10-QPeriod: Q3 FY2009

CORNING INC /NY Quarterly Report for Q3 Ended Sep 30, 2009

Filed November 2, 2009For Securities:GLW

Summary

Corning Incorporated (GLW) reported its third quarter and nine-month results for 2009, showcasing resilience amidst a challenging economic environment. While net sales saw a year-over-year decrease, the company demonstrated effective cost management and strategic investments. Net income for the third quarter was $643 million, or $0.41 per diluted share, compared to $768 million, or $0.49 per diluted share, in the prior year. For the nine-month period, net income was $1.268 billion, or $0.81 per diluted share, a significant decrease from $5.008 billion, or $3.15 per diluted share, in 2008, largely due to the absence of significant one-time tax benefits realized in the prior year. The company also made strategic acquisitions, such as Axygen Bioscience, to strengthen its Life Sciences segment and maintained a strong balance sheet with ample liquidity. The company faced headwinds including price declines in its key Display Technologies segment and disruptions from an earthquake in Japan. However, it benefited from favorable foreign exchange movements and government incentives in certain segments. Corning continues to prioritize financial health and strategic investments in future growth areas, managing capital expenditures and operating costs proactively. The company maintained a strong liquidity position with significant cash reserves and an available credit facility.

Financial Highlights

49 data points
Beta

Revenue

$1.48B

40.5% Gross Margin

Net Income

$643.00M

43.5% Net Margin

EPS (Diluted)

$0.41

Total Assets

$20.75B

Cash & Equivalents

$1.96B

Free Cash Flow

$532.00M

Financial Statements
Beta
Revenue$1.48B
Cost of Revenue$880.00M
Gross Profit$599.00M
SG&A Expenses$219.00M
Operating Income$230.00M
Net Income$643.00M
EPS (Basic)$0.41
EPS (Diluted)$0.41
Shares Outstanding (Basic)1.55B

Key Highlights

  • 1Net sales for the third quarter decreased by 5% to $1.479 billion, while for the nine-month period, sales declined 21% to $3.863 billion, reflecting impacts of global economic conditions and price declines in key segments.
  • 2Net income attributable to Corning for Q3 2009 was $643 million ($0.41/share), down from $768 million ($0.49/share) in Q3 2008. Year-to-date net income was $1.268 billion ($0.81/share), down significantly from $5.008 billion ($3.15/share) in the prior year, largely due to the absence of significant prior-year tax benefits.
  • 3The company acquired Axygen Bioscience, Inc. for $410 million to bolster its Life Sciences segment, demonstrating a commitment to strategic growth.
  • 4Corning maintained a strong balance sheet with $2.9 billion in cash, cash equivalents, and short-term investments, and a low debt-to-capital ratio of 12%.
  • 5The Display Technologies segment, while facing price declines and an earthquake-related disruption in Japan, showed sequential volume improvements and benefited from favorable foreign exchange rates.
  • 6Restructuring charges of $175 million were recorded year-to-date, primarily related to workforce reductions aimed at reducing costs and aligning operations with anticipated lower sales.
  • 7Equity in earnings of affiliated companies remained significant, contributing $418 million in Q3 and $974 million year-to-date, with key contributions from Samsung Corning Precision and Dow Corning.

Frequently Asked Questions

The significant decrease in net income for the nine months ended September 30, 2009, compared to the same period in 2008, was primarily due to the absence of a $2.4 billion release of valuation allowances on deferred tax assets and a $312 million credit to asbestos litigation expense realized in the prior year. These were one-time benefits in 2008 that did not recur in 2009.

An earthquake in August 2009 halted production at one of Corning's LCD glass manufacturing facilities in Japan. The company incurred approximately $20 million in costs associated with this event, primarily for accelerated depreciation. Production capacity in Taiwan and the ability to resume some manufacturing in Japan helped to mitigate the impact on shipments.

Corning ended the third quarter of 2009 with $2.9 billion in cash, cash equivalents, and short-term investments, well above its total debt balance of $2.0 billion. The company generated $1.164 billion in cash flow from operating activities for the nine-month period and has access to a $1.1 billion unsecured committed revolving credit facility. Corning prioritizes preserving cash, controlling costs, and maintaining financial stability.

For the fourth quarter of 2009, Corning anticipated sequential volume to be flat to down slightly at its wholly-owned Display Technologies business due to a recent power disruption in Taiwan. Glass pricing was expected to remain consistent. While the overall LCD glass market was projected to grow in 2009, the company remains cautious about potential negative impacts from the global economic recession on consumer demand and foresees potential for glass manufacturing capacity to exceed demand at times.