10-QPeriod: Q2 FY2008

CORNING INC /NY Quarterly Report for Q2 Ended Jun 30, 2008

Filed July 30, 2008For Securities:GLW

Summary

Corning Inc. reported strong financial results for the second quarter of 2008, with net income soaring to $3.21 billion ($2.01 per diluted share) from $489 million ($0.30 per diluted share) in the prior year. This significant increase was primarily driven by a $2.4 billion release of valuation allowances on U.S. deferred tax assets, reflecting improved expectations for future U.S. profitability, particularly in the Display Technologies segment. Net sales also saw a substantial increase of 19% year-over-year to $1.69 billion, fueled by robust volume growth in Display Technologies, partially offset by price declines. The company generated strong operating cash flow of $985 million in the first half of the year and maintained a healthy cash position of $3.5 billion. Capital expenditures were significant, with plans to invest between $1.8 billion and $2.0 billion for the full year 2008, primarily to expand LCD glass substrate capacity.

Financial Highlights

24 data points
Beta

Revenue

$1.69B

50.4% Gross Margin

Net Income

$3.21B

189.8% Net Margin

EPS (Diluted)

$2.01

Cash & Equivalents

$2.17B

Free Cash Flow

$985.00M

Financial Statements
Beta
Revenue$1.69B
Cost of Revenue$840.00M
Gross Profit$852.00M
SG&A Expenses$260.00M
Operating Income$417.00M
Net Income$3.21B
EPS (Basic)$2.05
EPS (Diluted)$2.01

Key Highlights

  • 1Net income for Q2 2008 surged to $3.21 billion, a significant increase from $489 million in Q2 2007, largely due to a $2.4 billion release of valuation allowances on deferred tax assets.
  • 2Net sales increased 19% year-over-year to $1.69 billion, driven by strong volume growth in the Display Technologies segment and favorable foreign exchange rates.
  • 3The Display Technologies segment showed robust performance with net sales up 33% and net income up 39%, supported by strong demand for large-size LCD glass substrates and high capacity utilization.
  • 4Operating cash flow for the first six months of 2008 was $985 million, indicating strong operational cash generation.
  • 5The company announced a new $1 billion stock repurchase program, signaling confidence in its financial position and commitment to returning capital to shareholders.
  • 6Corning's balance sheet remains strong with a low debt-to-capital ratio of 10% as of June 30, 2008.

Frequently Asked Questions

The primary driver for the substantial increase in net income was the release of $2.4 billion in valuation allowances on U.S. deferred tax assets. This release was based on management's improved outlook for future U.S. profitability, particularly from the Display Technologies segment.

The Display Technologies segment demonstrated strong performance, with net sales increasing 33% year-over-year to $809 million. This growth was driven by a 26% increase in volume (in square feet of glass sold) due to high capacity utilization and strong demand for large-size LCD glass substrates, as well as a positive impact from foreign exchange rates. Net income for the segment increased 39%.

Corning expects its 2008 capital spending to be in the range of $1.8 billion to $2.0 billion, an increase from previous estimates. The majority of this spending, approximately $1.2 billion to $1.4 billion, will be directed towards expanding manufacturing capacity for LCD glass substrates in the Display Technologies segment to meet growing demand.

Corning is involved in significant litigation related to asbestos claims, with a proposed settlement under an Amended PCC Plan estimated at $684 million as of June 30, 2008. The company also has ongoing environmental liabilities and is involved in litigation related to Dow Corning. While management believes the likelihood of a material adverse impact from these matters is remote, they represent ongoing contingencies.