10-QPeriod: Q2 FY2010

CORNING INC /NY Quarterly Report for Q2 Ended Jun 30, 2010

Filed July 30, 2010For Securities:GLW

Summary

Corning Inc. (GLW) reported a strong second quarter and first half of 2010, demonstrating a significant recovery from the prior year. Net sales surged by 23% year-over-year for the quarter and 37% for the first half, driven by robust performance in its Display Technologies and Environmental Technologies segments. This top-line growth, coupled with improved operational efficiencies, led to a substantial increase in gross margin to 48% from 41% in the prior year's quarter. Net income attributable to Corning more than doubled year-over-year for both the quarter ($913 million) and the first half ($1,729 million), reflecting not only operational improvements but also a favorable shift in the effective tax rate and strong equity earnings from key affiliates like Samsung Corning Precision and Dow Corning. The company ended the period with a strengthened balance sheet, boasting $4.3 billion in cash, cash equivalents, and short-term investments, while managing its debt levels prudently. A significant capital expenditure plan was announced, including an $800 million investment in a new LCD glass substrate facility in China, signaling confidence in future demand. Despite ongoing legal proceedings, such as asbestos litigation, and market risks, Corning maintains a positive outlook for the remainder of 2010, anticipating continued sales growth and margin expansion.

Financial Highlights

47 data points
Beta

Revenue

$1.71B

48.3% Gross Margin

Net Income

$913.00M

53.3% Net Margin

EPS (Diluted)

$0.58

Total Assets

$22.54B

Cash & Equivalents

$3.21B

Free Cash Flow

$672.00M

Financial Statements
Beta
Revenue$1.71B
Cost of Revenue$885.00M
Gross Profit$827.00M
SG&A Expenses$246.00M
Operating Income$430.00M
Net Income$913.00M
EPS (Basic)$0.59
EPS (Diluted)$0.58
Shares Outstanding (Basic)1.56B

Key Highlights

  • 1Net sales increased by 23% to $1.71 billion in Q2 2010 and by 37% to $3.27 billion in the first half of 2010 compared to the prior year periods.
  • 2Gross margin significantly improved, reaching 48% in Q2 2010 and the first half of 2010, up from 41% and 35% respectively in the prior year.
  • 3Net income attributable to Corning Inc. more than doubled, reaching $913 million ($0.58/share diluted) in Q2 2010 and $1.73 billion ($1.09/share diluted) in the first half of 2010.
  • 4The company's cash, cash equivalents, and short-term investments grew to $4.3 billion as of June 30, 2010, indicating strong liquidity.
  • 5Equity in earnings of affiliated companies surged by 31% in Q2 2010 and 70% in the first half of 2010, driven by strong performance from Samsung Corning Precision and Dow Corning.
  • 6Corning announced a significant multi-year capital expenditure plan, including $800 million for a new LCD glass substrate facility in China, signaling confidence in future demand.
  • 7The company's debt-to-capital ratio remained low at 10% as of June 30, 2010, down from 11% at the end of 2009, reflecting a healthy financial structure.

Frequently Asked Questions

Corning's revenue growth in Q2 2010 was primarily driven by higher sales volumes in its Display Technologies and Environmental Technologies segments, reflecting a recovery in demand for LCD products and improvements in the automotive industry, respectively. Favorable foreign exchange rate movements also contributed positively to net sales.

Corning's profitability saw significant improvement due to a combination of factors. Higher sales volumes led to a substantial increase in gross margin to 48%. Additionally, the company benefited from the absence of significant restructuring charges that impacted the prior year, improved equity earnings from key affiliates, and a more favorable effective tax rate due to repatriation plans for foreign earnings.

Corning maintains a strong liquidity position, with $4.3 billion in cash, cash equivalents, and short-term investments as of June 30, 2010. The company's debt-to-capital ratio remains low at 10%. Corning is funding its operations, capital expenditures, and debt obligations primarily through operating cash flow and existing cash balances, and has access to a substantial revolving credit line.

Corning is involved in ongoing asbestos litigation, with a recorded liability of $636 million as of June 30, 2010, which is subject to potential adjustments. The company is also named as a potentially responsible party for 21 hazardous waste sites under Superfund laws, with an accrued liability of $32 million. Management believes the likelihood of a material adverse impact from these matters is remote, but they represent ongoing risks.