|
$
|
59
|
$
|
9
|
$
|
(30)
|
$
|
541
|
Display
Technologies
|
Telecom-
munications
|
Environmental
Technologies
|
Specialty
Materials
|
Life
Sciences
|
All
Other
|
Total
|
||||||||||||||
Nine months ended
September 30, 2013
|
||||||||||||||||||||
Net sales
|
$
|
1,929
|
$
|
1,721
|
$
|
681
|
$
|
885
|
$
|
641
|
$
|
6
|
$
|
5,863
|
||||||
Depreciation (1)
|
$
|
362
|
$
|
110
|
$
|
91
|
$
|
104
|
$
|
42
|
$
|
13
|
$
|
722
|
||||||
Amortization of purchased intangibles
|
$
|
7
|
$
|
16
|
$
|
23
|
||||||||||||||
Research, development and engineering expenses (2)
|
$
|
60
|
$
|
103
|
$
|
68
|
$
|
108
|
$
|
15
|
$
|
104
|
$
|
458
|
||||||
Equity in earnings of affiliated companies
|
$
|
314
|
$
|
2
|
$
|
1
|
$
|
4
|
$
|
13
|
$
|
334
|
||||||||
Income tax (provision) benefit
|
$
|
(250)
|
$
|
(87)
|
$
|
(47)
|
$
|
(79)
|
$
|
(28)
|
$
|
46
|
$
|
(445)
|
||||||
Net income (loss) (3)
|
$
|
1,004
|
$
|
173
|
$
|
95
|
$
|
162
|
$
|
57
|
$
|
(91)
|
$
|
1,400
|
Display
Technologies
|
Telecom-
munications
|
Environmental
Technologies
|
Specialty
Materials
|
Life
Sciences
|
All
Other
|
Total
|
||||||||||||||
Nine months ended
September 30, 2012
|
||||||||||||||||||||
Net sales
|
$
|
2,109
|
$
|
1,590
|
$
|
745
|
$
|
947
|
$
|
472
|
$
|
3
|
$
|
5,866
|
||||||
Depreciation (1)
|
$
|
377
|
$
|
98
|
$
|
87
|
$
|
110
|
$
|
31
|
$
|
11
|
$
|
714
|
||||||
Amortization of purchased intangibles
|
$
|
7
|
$
|
6
|
$
|
13
|
||||||||||||||
Research, development and engineering expenses (2)(4)
|
$
|
77
|
$
|
105
|
$
|
75
|
$
|
101
|
$
|
16
|
$
|
91
|
$
|
465
|
||||||
Equity in earnings of affiliated companies
|
$
|
553
|
$
|
(1)
|
$
|
1
|
$
|
14
|
$
|
567
|
||||||||||
Income tax (provision) benefit (4)
|
$
|
(257)
|
$
|
(46)
|
$
|
(50)
|
$
|
(57)
|
$
|
(15)
|
$
|
38
|
$
|
(387)
|
||||||
Net income (loss) (3)(4)
|
$
|
1,235
|
$
|
93
|
$
|
102
|
$
|
115
|
$
|
32
|
$
|
(66)
|
$
|
1,511
|
(1)
|
Depreciation expense for Corning’s reportable segments includes an allocation of depreciation of corporate property not specifically identifiable to a segment.
|
(2)
|
Research, development, and engineering expenses include direct project spending that is identifiable to a segment.
|
(3)
|
Many of Corning’s administrative and staff functions are performed on a centralized basis. Where practicable, Corning charges these expenses to segments based upon the extent to which each business uses a centralized function. Other staff functions, such as corporate finance, human resources and legal, are allocated to segments, primarily as a percentage of sales.
|
(4)
|
As revised for the change in our method of recognizing pension expense. See Note 1 of Notes to Consolidated Financial Statements for a discussion of the change and the impacts of the change for the three and nine months ended September 30, 2012.
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
||||||||||
2013
|
2012
|
2013
|
2012
|
||||||||
Net income of reportable segments (4)
|
$
|
497
|
$
|
571
|
$
|
1,491
|
$
|
1,577
|
|||
Non-reportable segments
|
(32)
|
(30)
|
(91)
|
(66)
|
|||||||
Unallocated amounts:
|
|||||||||||
Net financing costs (1)
|
(3)
|
(55)
|
(65)
|
(139)
|
|||||||
Stock-based compensation expense
|
(15)
|
(16)
|
(40)
|
(56)
|
|||||||
Exploratory research
|
(29)
|
(27)
|
(80)
|
(74)
|
|||||||
Corporate contributions
|
(7)
|
(13)
|
(32)
|
(36)
|
|||||||
Equity in earnings of affiliated companies, net of impairments (2)
|
59
|
52
|
142
|
151
|
|||||||
Asbestos settlement (3)
|
(5)
|
(3)
|
(13)
|
(9)
|
|||||||
Purchased collars and average rate forward contracts (6)
|
(46)
|
206
|
|||||||||
Other corporate items (4)(5)
|
(11)
|
54
|
22
|
133
|
|||||||
Net income (4)
|
$
|
408
|
$
|
533
|
$
|
1,540
|
$
|
1,481
|
(1)
|
Net financing costs include interest income, interest expense, and interest costs and investment gains associated with benefit plans.
|
(2)
|
Primarily represents the equity earnings of Dow Corning Corporation, which includes gains in the three and nine months ended September 30, 2013 in the amounts of approximately $30 million for the resolution of contract disputes against customers relating to enforcement of long-term supply agreements and $16 million for the positive impact of the settlement of a derivative, along with a charge of $4 million related to the impact of a tax valuation allowance. Also included in the nine months ended September 30, 2013 are restructuring charges in the amount of $11 million. In the three and nine months ended September 30, 2012, Corning recorded a $10 million credit for our share of Dow Corning Corporation’s settlement of a dispute related to long-term supply agreements.
|
(3)
|
In the three and nine months ended September 30, 2013, Corning recorded a charge of $5 million and $13 million, respectively, to adjust the asbestos liability for the change in value of components of the Amended PCC Plan. In the three and nine month ended September 30, 2012, Corning recorded a charge of $3 million and $9 million, respectively, to adjust the asbestos liability for the change in value of components of the Amended PCC Plan.
|
(4)
|
As revised for the change in our method of recognizing pension expense. See Note 1 of Notes to Consolidated Financial Statements for a discussion of the change and the impacts of the change for the three and nine months ended September 30, 2012.
