10-QPeriod: Q1 FY2010

CORNING INC /NY Quarterly Report for Q1 Ended Mar 31, 2010

Filed April 30, 2010For Securities:GLW

Summary

Corning Inc. (GLW) reported a significant rebound in its first quarter of 2010 compared to the prior year, with net sales surging 57% to $1.55 billion and net income soaring from $14 million to $816 million. This dramatic improvement was primarily driven by a strong recovery in the Display Technologies segment, fueled by robust demand for LCD glass products, which operated near capacity. The company also benefited from higher equity earnings from its joint venture Dow Corning, driven by strong silicone product sales, and the absence of significant restructuring charges incurred in the first quarter of 2009. Corning's financial health remains strong, with a solid balance sheet and positive operating cash flow of $643 million. The company ended the quarter with substantial cash and short-term investments totaling $3.9 billion, well exceeding its debt obligations. Management expressed optimism for the remainder of 2010, anticipating continued growth in LCD glass demand, expanding gross margins, and further improvements in equity earnings, supported by ongoing innovation and cost management strategies.

Financial Highlights

47 data points
Beta

Revenue

$1.55B

47.1% Gross Margin

Net Income

$816.00M

52.5% Net Margin

EPS (Diluted)

$0.52

Total Assets

$21.73B

Cash & Equivalents

$3.08B

Free Cash Flow

$643.00M

Financial Statements
Beta
Revenue$1.55B
Cost of Revenue$822.00M
Gross Profit$731.00M
SG&A Expenses$235.00M
Operating Income$403.00M
Net Income$816.00M
EPS (Basic)$0.52
EPS (Diluted)$0.52
Shares Outstanding (Basic)1.55B

Key Highlights

  • 1Net sales increased by 57% year-over-year to $1.55 billion in Q1 2010.
  • 2Net income saw a substantial increase from $14 million in Q1 2009 to $816 million in Q1 2010.
  • 3The Display Technologies segment experienced a significant recovery, with sales up 119% due to strong demand for LCD glass.
  • 4Equity in earnings of affiliated companies more than doubled, driven by improved performance at Samsung Corning Precision and Dow Corning.
  • 5Operating cash flow was robust at $643 million for the quarter.
  • 6The company ended the quarter with $3.9 billion in cash, cash equivalents, and short-term investments.
  • 7Corning recorded a $52 million credit related to its asbestos litigation liability due to changes in settlement terms.

Frequently Asked Questions

The primary driver was the strong recovery in the Display Technologies segment, which experienced a 119% increase in net sales due to higher volumes of LCD glass driven by robust consumer demand. Additionally, improved equity earnings from affiliates like Dow Corning and the absence of substantial restructuring charges recorded in the prior year's quarter contributed significantly.

Corning's financial position is strong. The company ended Q1 2010 with $3.9 billion in cash, cash equivalents, and short-term investments, providing ample liquidity. Operating cash flow was robust at $643 million, and the debt-to-capital ratio remained low at 11%. Management expressed confidence in their ability to meet future cash requirements.

Yes, Corning is involved in ongoing asbestos litigation related to its former joint venture, Pittsburgh Corning Corporation (PCC). In Q1 2010, the company recorded a $52 million credit to its asbestos liability due to changes in the terms of a proposed settlement. While management believes the likelihood of a material adverse impact is remote, this remains a significant contingent liability. Additionally, the company is a potentially responsible party for 21 hazardous waste sites under Superfund laws, with an accrued liability of $25 million.

Corning anticipates a favorable outlook for the Display Technologies segment. They expect the overall LCD glass market to grow between 18% and 27% in 2010. This growth is driven by continued demand for LCD televisions and personal computers. The company expects gross margins to expand due to increased volume and cost efficiencies, though price declines are expected to moderate.