Date of Report: (Date of earliest event reported)
|
January 29, 2013
|
New York
(State or other jurisdiction
of incorporation)
|
1-3247
(Commission
File Number)
|
16-0393470
(I.R.S. Employer
Identification No.)
|
One Riverfront Plaza, Corning, New York
(Address of principal executive offices)
|
14831
(Zip Code)
|
¨
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
¨
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
¨
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
¨
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
CORNING INCORPORATED
|
|
Registrant
|
Date: January 29, 2013
|
By
|
/s/ R. TONY TRIPENY
|
R. Tony Tripeny
|
||
Senior Vice President & Corporate Controller
|
·
|
Sales were $2.15 billion, a 14% year-over-year increase. The quarter performance reflects the largest quarterly sales in Corning history.
|
·
|
Earnings per share were $0.34,* excluding special items, the company’s first year-over-year quarterly improvement since 2010; GAAP earnings per share were $0.19.
|
·
|
Display Technologies total glass volume from Corning’s wholly owned business and Samsung Corning Precision Materials Co., Ltd. (SCPM) increased sequentially by a high-single digit percentage, reflecting overall improved market demand throughout the quarter. Price declines in Corning’s wholly owned business were slightly higher than in the third quarter, as expected. For SCPM, price declines were consistent with the previous quarter.
|
·
|
Specialty Materials sales were up 68% on a year-over-year basis and 10% sequentially, driven by the continued strength of Corning® Gorilla® Glass.
|
·
|
Telecommunications sales improved 10% over the year-ago period and 3% sequentially.
|
·
|
Sales were $8.01 billion, a 2% increase over $7.9 billion last year, representing a sales record for the company.
|
·
|
Excluding special items, earnings per share for the year were $1.29* compared to last year’s $1.76*. GAAP earnings per share for the year were $1.15 versus $1.77 last year.
|
·
|
Free cash flow for the year was $579 million*.
|
Q4 2012
|
Q4 2011
|
% Change
|
|
Net Sales in millions
|
$2,146
|
$1,887
|
14%
|
Net Income in millions
|
$283
|
$491
|
(42%)
|
Non-GAAP Net Income
in millions*
|
$498
|
$513
|
(3%)
|
GAAP EPS
|
$0.19
|
$0.31
|
(39%)
|
Non-GAAP EPS*
|
$0.34
|
$0.33
|
3%
|
2012
|
2011
|
% Change
|
|
Net Sales in millions
|
$8,012
|
$7,890
|
2%
|
Net Income in millions
|
$1,728
|
$2,805
|
(38%)
|
Non-GAAP Net Income
in millions*
|
$1,940
|
$2,789
|
(30%)
|
GAAP EPS
|
$1.15
|
$1.77
|
(35%)
|
Non-GAAP EPS*
|
$1.29
|
$1.76
|
(27%)
|
·
|
In the Display Technologies segment, Corning expects first-quarter total glass volume from its wholly owned display business and Samsung Corning Precision Materials to increase on a year-over-year basis, but to decline sequentially by mid-single digits. This volume decline is in line with previous first-quarter seasonal declines. Corning’s LCD glass volume is anticipated to grow for the full year. Price declines in the quarter for our wholly owned business are expected to be more moderate versus the previous quarter. SCPM’s price declines should be similar to last quarter.
|
·
|
Telecommunications segment sales in the first quarter are expected to increase on a year-over-year basis. A rise in demand for Corning’s optical fiber and cable, combined with growth of fiber-to-the-home sales in Australia, and enterprise networks solutions, should bring about a strong year for the company’s Telecommunications segment.
|
·
|
Specialty Materials segment sales are expected to decline in the first quarter, which is typically the lowest quarter of the year for this business. For the full year, the company is anticipating double-digit market growth for Gorilla Glass, driven by its continued popularity as a cover glass for smartphones and tablets, and the emergence of touch technology on notebook computers.
|
·
|
Environmental Technologies first-quarter results are expected to decline from last year’s record quarterly sales. For the full year, the company anticipates that the worldwide auto and heavy-duty diesel truck markets should grow year over year.
|
·
|
In the Life Sciences segment, sales are expected to increase significantly year over year for both the first quarter and full year, benefiting from its recent acquisition.