|
(5)
|
For the nine months ended September 30, 2013, Corning recorded a $54 million tax benefit for the impact of the American Taxpayer Relief Act enacted on January 3, 2013 and made retroactive to 2012.
|
(6)
|
For the three and nine months ended September 30, 2013, Corning recorded a net loss of $46 million and a net gain of $206 million, respectively, related to its purchased collars and average rate forward contracts.
|
·
|
In the Display Technologies segment, four customers accounted for 97% of total segment sales.
|
·
|
In the Telecommunications segment, no customers accounted for 10% of total segment sales.
|
·
|
In the Environmental Technologies segment, three customers accounted for 87% of total segment sales.
|
·
|
In the Specialty Materials segment, three customers accounted for 55% of total segment sales.
|
·
|
In the Life Sciences segment, two customers accounted for 48% of total segment sales.
|
·
|
In the Display Technologies segment, four customers accounted for 94% of total segment sales.
|
·
|
In the Telecommunications segment, one customer accounted for 10% of total segment sales.
|
·
|
In the Environmental Technologies segment, three customers accounted for 87% of total segment sales.
|
·
|
In the Specialty Materials segment, three customers accounted for 46% of total segment sales.
|
·
|
In the Life Sciences segment, two customers accounted for 44% of total segment sales.
|
·
|
Corning obtaining full ownership of Samsung Corning Precision Materials Co., Ltd. (SCP), an unconsolidated equity venture with Samsung Display that manufactures LCD glass in South Korea. Samsung Display currently owns 43% of SCP.
|
·
|
After redemption of their interest in SCP, Samsung Display’s investment in new convertible preferred shares of Corning with an aggregate face amount of $1.9 billion.
|
·
|
Corning’s acquisition of the other shareholders’ minority interests in SCP for an expected proportional cash payment.
|
·
|
Samsung Display’s additional $400 million investment in Corning by subscribing to new convertible preferred shares.
|
·
|
Using Corning’s current share count, Samsung Display’s combined investment in Corning would result in approximately 7.4% ownership on an as-converted basis.
|
·
|
A new long-term LCD display glass supply agreement between Corning and Samsung Display through 2023.
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
·
|
Overview
|
·
|
Results of Operations
|
·
|
Core Performance Measures
|
·
|
Reportable Segments
|
·
|
Liquidity and Capital Resources
|
·
|
Critical Accounting Estimates
|
·
|
New Accounting Standards
|
·
|
Environment
|
·
|
Forward-Looking Statements
|
·
|
An increase of $127 million, or 24%, in Telecommunications segment sales, driven by an increase in sales of carrier products in the amount of $108 million and enterprise network products in the amount of $27 million;
|
·
|
An increase in net sales in the Life Sciences segment in the amount of $60 million due to the impact of the acquisition of the majority of the Discovery Labware business in the fourth quarter of 2012;
|
·
|
Lower sales in the Display Technologies segment, primarily due to the depreciation of the Japanese yen versus the U.S. dollar and price declines in the mid-teens in percentage terms, offset somewhat by an increase in volume in the mid-twenties in percentage terms; and
|
·
|
A 10% decrease in Specialty Materials segment sales, driven by a decline in sales of Corning® Gorilla® Glass.
|
·
|
An increase in net sales in the amount of $169 million in the Life Sciences segment due to the impact of the acquisition of the majority of the Discovery Labware business in the fourth quarter of 2012;
|
·
|
An increase in Telecommunication segment sales in the amount of $131 million, driven by an increase in sales of carrier products in the amount of $135 million, largely due to an increase in wireless products sales, growth in North America and Europe, and the ramp-up of the initiative in Australia, coupled with higher enterprise network product sales, offset by a decline in optical fiber;
|
·
|
Lower sales in the Display Technologies segment, primarily due to the depreciation of the Japanese yen versus the U.S. dollar and price declines in the mid-teens in percentage terms, offset somewhat by an increase in volume in the low-thirties;
|
·
|
A sales decrease of $62 million in the Specialty Materials segment, driven by a decrease in sales of Corning Gorilla Glass and advanced optics products; and
|
·
|
A decline in diesel product sales in the amount of $58 million in the Environmental Technologies segment due to reductions in demand for our light duty and heavy duty diesel products.
|
·
|
A decrease in net income in the Display Technologies segment due to the depreciation of the Japanese yen versus the U.S. dollar, price declines in the mid-teens in percentage terms and lower equity earnings from Samsung Corning Precision;
|
·
|
The negative impact of the mark-to-market of our purchased collars and average rate forwards related to translated earnings contracts in the amount of $41 million, partially offset by a net settlement gain of $16 million; and
|
·
|
An increase in the effective tax rate due to the following:
|
o
|
The tax impact of the mark-to-market of our purchased collars and average rate forward contracts related to translated earnings contracts;
|
o
|
The recording of valuation allowances due to changes in the realization of certain foreign and state deferred tax assets; and
|
o
|
Tax law changes resulting in a decrease in our deferred tax asset.
|
·
|
Net gain recorded on our purchase collars and average rate forwards related to translated earnings contracts in the amount of $138 million;
|
·
|
Higher net income in our Telecommunications, Specialty Materials and Life Sciences segments;
|
·
|
The positive impact of the true-up to our 2012 defined benefit pension plan valuation in the amount of $26 million. In the first quarter of 2013, Corning changed its method of recognizing actuarial gains and losses in our defined benefit pension plans to immediately recognize these gains and losses in income when the plan is remeasured or valuation estimates are finalized; and
|
·
|
A tax benefit in the amount of $54 million related to the impact of the American Taxpayer Relief Act enacted on January 3, 2013 and made retroactive to 2012.
|
·
|
We ended the third quarter of 2013 with $5.4 billion of cash, cash equivalents and short-term investments, a decrease from the December 31, 2012 balance of $6.1 billion, but well above our debt balance at September 30, 2013 of $2.8 billion. The decrease in cash was largely driven by the repayment of the Chinese credit facility in the amount of approximately $500 million, small acquisitions completed in the second and third quarters, and the repurchase of shares authorized by the Board of Directions on April 24, 2013.
|
·
|
Our debt to capital ratio decreased from 14% reported at December 31, 2012 to 12% at September 30, 2013, largely due to the repayment of the Chinese credit facility in the first quarter of 2013.
|
·
|
We generated significant positive operating cash flow in the amount of $1.5 billion.
