| [April 29, 2008] |
 |
Corning Reports Strong First-Quarter Earnings
CORNING, N.Y. --(Business Wire)-- Corning Incorporated (NYSE:GLW) today announced results for the first quarter of 2008.
First-Quarter Highlights
-- Sales reached $1.62 billion, up 24% year over year.
-- Earnings per share were $0.64, including a $327 million gain related to the pending Pittsburgh Corning Corporation bankruptcy proceeding.
-- Excluding the special item for the first quarter, earnings per share were $0.44,* better than the company's guidance of $0.41 to $0.43, and up 57% from last year.
-- Display Technologies' glass volume increased 2% sequentially and 50% year over year. Samsung Corning Precision Glass Co. Ltd.'s (SCP) volume was flat sequentially and increased 46% year over year.
-- The company's sales and earnings comparisons benefited from the weakening U.S. dollar, primarily versus the Japanese yen.
-- Gross margin for the quarter was 52%, an all-time record for the company.
Second-Quarter Outlook Highlights
-- Sales are expected in the range of $1.71 billion to $1.75 billion, an increase of more than 20% compared to second quarter last year.
-- Earnings per share, excluding special items, are anticipated in the range of $0.47 to $0.50.*
-- Combined LCD glass volume for Corning's wholly owned business and Samsung Corning Precision is expected to increase 6% to 9% sequentially, with the wholly owned business up 2% to 5% and SCP up 8% to 13%.
-- Telecommunications sales are expected to be up more than 10% sequentially.
Wendell P. Weeks, chairman and chief executive officer, said, "This was a tremendously strong quarter for Corning. Display glass demand remains robust and we continue to operate our LCD glass substrate facilities at full capacity. The global consumer appetite for LCD televisions continues to grow." Weeks noted that very strong manufacturing performance in Corning's Display Technologies segment also contributed to the excellent first-quarter results.
"Given the strength of LCD TV in the first quarter and our outlook for the remainder of the year, we now expect the global LCD glass market to grow at the upper end of the 25% to 30% range that we provided earlier this year," Weeks added.
*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 website.
Quarter One Financial Comparisons
Q1 2008 Q4 2007 % Change Q1 2007 % Change
---------------------------------------------------------------
-------
Net Sales in millions $1,617 $1,582 2% $1,307 24%
------------------------------------------------------------------
----
Net Income in millions $1,029 $717 44% $327 215%
-----------------------------------------------------------------
-----
Non-GAAP Net Income in
millions* $702 $643 9% $452 55%
------------------------------------------------------------------
----
GAAP EPS $0.64 $0.45 42% $0.20 220%
-----------------------------------------------------------------
-----
Non-GAAP EPS* $0.44 $0.40 10% $0.28 57%
------------------------------------------------------------------
----
Overview of Business Segment Results
First-quarter sales for Corning's Display Technologies segment were $829 million, a 7% sequential increase and a 58% increase over the first quarter 2007. The display segment results were positively impacted by a favorable U.S.-dollar-to-Japanese-yen exchange rate in the quarter. Price declines were consistent with previous quarters.
Telecommunications segment sales in the first quarter were $421 million, a 2% sequential decline and a 4% decline from quarter one 2007. Strong optical fiber volume and higher fiber-to-the-premises sales were offset primarily by the slow start of several customer projects. Corning anticipates that some of these projects will begin in the second quarter. Excluding the impact of last year's divestiture of Corning's submarine cabling business, quarter one sales increased 3%* versus last year.
Environmental Technologies segment sales in the first quarter were $197 million, a 4% sequential increase and a nearly 10% increase over the first quarter 2007.
Specialty Materials segment sales were $83 million, about even with quarter one 2007 results. The Life Sciences segment had sales of $81 million, a 10% sequential increase and a 7% increase from quarter one 2007.
Corning's equity earnings from Dow Corning were $80 million in the first quarter, compared to $84 million in the previous quarter and $92 million a year ago. Dow Corning's results were impacted by higher raw material prices.
