10-KPeriod: FY2002

CORNING INC /NY Annual Report, Year Ended Dec 31, 2002

Filed February 20, 2003For Securities:GLW

Summary

Corning Incorporated's 2002 Form 10-K filing reveals a challenging year marked by significant revenue declines, primarily driven by the ongoing downturn in the telecommunications industry. The company experienced substantial restructuring and impairment charges, leading to a net loss for the year. Despite these headwinds, Corning continued to invest in research and development and reported progress in its Technologies Segment, particularly in display technologies and environmental products. Key strategic actions included the sale of the precision lens business and efforts to reduce operating costs and streamline manufacturing. The company's outlook for 2003 anticipates stabilizing revenues, a reduced operating loss, and a return to profitability before one-time charges, contingent on economic stability. Investors should note the significant goodwill impairment and the ongoing litigation risks, particularly related to Pittsburgh Corning and environmental matters.

Key Highlights

  • 1Significant revenue decline of 48% in 2002, primarily due to the severe downturn in the Telecommunications Segment.
  • 2Recorded substantial restructuring and impairment charges totaling $1.3 billion in 2002, leading to a net loss of $1.3 billion.
  • 3Completed the sale of its precision lens business for approximately $850 million, recognizing a gain of $415 million after-tax.
  • 4The Technologies Segment showed resilience with a modest 4% sales decrease, while Display Technologies saw a 25% sales increase.
  • 5Implemented significant cost-saving measures, including workforce reductions and facility closures, to align operations with lower demand.
  • 6Downgraded credit ratings to sub-investment grade by major agencies, impacting borrowing costs and access to capital markets.
  • 7Initiated a program to begin recognizing equity earnings from Dow Corning in Q1 2003 after years of impairment.

Frequently Asked Questions

The primary driver of Corning's financial performance in 2002 was the severe and prolonged downturn in the telecommunications industry. This led to drastically reduced sales volumes and significant price declines for optical fiber, cable, and photonic technologies, impacting the Telecommunications Segment heavily. The company also incurred substantial restructuring and impairment charges due to these market conditions.

Corning has responded to the challenges in its Telecommunications Segment through significant restructuring actions, including permanent closures of manufacturing facilities, mothballing of others, headcount reductions, and consolidation of operations. These measures aimed to align manufacturing capacity with reduced demand, lower operating costs, and preserve liquidity.

Corning expects 2003 net sales to approximate 2002 levels, with a decline in the Telecommunications Segment but an improvement in the Technologies Segment. The company aims to significantly reduce operating losses and return to profitability before considering one-time charges, contingent on revenue stabilization and economic conditions. Investments are planned for the liquid crystal display and environmental businesses.

The filing details several legal proceedings, including environmental liabilities related to Superfund sites, a lawsuit concerning Sylvania-Corning Nuclear Corporation, and ongoing litigation related to Pittsburgh Corning Corporation's asbestos claims, which is subject to a bankruptcy reorganization and potential settlement. The company also mentions its 50% ownership in Dow Corning, which is emerging from Chapter 11 bankruptcy.