10-QPeriod: Q2 FY2002

CORNING INC /NY Quarterly Report for Q2 Ended Jun 30, 2002

Filed July 24, 2002For Securities:GLW

Summary

Corning Incorporated's second quarter 2002 filing reveals significant challenges, primarily stemming from the continued downturn in the telecommunications sector. Net sales plummeted by 52% year-over-year to $896 million, with the Telecommunications Segment experiencing a dramatic 68% decline. This revenue erosion led to a substantial net loss of $370 million for the quarter. The company has undertaken aggressive cost-reduction measures, including restructuring actions and asset impairments totaling $494 million pre-tax in the current quarter, aimed at mitigating losses and adapting to the challenging market conditions. Despite the severe impact on its core telecommunications business, Corning's Advanced Materials and Information Display segments showed more resilience, with modest sales declines or even growth in certain areas. The company ended the quarter with $1.3 billion in cash and short-term investments, providing some liquidity, but its outlook for meaningful recovery in the telecommunications segment for the remainder of 2002 remains bleak. Investors should closely monitor the effectiveness of restructuring efforts and any potential for diversification into more stable markets.

Key Highlights

  • 1Significant revenue decline of 52% year-over-year to $896 million, largely due to the severe slump in the Telecommunications Segment.
  • 2Net loss of $370 million for the quarter, a considerable improvement from the $4.755 billion loss in Q2 2001, but still reflecting substantial financial distress.
  • 3Aggressive restructuring and impairment charges totaling $494 million were recorded in the quarter, signaling a strategic effort to cut costs and streamline operations in response to market conditions.
  • 4The Telecommunications Segment saw its sales decrease by 68% year-over-year, underscoring the profound impact of the telecom industry's downturn.
  • 5Advanced Materials and Information Display segments demonstrated relative stability, with Information Display showing some sales growth in key areas.
  • 6Corning ended the quarter with $1.3 billion in cash and short-term investments, indicating a degree of liquidity, though the company's credit ratings were recently downgraded.
  • 7The company anticipates no meaningful recovery in the Telecommunications Segment for the remainder of 2002 and expects to continue incurring losses in the short term.

Frequently Asked Questions

The primary driver of Corning's financial performance is the severe and ongoing downturn in the telecommunications industry. This has led to a significant decline in sales, particularly in the Telecommunications Segment, which accounts for a large portion of the company's revenue.

Corning incurred $494 million in pre-tax charges related to restructuring, fixed asset impairments, and investment write-offs. These charges are a direct result of actions taken to reduce costs and streamline operations in response to lower revenues, including facility closures, workforce reductions, and the abandonment of certain construction projects.

The Advanced Materials and Information Display segments are performing more favorably than the Telecommunications Segment. While Advanced Materials saw a slight sales decrease, Information Display experienced sales growth in key areas like display technologies. These segments provide some stability and offset some of the losses from the struggling telecommunications business.

Corning's outlook for the remainder of 2002 is cautious, particularly for the Telecommunications Segment, where no meaningful recovery is expected. The company anticipates continued losses in the short term as it restructures its operations. Third-quarter sales are projected to be between $825 million and $875 million, with an expected loss per share (excluding special charges) between $0.07 and $0.10.