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Corning Inc Ny (GLW) SEC Filing 8-K Material Event for the period ending Tuesday, October 26, 2021

Corning Inc Ny

CIK: 24741 Ticker: GLW
 

Exhibit 99

FOR RELEASE  October 26, 2021

 

Corning Reports Third-Quarter 2021 Results

as Sales Reach All-Time High

 

Core sales and EPS grew 21% and 30% year over year, respectively, with
free cash flow of $0.5 billion

 

Announcements with AT&T, Jeep, PPG, and Samsung highlight
Cornings contributions to significant industry advancements

 

Company on track to reach $14 billion in sales and over $2 in EPS for 2021

 

Sales and EPS growth with strong cash generation expected to continue in 2022

 

CORNING, N.Y. – Corning Incorporated (NYSE: GLW) today announced results for the third quarter ended Sept. 30, 2021, and provided its outlook for the fourth quarter.

 

GAAP and core sales were $3.6 billion; core sales grew 4% sequentially and 21% year over year, driven by strong growth in Optical Communications; GAAP net income was $371 million, and core net income was $485 million.
GAAP EPS was $0.43 and core EPS was $0.56; core EPS increased 6% sequentially and 30% year over year. 
Lower production levels in the automotive industry due to the semiconductor chip shortage reduced sales by approximately $40 million and EPS by $0.02.

Gross margin expanded 50 basis points sequentially and 70 basis points year over year to 38.3%, despite a net impact of 150 basis points from supply chain challenges and inflationary headwinds.
Free cash flow was $497 million for the quarter and $1.3 billion for the first nine months of 2021.
For the fourth quarter, Corning expects core sales to be in the range of $3.5 billion to $3.7 billion with core EPS in the range of $0.50 to $0.55. Profitability is expected to decline slightly on a sequential basis due to further reductions in automotive industry-related sales and lower Corning® Gorilla® Glass sales following large product launches by customers. 

 

Wendell P. Weeks, chairman and chief executive officer, said, “Strong execution resulted in another outstanding quarter as sales reached an all-time high. For the full year, we are on pace to reach $14 billion in sales and over $2 in EPS. We are successfully capturing a compelling set of long-term growth opportunities by innovating, extending commercial relationships, and scaling operations to meet robust demand. We are advancing our market leadership and expect to grow again in 2022.”

 

Weeks continued, “Corning has become increasingly vital to multiple industry transformations that are moving the world forward. Key trends continue to converge around our capabilities – and we believe this is just the beginning. Corning’s strong position reflects the contributions of our dedicated people as we navigate this period of global disruption.”

 

Tony Tripeny, executive vice president and chief financial officer, said, “In the third quarter, we continued to execute well in a complex environment. A key driver of that execution was our global supply management and operations teams maintaining a steady supply of raw materials and finding creative shipping strategies. Their actions enabled us to deliver effectively for our customers. At the same time, we incurred additional costs that were elevated by inflation. To help offset these costs, we have price increases underway in all of our businesses.”

 

Tripeny concluded, “As we approach 2022, we remain focused on driving top-line growth and expanding our margins. We are well positioned to address growing customer demand, deepen our innovation portfolio, and reward shareholders.”

 

Market-Access Platform Highlights

 

During the quarter, Corning continued to build on partnerships with industry leaders such as AT&T, Jeep, PPG, and Samsung and advanced important growth initiatives across its Market-Access Platforms.

 

Optical Communications – Demand on networks is at an all-time high, setting the stage for significant investments by operators to expand network capacity, capability, and access. During the quarter, the company announced a collaboration with AT&T. Corning’s capacity expansions will allow AT&T to extend investments in fiber infrastructure, expand U.S. broadband networks, and accelerate 5G deployment. Corning continues to outperform the market.

 

© 2021 Corning Incorporated. All Rights Reserved.

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Corning Reports Third-Quarter 2021 Results

Page 2

 

 

 

 

Life Sciences – Corning continues to support the pandemic response, and its portfolio of advanced vials and pharmaceutical glass tubing has enabled the delivery of more than 3 billion doses of COVID-19 vaccines so far. The company also continues to advance its pharmaceutical packaging portfolio through key partnerships and a growing customer base. Additionally, innovations are helping advance developments in cell- and gene-based therapies, which offer a significant opportunity to increase Corning content in life sciences products.
 

