10-KPeriod: FY2011

CORNING INC /NY Annual Report, Year Ended Dec 31, 2011

Filed February 13, 2012For Securities:GLW

Summary

Corning Incorporated's 2011 Form 10-K highlights a year of significant sales growth driven by its Telecommunications and Specialty Materials segments, with Gorilla Glass showing particularly strong demand. Despite overall revenue increases, net income saw a decrease compared to 2010, primarily due to lower equity earnings from key affiliates like Samsung Corning Precision and Dow Corning, and an impairment charge for large cover glass assets in Japan. The company continued to focus on financial health, maintaining a strong cash position, increasing its dividend, and executing a share repurchase program. Corning's diversified business model spans five reportable segments: Display Technologies, Telecommunications, Environmental Technologies, Specialty Materials, and Life Sciences. While Display Technologies experienced pricing pressure and excess capacity, other segments demonstrated resilience and growth. The company's outlook for 2012 anticipates continued growth, particularly in Telecommunications and Environmental Technologies, though tempered by expected price declines in the Display segment and potential global economic uncertainties.

Financial Highlights

54 data points
Beta

Revenue

$7.89B

45.3% Gross Margin

Net Income

$2.82B

35.7% Net Margin

EPS (Diluted)

$1.78

Total Assets

$27.85B

Cash & Equivalents

$4.66B

Free Cash Flow

$3.19B

Financial Statements
Beta
Revenue$7.89B
Cost of Revenue$4.31B
Gross Profit$3.58B
R&D Expenses$561.00M
SG&A Expenses$1.03B
Operating Income$1.71B
Net Income$2.82B
EPS (Basic)$1.80
EPS (Diluted)$1.78
Shares Outstanding (Basic)1.56B
Shares Outstanding (Diluted)1.58B

Key Highlights

  • 1Strong sales growth of 19% in 2011, reaching $7.89 billion, primarily driven by the Specialty Materials (Gorilla Glass) and Telecommunications segments.
  • 2Net income declined by 21% to $2.8 billion in 2011 compared to $3.6 billion in 2010, largely due to reduced equity earnings from affiliates and a $130 million impairment charge.
  • 3Maintained a robust financial position with over $5.8 billion in cash and short-term investments as of December 31, 2011.
  • 4Increased quarterly common stock dividend by 50%, from $0.05 to $0.075 per share, demonstrating confidence in future cash flows.
  • 5Announced and began executing a share repurchase program, buying back 55 million shares for $780 million in Q4 2011.
  • 6Addressing excess capacity in Display Technologies and Specialty Materials segments by reducing worldwide glass capacity by approximately 25%.
  • 7Significant capital expenditures of $2.4 billion in 2011, focused on expanding manufacturing capacity in key segments like Display Technologies and Specialty Materials.

Frequently Asked Questions

Corning's sales growth in 2011 was primarily driven by strong demand for its Corning Gorilla Glass in the Specialty Materials segment, significant growth in the Telecommunications segment (especially fiber-to-the-premises and optical fiber/cable), and increased demand in the Environmental Technologies segment for diesel products. The Telecommunications and Environmental Technologies segments also benefited from favorable foreign exchange movements.

The decrease in net income in 2011 compared to 2010 was primarily due to lower equity earnings from key affiliates like Samsung Corning Precision (impacted by price declines and excess capacity in LCD glass) and Dow Corning (affected by higher raw material costs and a sales shift to lower-margin products). Additionally, a $324 million insurance settlement benefit recognized in 2010 was absent in 2011, and a $130 million impairment charge for large cover glass assets was recorded in 2011.

Corning is addressing the excess glass capacity and pricing pressure in its Display Technologies segment by reducing worldwide glass capacity by approximately 25%. This includes delaying new tank startups, postponing tank relights, and actions taken by its equity affiliate, Samsung Corning Precision, to reduce its glass melting capacity. The company also experienced significant price declines in this segment.

Corning anticipates moderate sales growth in 2012, led by the Telecommunications and Environmental Technologies segments. While LCD glass demand is expected to increase, the company forecasts cumulative double-digit price declines in its Display segment over the next two quarters. Net income is expected to be negatively impacted by lower equity earnings from Dow Corning. The company remains open to acquisition opportunities that align with its long-term strategies.