|
Three months ended
September 30,
|
%
change
|
Nine months ended
September 30,
|
%
change
|
||||||||||||
2013
|
2012
|
13 vs. 12
|
2013
|
2012
|
13 vs. 12
|
||||||||||
Net sales
|
$
|
2,067
|
$
|
2,038
|
1
|
$
|
5,863
|
$
|
5,866
|
||||||
Gross margin
|
$
|
901
|
$
|
889
|
1
|
$
|
2,554
|
$
|
2,521
|
1
|
|||||
(gross margin %)
|
44%
|
44%
|
44%
|
43%
|
|||||||||||
Selling, general, and administrative expenses
|
$
|
265
|
$
|
289
|
(8)
|
$
|
790
|
$
|
848
|
(7)
|
|||||
(as a % of net sales)
|
13%
|
14%
|
13%
|
14%
|
|||||||||||
Research, development, and engineering expenses
|
$
|
184
|
$
|
182
|
1
|
$
|
541
|
$
|
551
|
(2)
|
|||||
(as a % of net sales)
|
9%
|
9%
|
9%
|
9%
|
|||||||||||
Equity in earnings of affiliated companies
|
$
|
138
|
$
|
240
|
(43)
|
$
|
477
|
$
|
717
|
(33)
|
|||||
(as a % of net sales)
|
7%
|
12%
|
8%
|
12%
|
|||||||||||
Income before income taxes
|
$
|
549
|
$
|
627
|
(12)
|
$
|
1,906
|
$
|
1,793
|
6
|
|||||
(as a % of net sales)
|
27%
|
31%
|
33%
|
31%
|
|||||||||||
Provision for income taxes
|
$
|
(141)
|
$
|
(94)
|
50
|
$
|
(366)
|
$
|
(312)
|
17
|
|||||
(as a % of net sales)
|
(7)%
|
(5)%
|
(6)%
|
(5)%
|
|||||||||||
Net income attributable to Corning Incorporated
|
$
|
408
|
$
|
533
|
(23)
|
$
|
1,540
|
$
|
1,481
|
4
|
|||||
(as a % of net sales)
|
20%
|
26%
|
26%
|
25%
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
||||||||||
2013
|
2012
|
2013
|
2012
|
||||||||
Samsung Corning Precision
|
$
|
74
|
$
|
186
|
$
|
319
|
$
|
562
|
|||
Dow Corning Corporation
|
57
|
48
|
137
|
144
|
|||||||
All other
|
7
|
6
|
21
|
11
|
|||||||
Total equity earnings
|
$
|
138
|
$
|
240
|
$
|
477
|
$
|
717
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
||||||||||
2013
|
2012
|
2013
|
2012
|
||||||||
Silicone
|
$
|
50
|
$
|
28
|
$
|
134
|
$
|
113
|
|||
Polysilicon (Hemlock Semiconductor Group)
|
7
|
20
|
3
|
31
|
|||||||
Total Dow Corning
|
$
|
57
|
$
|
48
|
$
|
137
|
$
|
144
|
·
|
An increase in earnings from silicone products, driven by an increase in volume, a gain of $20 million associated with the termination of a long-term sales agreement, the positive impact of the recognition of a derivative instrument in the amount of $16 million, and lower variable compensation costs. The increase in earnings was partially offset by the impact of price declines and weaker demand in Asia; and
|
·
|
A decrease in earnings at Hemlock Semiconductor Group (Hemlock), a producer of high purity polycrystalline silicon for the semiconductor and solar industries, due to manufacturing inefficiencies and volume declines driven by overcapacity at all levels of the solar industry supply chain, partially offset by a gain in the amount of $10 million associated with the termination of long-term sales agreements with a customer, slightly higher prices and lower variable compensation costs.
|
·
|
Lower earnings at Hemlock due to volume declines driven by overcapacity at all levels of the solar industry supply chain, partially offset by a gain in the amount of $10 million associated with the termination of long-term sales agreements and slightly higher prices;
|
·
|
A decrease in sales of silicon products, driven by price declines and weaker demand in Asia and the Americas, offset by a net gain of $20 million associated with the termination of a long-term sales agreement, the positive impact of the recognition of a derivative instrument in the amount of $16 million, and lower variable compensation costs;
|
·
|
Corning’s share of restructuring charges at Hemlock in the amount of $11 million recorded in the first half of 2013; and
|
·
|
The impact of a tax valuation allowance in Brazil in the amount of $4 million.
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
||||||||||
2013
|
2012
|
2013
|
2012
|
||||||||
Royalty income from Samsung Corning Precision
|
$
|
14
|
$
|
20
|
$
|
43
|
$
|
63
|
|||
Foreign currency exchange and hedge (losses) gains, net
|
(33)
|
(1)
|
248
|
4
|
|||||||
Net loss attributable to noncontrolling interests
|
1
|
1
|
4
|
||||||||
Other, net
|
18
|
(15)
|
37
|
(29)
|
|||||||
Total
|
$
|
(1)
|
$
|
5
|
$
|
329
|
$
|
42
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
||||||||||
2013
|
2012
|
2013
|
2012
|
||||||||
Provision for income taxes*
|
$
|
(141)
|
$
|
(94)
|
$
|
(366)
|
$
|
(312)
|
|||
Effective tax rate*
|
25.7%
|
15.0%
|
19.2%
|
17.4%
|
·
|
Rate differences on income (loss) of consolidated foreign companies;
|
·
|
The impact of equity in earnings of nonconsolidated affiliates reported in the financials, net of tax; and
|
·
|
The benefit of tax incentives in foreign jurisdictions, primarily Taiwan.
|
·
|
Rate differences on income (loss) of consolidated foreign companies;
|
·
|
The impact of equity in earnings of nonconsolidated affiliates reported in the financials, net of tax;
|
·
|
The expiration of favorable U.S. tax provisions; and
|
·
|
The benefit of tax incentives in foreign jurisdictions, primarily Taiwan.