Mobile Consumer Electronics – Corning continues to advance its objective of delivering more Corning content and capturing higher revenue per device. During the quarter, Samsung introduced its Galaxy Z Fold3 5G and Galaxy Z Flip3 5G, both featuring Corning® Gorilla® Glass Victus®. These devices feature Corning® Gorilla® Glass with DX for device cameras, marking Corning’s entrance into a new product category. Additionally, nearly 30 new devices – including smartphones, wearables, and laptops – launched featuring Corning® Gorilla® Glass.
 

Automotive – Corning is uniquely suited to address global trends toward cleaner, safer vehicles that enhance the driving experience. Jeep and Corning announced that a windshield with Corning® Gorilla® Glass is available as a factory-installed option on the 2021 Jeep® Wrangler and 2021 Jeep® Gladiator. Environmental Technologies continues to deliver more Corning content per vehicle; since 2017, the company’s automotive product sales have increased more than 40% while global car sales have decreased 20%.

 

Display – The market for large-sized TVs is projected to grow at a double-digit compound annual growth rate through 2024. Gen 10.5 glass provides the most economical approach for larger sets, and Corning is well positioned to meet growing demand as the leader in Gen 10.5. Glass demand at retail is expected to be up by a high-single digit percentage in 2022. The company expects the glass pricing environment to remain favorable in the fourth quarter and in 2022. Fourth-quarter glass pricing is expected to be consistent with the third quarter.

 

Third-Quarter 2021 Results and Comparisons
(In millions, except per-share amounts)

   

Q3 2021

   

Q2 2021

   

% change

   

Q3 2020

   

% change

 

GAAP Net Sales

  $ 3,615     $ 3,501       3 %   $ 3,001       20 %

GAAP Net Income

  $ 371     $ 449       (17 %)   $ 427       (13 %)

GAAP EPS

  $ 0.43     $ (0.42 )     **     $ 0.48       (10 %)

Core Sales*

  $ 3,639     $ 3,504       4 %   $ 3,007       21 %

Core Net Income*

  $ 485     $ 459       6 %   $ 380       28 %

Core EPS*

  $ 0.56     $ 0.53       6 %   $ 0.43       30 %

 

*Core performance measures are non-GAAP financial measures. The reconciliation between GAAP and non-GAAP measures is provided in the tables following this news release, as well as on the companys website.

 

**Not Meaningful

 

Third-Quarter 2021 Segment Results

 

Display Technologies

   

Q3 2021

   

Q2 2021

   

% change

   

Q3 2020

   

% change

 

Net Sales

  $ 956     $ 939       2 %   $ 827       16 %

Net Income Before Tax

  $ 311     $ 312       (0 %)   $ 248       25 %

Net Income

  $ 247     $ 248       (0 %)   $ 196       26 %

 

In Display Technologies, third-quarter sales were $956 million, up 2% sequentially and 16% year over year. Sequentially, volume was up slightly and glass prices increased moderately, as expected.

 

© 2021 Corning Incorporated. All Rights Reserved.

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Corning Reports Third-Quarter 2021 Results

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Optical Communications

   

Q3 2021

   

Q2 2021

   

% change

   

Q3 2020

   

% change

 

Net Sales

  $ 1,131     $ 1,075       5 %   $ 909       24 %

Net Income Before Tax

  $ 177     $ 188       (6 %)   $ 147       20 %

Net Income

  $ 139     $ 148       (6 %)   $ 115       21 %

 

In Optical Communications, third-quarter sales were $1.13 billion, up 5% sequentially and 24% year over year. 5G, broadband, and cloud computing continue to drive strong growth across this segment. Increased raw material and shipping costs significantly impacted profitability

 

Specialty Materials

   

Q3 2021

   

Q2 2021

   

% change

   

Q3 2020

   

% change

 

Net Sales

  $ 556     $ 483       15 %   $ 570       (2 %)

Net Income Before Tax

  $ 135     $ 103       31 %   $ 184       (27 %)

Net Income

  $ 107     $ 81       32 %   $ 146       (27 %)

 

In Specialty Materials, third-quarter sales were $556 million, up 15% sequentially. The company continues to garner significant demand for its premium cover materials and Advanced Optics products, driven by ongoing strength in the underlying IT, mobile device, and semiconductor markets. In the fourth quarter, the company expects typical volume declines in Gorilla Glass following builds supporting flagship product launches by customers.