Special Items
The company's first-quarter results included a non-cash credit of $327 million pretax and after-tax related to the pending Pittsburgh Corning Corporation bankruptcy proceeding. As a result of significant progress made on negotiating a revised plan of reorganization, Corning reduced its estimated liability for the asbestos settlement from about $1 billion to $675 million.
Second-Quarter 2008 Outlook
James B. Flaws, vice chairman and chief financial officer, said, "Global demand for LCD televisions and laptop computers remains strong going into the second quarter. We continue to closely monitor the U.S. retail market, but we have not seen any indication that the U.S. slowdown is impacting our LCD glass business."
Business Highlights
-- Combined LCD glass volume for Corning's wholly owned business and Samsung Corning Precision is expected to increase 6% to 9% sequentially, with the wholly owned business up 2% to 5% and SCP up 8% to 13%. Price declines in the quarter will again be moderate. Second-quarter sales are also expected to benefit from a weaker dollar.
-- Corning's Telecommunications segment sales are expected to increase more than 10% sequentially. Growth will be driven by significant fiber-to-the-premise demand from a number of customers, as well as the expected start up of several customer projects.
-- Environmental Technologies segment sales are anticipated to be flat to up 5% in the quarter.
-- Specialty Materials segment sales are expected to increase about 20%. Sales in the Life Sciences segment are expected to be up slightly.
-- Equity earnings in total are expected to be up 10% to 15%. This includes Dow Corning Corporation earnings which are expected to increase in the range of 15% to 20% for the quarter.
Full-Year Outlook
Flaws noted that the company is increasing its capital spending plan for the year to $1.8 to $2.0 billion. This increase is driven primarily by the acceleration of LCD capacity in anticipation of a stronger display market, and growing demand for Corning's new Gorilla(TM) glass. Higher precious metals prices are also contributing to the increased capital spending. "Despite this increase, we still expect our free cash flow to be at least $500 million* this year," Flaws said.
Flaws added that, due to the continued slowdown in the U.S. freight industry, Corning now expects domestic Class 8 truck engine production to come in at the lower end of its estimated range of 175,000 to 225,000 this year. As a result, Corning has adjusted its expectation for diesel product sales to grow 15% to 20% this year, versus its original expectation of at least 25%.
"Our first-quarter results have given us strong momentum heading into the second quarter," Flaws said. "Although cautious, we look forward to another excellent quarter for Corning."
Upcoming Investor Meetings
Corning Incorporated Vice Chairman and Chief Financial Officer James B. Flaws will participate in an open investor luncheon in Dallas on May 1. Peter F. Volanakis, president and chief operating officer, will be presenting at the JP Morgan Technology Conference in Boston on May 19, and Wendell P. Weeks, chairman and chief executive officer, will be presenting at the Bernstein Strategic Decisions Conference in New York on May 29. On June 16 and 17, Flaws will be hosting open investor luncheons in Denver and Minneapolis. Investors interested in attending any of the luncheons should contact Corning's investor relations department for additional information.
First-Quarter Conference Call Information
The company will host a first-quarter conference call on Tuesday, April 29 at 8:30 a.m. EDT. To access the call, dial (210) 234-0004 approximately 10-15 minutes prior to the start of the call. The password is QUARTER ONE. The leader 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 follow the instructions. A replay of the call will begin at approximately 10:30 a.m. ET, and will run through 5 p.m. EDT, Tuesday, May 13. To listen, dial (203) 369-3844. No pass code is required. The audio webcast will be archived for one year following the call.
Presentation of Information in this News Release
Non-GAAP financial measures are not in accordance 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 required by movements in Corning's common stock price, 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. These non-GAAP measures are reconciled on the company's Web site at www.corning.com/investor_relations and accompanies this news release.
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.