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
||||||||||
2013
|
2012
|
2013
|
2012
|
||||||||
Net income attributable to Corning Incorporated
|
$
|
408
|
$
|
533
|
$
|
1,540
|
$
|
1,481
|
|||
Basic earnings per common share
|
$
|
0.28
|
$
|
0.36
|
$
|
1.05
|
$
|
0.99
|
|||
Diluted earnings per common share
|
$
|
0.28
|
$
|
0.36
|
$
|
1.04
|
$
|
0.98
|
|||
Shares used in computing per share amounts
|
|||||||||||
Basic earnings per common share
|
1,454
|
1,483
|
1,465
|
1,502
|
|||||||
Diluted earnings per common share
|
1,463
|
1,494
|
1,474
|
1,514
|
Three months ended
September 30,
|
%
change
|
Nine months ended
September 30,
|
%
change
|
||||||||||||
2013
|
2012
|
13 vs. 12
|
2013
|
2012
|
13 vs. 12
|
||||||||||
Core net sales
|
$
|
2,108
|
$
|
1,920
|
10%
|
$
|
5,943
|
$
|
5,559
|
7%
|
|||||
Core equity in earnings of affiliated companies
|
$
|
121
|
$
|
173
|
(30)%
|
$
|
474
|
$
|
562
|
(16)%
|
|||||
Core earnings
|
$
|
487
|
$
|
415
|
17%
|
$
|
1,387
|
$
|
1,186
|
17%
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
||||||||||
2013
|
2012
|
2013
|
2012
|
||||||||
Samsung Corning Precision
|
$
|
85
|
$
|
141
|
$
|
335
|
$
|
430
|
|||
Dow Corning Corporation
|
28
|
28
|
114
|
114
|
|||||||
All other
|
8
|
4
|
25
|
18
|
|||||||
Total equity earnings
|
$
|
121
|
$
|
173
|
$
|
474
|
$
|
562
|
·
|
Higher core earnings in the Telecommunications, Life Sciences and Environmental Technologies segments; and
|
·
|
Lower operating expenses, driven by a decrease in stock compensation expense and cost control measures implemented by our segments.
|
·
|
Higher core earnings in the Telecommunications, Specialty Materials, Life Sciences and Display Technologies segments; and
|
·
|
Lower operating expenses, driven by a decrease in stock compensation expense and cost control measures implemented by our segments.
|
Three months ended September 30, 2013
|
||||||||||||||||
Net
sales
|
Equity
earnings
|
Income
before
income
taxes
|
Net
income
|
Effective
tax
rate
|
Per
share
|
|||||||||||
As reported
|
$
|
2,067
|
$
|
138
|
$
|
549
|
$
|
408
|
25.7%
|
$
|
0.28
|
|||||
Acquisition-related costs (4)
|
10
|
7
|
||||||||||||||
Provision for income taxes (5)
|
58
|
0.04
|
||||||||||||||
Asbestos settlement (6)
|
5
|
3
|
||||||||||||||
Gain on change in control of equity investment (9)
|
(1)
|
|||||||||||||||
Equity in earnings of affiliated companies (10)
|
(22)
|
(22)
|
(20)
|
(0.02)
|
||||||||||||
Hemlock Semiconductor operating results (3)
|
3
|
3
|
3
|
|||||||||||||
Hemlock Semiconductor non-operating results (3)
|
(10)
|
(10)
|
(9)
|
(0.01)
|
||||||||||||
Purchased collars and average rate forwards (2)
|
46
|
25
|
0.02
|
|||||||||||||
Other yen-related transactions (2)
|
(25)
|
(18)
|
(0.01)
|
|||||||||||||
Constant-yen (1)
|
41
|
12
|
40
|
31
|
0.02
|
|||||||||||
Core Performance measures
|
$
|
2,108
|
$
|
121
|
$
|
596
|
$
|
487
|
18.3%
|
$
|
0.33
|
Three months ended September 30, 2012
|
||||||||||||||||
Net
sales
|
Equity
earnings
|
Income
before
income
taxes
|
Net
income
|
Effective
tax
rate
|
Per
share
|
|||||||||||
As reported *
|
$
|
2,038
|
$
|
240
|
$
|
627
|
$
|
533
|
15.0%
|
$
|
0.36
|
|||||
Asbestos settlement (6)
|
3
|
2
|
||||||||||||||
Hemlock Semiconductor operating results (3)
|
(11)
|
(11)
|
(10)
|
(0.01)
|
||||||||||||
Hemlock Semiconductor non-operating results (3)
|
(10)
|
(10)
|
(9)
|
(0.01)
|
||||||||||||
Other yen-related transactions (2)
|
(2)
|
(1)
|
||||||||||||||
Constant-yen (1)
|
(118)
|
(46)
|
(122)
|
(100)
|
(0.07)
|
|||||||||||
Core Performance measures
|
$
|
1,920
|
$
|
173
|
$
|
485
|
$
|
415
|
14.4%
|
$
|
0.28
|
Nine months ended September 30, 2013
|
||||||||||||||||
Net
sales
|
Equity
earnings
|
Income
before
income
taxes
|
Net
income
|
Effective
tax
rate
|
Per
share
|
|||||||||||
As reported
|
$
|
5,863
|
$
|
477
|
$
|
1,906
|
$
|
1,540
|
19.2%
|
$
|
1.04
|
|||||
Acquisition-related costs (4)
|
36
|
24
|
0.02
|
|||||||||||||
Pension mark-to-market (8)
|
(41)
|
(26)
|
(0.02)
|
|||||||||||||
Provision for income taxes (5)
|
4
|
|||||||||||||||
Asbestos settlement (6)
|
13
|
9
|
0.01
|
|||||||||||||
Gain on change in control of equity investment (9)
|
(17)
|
(12)
|
(0.01)
|
|||||||||||||
Equity in earnings of affiliated companies (10)
|
(22)
|
(22)
|
(20)
|
(0.02)
|
||||||||||||
Hemlock Semiconductor operating results (3)
|
(4)
|
(4)
|
(4)
|
|||||||||||||
Hemlock Semiconductor non-operating results (3)(7)
|
1
|
1
|
1
|
|||||||||||||
Purchased collars and average rate forwards (2)
|
(206)
|
(138)
|
(0.09)
|
|||||||||||||
Other yen-related transactions (2)
|
(71)
|
(49)
|
(0.03)
|
|||||||||||||
Constant-yen (1)
|
80
|
22
|
76
|
58
|
0.04
|
|||||||||||
Core Performance measures
|
$
|
5,943
|
$
|
474
|
$
|
1,671
|
$
|
1,387
|
17.0%
|
$
|
0.94
|
Nine months ended September 30, 2012
|
||||||||||||||||
Net
sales
|
Equity
earnings
|
Income
before
income
taxes
|
Net
income
|
Effective
tax
rate
|
Per
share
|
|||||||||||
As reported *
|
$
|
5,866
|
$
|
717
|
$
|
1,793
|
$
|
1,481
|
17.4%
|
$
|
0.98
|
|||||
Asbestos settlement (6)
|
9
|
6
|
||||||||||||||
Hemlock Semiconductor operating results (3)
|
(22)
|
(22)
|
(20)
|
(0.01)
|
||||||||||||
Hemlock Semiconductor non-operating results (3)
|
(10)
|
(10)
|
(9)
|
(0.01)
|
||||||||||||
Other yen-related transactions (2)
|
(14)
|
(9)
|
(0.01)
|
|||||||||||||
Constant-yen (1)
|
(307)
|
(123)
|
(323)
|
(263)
|
(0.17)
|
|||||||||||
Core Performance measures
|
$
|
5,559
|
$
|
562
|
$
|
1,433
|
$
|
1,186
|
17.2%
|
$
|
0.78
|
(1)
|
Constant-yen: Because a significant portion of Corning’s LCD glass business revenues and manufacturing costs are denominated in Japanese yen, management believes it is important to understand the impact on core earnings from translating yen into dollars. Presenting results on a constant-yen basis eliminates the translation impact of the Japanese yen, and allows management to evaluate performance period over period, analyze underlying trends in our businesses, and to establish operational goals and forecasts. We use an internally derived management rate of ¥93, which is closely aligned to our yen portfolio of purchased collars, and have restated all years presented based on this rate in order to effectively remove the impact of changes in the Japanese yen.
