10-QPeriod: Q3 FY2011

CORNING INC /NY Quarterly Report for Q3 Ended Sep 30, 2011

Filed October 27, 2011For Securities:GLW

Summary

Corning Incorporated (GLW) reported strong financial results for the third quarter and first nine months of 2011. Net sales increased significantly year-over-year, driven by robust performance across most operating segments, particularly Specialty Materials which saw substantial growth due to strong demand for Corning® Gorilla® glass. The company demonstrated improved profitability, with net income rising in the third quarter, although it experienced a slight decline year-to-date due to lower equity earnings from key affiliates and increased tax provisions. Corning's balance sheet remains strong, with ample liquidity provided by substantial cash and short-term investments, well exceeding its debt obligations. The company is actively investing in its future through increased research and development and significant capital expenditures, primarily focused on expanding manufacturing capacity in key segments like Display Technologies and Specialty Materials. Strategic debt management and a recently announced increase in dividend and stock repurchase program highlight a commitment to shareholder value while maintaining financial health.

Financial Highlights

52 data points
Beta

Revenue

$2.08B

47.1% Gross Margin

Net Income

$811.00M

39.1% Net Margin

EPS (Diluted)

$0.51

Total Assets

$28.17B

Cash & Equivalents

$4.90B

Free Cash Flow

$913.00M

Financial Statements
Beta
Revenue$2.08B
Cost of Revenue$1.10B
Gross Profit$978.00M
SG&A Expenses$216.00M
Operating Income$587.00M
Net Income$811.00M
EPS (Basic)$0.52
EPS (Diluted)$0.51
Shares Outstanding (Basic)1.57B
Shares Outstanding (Diluted)1.59B

Key Highlights

  • 1Net sales increased by 30% for the three months ended September 30, 2011, compared to the same period in 2010, reaching $2.075 billion.
  • 2Net income attributable to Corning Incorporated for the third quarter of 2011 was $811 million, or $0.51 per diluted share, a slight increase from $785 million, or $0.50 per diluted share, in the prior year's quarter.
  • 3The Specialty Materials segment experienced significant growth, with net sales up 88% for the third quarter and 119% for the first nine months of 2011, driven by strong demand for Corning® Gorilla® glass.
  • 4Corning maintained a strong liquidity position, with $6.4 billion in cash, cash equivalents, and short-term investments as of September 30, 2011.
  • 5Capital expenditures increased significantly to $1.7 billion for the first nine months of 2011, reflecting investments in manufacturing capacity for Display Technologies and Specialty Materials.
  • 6Equity in earnings of affiliated companies decreased by 36% in the third quarter and 21% year-to-date, primarily due to lower contributions from Samsung Corning Precision and Dow Corning.
  • 7Corning announced a 50% increase in its quarterly common stock dividend and authorized a $1.5 billion stock repurchase program.

Frequently Asked Questions

The significant sales growth in the Specialty Materials segment is primarily driven by the strong and continued demand for Corning® Gorilla® glass, used in portable display devices, tablets, and notebook computers. Increased usage of this glass on these devices and robust retail demand have fueled this expansion.

Equity earnings from affiliated companies, particularly Samsung Corning Precision and Dow Corning, decreased due to several factors. For Samsung Corning Precision, this was due to volume and price declines, and higher taxes. For Dow Corning, it was due to increased raw material costs, a shift in sales mix to lower-margin products, and higher interest expense. The absence of certain tax credits in 2010 also contributed to the year-over-year decline.

Corning's strategy for investing in the future involves a balanced approach focused on growing existing businesses, developing opportunities adjacent to its core technical and manufacturing capabilities, and investing in longer-term opportunities. This includes continued investment in research, development, and engineering to drive innovation, particularly for products like Corning® Gorilla® glass, and significant capital expenditures to expand manufacturing capacity in key segments like Display Technologies and Specialty Materials.

Corning is maintaining a strong financial health and liquidity position through robust operating cash flow generation, a strong balance sheet with ample cash and investments, and disciplined capital allocation. The company has sufficient liquidity to meet its obligations and strategic investments. Furthermore, Corning recently increased its quarterly dividend and announced a significant stock repurchase program, signaling confidence in its financial stability and commitment to returning value to shareholders.