10-KPeriod: FY2014

CORNING INC /NY Annual Report, Year Ended Dec 31, 2014

Filed February 13, 2015For Securities:GLW

Summary

Corning Inc. reported significant revenue and profit growth in 2014, largely driven by the full consolidation of Samsung Corning Precision Materials and strong performance in its Optical Communications and Environmental Technologies segments. The company's net sales increased by 24% year-over-year, with net income rising by 26%. This growth was supported by a substantial gain from its yen-denominated hedging program, strategic financial agreements with Samsung Display, and increased equity earnings from Dow Corning. Corning maintained a sound financial position, with a significant increase in cash and stable debt-to-capital ratios. Looking ahead, Corning anticipates continued sales growth across most segments in 2015, supported by an expected high-single-digit increase in the LCD glass market and ongoing demand for its optical communication products. The company remains committed to its strategy of global innovation and financial prudence, focusing on developing new products and leveraging its materials science expertise to drive future growth.

Financial Highlights

51 data points
Beta

Revenue

$9.71B

41.7% Gross Margin

Net Income

$2.47B

25.4% Net Margin

EPS (Diluted)

$1.73

Total Assets

$30.06B

Cash & Equivalents

$5.31B

Free Cash Flow

$4.71B

Financial Statements
Beta
Revenue$9.71B
Cost of Revenue$5.66B
Gross Profit$4.05B
R&D Expenses$701.00M
SG&A Expenses$1.20B
Operating Income$1.93B
Net Income$2.47B
EPS (Basic)$1.82
EPS (Diluted)$1.73
Shares Outstanding (Basic)1.30B
Shares Outstanding (Diluted)1.43B

Key Highlights

  • 1Net sales increased by 24% to $9.7 billion in 2014, primarily driven by the consolidation of Samsung Corning Precision Materials and growth in Optical Communications and Environmental Technologies.
  • 2Net income attributable to Corning Incorporated rose by 26% to $2.5 billion, boosted by favorable foreign currency hedge gains and improved operational performance across key segments.
  • 3Corning's Display Technologies segment experienced mid-teen price declines but offset this with a slight increase in volume, with overall segment sales up due to the consolidation of Corning Precision Materials.
  • 4The Optical Communications segment saw a 14% increase in net sales, driven by strong demand in carrier and enterprise networks, particularly in North America and Europe.
  • 5Environmental Technologies reported a 19% increase in net sales, fueled by new regulations and demand for diesel emission control products.
  • 6The company announced a 20% increase in its quarterly common stock dividend, reflecting confidence in its financial health and future prospects.
  • 7Corning ended 2014 with $6.1 billion in cash and cash equivalents, demonstrating strong liquidity and financial stability.

Frequently Asked Questions

Corning's revenue growth in 2014 was primarily driven by the full consolidation of its affiliate, Samsung Corning Precision Materials (now Corning Precision Materials), which contributed $1.8 billion in sales. Additionally, strong performance in the Optical Communications and Environmental Technologies segments, along with favorable foreign currency hedging, contributed to the overall 24% increase in net sales.

The Display Technologies segment faced mid-teen percentage price declines, which were partially offset by a slight increase (over 10%) in volume. The consolidation of Corning Precision Materials significantly boosted segment sales, helping to absorb the pricing pressures. Despite these challenges, the segment's net income saw an 8% increase due to synergies from the acquisition and manufacturing improvements.

Corning anticipates another year of growth in 2015, projecting high-single-digit percentage increases in the LCD glass market and continued growth in Optical Communications sales. The company expects overall earnings growth driven by sales increases and ongoing cost reduction initiatives.

Corning actively manages its exposure to currency fluctuations, especially the Japanese Yen, through various derivative instruments, including purchased collars and average rate forward contracts. These financial instruments are used to hedge translation exposure, mitigating the impact of currency movements on the company's net earnings. In 2014, these hedging activities resulted in significant pre-tax gains due to the depreciation of the Yen.