 

Environmental Technologies

   

Q3 2021

   

Q2 2021

   

% change

   

Q3 2020

   

% change

 

Net Sales

  $ 385     $ 407       (5 %)   $ 379       2 %

Net Income Before Tax

  $ 76     $ 102       (25 %)   $ 87       (13 %)

Net Income

  $ 60     $ 81       (26 %)   $ 69       (13 %)

 

In Environmental Technologies, third-quarter sales were $385 million, up 2% year over year, driven by diesel product sales. The automotive industry was significantly impacted by the semiconductor chip shortage as OEMs extended shutdowns due to production constraints, and Corning's automotive sales and profitability were down as a result. The company expects sales and profit to be further impacted in the fourth quarter.

 

Life Sciences

   

Q3 2021

   

Q2 2021

   

% change

   

Q3 2020

   

% change

 

Net Sales

  $ 305     $ 312       (2 %)   $ 223       37 %

Net Income Before Tax

  $ 57     $ 66       (14 %)   $ 36       58 %

Net Income

  $ 45     $ 52       (13 %)   $ 28       61 %

 

In Life Sciences, third-quarter sales were $305 million, up 37% year over year, driven by ongoing demand to support the global pandemic response, continued recovery in academic and pharmaceutical research labs, and strong demand for bioproduction vessels and diagnostic-related consumables.

 

Upcoming Investor Events 

 

On Nov. 10, Corning will attend the Baird Virtual Global Industrial Conference. On Dec. 1, Corning will attend the Credit Suisse Annual Technology Conference. And, on Dec. 7, Corning will attend the Barclays Virtual Global Technology, Media, and Telecommunications Conference.

 

© 2021 Corning Incorporated. All Rights Reserved.

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Corning Reports Third-Quarter 2021 Results

Page 4

 

 

Third-Quarter Conference Call Information

 

The company will host its third-quarter conference call on Tuesday, Oct. 26, at 8:30 a.m. EDT. To participate, please call toll-free (877) 710-0209 or for international access, call (315) 625-3068 approximately 10 to 15 minutes prior to the start of the call. The access code is 483 4419. To listen to a live audio webcast of the call, go to Corning’s website at http://www.corning.com/investor_relations, click “Events,” and follow the instructions.

 

Presentation of Information in this News Release

 

This news release includes non-GAAP financial measures. Non-GAAP financial measures are not in accordance with, or an alternative to, GAAP. Corning’s non-GAAP financial measures exclude the impact of items that are driven by general economic conditions and events that do not reflect the underlying fundamentals and trends in the company’s operations. The company believes presenting non-GAAP financial measures assists in analyzing financial performance without the impact of items that may obscure trends in the company’s underlying performance. Definitions of these non-GAAP financial measures and reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures can be found on the company’s website by going to the Investor Relations page and clicking “Quarterly Results” under the “Financials and Filings” tab. These reconciliations also accompany this news release.

 

Caution Concerning Forward-Looking Statements

 

The statements in this release that are not historical facts or information and contain words such as “will,” “believe,” “anticipate,” “expect,” “intend,” “plan,” “seek,” “see,” “would,” and “target” and similar expressions are forward-looking statements. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and include estimates and assumptions related to economic, competitive and legislative developments. Such statements relate to future events that by their nature address matters that are, to different degrees, uncertain.  These forward-looking statements relate to, among other things, the Company’s future operating performance, the Company's share of new and existing markets, the Company's revenue and earnings growth rates, the Company’s ability to innovate and commercialize new products, and the Company’s implementation of cost-reduction initiatives and measures to improve pricing, including the optimization of the Company’s manufacturing capacity. These statements are subject to change and uncertainty which are, in many instances, beyond our control. There can be no assurance that future developments will be in accordance with management’s expectations. Actual results could differ materially from those expected by us, depending on the outcome of various factors. We do not undertake to update forward-looking statements.

 

 

© 2021 Corning Incorporated. All Rights Reserved.

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Corning Reports Third-Quarter 2021 Results

Page 5

 

 

