10-QPeriod: Q1 FY2014

CORNING INC /NY Quarterly Report for Q1 Ended Mar 31, 2014

Filed April 28, 2014For Securities:GLW

Summary

Corning Inc. (GLW) reported its first quarter 2014 financial results, highlighting a significant increase in net sales driven primarily by the full consolidation of Samsung Corning Precision Materials (now Corning Precision Materials) following its acquisition. However, net income saw a notable decrease compared to the prior year, impacted by a $102 million South Korean withholding tax on a dividend from the acquired entity, mid-teen percentage price declines in the Display Technologies segment, and unfavorable foreign currency exchange rates, particularly the Japanese yen. Despite these challenges, the company demonstrated strong operational cash flow and maintained a robust balance sheet. Corning also continued its significant share repurchase program, reflecting confidence in its financial position and future prospects.

Financial Highlights

51 data points
Beta

Revenue

$2.29B

40.8% Gross Margin

Net Income

$301.00M

13.1% Net Margin

EPS (Diluted)

$0.20

Total Assets

$29.54B

Cash & Equivalents

$4.97B

Free Cash Flow

$1.74B

Financial Statements
Beta
Revenue$2.29B
Cost of Revenue$1.35B
Gross Profit$935.00M
SG&A Expenses$397.00M
Operating Income$315.00M
Net Income$301.00M
EPS (Basic)$0.21
EPS (Diluted)$0.20
Shares Outstanding (Basic)1.36B
Shares Outstanding (Diluted)1.37B

Key Highlights

  • 1Net sales increased by 26% year-over-year to $2,289 million, largely due to the consolidation of the acquired Samsung Corning Precision Materials, which added $428 million in sales.
  • 2Net income attributable to Corning Incorporated decreased by 39% to $301 million ($0.20 per diluted share) from $494 million ($0.33 per diluted share) in the prior year's quarter.
  • 3A significant factor impacting net income was a $102 million South Korean withholding tax related to a dividend from the acquired Samsung Corning Precision Materials.
  • 4The Display Technologies segment experienced mid-teen percentage price declines, contributing to reduced profitability despite increased sales volume.
  • 5Corning's balance sheet remains strong, with cash, cash equivalents, and short-term investments totaling $5.6 billion at the end of the quarter.
  • 6Net cash provided by operating activities significantly increased to $1,737 million, largely due to a substantial dividend received from Samsung Corning Precision Materials.
  • 7The company actively engaged in share repurchases, spending $2.6 billion in the quarter under its authorized repurchase programs.

Frequently Asked Questions

The primary driver for the substantial increase in net sales was the acquisition and subsequent full consolidation of Samsung Corning Precision Materials, now known as Corning Precision Materials, which was completed in January 2014. This consolidation added $428 million to the company's reported net sales for the quarter.

The decrease in net income was primarily due to several factors: a $102 million South Korean withholding tax on a dividend from the newly consolidated Samsung Corning Precision Materials, price declines in the Display Technologies segment (mid-teen percentages), and the negative impact of foreign currency fluctuations, particularly the Japanese yen, which reduced income by approximately $89 million. Higher operating expenses, including acquisition-related costs, also contributed.

Corning actively repurchased its common stock during the quarter, spending $2.6 billion through accelerated share repurchase (ASR) agreements and open market purchases under its authorized programs. Despite these significant outflows, the company's liquidity remains strong, with $5.6 billion in cash, cash equivalents, and short-term investments at quarter-end. The company generated substantial operating cash flow, which helps support these capital allocation activities.

Corning anticipates the overall LCD glass retail market to grow in the mid-to-high single digits in 2014, driven by increased TV sales and larger screen sizes. While price declines in the segment are expected to continue, they are projected to moderate in the second quarter after being in the mid-teen percentages in the first quarter. The company expects its market share to remain stable. There is also a focus on managing capacity and potential cost reduction efforts.