Forward-Looking and Cautionary Statements
This press release contains forward-looking statements that involve a variety of business risks and other uncertainties that could cause actual results to differ materially. These risks and uncertainties include the possibility of changes in global economic and political conditions; currency fluctuations; product demand and industry capacity; competition; manufacturing efficiencies; cost reductions; availability of critical components and materials; new product commercialization; changes in the mix of sales between premium and non-premium products; new plant start-up 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. Additional risk factors are identified in Corning's filings with the Securities and Exchange Commission. Forward-looking statements speak only as of the day that they are made, and Corning undertakes no obligation to update them in light of new information or future events.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; in millions, except per share amounts)
Three months ended
March 31,
---------------------
2008 2007
--------- ---------
Net sales $ 1,617 $ 1,307
Cost of sales 773 716
--------- ---------
Gross margin 844 591
Operating expenses:
Selling, general and administrative expenses 242 214
Research, development and engineering
expenses 151 130
Amortization of purchased intangibles 2 3
Restructuring, impairment and other credits (1)
Asbestos settlement (credit) charge (Note 1) (327) 110
--------- ---------
Operating income 777 134
Interest income 30 37
Interest expense (18) (21)
Loss on repurchase of debt (15)
Other income, net 1 32
--------- ---------
Income before income taxes 790 167
Provision for income taxes (66) (56)
--------- ---------
Income before minority interests and equity
earnings 724 111
Minority interests 1
Equity in earnings of affiliated companies, net
of impairments 304 216
--------- ---------
Net income $ 1,029 $ 327
========= =========
Basic earnings per common share (Note 2) $ 0.66 $ 0.21
========= =========
Diluted earnings per common share (Note 2) $ 0.64 $ 0.20
========= =========
Dividends declared per common share $ 0.05
=========
See accompanying notes to these financial statements.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(Unaudited; in millions, except per share amounts)
March 31, December 31,
2008 2007
---------- ------------
Assets
Current assets:
Cash and cash equivalents $ 2,124 $ 2,216
Short-term investments, at fair value 1,185 1,300
---------- ------------
Total cash, cash equivalents and short-
term investments 3,309 3,516
Trade accounts receivable, net 988 856
Inventories 692 631
Deferred income taxes 47 54
Other current assets 303 237
---------- ------------
Total current assets 5,339 5,294
Investments 3,098 3,036
Property, net of accumulated depreciation 6,837 5,986
Goodwill and other intangible assets, net 306 308
Deferred income taxes 229 202
Other assets 454 389
---------- ------------
Total Assets $ 16,263 $ 15,215
========== ============
Liabilities and Shareholders' Equity
Current liabilities:
Current portion of long-term debt $ 78 $ 23
Accounts payable 701 609
Other accrued liabilities 1,083 1,880
---------- ------------
Total current liabilities 1,862 2,512
Long-term debt 1,503 1,514
Postretirement benefits other than pensions 743 744
Other liabilities 1,368 903
---------- ------------
Total liabilities 5,476 5,673
---------- ------------
Commitments and contingencies
Minority interests 47 46
Shareholders' equity:
Common stock - Par value $0.50 per share;
Shares authorized: 3.8 billion; Shares
issued: 1,602 million and 1,598 million 801 799
Additional paid-in capital 12,349 12,281
Accumulated deficit (2,053) (3,002)
Treasury stock, at cost; Shares held: 34
million and 30 million (588) (492)
Accumulated other comprehensive income
(loss) 231 (90)
---------- ------------
Total shareholders' equity 10,740 9,496
---------- ------------
Total Liabilities and Shareholders' Equity $ 16,263 $ 15,215
========== ============
