01—Abstract
Summary
Summary of the 10-K filed February 10, 2014. Cited figures are marked; the original filing is the authoritative source.
Corning Incorporated (GLW) filed its 2013 10-K on February 9, 2014, detailing its performance across five key segments: Display Technologies, Optical Communications, Environmental Technologies, Specialty Materials, and Life Sciences.
The company demonstrated resilience with stable net sales compared to the previous year, while achieving a notable 20%a increase in net income, driven by strong hedging program gains, improved equity earnings from Dow Corning, and solid performance in several operational segments. A significant strategic move during the period was the acquisition of full ownership of Samsung Corning Precision Materials, which is expected to provide greater operational flexibility and strengthen Corning's position in the Display Technologies market.
The company also continued its commitment to innovation and financial health, with substantial investments in research and development and a solid cash flow position. The outlook for 2014 was positive, with anticipated growth across most segments, despite potential headwinds from foreign exchange rates and lower equity earnings from Dow Corning.
02—Key points
Key Highlights
- Corning reported stable net sales of $7.82 billion in 2013, with net income increasing by 20% to $1.96 billion compared to 2012, largely due to favorable hedging gains and improved equity earnings from affiliates.
- The Display Technologies segment experienced a sales decline of 13% in reported terms due to price reductions and foreign currency depreciation, but core sales saw a 7% increase driven by volume growth.
- The Optical Communications segment demonstrated strong growth, with net sales increasing by 9% to $2.33 billion, supported by increased demand for carrier network products, particularly in North America, China, and Europe.
- Specialty Materials segment net sales decreased by 13% to $1.17 billion, primarily due to a 17% decline in Corning Gorilla Glass sales, although cost controls helped maintain profitability.
- Corning made significant progress on its strategic priority of securing full ownership of Samsung Corning Precision Materials, with the transaction closing in January 2014, integrating it fully into the Display Technologies segment.
- The company maintained a strong financial position, ending the year with $5.2 billion in cash, cash equivalents, and short-term investments, while also returning capital to shareholders through increased dividends and share repurchases.
- A significant legal proceeding involved the Amended PCC Plan of Reorganization related to asbestos litigation, requiring Corning to contribute $290 million in payments over several years.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2013, Corning kept $0.25.
- Revenue$7.82B100.0%
- Cost of revenue−$4.50B57.5%
- Gross profit$3.32B42.5%
- Operating costs−$1.95B25.0%
- Operating income$1.37B17.5%
- Interest, other & tax$590.0M7.5%
- Net income$1.96B25.1%
Where FY2013 revenue went
$7.82B- Cost of revenue: $4.50B, 57% of revenue
- Operating income: $1.37B, 18% of revenue
- SG&A: $1.13B, 14% of revenue
- R&D: $613.0M, 7.8% of revenue
- Other operating costs: $214.0M, 2.7% of revenue
Kept 18% as operating income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2013filed February 10, 2014Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Revenue | $7.82B$8.01B | −2.4% |
| Cost of Revenue | $4.50B$4.69B | −4.2% |
| Gross Profit | $3.32B$3.32B | +0.2% |
| R&D Expenses | $613.00M$651.00M | −5.8% |
| SG&A Expenses | $1.13B$1.21B | −6.6% |
| Operating Income | $1.37B$1.18B | +16.3% |
| Net Income | $1.96B$1.64B | +19.9% |
| EPS (Basic) | $1.35$1.10 | +22.7% |
| EPS (Diluted) | $1.34$1.09 | +22.9% |
| Shares Outstanding (Basic) | 1.45B1.49B | −2.8% |
| Shares Outstanding (Diluted) | 1.46B1.51B | −2.9% |
05—Questions
Frequently Asked Questions
What was Corning's overall financial performance in 2013?
Corning reported stable net sales of $7.82 billion in 2013, a slight decrease from $8.01 billion in 2012. However, net income saw a significant improvement, increasing by 20% to $1.96 billion, driven by factors such as net gains from hedging programs and improved equity earnings from affiliates.
How did the Display Technologies segment perform, and what were the key drivers?
The Display Technologies segment's reported net sales decreased by 13% to $2.55 billion. This was primarily due to mid-teen percentage price declines in LCD glass substrates and the depreciation of the Japanese yen against the U.S. dollar. Despite these challenges, core net sales increased by 7% due to mid-twenty percentage volume increases, driven by demand for larger televisions and growth in mobile computing products.
What were the key strategic developments for Corning in 2013?
A major strategic development was Corning's acquisition of full ownership of Samsung Corning Precision Materials, which was completed in January 2014. This move is expected to enhance operational flexibility and market positioning. The company also continued to focus on innovation by investing in research and development, and demonstrated a commitment to financial health through strong cash flow generation and share repurchases.
What is the status of Corning's significant legal matters, particularly the asbestos litigation?
Corning is involved in significant legal matters, notably the asbestos litigation related to Pittsburgh Corning Corporation (PCC). In November 2013, the Bankruptcy Court confirmed an Amended PCC Plan of Reorganization, under which Corning is required to contribute $290 million in fixed payments over several years. The company also recorded an additional $150 million liability for non-PCC asbestos cases. The company believes the ultimate resolution of these matters is unlikely to have a material adverse effect on its financial statements.
06—Continue