|
(2)
|
Purchased collars, average forward contracts and other yen-related transactions: We have excluded the impact of our purchased collars, average forward contracts, and other yen-related transactions for each period presented. By aligning an internally derived rate with our portfolio of purchased collars and average forward contracts, and excluding other yen-related transactions and the constant-yen adjustments, we have effectively eliminated the impact of changes in the Japanese yen on our results.
|
(3)
|
Results of Dow Corning Corporation’s consolidated subsidiary, Hemlock Semiconductor: We are excluding the results of Dow Corning’s consolidated subsidiary, Hemlock Semiconductor, a producer of polycrystalline silicon, to remove the operating and non-operating items and events which have caused severe unpredictability and instability in earnings over the past eighteen months, and are expected to continue in the future. These events are being primarily driven by the macro-economic environment. Specifically, the negative impact of the determination by the Chinese Ministry of Commerce, which imposes provisional anti-dumping duties on solar-grade polysilicon imports from the United States, and the impact of potential asset write-offs, offset by the potential benefit of large payments required under Hemlock customers’ “take-or-pay” contracts, are events that are unrelated to Dow Corning’s core operations, and that have, or could have, significant impacts to this business.
|
(4)
|
Acquisition-related costs: These expenses include intangible amortization, inventory valuation adjustments and external acquisition-related deal costs.
|
(5)
|
Provision for income taxes: These items represent discrete adjustments recorded for effects of tax law and realizability of deferred tax assets changes. This item also includes the income tax effects of adjusting from a GAAP tax rate to a Core earnings tax rate.
|
(6)
|
Certain litigation-related charges: These adjustments relate to the Pittsburgh Corning Corporation (PCC) asbestos litigation.
|
(7)
|
Restructuring, impairments, and other charges.
|
(8)
|
Pension mark-to-market adjustment: Mark-to-market pension gains and losses, which arise from changes in actuarial assumptions and the difference between actual and expected returns on plan assets and discount rates. In accordance with GAAP, Corning recognizes pension actuarial gains and losses outside of the corridor, where the corridor is equal to 10% of the greater of the benefit obligation or the market-related value of plan assets at the beginning of the year, for our defined benefit pension plans annually in the fourth quarter of each year and whenever a plan is remeasured or valuation estimates are finalized. Actuarial gains and losses occur when actual experience differs from the estimates used to allocate the change in value of pension plans to expense throughout the year or when assumptions change, as they may each year. Significant factors that can contribute to the recognition of actuarial gains and losses include changes in discount rates, differences between actual and expected returns on plan assets, and other changes in actuarial assumptions such as life expectancy of plan participants. Management believes that pension actuarial gains and losses are primarily financing activities that are more reflective of changes in current conditions in global financial markets, and are not directly related to the underlying performance of our businesses. For further information on the actuarial assumptions and plan assets referenced above, see Management’s Discussion and Analysis of Financial Condition and Results of Operations, under Critical Accounting Estimates - Employee Retirement Plans, and Note 13, Employee Retirement Plans, of Notes to the Consolidated Financial Statements.
|
(9)
|
Gain on change in control of equity investment: Adjustment of the gain as a result of certain changes to the Shareholder Agreement of an equity company occurring in the second quarter of 2013, resulting in Corning having a controlling interest that requires consolidation of this investment.
|
(10)
|
Equity in earnings of affiliated companies: These adjustments relate to items which do not reflect expected on-going operating results in the silicone products business of Dow Corning, such as settlements under “take-or-pay” contracts.
|
·
|
Display Technologies – manufactures liquid crystal display (LCD) glass for flat panel displays.
|
·
|
Telecommunications – manufactures optical fiber and cable, and hardware and equipment components for the telecommunications industry.
|
·
|
Environmental Technologies – manufactures ceramic substrates and filters for automotive and diesel applications. This reportable segment is an aggregation of our Automotive and Diesel operating segments, as these two segments share similar economic characteristics, products, customer types, production processes and distribution methods.
|
·
|
Specialty Materials – manufactures products that provide more than 150 material formulations for glass, glass ceramics and fluoride crystals to meet demand for unique customer needs.
|
·
|
Life Sciences – manufactures glass and plastic labware, equipment, media and reagents to provide workflow solutions for scientific applications.