|
Media Relations Contact:
|
Daniel F. Collins
|
(607) 974-4197
|
collinsdf@corning.com
|
Investor Relations Contact:
|
Ann H. S. Nicholson
|
(607) 974-6716
|
nicholsoas@corning.com
|
Three months ended
December 31,
|
Year ended
December 31,
|
||||||||||
2012
|
2011
|
2012
|
2011
|
||||||||
Net sales
|
$
|
2,146
|
$
|
1,887
|
$
|
8,012
|
$
|
7,890
|
|||
Cost of sales
|
1,239
|
1,062
|
4,615
|
4,324
|
|||||||
Gross margin
|
907
|
825
|
3,397
|
3,566
|
|||||||
Operating expenses:
|
|||||||||||
Selling, general and administrative expenses
|
301
|
283
|
1,165
|
1,033
|
|||||||
Research, development and engineering expenses
|
185
|
177
|
745
|
671
|
|||||||
Amortization of purchased intangibles
|
6
|
4
|
19
|
15
|
|||||||
Restructuring, impairment and other charges (Note 2)
|
133
|
129
|
133
|
129
|
|||||||
Asbestos litigation charge (Note 3)
|
5
|
9
|
14
|
24
|
|||||||
Operating income
|
277
|
223
|
1,321
|
1,694
|
|||||||
Equity in earnings of affiliated companies (Note 4)
|
93
|
321
|
810
|
1,471
|
|||||||
Interest income
|
4
|
4
|
14
|
19
|
|||||||
Interest expense
|
(34)
|
(17)
|
(111)
|
(89)
|
|||||||
Other income, net (Note 7)
|
41
|
21
|
83
|
118
|
|||||||
Income before income taxes
|
381
|
552
|
2,117
|
3,213
|
|||||||
Provision for income taxes (Note 5)
|
(98)
|
(61)
|
(389)
|
(408)
|
|||||||
Net income attributable to Corning Incorporated
|
$
|
283
|
$
|
491
|
$
|
1,728
|
$
|
2,805
|
|||
Earnings per common share attributable to Corning Incorporated:
|
|||||||||||
Basic (Note 8)
|
$
|
0.19
|
$
|
0.32
|
$
|
1.16
|
$
|
1.80
|
|||
Diluted (Note 8)
|
$
|
0.19
|
$
|
0.31
|
$
|
1.15
|
$
|
1.77
|
|||
Dividends declared per common share
|
$
|
0.09
|
$
|
0.08
|
$
|
0.32
|
$
|
0.23
|
Years ended December 31,
|
||||||||
(In millions, except per share amounts)
|
2012
|
2011
|
2010
|
|||||
Net income attributable to Corning Incorporated
|
$
|
1,728
|
$
|
2,805
|
$
|
3,558
|
||
Other comprehensive income, before tax:
|
||||||||
Foreign currency translation adjustments and other:
|
||||||||
Adjustments arising during the period
|
(439)
|
144
|
399
|
|||||
Less: reclassification adjustment for amounts included in net income
|
(52)
|
3
|
||||||
Equity investee’s foreign currency translation adjustment
|
312
|
(168)
|
167
|
|||||
Net unrealized gains (losses) on investments:
|
||||||||
Unrealized holding gain (loss) arising during the period
|
17
|
(2)
|
15
|
|||||
Less: reclassification adjustment for amounts included in net income
|
(10)
|
2
|
||||||
Equity investee’s unrealized gain (loss) on investments
|
9
|
6
|
(6)
|
|||||
Unamortized losses and prior service costs for postretirement benefit plans:
|
||||||||
Adjustments arising during the period
|
(280)
|
(79)
|
(176)
|
|||||
Less: amortization of losses and prior service costs included in net income
|
89
|
97
|
68
|
|||||
Equity investee’s defined benefit plan adjustments
|
34
|
(131)
|
(29)
|
|||||
Net unrealized gains (losses) on designated hedges:
|
||||||||
Unrealized holding gain (loss) arising during the period
|
100
|
(61)
|
(65)
|
|||||
Less: reclassification adjustment for amounts included in net income
|
(28)
|
54
|
24
|
|||||
Equity investee’s unrealized gain (loss) on designated hedges
|
2
|
(2)
|
2
|
|||||
Other comprehensive income, before tax
|
(246)
|
(139)
|
401
|
|||||
Income tax benefit related to items of other comprehensive income
|
35
|
7
|
43
|
|||||
Other comprehensive (loss) income, net of tax
|
(211)
|
(132)
|
444
|
|||||
Comprehensive income attributable to Corning Incorporated
|
$
|
1,517
|
$
|
2,673
|
$
|
4,002
|
December 31,
|
|||||
2012
|
2011
|
||||
Assets
|
|||||
Current assets:
|
|||||
Cash and cash equivalents
|
$
|
4,988
|
$
|
4,661
|
|
Short-term investments, at fair value
|
1,156
|
1,164
|
|||
Total cash, cash equivalents and short-term investments
|
6,144
|
5,825
|
|||
Trade accounts receivable, net of doubtful accounts and allowances
|
1,302
|
1,082
|
|||
Inventories
|
1,051
|
975
|
|||
Deferred income taxes
|
579
|
448
|
|||
Other current assets
|
619
|
347
|
|||
Total current assets
|
9,695
|
8,677
|
|||
Investments
|
4,915
|
4,726
|
|||