See accompanying notes to these financial statements.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in millions)
Three months ended
March 31,
-------------------
2008 2007
--------- --------
Cash Flows from Operating Activities:
Net income $ 1,029 $ 327
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 157 150
Amortization of purchased intangibles 2 3
Asbestos settlement (credit) charge (327) 110
Restructuring, impairment and other
credits (1)
Loss on repurchases of debt 15
Stock compensation charges 41 36
Undistributed earnings of affiliated
companies (153) (67)
Deferred tax benefit (2)
Restructuring payments (7) (11)
Customer deposits, net of (credits)
issued (66) (33)
Employee benefit payments in excess of
expense (48) (92)
Changes in certain working capital items:
Trade accounts receivable (50) (28)
Inventories (32) (42)
Other current assets (21) (57)
Accounts payable and other current
liabilities, net of restructuring
payments (232) (130)
Other, net 5 12
--------- --------
Net cash provided by operating activities 295 193
--------- --------
Cash Flows from Investing Activities:
Capital expenditures (467) (262)
Short-term investments - acquisitions (724) (553)
Short-term investments - liquidations 816 798
--------- --------
Net cash used in investing activities (375) (17)
--------- --------
Cash Flows from Financing Activities:
Net repayments of short-term borrowings and
current portion of long-term debt (9) (8)
Retirements of long-term debt (238)
Proceeds from issuance of common stock, net 4 4
Proceeds from the exercise of stock options 18 22
Repurchase of common stock (62)
Dividends paid (78)
Other, net (2)
--------- --------
Net cash used in financing activities (129) (220)
--------- --------
Effect of exchange rates on cash 117 10
--------- --------
Net decrease in cash and cash equivalents (92) (34)
Cash and cash equivalents at beginning of period 2,216 1,157
--------- --------
Cash and cash equivalents at end of period $ 2,124 $ 1,123
========= ========
Certain amounts for 2007 were reclassified to conform to 2008
classifications.
[FEED_CR
LF] 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.
Dis- Environ- Spec-
play Tele- mental ialty
Techno- commun- Tech- Mater- Life All
logies ications nologies ials Sciences Other Total
-------------------------------------------------- -------
Three months
ended
March 31,
2008
Net sales $ 829 $ 421 $ 197 $ 83 $ 81 $ 6 $1,617
Depreciation
(1) $ 90 $ 27 $ 24 $ 8 $ 4 $ 3 $ 156
Amortization
of
purchased
intangible
s $ 2 $ 2
Research,
development
and
engineering[
FEED_CRLF]expenses
(2) $ 24 $ 24 $ 33 $ 9 $ 2 $ 36 $ 128
Restruct-
uring,
impairment
and other
credits
(before
related tax
benefits
and
minority
interest) $ (1) $ (1)
Income tax
(provision)
benefit $ (57) $ (5) $ (5) $ (5) $ 2 $ (70)
Earnings
(loss)
before
minority[FEE
D_CRLF]interest
and equity
earnings
(3) $ 476 $ 10 $ 12 $ (4) $ 10 $(45) $ 459
Minority
interest $ 1 $ 1
Equity in
earnings of
affiliated
companies $ 203 $ 1 $ 18 $ 222
-------- -------- -------- ------- --------- ----- -------
Net income
(loss) $ 679 $ 11 $ 13 $ (4) $ 10 $(27) $ 682
======== ======== ======== ======= ========= ===== =======
Three months
ended
March 31,
2007
Net sales $ 524 $ 439 $ 179 $ 84 $ 76 $ 5 $1,307
Depreciation
(1) $ 81 $ 33 $ 21 $ 8 $ 4 $ 1 $ 148
Amortization
of
purchased
intangible
s $ 3 $ 3
Research,
development
and
engineering[
FEED_CRLF]expenses
(2) $ 22 $ 19 $ 30 $ 9 $ 2 $ 26 $ 108
Income tax
(provision)
benefit $ (42) $ (11) $ (3) $ (4) $ 2 $ (58)
Earnings
(loss)
before
minority[FEE
D_CRLF]interest
and equity
earnings
(loss) (3) $ 273 $ 31 $ 10 $ 10 $(32) $ 292
Equity in
earnings of
affiliated
companies $ 113 $ 1 $ 9 $ 123
-------- -------- -------- ------- --------- ----- -------
Net income
(loss) $ 386 $ 32 $ 10 0 $ 10 $(23) $ 415
======== ======== ======== ======= ========= ===== =======
(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 includes direct
project spending which is identifiable to a segment.