|
As Reported*
|
Three months ended
September 30,
|
%
change
|
Nine months ended
September 30,
|
%
change
|
|||||||||||
2013
|
2012
|
13 vs. 12
|
2013
|
2012
|
13 vs. 12
|
||||||||||
Net sales
|
$
|
648
|
$
|
763
|
(15)%
|
$
|
1,929
|
$
|
2,109
|
(9)%
|
|||||
Equity earnings of affiliated companies
|
$
|
73
|
$
|
187
|
(61)%
|
$
|
314
|
$
|
553
|
(43)%
|
|||||
Net income
|
$
|
318
|
$
|
441
|
(28)%
|
$
|
1,004
|
$
|
1,235
|
(19)%
|
Core Performance*
|
Three months ended
September 30,
|
%
change
|
Nine months ended
September 30,
|
%
change
|
|||||||||||
2013
|
2012
|
13 vs. 12
|
2013
|
2012
|
13 vs. 12
|
||||||||||
Net sales
|
$
|
689
|
$
|
645
|
7%
|
$
|
2,009
|
$
|
1,802
|
11%
|
|||||
Equity earnings of affiliated companies
|
$
|
85
|
$
|
141
|
(40)%
|
$
|
335
|
$
|
430
|
(22)%
|
|||||
Core earnings
|
$
|
304
|
$
|
333
|
(9)%
|
$
|
954
|
$
|
944
|
1%
|
Three months ended
September 30, 2013
|
Nine months ended
September 30, 2013
|
||||||||||||||||
Display Technologies
|
Sales
|
Equity
earnings
|
Net
income
|
Sales
|
Equity
earnings
|
Net
income
|
|||||||||||
As reported
|
$
|
648
|
$
|
73
|
$
|
318
|
$
|
1,929
|
$
|
314
|
$
|
1,004
|
|||||
Pension mark-to-market
|
(53)
|
||||||||||||||||
Purchased collars
|
(28)
|
(9)
|
|||||||||||||||
Other yen-related transactions
|
(17)
|
(48)
|
|||||||||||||||
Constant-yen
|
41
|
12
|
31
|
80
|
21
|
60
|
|||||||||||
Core performance
|
$
|
689
|
$
|
85
|
$
|
304
|
$
|
2,009
|
$
|
335
|
$
|
954
|
Three months ended
September 30, 2012
|
Nine months ended
September 30, 2012
|
||||||||||||||||
Display Technologies
|
Sales
|
Equity
earnings
|
Net
income
|
Sales
|
Equity
earnings
|
Net
income
|
|||||||||||
As reported
|
$
|
763
|
$
|
187
|
$
|
441
|
$
|
2,109
|
$
|
553
|
$
|
1,235
|
|||||
Other yen-related transactions
|
(1)
|
(9)
|
|||||||||||||||
Constant-yen
|
(118)
|
(46)
|
(107)
|
(307)
|
(123)
|
(282)
|
|||||||||||
Core performance
|
$
|
645
|
$
|
141
|
$
|
333
|
$
|
1,802
|
$
|
430
|
$
|
944
|
As Reported*
|
Three months ended
September 30,
|
%
change
|
Nine months ended
September 30,
|
%
change
|
|||||||||||
2013
|
2012
|
13 vs. 12
|
2013
|
2012
|
13 vs. 12
|
||||||||||
Net sales
|
$
|
650
|
$
|
523
|
24%
|
$
|
1,721
|
$
|
1,590
|
8%
|
|||||
Net income
|
$
|
62
|
$
|
35
|
77%
|
$
|
173
|
$
|
93
|
86%
|
Core Performance*
|
Three months ended
September 30,
|
%
change
|
Nine months ended
September 30,
|
%
change
|
|||||||||||
2013
|
2012
|
13 vs. 12
|
2013
|
2012
|
13 vs. 12
|
||||||||||
Net sales
|
$
|
650
|
$
|
523
|
24%
|
$
|
1,721
|
$
|
1,590
|
8%
|
|||||
Core earnings
|
$
|
65
|
$
|
35
|
86%
|
$
|
160
|
$
|
93
|
72%
|
Three months ended
September 30, 2013
|
Nine months ended
September 30, 2013
|
||||||||||
Telecommunications
|
Sales
|
Net
income
|
Sales
|
Net
income
|
|||||||
As reported
|
$
|
650
|
$
|
62
|
$
|
1,721
|
$
|
173
|
|||
Pension mark-to-market
|
(9)
|
||||||||||
Gain on change in control
|
(11)
|
||||||||||
Acquisition-related costs
|
3
|
7
|
|||||||||
Core performance
|
$
|
650
|
$
|
65
|
$
|
1,721
|
$
|
160
|
As Reported*
|
Three months ended
September 30,
|
%
change
|
Nine months ended
September 30,
|
%
change
|
|||||||||||
2013
|
2012
|
13 vs. 12
|
2013
|
2012
|
13 vs. 12
|
||||||||||
Net sales:
|
|||||||||||||||
Automotive
|
$
|
121
|
$
|
123
|
(2)%
|
$
|
366
|
$
|
372
|
(2)%
|
|||||
Diesel
|
104
|
110
|
(5)%
|
315
|
373
|
(16)%
|
|||||||||
Total net sales
|
$
|
225
|
$
|
233
|
(3)%
|
$
|
681
|
$
|
745
|
(9)%
|
|||||
Net income
|
$
|
32
|
$
|
27
|
19%
|
$
|
95
|
$
|
102
|
(7)%
|
Core Performance*
|
Three months ended
September 30,
|
%
change
|
Nine months ended
September 30,
|
%
change
|
|||||||||||
2013
|
2012
|
13 vs. 12
|
2013
|
2012
|
13 vs. 12
|
||||||||||
Net sales
|
$
|
225
|
$
|
233
|
(3)%
|
$
|
681
|
$
|
745
|
(9)%
|
|||||
Core earnings
|
$
|
32
|
$
|
27
|
19%
|
$
|
92
|
$
|
102
|
(10)%
|
Three months ended
September 30, 2013
|
Nine months ended
September 30, 2013
|
||||||||||
Environmental Technologies
|
Sales
|
Net
income
|
Sales
|
Net
income
|
|||||||
As reported
|
$
|
225
|
$
|
32
|
$
|
681
|
$
|
95
|
|||
Pension mark-to-market
|
(3)
|
||||||||||
Core performance
|
$
|
225
|
$
|
32
|
$
|
681
|
$
|
92
|
As Reported*
|
Three months ended
September 30,
|
%
change
|
Nine months ended
September 30,
|
%
change
|
|||||||||||
2013
|
2012
|
13 vs. 12
|
2013
|
2012
|
13 vs. 12
|
||||||||||
Net sales
|
$
|
326
|
$
|
363
|
(10)%
|
$
|
885
|
$
|
947
|
(7)%
|
|||||
Net income
|
$
|
65
|
$
|
59
|
10%
|
$
|
162
|
$
|
115
|
41%
|
Core Performance*
|
Three months ended
September 30,
|
%
change
|
Nine months ended
September 30,
|
%
change
|
|||||||||||
2013
|
2012
|
13 vs. 12
|
2013
|
2012
|
13 vs. 12
|
||||||||||
Net sales
|
$
|
326
|
$
|
363
|
(10)%
|
$
|
885
|
$
|
947
|
(7)%
|
|||||
Core earnings
|
$
|
65
|
$
|
66
|
(2)%
|
$
|
157
|
$
|
134
|
17%
|
Three months ended
September 30, 2013
|
Nine months ended
