Summary
Corning Incorporated announced its first-quarter 2006 financial results, exceeding prior guidance. However, the company also disclosed that it will restate its financial statements for 2003 through 2005 and previous interim periods. This restatement is due to accounting errors related to the 2003 Pittsburgh Corning Corporation asbestos litigation bankruptcy settlement, specifically concerning the fair value accounting of settlement components and the equity accounting for its investment in Pittsburgh Corning Europe. The company anticipates the restatement will increase asbestos settlement charges and liabilities, and reduce equity earnings, impacting net income and EPS for those prior periods. Importantly, the restatement is expected to have no impact on reported revenue, cash balances, or debt covenant compliance. Looking ahead, Corning provided guidance for the second quarter of 2006, projecting sales between $1.29 billion and $1.33 billion, with diluted EPS expected to be between $0.24 and $0.26, excluding special items. The company highlighted strong performance in its Display Technologies segment, with significant year-over-year volume growth in LCD glass, though it cautioned about potential impacts from a recent power outage at its Shizuoka, Japan plant and inventory build-up in the supply chain, which are expected to lower second-quarter Display segment earnings. Despite these near-term factors, management remains optimistic about the long-term growth of the LCD industry.
Key Highlights
- 1Corning Inc. announced first-quarter 2006 results that exceeded its own guidance for both sales and earnings.
- 2The company will restate its financial statements for the years 2003 through 2005 and previously issued interim financial statements.
- 3The restatement is related to accounting errors in the 2003 Pittsburgh Corning Corporation asbestos litigation bankruptcy settlement, specifically concerning fair value accounting and equity earnings of Pittsburgh Corning Europe.
- 4The restatement will increase asbestos settlement charges and liabilities but is not expected to impact revenue, cash balances, or debt covenant compliance.
- 5Second-quarter 2006 guidance projects sales of $1.29 billion to $1.33 billion and EPS of $0.24 to $0.26 (non-GAAP).
- 6The Display Technologies segment showed strong year-over-year growth, though near-term headwinds from supply chain inventory and a plant power outage are expected to affect second-quarter segment earnings.
- 7Standard & Poor's upgraded Corning's credit rating to BBB in early April.