(3)Many of Corning's administrative and staff functions are performed
on a centralized basis. Where practicable, Corning charges these
expenses to segments based upon the extent to which each business
uses a centralized function. Other staff functions, such as
corporate finance, human resources and legal are allocated to
segments, primarily as a percentage of sales.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
SEGMENT RESULTS
(Unaudited; in millions)
A reconciliation of reportable segment net income to consolidated net
income follows (in millions):
Three months ended
March 31,
-----------------------
2008 2007
----------- ----------
Net income of reportable segments $ 709 $ 438
Non-reportable segments (27) (23)
Unallocated amounts:
Net financing costs (1) 9 8
Stock-based compensation expense (41) (36)
Exploratory research (18) (17)
Corporate contributions (11) (14)
Equity in earnings of affiliated companies,
net of impairments (2) 82 93
Asbestos settlement charge (credit) (3) 327 (110)
Other corporate items (4) (1) (12)
----------- ----------
Net income $ 1,029 $ 327
=========== ==========
(1) Net financing costs include interest income, interest expense, and
interest costs and investment gains associated with benefit
plans.
(2) Represents the equity earnings of Dow Corning Corporation.
(3) In the first quarter of 2008, Corning reduced its liability for
asbestos litigation as a result of the increase in the likelihood
of a settlement under recently proposed terms and a corresponding
decrease in the likelihood of a settlement under terms
established in 2003.
(4) Other corporate items include the tax impact of the unallocated
amounts. In addition, the first quarter 2007 included a loss of
$15 million from the repurchase of $223 million principal amount
of our 6.25% Euro notes due 2010.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Asbestos Settlement
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
on March 31, 2008. 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 settlement
liability will no longer be 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 settlement liability.
Accordingly, in the first quarter of 2008, Corning recorded an
asbestos settlement credit of $327 million to adjust the asbestos
settlement liability from $1 billion to $675 million, including the
components of the Amended PCC Plan and the estimated liability for
non-PCC asbestos claims.
2. Weighted Average Shares Outstanding
Weighted average shares outstanding are as follows (in millions):
Three months ended Three months ended
March 31, December 31,
------------------ -------------------
2008 2007 2007
--------- ------- -------------------
Basic 1,566 1,563 1,567
Diluted 1,598 1,600 1,602
Diluted used for non-GAAP
measures 1,598 1,600 1,602
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
QUARTERLY SALES INFORMATION
(Unaudited; in millions)
2008 2007
------ ----------------------------------
Q1 Q1 Q2 Q3 Q4 Total
------ ------ ------ ------ ------ ------
Display Technologies $ 829 $ 524 $ 610 $ 705 $ 774 $2,613
Telecommunications
Fiber and cable 214 211 219 237 213 880
Hardware and equipment 207 228 219 235 217 899
------ ------ ------ ------ ------ ------
421 439 438 472 430 1,779
Environmental Technologies
Automotive 137 123 128 126 131 508
Diesel 60 56 63 72 58 249
------ ------ ------ ------ ------ ------
197 179 191 198 189 757
Specialty Materials 83 84 95 95 105 379
Life Sciences 81 76 78 78 73 305
Other 6 5 6 5 11 27
------ ------ ------ ------ ------ ------
Total $1,617 $1,307 $1,418 $1,553 $1,582 $5,860
====== ====== ====== ====== ====== ======
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 March 31, 2008
(Unaudited; amounts in millions, except per share amounts)
-------------------------------------------------------------
---------
Corning's net income and earnings per share (EPS) excluding special
items for the first quarter of 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.