Property, net of accumulated depreciation
|
10,625
|
10,671
|
|||
Goodwill and other intangible assets, net
|
1,496
|
926
|
|||
Deferred income taxes
|
2,343
|
2,652
|
|||
Other assets
|
301
|
196
|
|||
Total Assets
|
$
|
29,375
|
$
|
27,848
|
|
Liabilities and Equity
|
|||||
Current liabilities:
|
|||||
Current portion of long-term debt
|
$
|
76
|
$
|
27
|
|
Accounts payable
|
779
|
977
|
|||
Other accrued liabilities
|
1,101
|
1,093
|
|||
Total current liabilities
|
1,956
|
2,097
|
|||
Long-term debt
|
3,382
|
2,364
|
|||
Postretirement benefits other than pensions
|
930
|
897
|
|||
Other liabilities
|
1,574
|
1,361
|
|||
Total liabilities
|
7,842
|
6,719
|
|||
Commitments and contingencies
|
|||||
Shareholders’ equity:
|
|||||
Common stock – Par value $0.50 per share; Shares authorized: 3.8 billion; Shares issued: 1,650 million and 1,636 million
|
825
|
818
|
|||
Additional paid-in capital
|
13,146
|
13,041
|
|||
Retained earnings
|
10,588
|
9,332
|
|||
Treasury stock, at cost; Shares held: 180 million and 121 million
|
(2,773)
|
(2,024)
|
|||
Accumulated other comprehensive loss
|
(300)
|
(89)
|
|||
Total Corning Incorporated shareholders’ equity
|
21,486
|
21,078
|
|||
Noncontrolling interests
|
47
|
51
|
|||
Total equity
|
21,533
|
21,129
|
|||
Total Liabilities and Equity
|
$
|
29,375
|
$
|
27,848
|
Three months ended
December 31,
|
Year ended
December 31,
|
||||||||||
2012
|
2011
|
2012
|
2011
|
||||||||
Cash Flows from Operating Activities:
|
|||||||||||
Net income
|
$
|
283
|
$
|
491
|
$
|
1,728
|
$
|
2,805
|
|||
Adjustments to reconcile net income to net cash provided by operating activities:
|
|||||||||||
Depreciation
|
261
|
243
|
978
|
942
|
|||||||
Amortization of purchased intangibles
|
6
|
4
|
19
|
15
|
|||||||
Restructuring, impairment and other charges
|
133
|
129
|
133
|
129
|
|||||||
Loss on retirement of debt
|
26
|
26
|
|||||||||
Stock compensation charges
|
14
|
20
|
70
|
86
|
|||||||
Undistributed earnings of affiliated companies less than (in excess of) dividends received
|
420
|
35
|
280
|
(651)
|
|||||||
Deferred tax provision (benefit)
|
24
|
(3)
|
68
|
115
|
|||||||
Restructuring payments
|
(12)
|
(1)
|
(15)
|
(16)
|
|||||||
Cash received from settlement of insurance claims
|
66
|
||||||||||
Employee benefit payments less than expense
|
36
|
27
|
36
|
132
|
|||||||
Changes in certain working capital items:
|
|||||||||||
Trade accounts receivable
|
(123)
|
98
|
(272)
|
(84)
|
|||||||
Inventories
|
8
|
(31)
|
(23)
|
(201)
|
|||||||
Other current assets
|
(16)
|
29
|
(81)
|
(20)
|
|||||||
Accounts payable and other current liabilities
|
231
|
80
|
189
|
(27)
|
|||||||
Other, net
|
(51)
|
36
|
70
|
(102)
|
|||||||
Net cash provided by operating activities
|
1,240
|
1,157
|
3,206
|
3,189
|
|||||||
Cash Flows from Investing Activities:
|
|||||||||||
Capital expenditures
|
(526)
|
(766)
|
(1,801)
|
(2,432)
|
|||||||
Acquisitions of businesses, net of cash received
|
(723)
|
(67)
|
(723)
|
(215)
|
|||||||
Net proceeds from sale or disposal of assets
|
2
|
||||||||||
Investment in affiliates
|
(111)
|
||||||||||
Short-term investments – acquisitions
|
(411)
|
(389)
|
(2,270)
|
(2,582)
|
|||||||
Short-term investments – liquidations
|
651
|
745
|
2,269
|
3,171
|
|||||||
Other, net
|
2
|
1
|
8
|
||||||||
Net cash used in investing activities
|
(1,007)
|
(476)
|
(2,628)
|
(2,056)
|
|||||||
Cash Flows from Financing Activities:
|
|||||||||||
Net repayments of short-term borrowings and current portion of long-term debt
|
(2)
|
(2)
|
(26)
|
(24)
|
|||||||
Proceeds from issuance of long-term debt, net
|
332
|
86
|
1,362
|
120
|
|||||||
Payment to settle interest rate swap agreements
|
(18)
|
||||||||||
Retirements of long-term debt, net
|
(280)
|
(280)
|
|||||||||
Principal payments under capital lease obligations
|
(1)
|
(32)
|
|||||||||
Proceeds from the exercise of stock options
|
12
|
8
|
38
|
90
|
|||||||
Repurchases of common stock for treasury
|
(140)
|
(780)
|
(720)
|
(780)
|
|||||||
Dividends paid
|
(133)
|
(117)
|
(472)
|
(354)
|
|||||||
Other, net
|
2
|
2
|
|||||||||
Net cash used in financing activities
|
(209)
|
(805)
|
(115)
