8-KEarnings & ResultsRegulation FD

CORNING INC /NY 8-K Report, Financial Results (Oct 20, 2004)

Filed October 20, 2004For Securities:GLW

Summary

Corning Incorporated reported third-quarter 2004 sales of $1.006 billion, marking its highest sales level since the fourth quarter of 2001. However, the company incurred a significant net loss of $2.491 billion, or $1.78 per share. This substantial loss was primarily driven by non-cash special items totaling $2.704 billion, or $1.92 per share. These items included a large $1.794 billion charge for restructuring and impairment, mainly related to the Telecommunications segment, and a $937 million increase in income tax expense due to establishing a valuation allowance against deferred tax assets. Despite the large net loss, the company highlighted strong sequential revenue improvement across its segments and a robust gross margin of 40%. The Display Technologies segment saw sales grow 6% sequentially, with a substantial year-over-year increase in LCD glass volume. The Telecommunications segment also experienced a sequential sales increase, partly due to participation in Verizon's fiber-to-the-premises project. Corning ended the quarter with improved liquidity, holding $1.7 billion in cash and short-term investments. Looking ahead, the company projected fourth-quarter sales between $950 million and $1 billion, with earnings per share expected between $0.10 and $0.12, excluding special items.

Key Highlights

  • 1Third-quarter sales reached $1.006 billion, the highest since Q4 2001.
  • 2Reported a net loss of $2.491 billion ($1.78 per share) due to significant non-cash charges.
  • 3Non-cash special items totaled $2.704 billion, including $1.794 billion in restructuring and impairment charges (primarily Telecommunications segment) and $937 million in tax expense for valuation allowance.
  • 4Sequential revenue growth observed in Display Technologies and Telecommunications segments.
  • 5Gross margin improved to 40% from 36% in the prior quarter.
  • 6Company ended the quarter with $1.7 billion in cash and short-term investments, an increase from the previous quarter.
  • 7Fourth-quarter sales outlook provided, ranging from $950 million to $1 billion, with expected EPS of $0.10-$0.12 (excluding special items).

Frequently Asked Questions

The significant net loss of $2.491 billion was primarily due to substantial non-cash special items amounting to $2.704 billion. These included a $1.794 billion charge for restructuring and impairment, largely impacting the Telecommunications segment's goodwill and fixed assets, and a $937 million increase in income tax expense related to establishing a valuation allowance against deferred tax assets.

Corning reported positive operational trends including sequential revenue growth across its segments, with the Display Technologies segment showing a 6% increase and significant year-over-year LCD glass volume growth. The Telecommunications segment also saw sequential sales improvement. Furthermore, the company's gross margin improved to 40% from 36% in the previous quarter, and cash and short-term investments increased to $1.7 billion.

Corning expects fourth-quarter sales to be in the range of $950 million to $1 billion. Earnings per share are projected to be between $0.10 and $0.12, excluding any special items. The company anticipates stable foreign exchange rates and a gross margin between 37% and 38%.

The company recorded a goodwill impairment charge of $1.420 billion and fixed asset impairment charges of $374 million within the Telecommunications segment. Additionally, $35 million in impairment charges were recorded for certain equity investments in the Telecommunications segment.