8-KEarnings & ResultsRegulation FDExhibits & Filings

CORNING INC /NY 8-K Report, Financial Results (Jul 26, 2005)

Filed July 26, 2005For Securities:GLW

Summary

Corning Inc. reported strong second-quarter 2005 financial results, exceeding expectations with a 17% year-over-year sales increase to $1.141 billion. This performance was primarily driven by a significant 50% surge in sales within the Display Technologies segment, which benefited from robust demand for larger-size glass substrates used in flat-panel displays. The company also highlighted its tenth consecutive quarter of sales growth, underscoring a successful execution of its growth strategy. Despite reporting a net income of $165 million ($0.11 per share), which included substantial special charges of $141 million (largely related to asbestos litigation and debt repurchase), the company's adjusted earnings per share of $0.20 surpassed its own guidance. Corning also strengthened its financial position, ending the quarter with $2.1 billion in cash and achieving investment-grade credit ratings. The company provided a positive outlook for the third quarter, expecting continued sales growth and earnings within a solid range, further bolstered by increasing capacity in its key Display Technologies segment.

Key Highlights

  • 1Second-quarter sales increased 17% year-over-year to $1.141 billion, marking the 10th consecutive quarterly sales increase.
  • 2Display Technologies segment achieved record sales of $415 million, up 50% year-over-year, driven by strong demand for larger glass substrates.
  • 3Net income was $165 million ($0.11 per share), including $141 million in net special charges.
  • 4Excluding special items, EPS was $0.20, exceeding the company's guidance range of $0.17-$0.19.
  • 5Gross margin improved to 42%, the highest since Q1 2001, due to strong performance in Display Technologies.
  • 6The company ended the quarter with $2.1 billion in cash and short-term investments, a significant increase from the prior quarter.
  • 7Third-quarter 2005 sales are projected to be between $1.14 billion and $1.19 billion, with EPS guidance of $0.20-$0.22 (excluding special items).

Frequently Asked Questions

The primary driver was the strong performance of the Display Technologies segment, which saw a 50% year-over-year sales increase due to high demand for larger-size glass substrates used in flat-panel displays and televisions. This segment's growth contributed significantly to Corning's tenth consecutive quarter of overall sales increases.

Corning reported net special charges of $141 million in the second quarter. These charges were primarily due to a $137 million mark-to-market adjustment for its common stock contribution to settle asbestos litigation related to Pittsburgh Corning Corporation, and a $12 million loss on debt repurchase. Excluding these charges, the company's adjusted earnings per share of $0.20 exceeded its previously issued guidance.

Corning expects third-quarter sales to be in the range of $1.14 billion to $1.19 billion. The company anticipates earnings per share (excluding special items) to be between $0.20 and $0.22. The company projects continued sequential volume growth in Display Technologies, supported by expanding manufacturing capacity, while the Telecommunications segment is expected to remain stable or slightly decline.

Corning's gross margin improved to 42% in the second quarter, the highest level since the first quarter of 2001. This improvement is attributed to the strong performance in the Display Technologies segment, driven by increased demand for larger glass substrates and efficient manufacturing operations, indicating improved profitability on sales.