|
(980)
|
|||||||
Effect of exchange rates on cash
|
12
|
(116)
|
(136)
|
(90)
|
|||||||
Net increase in cash and cash equivalents
|
36
|
(240)
|
327
|
63
|
|||||||
Cash and cash equivalents at beginning of period
|
4,952
|
4,901
|
4,661
|
4,598
|
|||||||
Cash and cash equivalents at end of period
|
$
|
4,988
|
$
|
4,661
|
$
|
4,988
|
$
|
4,661
|
Display
Technologies
|
Telecom-
munications
|
Environmental
Technologies
|
Specialty
Materials
|
Life
Sciences
|
All
Other
|
Total
|
||||||||||||||
Three months ended
December 31, 2012
|
||||||||||||||||||||
Net sales
|
$
|
800
|
$
|
540
|
$
|
219
|
$
|
399
|
$
|
185
|
$
|
3
|
$
|
2,146
|
||||||
Depreciation (1)
|
$
|
137
|
$
|
32
|
$
|
30
|
$
|
43
|
$
|
13
|
$
|
3
|
$
|
258
|
||||||
Amortization of purchased intangibles
|
$
|
2
|
$
|
4
|
$
|
6
|
||||||||||||||
Research, development and engineering expenses (2)
|
$
|
26
|
$
|
33
|
$
|
25
|
$
|
42
|
$
|
6
|
$
|
32
|
$
|
164
|
||||||
Restructuring, impairment and other charges (3)
|
$
|
21
|
$
|
39
|
$
|
3
|
$
|
54
|
$
|
2
|
$
|
119
|
||||||||
Equity in earnings of affiliated
companies (4)
|
$
|
139
|
$
|
1
|
$
|
3
|
$
|
143
|
||||||||||||
Income tax (provision) benefit
|
$
|
(110)
|
$
|
(12)
|
$
|
(7)
|
$
|
(12)
|
$
|
1
|
$
|
15
|
$
|
(125)
|
||||||
Net income (loss) (5)
|
$
|
370
|
$
|
63
|
$
|
15
|
$
|
28
|
$
|
(1)
|
$
|
(32)
|
$
|
443
|
||||||
Three months ended
December 31, 2011
|
||||||||||||||||||||
Net sales
|
$
|
780
|
$
|
490
|
$
|
234
|
$
|
238
|
$
|
143
|
$
|
2
|
$
|
1,887
|
||||||
Depreciation (1)
|
$
|
133
|
$
|
32
|
$
|
28
|
$
|
36
|
$
|
9
|
$
|
4
|
$
|
242
|
||||||
Amortization of purchased intangibles
|
$
|
2
|
$
|
2
|
$
|
4
|
||||||||||||||
Research, development and engineering expenses (2)
|
$
|
18
|
$
|
35
|
$
|
23
|
$
|
37
|
$
|
7
|
$
|
30
|
$
|
150
|
||||||
Restructuring, impairment and other credits (3)
|
$
|
(1)
|
$
|
130
|
$
|
129
|
||||||||||||||
Equity in earnings of affiliated companies (4)
|
$
|
192
|
$
|
(1)
|
$
|
(9)
|
$
|
2
|
$
|
184
|
||||||||||
Income tax (provision) benefit
|
$
|
(126)
|
$
|
(11)
|
$
|
(14)
|
$
|
52
|
$
|
(5)
|
$
|
11
|
$
|
(93)
|
||||||
Net income (loss) (5)
|
$
|
492
|
$
|
26
|
$
|
28
|
$
|
(105)
|
$
|
10
|
$
|
(26)
|
$
|
425
|
||||||
Year ended
December 31, 2012
|
||||||||||||||||||||
Net sales
|
$
|
2,909
|
$
|
2,130
|
$
|
964
|
$
|
1,346
|
$
|
657
|
$
|
6
|
$
|
8,012
|
||||||
Depreciation (1)
|
$
|
514
|
$
|
130
|
$
|
117
|
$
|
153
|
$
|
44
|
$
|
14
|
$
|
972
|
||||||
Amortization of purchased intangibles
|
$
|
9
|
$
|
10
|
$
|
19
|
||||||||||||||
Research, development and engineering expenses (2)
|
$
|
103
|
$
|
138
|
$
|
100
|
$
|
144
|
$
|
22
|
$
|
124
|
$
|
631
|
||||||
Restructuring, impairment and other charges (3)
|
$
|
21
|
$
|
39
|
$
|
3
|
$
|
54
|
$
|
2
|
$
|
119
|
||||||||
Equity in earnings of affiliated
companies (4)
|
$
|
692
|
$
|
$
|
1
|
$
|
17
|
$
|
710
|
|||||||||||
Income tax (provision) benefit
|
$
|
(367)
|
$
|
(58)
|
$
|
(57)
|
$
|
(69)
|
$
|
(14)
|
$
|
52
|
$
|
(513)
|
||||||
Net income (loss) (5)
|
$
|
1,602
|
$
|
155
|
$
|
115
|
$
|
142
|
$
|
31
|
$
|
(98)
|
$
|
1,947
|
||||||
Year ended
December 31, 2011
|
||||||||||||||||||||
Net sales
|
$
|
3,145
|
$
|
2,072
|
$
|
998
|
$
|
1,074
|
$
|
595
|
$
|
6
|
$
|
7,890
|
||||||
Depreciation (1)
|
$
|
511
|
$
|
123
|
$
|
107
|
$
|
156
|
$
|
34
|
$
|
12
|
$
|
943
|
||||||
Amortization of purchased intangibles
|
$
|
7
|
$
|
1
|
$
|
7
|
$
|
15
|
||||||||||||
Research, development and engineering expenses (2)
|
$
|
91
|
$
|
125
|
$
|
96
|
$
|
137
|
$
|
19
|
$
|
98
|
$
|
566
|
||||||
Restructuring, impairment and other credits (3)
|
$
|
(1)
|
$
|
130
|
$
|
129
|
||||||||||||||
Equity in earnings of affiliated companies (4)
|
$
|
1,027
|
$
|
3
|
$
|
1
|
$
|
4
|
$
|
15
|
$
|
1,050
|
||||||||
Income tax (provision) benefit
|
$
|
(501)
|
$
|
(82)
|
$
|
(58)
|
$
|
24
|
$
|
(29)
|
$
|
39
|
$
|
(607)
|
||||||
Net income (loss) (5)
|
$
|
2,349
|
$
|
195
|
$
|
121
|
$
|
(36)
|
$
|
61
|
$
|
(78)
|
$
|
2,612
|
(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 expense includes direct project spending which is identifiable to a segment.
