10-QPeriod: Q3 FY2010

CORNING INC /NY Quarterly Report for Q3 Ended Sep 30, 2010

Filed November 1, 2010For Securities:GLW

Summary

Corning Inc. reported strong financial performance for the third quarter and nine months ended September 29, 2010. Net sales increased by 8% year-over-year for the quarter and 26% for the nine-month period, reaching $1.602 billion and $4.867 billion respectively. Net income attributable to Corning Incorporated saw a significant jump of 22% for the quarter to $785 million ($0.50/share diluted) and a substantial 98% increase for the nine-month period to $2.514 billion ($1.59/share diluted). The company's improved profitability was driven by strong performance across most operating segments, particularly Display Technologies, Specialty Materials, and Telecommunications. Equity in earnings of affiliated companies, notably from Samsung Corning Precision and Dow Corning, also contributed significantly to the bottom line. Corning maintained a robust balance sheet with $5.0 billion in cash, cash equivalents, and short-term investments, while managing its debt effectively. The company also announced plans for significant capital investments, including a new LCD glass substrate facility in China, underscoring its commitment to future growth.

Financial Highlights

50 data points
Beta

Revenue

$1.60B

45.2% Gross Margin

Net Income

$785.00M

49.0% Net Margin

EPS (Diluted)

$0.50

Total Assets

$24.67B

Cash & Equivalents

$3.30B

Free Cash Flow

$428.00M

Financial Statements
Beta
Revenue$1.60B
Cost of Revenue$878.00M
Gross Profit$724.00M
SG&A Expenses$250.00M
Operating Income$319.00M
Net Income$785.00M
EPS (Basic)$0.50
EPS (Diluted)$0.50
Shares Outstanding (Basic)1.56B
Shares Outstanding (Diluted)1.58B

Key Highlights

  • 1Net sales for the third quarter of 2010 increased 8% to $1.602 billion, and 26% for the nine months to $4.867 billion, compared to the prior year periods.
  • 2Net income attributable to Corning Incorporated surged 22% to $785 million ($0.50/share diluted) in Q3 2010, and 98% to $2.514 billion ($1.59/share diluted) for the nine months.
  • 3Gross margin improved significantly to 45% for the quarter and 47% year-to-date, up from 41% and 37% respectively in the prior year, reflecting higher volumes and cost efficiencies.
  • 4Equity in earnings of affiliated companies grew by 21% for the quarter to $504 million and 49% for the nine months to $1.447 billion, driven by strong performance from Samsung Corning Precision and Dow Corning.
  • 5The company reported a strong liquidity position with $5.0 billion in cash, cash equivalents, and short-term investments as of September 30, 2010.
  • 6Corning announced plans for substantial capital investments, including an $800 million new LCD glass substrate facility in China, signaling commitment to future capacity expansion.
  • 7The Display Technologies segment showed resilience despite a supply chain inventory correction, with net sales down 5% for the quarter but up 32% for the nine months, supported by strong equity earnings from Samsung Corning Precision.

Frequently Asked Questions

Corning's revenue growth was driven by increased sales volumes in its Specialty Materials and Environmental Technologies segments. The Display Technologies segment also contributed significantly through strong equity earnings from its affiliate, Samsung Corning Precision, and a rebound in demand after an initial supply chain inventory correction. Furthermore, favorable foreign exchange rate movements positively impacted net sales.

Corning's profitability saw a substantial improvement. Net income attributable to Corning Incorporated increased by 22% year-over-year for the third quarter and by 98% for the nine-month period. This was primarily due to higher net sales, improved gross margins resulting from increased volumes and cost reduction efforts, and a significant increase in equity earnings from affiliated companies. The absence of significant restructuring charges incurred in the prior year also contributed to the improved net income.

Corning maintains a strong financial position. As of September 30, 2010, the company held $5.0 billion in cash, cash equivalents, and short-term investments, significantly exceeding its total debt of $2.4 billion. The debt-to-capital ratio stood at a healthy 12%. The company generated $1.743 billion in cash flow from operating activities for the nine months ended September 30, 2010, indicating robust operational cash generation.

Corning announced significant multi-year investment plans focused on expanding manufacturing capacity. Key among these is an $800 million investment in a new LCD glass substrate facility in China, expected to begin production in 2012. The company is also investing in expanding capacity for its Gorilla® glass and environmental technologies, as well as establishing a new Life Sciences facility in China. These investments reflect a strategic focus on growth and meeting future demand.