Although the Company believes that these forward-looking statements are based upon reasonable assumptions regarding, among other things, current estimates and forecasts, general economic conditions, its knowledge of its business, and key performance indicators that impact the Company, actual results could differ materially. Some of the risks, uncertainties and other factors that could cause actual results to differ materially from those expressed in or implied by the forward looking statements include, but are not limited to: the duration and severity of the COVID-19 pandemic, and its impact across our businesses on demand, operations, our global supply chains and stock price; the effects of acquisitions, dispositions and other similar transactions; global economic trends, competition and geopolitical risks, or an escalation of sanctions, tariffs or other trade tensions between the U.S. and China or other countries, and related impacts on our businesses' global supply chains and strategies; changes in macroeconomic and market conditions and market volatility (including developments and volatility arising from the COVID-19 pandemic), including inflation, interest rates, the value of securities and other financial assets, precious metals, oil, natural gas and other commodity prices and exchange rates (particularly between the U.S. dollar and the Japanese yen, new Taiwan dollar, euro, Chinese yuan and South Korean won), and the impact of such changes and volatility on our financial position and businesses; product demand and industry capacity; competitive products and pricing; availability and costs of critical components and materials; new product development and commercialization; order activity and demand from major customers; the amount and timing of our cash flows and earnings and other conditions, which may affect our ability to pay our quarterly dividend at the planned level or to repurchase shares at planned levels; possible disruption in commercial activities or our supply chain due to terrorist activity, cyber-attack, armed conflict, political or financial instability, natural disasters, international trade disputes or major health concerns; loss of intellectual property due to theft, cyber-attack, or disruption to our information technology infrastructure; unanticipated disruption to our supply chain, equipment, facilities, IT systems or operations; effect of regulatory and legal developments; ability to pace capital spending to anticipated levels of customer demand; our ability to increase margins through implementation of operational changes and other cost reduction measures; rate of technology change; ability to enforce patents and protect intellectual property and trade secrets; adverse litigation; product and components performance issues; retention of key personnel; customer ability to maintain profitable operations and obtain financing to fund ongoing operations and manufacturing expansions and pay receivables when due; loss of significant customers; changes in tax laws and regulations; the impacts of audits by taxing authorities; and the potential impact of legislation, government regulations, other government action and investigations; and other risks detailed in Corning’s SEC filings.

 

For a complete listing of risks and other factors, please reference the risk factors and forward-looking statements described in our annual reports on Form 10-K and quarterly reports on Form 10-Q.

 

Web Disclosure

 

In accordance with guidance provided by the SEC regarding the use of company websites and social media channels to disclose material information, Corning Incorporated (“Corning”) wishes to notify investors, media, and other interested parties that it uses its website (https://www.corning.com/worldwide/en/about-us/news-events.html) to publish important information about the company, including information that may be deemed material to investors, or supplemental to information contained in this or other press releases. The list of websites and social media channels that the company uses may be updated on Corning’s media and website from time to time. Corning encourages investors, media, and other interested parties to review the information Corning may publish through its website and social media channels as described above, in addition to the company’s SEC filings, press releases, conference calls, and webcasts.

 

© 2021 Corning Incorporated. All Rights Reserved.

5

Corning Reports Third-Quarter 2021 Results

Page 6

 

 

About Corning Incorporated

 

Corning (www.corning.com) is one of the world's leading innovators in materials science, with a 170-year track record of life-changing inventions. Corning applies its unparalleled expertise in glass science, ceramic science, and optical physics along with its deep manufacturing and engineering capabilities to develop category-defining products that transform industries and enhance people's lives. Corning succeeds through sustained investment in RD&E, a unique combination of material and process innovation, and deep, trust-based relationships with customers who are global leaders in their industries. Corning's capabilities are versatile and synergistic, which allows the company to evolve to meet changing market needs, while also helping its customers capture new opportunities in dynamic industries. Today, Corning's markets include optical communications, mobile consumer electronics, display, automotive, and life sciences.

 

Media Relations Contact:         

Megan Whittemore                                        
(202) 661-4171                                              
whittemom@corning.com     

 

Investor Relations Contact:
Ann H.S. Nicholson
(607) 974-6716
nicholsoas@corning.com

 

 

 

© 2021 Corning Incorporated. All Rights Reserved.

6

 

CORNING INCORPORATED AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited; in millions, except per share amounts)

 

   

Three months ended

   

Nine months ended

 
   

September 30,

   

September 30,

 
   

2021

   

2020

   

2021

   

2020

 

Net sales

  $ 3,615     $ 3,001     $ 10,406     $ 7,953  

Cost of sales

    2,294       2,000       6,614       5,635  
                                 

Gross margin

    1,321       1,001       3,792       2,318  
                                 

Operating expenses:

                               

Selling, general and administrative expenses

    486       480       1,351       1,276  

Research, development and engineering expenses

    251       231       715       922  

Amortization of purchased intangibles

    32       33       97       87  
                                 

Operating income

    552       257       1,629       33  
                                 

Equity in earnings (losses) of affiliated companies

    16       (76 )     31       17  

Interest income

    3       3       8       12  

Interest expense

    (72 )     (70 )     (227 )     (201 )