|
(3)
|
In the three months and year ended 2012, Corning recorded a $44 million impairment charge in the Specialty Materials segment related to certain assets located in Japan used for the production of large cover glass. In the three months and the year ended December 31, 2011, restructuring, impairment and other charges includes $130 million impairment charge in the Specialty Materials segment related to certain long-lived assets.
|
(4)
|
In the three months and year ended 2012, equity in earnings of affiliated companies in the Display Technologies segment included a $18 million impairment charge for our share of costs for asset write-offs.
|
(5)
|
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.
|
Three months ended
December 31,
|
Year ended
December 31,
|
||||||||||
2012
|
2011
|
2012
|
2011
|
||||||||
Net income of reportable segments
|
$
|
475
|
$
|
451
|
$
|
2,045
|
$
|
2,690
|
|||
Net loss of All Other
|
(32)
|
(26)
|
(98)
|
(78)
|
|||||||
Unallocated amounts:
|
|||||||||||
Net financing costs (1)
|
(57)
|
(44)
|
(196)
|
(190)
|
|||||||
Stock-based compensation expense
|
(15)
|
(20)
|
(71)
|
(86)
|
|||||||
Exploratory research
|
(15)
|
(20)
|
(89)
|
(79)
|
|||||||
Corporate contributions
|
(8)
|
(10)
|
(44)
|
(48)
|
|||||||
Equity in earnings of affiliated companies, net of impairments (2)
|
(68)
|
137
|
82
|
421
|
|||||||
Asbestos settlement (3)
|
(5)
|
(9)
|
(14)
|
(24)
|
|||||||
Other corporate items (4)
|
8
|
32
|
113
|
199
|
|||||||
Net income
|
$
|
283
|
$
|
491
|
$
|
1,728
|
$
|
2,805
|
(1)
|
Net financing costs include interest expense, interest income, and interest costs and investment gains and losses associated with benefit plans.
|
(2)
|
Equity in earnings of affiliated companies, net of impairments, is primarily equity in earnings of Dow Corning, which includes the following items:
|
·
|
In the three months and year ended December 31, 2012, restructuring and impairment charges in the amount of $87 million ($81 million after tax) for our share of a charge related to workforce reductions and asset write-offs at Dow Corning; and, in the year ended 2012, a $10 million ($9 million after tax) credit for Corning’s share of Dow Corning’s settlement of a dispute related to long term supply agreements.
|
·
|
In the three months and year ended December 31, 2011, a $89 million credit for our share of Dow Corning’s settlement of a dispute related to long term supply agreements; and
|
(3)
|
In the three months and year ended December 31, 2012, Corning recorded charges of $5 million and $14 million, respectively, to adjust the asbestos liability for the change in value of the components of the Amended PCC Plan. In the three months and year ended December 31, 2011, Corning recorded charges of $9 million and $24 million, respectively, to adjust the asbestos liability for the change in value of the components of the Amended PCC Plan.
|
(4)
|
Other corporate items include the tax impact of the unallocated amounts and the following significant items:
|
·
|
In three months and year ended December 31, 2012, Corning recorded a $52 million translation capital gain on the liquidation of a foreign subsidiary; a loss of $26 million ($17 million after tax) from the repurchase of $13 million of our 8.875% senior unsecured notes due 2021, $11 million of our 8.875% senior unsecured notes due 2016, and $51 million of our 6.75% senior unsecured notes due 2013; and $41 million in tax expense, including $37 million resulting from the delay of the passage of the American Taxpayer Relief Act of 2012 until Jan. 2013 , that will be reversed in Q1, 2013.
|
·
|
In the year ended December 31, 2011, Corning recorded a $41 million tax benefit from the filing of an amended 2006 U.S. Federal Tax return to claim foreign tax credits.
|
1.
|
Translation Capital Gain
|
2.
|
Restructuring, Impairment, and Other Charges (Credits)
|
3.
|
Asbestos Litigation
|
4.
|
Equity in Earnings of Affiliated Companies
|
5.
|
Provision for Income Taxes
|
6.
|
Acquisition-related expenses
|
7.
|
Loss on Repurchase of Debt
|
8.