------------------------------------------------------------
----------
Per Income Before Net
Share Income Taxes Income
------ ------------- --------
Earnings per share (EPS) and net income,
excluding special items $ 0.44 $ 463 $ 702
Special items:
Asbestos settlement (a) 0.20 327 327
------ ----------- --------
Total EPS and net income $ 0.64 $ 790 $ 1,029
====== =========== ========
(a)In the first quarter of 2008, Corning recorded an asbestos
settlement credit of $327 million to adjust the asbestos liability
from $1 billion to $675 million, including the components of the
Amended PCC Plan and the estimated liability for non-PCC asbestos
claims.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE TO GAAP FINANCIAL MEASURE
Three Months Ended December 31, 2007
(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 2007 are non-GAAP financial measures
within the meaning of Regulation G of the Securities and Exchange
Commission. Non-GAAP financial measures are not in accordance with,
or an alternative to, generally accepted accounting principles
(GAAP). The company believes presenting non-GAAP net income and EPS
is helpful to analyze financial performance without the impact of
unusual items that may obscure trends in the company's underlying
performance. A detailed reconciliation is provided below outlining
the differences between these non-GAAP measures and the directly
related GAAP measures.
------------------------------------------------------------
----------
Income
(Loss)
Before Net
Income Income
Per Share Taxes (Loss)
--------- -------- ---------
Earnings per share (EPS) and net income,
excluding special items $ 0.40 $ 466 $643
Special items:
Asbestos settlement (a) (0.01) (15) (15)
Provision for income taxes (b) 0.07 103
Equity in earnings of affiliated
companies (c) (0.01) (14)
--------- ------- -----
Total EPS and net income $ 0.45 $ 451 $717
========= ======= =====
(a)Between 2003 and 2007, any changes in the estimated fair value of
the components of the proposed settlement agreement were
recognized in Corning's quarterly results. During that time, the
components of the proposed asbestos settlement included 25 million
shares of Corning common stock and certain other items. In the
fourth quarter of 2007, Corning recorded a charge of $15 million
(before- and after-tax) including a credit of $17 million for the
change in Corning's common stock price of $23.99 at December 31,
2007, compared to $24.65 at September 30, 2007 and a $32 million
charge for the change in the estimated fair value of certain other
components of the proposed asbestos settlement liability.
(b)Amount reflects a $103 million tax benefit from the release of our
valuation allowance on certain deferred tax assets in Germany.
(c)Amount reflects Corning's share of the following items associated
with Samsung Corning: an impairment charge for certain long-lived
assets; dividend withholding tax; and a gain on metal and scrap
sales. These items decreased Corning's equity earnings by $14
million (net) in the fourth quarter of 2007.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE TO GAAP FINANCIAL MEASURE
Three Months Ended March 31, 2007
(Unaudited; amounts in millions, except per share amounts)
-------------------------------------------------------------
---------
Corning's net income and earnings per share (EPS) excluding special
items for the first quarter of 2007 are non-GAAP financial measures
within the meaning of Regulation G of the Securities and Exchange
Commission. Non-GAAP financial measures are not in accordance with,
or an alternative to, generally accepted accounting principles
(GAAP). The company believes presenting non-GAAP net income and EPS
is helpful to analyze financial performance without the impact of
unusual items that may obscure trends in the company's underlying
performance. A detailed reconciliation is provided below outlining
the differences between these non-GAAP measures and the directly
related GAAP measures.
------------------------------------------------------------
----------
Income
(Loss)
Before Net
Income Income
Per Share Taxes (Loss)
--------- ----------- --------
Earnings per share (EPS) and net income,
excluding special items $ 0.28 $ 292 $ 452
Special items:
Asbestos settlement (a) (0.07) (110) (110)
Loss on repurchase of debt, net (b) (0.01) (15) (15)
--------- --------- ------
Total EPS and net income $ 0.20 $ 167 $ 327
========= ========= ======
(a)Between 2003 and 2007, changes in the estimated fair value of the
components of the proposed settlement agreement were recognized in
Corning's quarterly results. During that time, the components of
the proposed asbestos settlement included 25 million shares of
Corning common stock and certain other items. In the first quarter
of 2007, Corning recorded a charge of $110 million (before- and
after-tax) including a charge of $101 million for the change in
Corning's common stock price of $22.74 at March 31, 2007, compared
to $18.71 at December 31, 2006 and a $9 million charge for the
change in the estimated fair value of certain other components of
the proposed asbestos settlement liability.