Translated earnings contract (loss) gain, net

    (13 )     (100 )     262       5  

Transaction-related gain, net

            498               498  

Other (expense) income, net

    (6 )     (62 )     118       (71 )
                                 

Income before income taxes

    480       450       1,821       293  

Provision for income taxes

    (109 )     (23 )     (402 )     (33 )
                                 

Net income attributable to Corning Incorporated

  $ 371     $ 427     $ 1,419     $ 260  
                                 

Earnings per common share available to common shareholders:

                               

Basic

  $ 0.44     $ 0.53     $ 0.72     $ 0.25  

Diluted

  $ 0.43     $ 0.48     $ 0.71     $ 0.24  
                                 

Reconciliation of net income attributable to Corning Incorporated versus net income available to common shareholders:

                               
                                 

Net income attributable to Corning Incorporated

  $ 371     $ 427     $ 1,419     $ 260  
                                 

Series A convertible preferred stock dividend

                    (24 )     (73 )

Excess consideration paid for redemption of preferred shares

                    (803 )        
                                 

Net income available to common shareholders

  $ 371     $ 427     $ 592     $ 187  

 

© 2021 Corning Incorporated. All Rights Reserved.

7

 

CORNING INCORPORATED AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(In millions, except share and per share amounts)

 

   

September 30,

   

December 31,

 
   

2021

   

2020

 
    (unaudited)        

Assets

               
                 

Current assets:

               

Cash and cash equivalents

  $ 2,212     $ 2,672  

Trade accounts receivable, net of doubtful accounts

    2,114       2,133  

Inventories, net

    2,463       2,438  

Other current assets

    890       761  

Total current assets

    7,679       8,004  
                 

Property, plant and equipment, net of accumulated depreciation

    15,383       15,742  

Goodwill, net

    2,425       2,460  

Other intangible assets, net

    1,192       1,308  

Deferred income taxes

    1,062       1,121  

Other assets

    1,965       2,140  
                 

Total Assets

  $ 29,706     $ 30,775  
                 

Liabilities and Equity

               
                 

Current liabilities:

               

Current portion of long-term debt and short-term borrowings

  $ 50     $ 156  

Accounts payable

    1,396       1,174  

Other accrued liabilities

    2,891       2,437  

Total current liabilities

    4,337       3,767  
                 

Long-term debt

    7,019       7,816  

Postretirement benefits other than pensions

    729       727  

Other liabilities

    5,266       5,017  

Total liabilities

    17,351       17,327  
                 

Commitments and contingencies

               

Shareholders’ equity:

               

Convertible preferred stock, Series A – Par value $100 per share; Shares authorized 10 million; Shares issued: 0 and 2,300

            2,300  

Common stock – Par value $0.50 per share; Shares authorized 3.8 billion; Shares issued: 1.8 billion and 1.7 billion

    907       863  

Additional paid-in capital – common stock

    16,398       14,642  

Retained earnings

    16,110       16,120  

Treasury stock, at cost; Shares held: 963 million and 961 million

    (20,011 )     (19,928 )

Accumulated other comprehensive loss

    (1,259 )     (740 )

Total Corning Incorporated shareholders’ equity

    12,145       13,257  

Non-controlling interests

    210       191  

Total equity

    12,355       13,448  
                 

Total Liabilities and Equity

  $ 29,706     $ 30,775  

 

© 2021 Corning Incorporated. All Rights Reserved.

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CORNING INCORPORATED AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in millions)

 

   

Three months ended

   

Nine months ended

 
   

September 30,

   

September 30,

 
   

2021

   

2020

   

2021

   

2020

 

Cash Flows from Operating Activities:

                               

Net income

  $ 371     $ 427     $ 1,419     $ 260  

Adjustments to reconcile net income to net cash provided by operating activities:

                               

Depreciation

    339       361       1,005       1,041  

Amortization of purchased intangibles

    32       33       97       87  

Loss on disposal of assets

    7       32       8       107  

Severance charges

    (1 )     6               141  

Severance payments

    (4 )     (29 )     (24 )     (126 )

Share-based compensation expense

    39       62       117       127  

Equity in (earnings) losses of affiliated companies

    (16 )     76       (31 )     (17 )

Translation (gain) loss on Japanese yen-denominated debt

    (4 )     39       (127 )     50  

Deferred tax provision (benefit)