|
Weighted Average Shares Outstanding
|
Three months ended
December 31,
|
Year ended
December 31,
|
||||||
2012
|
2011
|
2012
|
2011
|
||||
Basic
|
1,471
|
1,546
|
1,494
|
1,562
|
|||
Diluted
|
1,481
|
1,564
|
1,506
|
1,583
|
|||
Diluted used for non-GAAP measures
|
1,481
|
1,564
|
1,506
|
1,583
|
2012
|
||||||||||||||
Q1
|
Q2
|
Q3
|
Q4
|
Total
|
||||||||||
Display Technologies
|
$
|
705
|
$
|
641
|
$
|
763
|
$
|
800
|
$
|
2,909
|
||||
Telecommunications
|
||||||||||||||
Fiber and cable
|
254
|
302
|
278
|
268
|
1,102
|
|||||||||
Hardware and equipment
|
254
|
257
|
245
|
272
|
1,028
|
|||||||||
508
|
559
|
523
|
540
|
2,130
|
||||||||||
Environmental Technologies
|
||||||||||||||
Automotive
|
129
|
120
|
123
|
114
|
486
|
|||||||||
Diesel
|
134
|
129
|
110
|
105
|
478
|
|||||||||
263
|
249
|
233
|
219
|
964
|
||||||||||
Specialty Materials
|
288
|
296
|
363
|
399
|
1,346
|
|||||||||
Life Sciences
|
155
|
162
|
155
|
185
|
657
|
|||||||||
All Other
|
1
|
1
|
1
|
3
|
6
|
|||||||||
Total
|
$
|
1,920
|
$
|
1,908
|
$
|
2,038
|
$
|
2,146
|
$
|
8,012
|
2011
|
||||||||||||||
Q1
|
Q2
|
Q3
|
Q4
|
Total
|
||||||||||
Display Technologies
|
$
|
790
|
$
|
760
|
$
|
815
|
$
|
780
|
$
|
3,145
|
||||
Telecommunications
|
||||||||||||||
Fiber and cable
|
248
|
265
|
276
|
262
|
1,051
|
|||||||||
Hardware and equipment
|
226
|
283
|
284
|
228
|
1,021
|
|||||||||
474
|
548
|
560
|
490
|
2,072
|
||||||||||
Environmental Technologies
|
||||||||||||||
Automotive
|
123
|
121
|
119
|
113
|
476
|
|||||||||
Diesel
|
136
|
137
|
128
|
121
|
522
|
|||||||||
259
|
258
|
247
|
234
|
998
|
||||||||||
Specialty Materials
|
254
|
283
|
299
|
238
|
1,074
|
|||||||||
Life Sciences
|
144
|
155
|
153
|
143
|
595
|
|||||||||
All Other
|
2
|
1
|
1
|
2
|
6
|
|||||||||
Total
|
$
|
1,923
|
$
|
2,005
|
$
|
2,075
|
$
|
1,887
|
$
|
7,890
|
Corning’s net income and earnings per share (EPS) excluding special items for the fourth quarter of 2012 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
Share
|
Income Before
Income Taxes
|
Net
Income
|
||||||
Earnings per share (EPS) and net income, excluding special items
|
$
|
0.34
|
$
|
622
|
$
|
498
|
||
Special items:
|
||||||||
Asbestos settlement (a)
|
-
|
(5)
|
(3)
|
|||||
Loss on repurchase of debt (b)
|
(0.01)
|
(26)
|
(17)
|
|||||
Equity in earnings of affiliated companies (c)
|
(0.07)
|
(105)
|
(99)
|
|||||
Acquisition-related costs (d)
|
(0.01)
|
(24)
|
(16)
|
|||||
Restructuring, impairment, and other credits (e)
|
(0.06)
|
(133)
|
(91)
|
|||||
Provision for income taxes (f)
|
(0.03)
|
-
|
(41)
|
|||||
Accumulated other comprehensive income (g)
|
0.04
|
52
|
52
|
|||||
Total EPS and net income
|
$
|
0.19
|
$
|
381
|
$
|
283
|
(a)
|
In the fourth quarter of 2012, Corning recorded a charge of $5 million ($3 million after tax) to adjust the asbestos liability for the change in value of the components of the Modified PCC Plan.
|
(b)
|
In the fourth quarter of 2012, Corning recorded a $26 million loss ($17 million after tax) on the repurchase of $13 million of our 8.875% senior unsecured notes due 2021, $11 million of our 8.875% senior unsecured notes due 2016, and $51 million of our 6.75% senior unsecured notes due 2013.
|
(c)
|
In the fourth quarter of 2012, Corning recorded an $18 million impairment charge for our share of costs for asset write-offs at Samsung Corning Precision Materials, and recorded restructuring and impairment charges in the amount of $87 million ($81 million after tax) for our share of costs associated with workforce reductions and asset write-offs at Dow Corning.
|
(d)
|
Includes expenses for the amortization of purchased intangibles, amortization of purchase accounting adjustments to inventories and external deal costs recognized as a result of acquisitions.
|
(e)
|
In the fourth quarter of 2012, Corning recorded a $133 million ($91 million after tax) charge for asset impairments, workforce reductions and asset write-offs and disposals.
|
(f)
|
In the fourth quarter of 2012, Corning recorded a $37 million tax expense resulting from the delay of the passage of the American Taxpayer Relief Act of 2012 until Jan. 2013 , that will be reversed in Q1, 2013, and a $4 million net tax provision related to the adjustment of deferred taxes as a result of tax rate reductions in Japan.
