Summary
Corning Incorporated (GLW) filed an 8-K on December 17, 2014, to update investors on significant events at its 50% owned joint venture, Dow Corning. The most impactful news concerns Dow Corning's reduction of its breast implant liability by approximately $1.3 billion. This adjustment, made after a reassessment of future funding needs for its bankruptcy reorganization plan, is expected to result in a pre-tax gain for Corning. Additionally, Dow Corning announced the permanent closure and abandonment of its Hemlock Semiconductor facility in Clarksville, Tennessee, due to sustained adverse market conditions, oversupply, operating costs, and tariffs. This closure is anticipated to result in a significant pre-tax charge for Dow Corning.
Key Highlights
- 1Dow Corning, a 50% joint venture of Corning, significantly reduced its estimated breast implant liability by approximately $1.3 billion.
- 2The reduction in implant liability is based on a reassessment of future funding requirements for the bankruptcy settlement facility, suggesting lower-than-anticipated actual costs.
- 3Corning expects to record a positive impact of approximately $400 million (after-tax) from this liability reduction in its fourth-quarter equity earnings.
- 4Dow Corning will permanently abandon its Hemlock Semiconductor facility in Clarksville, Tennessee.
- 5The decision to close the Clarksville facility is driven by sustained adverse market conditions, oversupply in the polysilicon market, high operating costs, and tariffs.
- 6Dow Corning expects to record a pre-tax charge of approximately $1.5 billion to $1.6 billion related to the closure of the Clarksville facility.
- 7Corning anticipates its fourth-quarter equity earnings will be negatively impacted by approximately $500 million (after-tax) from this facility closure charge.