September 30, 2013
|
||||||||||
Specialty Materials
|
Sales
|
Net
income
|
Sales
|
Net
income
|
|||||||
As reported
|
$
|
326
|
$
|
65
|
$
|
885
|
$
|
162
|
|||
Other yen-related transactions
|
(1)
|
||||||||||
Pension mark-to-market
|
(3)
|
||||||||||
Constant-yen
|
(1)
|
||||||||||
Core performance
|
$
|
326
|
$
|
65
|
$
|
885
|
$
|
157
|
Three months ended
September 30, 2012
|
Nine months ended
September 30, 2012
|
||||||||||
Specialty Materials
|
Sales
|
Net
income
|
Sales
|
Net
income
|
|||||||
As reported
|
$
|
363
|
$
|
59
|
$
|
947
|
$
|
115
|
|||
Constant-yen
|
7
|
19
|
|||||||||
Core performance
|
$
|
363
|
$
|
66
|
$
|
947
|
$
|
134
|
As Reported*
|
Three months ended
September 30,
|
%
change
|
Nine months ended
September 30,
|
%
change
|
|||||||||||
2013
|
2012
|
13 vs. 12
|
2013
|
2012
|
13 vs. 12
|
||||||||||
Net sales
|
$
|
215
|
$
|
155
|
39%
|
$
|
641
|
$
|
472
|
36%
|
|||||
Net income
|
$
|
20
|
$
|
9
|
122%
|
$
|
57
|
$
|
32
|
78%
|
Core Performance*
|
Three months ended
September 30,
|
%
change
|
Nine months ended
September 30,
|
%
change
|
|||||||||||
2013
|
2012
|
13 vs. 12
|
2013
|
2012
|
13 vs. 12
|
||||||||||
Net sales
|
$
|
215
|
$
|
155
|
39%
|
$
|
641
|
$
|
472
|
36%
|
|||||
Core earnings
|
$
|
23
|
$
|
9
|
156%
|
$
|
71
|
$
|
32
|
122%
|
Three months ended
September 30, 2013
|
Nine months ended
September 30, 2013
|
||||||||||
Life Sciences
|
Sales
|
Net
income
|
Sales
|
Net
income
|
|||||||
As reported
|
$
|
215
|
$
|
20
|
$
|
641
|
$
|
57
|
|||
Pension mark-to-market
|
(3)
|
||||||||||
Acquisition-related costs
|
3
|
17
|
|||||||||
Core performance
|
$
|
215
|
$
|
23
|
$
|
641
|
$
|
71
|
As Reported and Core Performance
|
Three months ended
September 30,
|
%
change
|
Nine months ended
September 30,
|
%
change
|
|||||||||||
2013
|
2012
|
13 vs. 12
|
2013
|
2012
|
13 vs. 12
|
||||||||||
Net sales
|
$
|
3
|
$
|
1
|
200%
|
$
|
6
|
$
|
3
|
100%
|
|||||
Research, development and engineering expenses
|
$
|
33
|
$
|
35
|
(6)%
|
$
|
104
|
$
|
91
|
14%
|
|||||
Equity in earnings of affiliated companies
|
$
|
4
|
$
|
1
|
300%
|
$
|
13
|
$
|
14
|
(7)%
|
|||||
Net loss
|
$
|
(32)
|
$
|
(30)
|
*
|
$
|
(91)
|
$
|
(66)
|
*
|
·
|
In the second quarter of 2013, the Company established a commercial paper program on a private placement basis, pursuant to which we may issue short-term, unsecured commercial paper notes up to a maximum aggregate principal amount outstanding at any time of $1 billion. Under this program, the Company may issue the notes from time to time and will use the proceeds for general corporate purposes. The maturities of the notes will vary, but may not exceed 390 days from the date of issue. The interest rates will vary based on market conditions and the ratings assigned to the notes by credit rating agencies at the time of issuance. The Company’s $1 billion revolving credit facility is available to support obligations under the commercial paper program, if needed. As of September 30, 2013, we did not have any outstanding commercial paper.
|
·
|
In the first quarter of 2013, we amended and restated our existing revolving credit facility. The amended facility provides a $1.0 billion unsecured multi-currency line of credit that expires in March 2018. The facility includes a leverage test (debt to capital ratio) financial covenant. As of September 30, 2013, we were in compliance with this covenant. The proceeds of this credit facility may be used for general corporate purposes, including support for our commercial paper program.
|
·
|
In the first quarter of 2013, Corning repaid the aggregate principal amount and accrued interest outstanding on the credit facility entered into in the second quarter of 2011 that allowed Corning to borrow up to Chinese Renminbi (RMB) 4.0 billion. The total amount repaid was approximately $500 million. Upon repayment, this facility was terminated.
|
·
|
In the first quarter of 2012, we issued $500 million of 4.75% senior unsecured notes that mature on March 15, 2042 and $250 million of 4.70% senior unsecured notes that mature on March 15, 2037.
|
Nine months ended
September 30,
|
|||||
2013
|
2012
|
||||
Net cash provided by operating activities
|
$
|
1,503
|
$
|
1,966
|
|
Net cash used in investing activities
|
$
|
(575)
|
$
|
(1,621)
|
|
Net cash provided by (used in) financing activities
|
$
|
(1,347)
|
$
|
94
|
As of
September 30,
2013
|
As of
December 31,
2012
|
||||
Working capital
|
$
|
7,550
|
$
|
7,739
|
|
Current ratio
|
5.8:1
|
5.0:1
|
|||
Trade accounts receivable, net of allowances
|
$
|
1,392
|
$
|
1,302
|
|
Days sales outstanding
|
61
|
55
|
|||
Inventories
|
$
|
1,275
|
$
|
1,051
|
|
Inventory turns
|
3.9
|
4.7
|
|||
Days payable outstanding (1)
|
37
|
41
|
|||
Long-term debt
|
$
|
2,816
|
$
|
3,382
|
|
Total debt to total capital
|
12%
|
14%
|
(1)
|
Includes trade payables only.