|
(g)
|
In the fourth quarter of 2012, Corning recorded a $52 million translation capital gain on the liquidation of a foreign subsidiary.
|
|
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
|
Corning’s net income and earnings per share (EPS) excluding special items for the fourth quarter of 2011 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
Share
|
Income Before
Income Taxes
|
Net
Income
|
||||||
Earnings per share (EPS) and net income, excluding special items
|
$
|
0.33
|
$
|
606
|
$
|
513
|
||
Special items:
|
||||||||
Contingent liability (a)
|
-
|
5
|
5
|
|||||
Restructuring, impairment, and other credits (b)
|
(0.05)
|
(130)
|
(83)
|
|||||
Asbestos settlement (c)
|
-
|
(9)
|
(5)
|
|||||
Equity in earnings of affiliated companies (d)
|
0.04
|
80
|
74
|
|||||
Provision for income taxes (e)
|
(0.01)
|
-
|
(13)
|
|||||
Total EPS and net income
|
$
|
0.31
|
$
|
552
|
$
|
491
|
(a)
|
In the fourth quarter of 2011, Corning recognized a credit of $5 million resulting from a reduction in a contingent liability associated with an acquisition recorded in the first quarter of 2011.
|
(b)
|
In the fourth quarter of 2011, Corning recorded a $130 million ($83 million after-tax) asset impairment charge for certain long-lived assets in our Specialty Materials segment.
|
(c)
|
In the fourth quarter of 2011, Corning recorded a charge of $9 million ($5 million after-tax) to adjust the asbestos liability for the change in value of the components of the modified PCC Plan.
|
(d)
|
In the fourth quarter of 2011, equity in earnings of affiliated companies included a $80 million ($74 million after-tax) credit for Corning’s share of the future portion of Dow Corning Corporation’s settlement of a dispute related to long term supply agreements.
|
(e)
|
In the fourth quarter of 2011, Corning recorded a $13 million net tax provision related to the adjustment of deferred taxes as a result of enacted tax rate reductions primarily in Japan.
|
Corning’s net income and earnings per share (EPS) excluding special items for the third quarter of 2012 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
Share
|
Income Before
Income Taxes
|
Net
Income
|
||||||
Earnings per share (EPS) and net income, excluding special items
|
$
|
0.34
|
$
|
601
|
$
|
514
|
||
Special items:
|
||||||||
Asbestos settlement (a)
|
-
|
(3)
|
(2)
|
|||||
Provision for income taxes (b)
|
0.01
|
10
|
9
|
|||||
Total EPS and net income
|
$
|
0.35
|
$
|
608
|
$
|
521
|
(a)
|
In the third quarter of 2012, Corning recorded a charge of $3 million ($2 million after-tax) to adjust the asbestos liability for the change in value of components of the Modified PCC Plan.
|
(b)
|
In the third quarter of 2012, equity in earnings of affiliated companies included a $10 million ($9 million after-tax) credit for Corning’s share of Dow Corning Corporation’s settlement of a dispute related to long term supply agreements.
|
Corning’s net income and earnings per share (EPS) excluding special items for the year ended December 31, 2012 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
Share
|
Income Before
Income Taxes
|
Net
Income
|
||||||
Earnings per share (EPS) and net income, excluding special items
|
$
|
1.29
|
$
|
2,357
|
$
|
1,940
|
||
Special items:
|
||||||||
Asbestos settlement (a)
|
(0.01)
|
(14)
|
(9)
|
|||||
Loss on repurchase of debt (b)
|
(0.01)
|
(26)
|
(17)
|
|||||
Equity in earnings of affiliated companies (c)
|
(0.05)
|
(95)
|
(90)
|
|||||
Acquisition-related costs (d)
|
(0.01)
|
(24)
|
(16)
|
|||||
Restructuring, impairment, and other credits (e)
|
(0.06)
|
(133)
|
(91)
|
|||||
Provision for income taxes (f)
|
(0.03)
|
-
|
(41)
|
|||||
Accumulated other comprehensive income (g)
|
0.03
|
52
|
52
|
|||||
Total EPS and net income
|
$
|
1.15
|
$
|
2,117
|
$
|
1,728
|
(a)
|
In the year ended December 31, 2012, Corning recorded a charge of $14 million ($9 million after tax) to adjust the asbestos liability for the change in value of the components of the Modified PCC Plan.
|
(b)
|
In the year ended December 31, 2012, Corning recorded a $26 million loss ($17 million after tax) on the repurchase of $13 million of our 8.875% senior unsecured notes due 2021, $11 million of our 8.875% senior unsecured notes due 2016, and $51 million of our 6.75% senior unsecured notes due 2013.
|
(c)
|
In the year ended December 31, 2012, Corning recorded an $18 million impairment charge for our share of costs for asset write-offs at Samsung Corning Precision Materials; restructuring and impairment charges in the amount of $87 million ($81 million after tax) for our share of costs associated with workforce reductions and asset write-offs at Dow Corning; and a $10 million ($9 million after tax) credit for Corning’s share of Dow Corning’s settlement of a dispute related to long term supply agreements.