(b)Amount reflects a $15 million loss on the repurchase of $223
million principal amount of our 6.25% Euro notes due 2010.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE TO GAAP FINANCIAL MEASURE
Telecommunications Segment
(Unaudited; amounts in millions)
------------------------------------------------------------
----------
Corning's comment, "Excluding the impact of last year's divestiture of
Corning's submarine cabling business, quarter one sales increased 3%
versus last year." includes 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 this non-GAAP improvement in segments
sales 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.
------------------------------------------------------------
----------
Sales vs. Prior Quarter
Three months ended
------------------------
March 31, March 31, %
2008 2007 Change
------------ ----------- -------
Telecommunications segment sales
excluding sales from the Company's
European submarine cabling business $ 421 $ 409 3%
Sales of the European submarine
cabling business 0 30
------------ ----------- -------
Telecommunications segment sales $ 421 $ 439 (4%)
============ =========== =======
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE TO GAAP FINANCIAL MEASURE
Three Months Ended March 31, 2008 and December 31, 2007
(Unaudited; amounts in millions)
------------------------------------------------------------
----------
Corning's free cash flow financial measure for the three months ended
March 31, 2008 and December 31, 2007 are non-GAAP financial measures
within the meaning of Regulation G of the Securities and Exchange
Commission. Non-GAAP financial measures are not in accordance with,
or an alternative to, generally accepted accounting principles
(GAAP). The company believes presenting non-GAAP financial measures
are helpful to analyze financial performance without the impact of
unusual items that may obscure trends in the company's underlying
performance. A detailed reconciliation is provided below outlining
the differences between this non-GAAP measure and the directly
related GAAP measures.
------------------------------------------------------------
----------
Three Three
months ended months ended
March 31, 2008 December 31, 2007
---------------- ------------------
Cash flows from operating
activities $ 295 $ 732
Less: Cash flows from investing
activities (375) (235)
Plus: Short-term investments -
acquisitions 724 570
Less: Short-term investments -
liquidations (816) (721)
---------------- ------------------
Free cash flow $ (172) $ 346
================ ==================
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE TO GAAP FINANCIAL MEASURE
Three Months Ended June 30, 2008
(Unaudited; amounts in millions, except per share amounts)
-------------------------------------------------------------
---------
Corning's earnings per share (EPS) excluding special items for the
second quarter of 2008 is a non-GAAP financial measure within the
meaning of Regulation G of the Securities and Exchange Commission.
Non-GAAP financial measures are not in accordance with, or an
alternative to, generally accepted accounting principles (GAAP). The
company believes presenting non-GAAP EPS is helpful to analyze
financial performance without the impact of unusual items that may
obscure trends in the company's underlying performance. A detailed
reconciliation is provided below outlining the differences between
this non-GAAP measure and the directly related GAAP measure.
-------------------------------------------------------------
---------
Range
-------------------------
Guidance: EPS excluding special items $ 0.47 $ 0.50
Special items (a)
------------ ---------
Earnings per share
----------------------------------------------------------------
------
This schedule will be updated as additional announcements occur.
---------------------------------------------------------------
-------
(a) From time to time, Corning may record special items which could
result in a gain or loss during the quarter.
Please note that the company may pursue other financing, restructuring
and divestiture activities at any time in the future, and that the
potential impact of these events is not included within Corning's
second quarter 2008 guidance.
This schedule contains forward looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Such forward
looking statements are based on current expectations and involve
certain risks and uncertainties. Actual results may differ from those
projected in the forward looking statements. Additional information
concerning factors that could cause actual results to materially
differ from those in the forward looking statements is contained in
the Securities and Exchange Commission filings of this Company.
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