|
RATING AGENCY
|
Rating
Long-Term Debt
|
Outlook
last update
|
|
Fitch
|
A-
|
Stable
|
|
May 17, 2011
|
|||
Standard & Poor’s
|
BBB+
|
Positive
|
|
February 14, 2012
|
|||
Moody’s
|
A3
|
Stable
|
|
September 12, 2011
|
December 31,
|
|||||||||
(In millions)
|
2012
|
2011
|
2010
|
||||||
Actual return on plan assets – Domestic plans
|
$
|
300
|
$
|
216
|
$
|
211
|
|||
Expected return on plan assets – Domestic plans
|
150
|
155
|
148
|
||||||
Actual return on plan assets – International plans
|
10
|
16
|
21
|
||||||
Expected return on plan assets – International plans
|
10
|
11
|
12
|
||||||
December 31,
|
|||||||||
2012
|
2011
|
2010
|
|||||||
Weighted-average actual and expected return on assets:
|
|||||||||
Actual return on plan assets – Domestic plans
|
12.06%
|
9.24%
|
10.49%
|
||||||
Expected return on plan assets – Domestic plans
|
6.00%
|
6.50%
|
7.25%
|
||||||
Actual return on plan assets – International plans
|
6.01%
|
8.40%
|
10.70%
|
||||||
Expected return on plan assets – International plans
|
6.01%
|
5.59%
|
6.01%
|
·
|
global business, economic and political conditions;
|
·
|
conditions in the financial and credit markets;
|
·
|
tariffs, import duties, and tax rates;
|
·
|
currency fluctuations between the U.S. dollar and other currencies, primarily the Japanese yen, New Taiwan dollar, Euro and South Korean won;
|
·
|
product demand and industry capacity;
|
·
|
competition and pricing;
|
·
|
sufficiency of manufacturing capacity and efficiencies;
|
·
|
availability and costs of critical components and materials;
|
·
|
new product development and commercialization;
|
·
|
order activity and demand from major customers;
|
·
|
fluctuations in spending by customers and pricing;
|
·
|
disruptions in commercial activities due to terrorist activity, armed conflict, cyber attack, political or financial instability, natural disasters or major health concerns;
|
·
|
new plant start-up or restructuring costs;
|
·
|
adequacy and availability of insurance;
|
·
|
capital resource and cash flow activities;
|
·
|
ability to pace capital spending to customer demand;
|
·
|
credit rating and ability to obtain financing and capital;
|
·
|
financial risk management;
|
·
|
capital spending;
|
·
|
equity company activities;
|
·
|
interest costs;
|
·
|
restructuring, goodwill and intangible asset impairment charges;
|
·
|
acquisition and divestiture activities;
|
·
|
rate of technology change;
|
·
|
level of excess or obsolete inventory;
|
·
|
ability to enforce patents;
|
·
|
adverse litigation or regulatory developments;
|
·
|
product, materials and components performance issues;
|
·
|
retention of key personnel;
|
·
|
stock price fluctuations;
|
·
|
the ability of research and development projects to produce revenues in future periods;
|
·
|
rate of substitution by end-users purchasing LCDs;
|
·
|
downturn in demand for LCD glass substrates;
|
·
|
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;
|
·
|
employee continuation and other transition risks when integrating acquired businesses;
|
·
|
loss of significant customers;
|
·
|
fluctuations in supply chain inventory levels;
|
·
|
changes in tax laws and regulations;
|
·
|
changes in accounting rules and standards;
|
·
|
the potential impact of legislation, government regulations and other government action and investigations;
|
·
|
temporary idling of capacity or delaying expansion;
|
·
|
the ability to implement productivity, consolidation and cost reduction efforts, and to realize anticipated benefits;
|
·
|
adverse weather conditions and earthquakes; and
|
·
|
other risks detailed in Corning’s SEC filings.
|
Period
|
Total number
of shares
purchased (1)
|
Average
price paid
per share (1)
|
Number of
shares purchased as
part of publicly
announced plan
or program (2)
|
Approximate dollar
value of shares that
may yet be purchased
under the plan
or program (2)
|
|||
July 1-31, 2013
|
4,343,304
|
$14.83
|
4,246,168
|
$1,694,638,832
|
|||
August 1-31, 2013
|
5,248,525
|
$14.81
|
5,214,896
|
$1,617,421,387
|
|||
September 1-30, 2013
|
4,964,346
|
$14.60
|
4,961,612
|
$1,544,970,853
|
|||
Total
|
14,556,175
|
$14.74
|
14,422,676
|
$1,544,970,853
|
(1)
|
This column reflects the following transactions during the third quarter of 2013: (i) the deemed surrender to us of 39,359 shares of common stock to satisfy tax withholding obligations in connection with the vesting of employee restricted stock units, (ii) the surrender to us of 94,140 shares of common stock to satisfy tax withholding obligations in connection with the vesting of restricted stock issued to employees, and (iii) the repurchase of 14,422,676 shares of common stock in conjunction with the repurchase program announced in the second quarter of 2013.
|
(2)
|
On April 24, 2013, we publically announced authorization to repurchase up to $2.0 billion of our common stock by December 31, 2014.
|
(a)
|
Exhibits
|
||
Exhibit Number
|
Exhibit Name
|
||
12
|
Computation of Ratio of Earnings to Fixed Charges
|
||
31.1
|
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) under the Exchange Act
|
||
31.2
|
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) under the Exchange Act
|
||
32
|
Certification Pursuant to 18 U.S.C. Section 1350
|
||
101.INS
|
XBRL Instance Document
|
||
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
||
101.CAL
|
XBRL Taxonomy Calculation Linkbase Document
|
||
101.LAB
|
XBRL Taxonomy Label Linkbase Document
|
||
101.PRE
|
XBRL Taxonomy Presentation Linkbase Document
|
||
101.DEF
|
XBRL Taxonomy Definition Document
|
Corning Incorporated
|
||||
(Registrant)
|
||||
October 30, 2013
|
/s/ JAMES B. FLAWS
|
|||
Date
|
James B. Flaws
|
|||
Vice Chairman and Chief Financial Officer
|
||||
(Principal Financial Officer)
|
||||
October 30, 2013
|
/s/ R. TONY TRIPENY
|
|||
Date
|
R. Tony Tripeny
|
|||
Senior Vice President and Corporate Controller
|
||||
(Principal Accounting Officer)
|