|
(d)
|
Includes expenses for the amortization of purchased intangibles, amortization of purchase accounting adjustments to inventories and external deal costs recognized as a result of acquisitions.
|
(e)
|
In the year ended December 31, 2012, Corning recorded a $133 million ($91 million after tax) charge for asset impairments, workforce reductions and asset write-offs and disposals.
|
(f)
|
In the year ended December 31, 2012, Corning recorded a $37 million tax expense resulting from the delay of the passage of the American Taxpayer Relief Act of 2012 until Jan. 2013 , that will be reversed in Q1, 2013, and a $4 million net tax provision related to the adjustment of deferred taxes as a result of tax rate reductions in Japan.
|
(g)
|
In the year ended December 31, 2012, Corning recorded a $52 million translation capital gain on the liquidation of a foreign subsidiary.
|
Corning’s net income and earnings per share (EPS) excluding special items for the year ended December 31, 2011 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
Share
|
Income Before
Income Taxes
|
Net
Income
|
||||||
Earnings per share (EPS) and net income, excluding special items
|
$
|
1.76
|
$
|
3,260
|
$
|
2,789
|
||
Special items:
|
||||||||
Contingent liability (a)
|
0.02
|
27
|
27
|
|||||
Restructuring, impairment, and other credits (b)
|
(0.05)
|
(130)
|
(83)
|
|||||
Asbestos settlement (c)
|
(0.01)
|
(24)
|
(15)
|
|||||
Equity in earnings of affiliated companies (d)
|
0.04
|
80
|
74
|
|||||
Provisions for income taxes (e)
|
0.01
|
-
|
13
|
|||||
Total EPS and net income
|
$
|
1.77
|
$
|
3,213
|
$
|
2,805
|
(a)
|
In 2011, Corning recognized a credit of $27 million resulting from a reduction to a contingent liability associated with an acquisition recorded in the first quarter of 2011.
|
(b)
|
In 2011, Corning recorded a $130 million ($83 million after-tax) asset impairment charge for certain long-lived assets in our Specialty Materials segment.
|
(c)
|
In 2011, Corning recorded a charge of $24 million ($15 million after-tax) to adjust the asbestos liability for the change in value of the components of the Modified PCC Plan.
|
(d)
|
In 2011, equity in earnings of affiliated companies included an $80 million credit ($74 million after-tax) for Corning’s share of the future portion of Dow Corning Corporation’s settlement of a dispute related to long term supply agreements.
|
(e)
|
In 2011, Corning recorded a $26 million net tax benefit related to prior year foreign tax credits and other tax adjustments. Also in 2011, Corning recorded a $13 million net tax provision related to the adjustment of deferred taxes as a result of enacted tax rate reductions primarily in Japan.
|
Corning’s comment, “Dow Corning Corporation’s equity earnings, excluding special items” is a non-GAAP financial measure within the meaning of Regulation G of the Securities and Exchange Commission. Non-GAAP financial measures are not in accordance with, or an alternative to, generally accepted accounting principles (GAAP). The company believes presenting non-GAAP financial measures are helpful to analyze financial performance without the impact of unusual items that may obscure trends in the company’s underlying performance. A detailed reconciliation is provided below outlining the differences between this non-GAAP measure and the directly related GAAP measures.
|
Q4, 2012
|
Q4, 2011
|
Q3, 2012
|
||||||
Equity earnings of Dow Corning Corporation, excluding special items
|
$
|
33
|
$
|
49
|
$
|
38
|
||
Special items:
|
||||||||
Equity in earnings of affiliated companies (a)
|
(87)
|
80
|
10
|
|||||
Equity earnings of Dow Corning Corporation
|
$
|
(54)
|
$
|
129
|
$
|
48
|
(a)
|
Equity earnings of affiliated companies included the following items: 1) In the fourth quarter of 2012, an impairment charge of $87 million for Corning’s share of a charge for workforce reductions and asset write-offs at Dow Corning; 2) in the fourth quarter of 2011, a $80 million credit for Corning’s share of the future portion of Dow Corning Corporation’s settlement of a dispute related to long term supply agreements; and 3) in the third quarter of 2012, a $10 million credit for Corning’s share of Dow Corning Corporation’s settlement of a dispute related to long term supply agreements.
|
Corning’s free cash flow financial measure for the three months and year ended December 31, 2012 is a non-GAAP financial measure within the meaning of Regulation G of the Securities and Exchange Commission. Non-GAAP financial measures are not in accordance with, or an alternative to, generally accepted accounting principles (GAAP). The company believes presenting non-GAAP financial measures are helpful to analyze financial performance without the impact of unusual items that may obscure trends in the company’s underlying performance. A detailed reconciliation is provided below outlining the differences between this non-GAAP measure and the directly related GAAP measures.
|
Three months ended
December 31, 2012
|
Year ended
December 31, 2012
|
||||
Cash flows from operating activities
|
$
|
1,240
|
$
|
3,206
|
|
Less: Cash flows from investing activities
|
(1,007)
|
(2,628)
|
|||
Plus: Short-term investments – acquisitions
|
411
|
2,270
|
|||
Less: Short-term investments – liquidations
|
(651)
|
(2,269)
|
|||
Free cash flow
|
$
|
(7)
|
$
|
579
|