    12       34       68       (96 )

Pension plan contributions

            (60 )             (80 )

Customer deposits and government incentives

    54       59       168       184  

Translated earnings contract loss (gain)

    13       100       (262 )     (5 )

Unrealized translation losses (gains) on transactions

    14       (65 )     65       (54 )

Tax assessment refunds

                            101  

Asset impairment

            22               217  

Transaction-related gain, net

            (498 )             (498 )

Changes in certain working capital items:

                               

Trade accounts receivable

    (97 )     (308 )     (146 )     (281 )

Inventories

    (90 )     187       (72 )     240  

Other current assets

    (57 )     (39 )     (210 )     (19 )

Accounts payable and other current liabilities

    269       96       425       (139 )

Other, net

    14       73       (111 )     166  

Net cash provided by operating activities

    895       608       2,389       1,406  
                                 

Cash Flows from Investing Activities:

                               

Capital expenditures

    (401 )     (153 )     (1,014 )     (986 )

Proceeds from sale or disposal of assets

                    17       27  

Proceeds from sale of business

                    102          

Proceeds from and investment in unconsolidated entities, net

    2       (2 )     87       (7 )

Realized gains (losses) on translated earnings contract

    17       (2 )     30       10  

Other, net

    (6 )     9       (25 )     24  

Net cash used in investing activities

    (388 )     (148 )     (803 )     (932 )
                                 

Cash Flows from Financing Activities:

                               

Repayments of short-term borrowings

    (69 )             (144 )        

Repayments of long-term debt

    (331 )             (716 )        

Proceeds from issuance of long-term debt

    19       3       19       212  

Payment for redemption of preferred stock

                    (507 )        

Payments of employee withholding tax on stock awards

    (2 )     (2 )     (57 )     (10 )

Proceeds from exercise of stock options

    9       36       91       49  

Purchases of common stock for treasury

    (21 )             (22 )     (105 )

Dividends paid

    (217 )     (204 )     (659 )     (587 )

Other, net

    11       24       5       26  

Net cash used in financing activities

    (601 )     (143 )     (1,990 )     (415 )

Effect of exchange rates on cash

    (14 )     39       (56 )     21  

Net (decrease) increase in cash and cash equivalents

    (108 )     356       (460 )     80  

Cash and cash equivalents at beginning of period

    2,320       2,158       2,672       2,434  

Cash and cash equivalents at end of period

  $ 2,212     $ 2,514     $ 2,212     $ 2,514  

 

© 2021 Corning Incorporated. All Rights Reserved.

9

 

CORNING INCORPORATED AND SUBSIDIARY COMPANIES

(Unaudited)

 

GAAP Earnings per Common Share

 

The following table sets forth the computation of basic and diluted earnings per common share (in millions, except per share amounts):

 

   

Three months ended

   

Nine months ended

 
   

September 30,

   

September 30,

 
   

2021

   

2020

   

2021

   

2020

 

Net income attributable to Corning Incorporated

  $ 371     $ 427     $ 1,419     $ 260  

Less: Series A convertible preferred stock dividend

            24       24       73  

Less: Excess consideration paid for redemption of preferred shares

                    803          

Net income available to common shareholders – basic

    371       403       592       187  

Plus: Series A convertible preferred stock dividend

            24                  

Net income available to common shareholders – diluted

  $ 371     $ 427     $ 592     $ 187  
                                 

Weighted-average common shares outstanding - basic

    852       760       821       760  

Effect of dilutive securities:

                               

Employee stock options and other dilutive securities

    14       14       16       8  

Series A convertible preferred stock

            115                  

Weighted-average common shares outstanding - diluted

    866       889       837       768  

Basic earnings per common share

  $ 0.44     $ 0.53     $ 0.72     $ 0.25  

Diluted earnings per common share

  $ 0.43     $ 0.48     $ 0.71     $ 0.24  

 

Core Earnings per Common Share

 

The following table sets forth the computation of core basic and core diluted earnings per common share (in millions, except per share amounts):

 

   

Three months ended

   

Nine months ended

 
   

September 30,

   

September 30,

 
   

2021

   

2020

   

2021

   

2020

 

Core net income attributable to Corning Incorporated

  $ 485     $ 380     $ 1,346     $ 775  

Less: Series A convertible preferred stock dividend

            24       24       73  

Core net income available to common shareholders - basic

    485       356       1,322       702  

Plus: Series A convertible preferred stock dividend

            24       24       73  

Core net income available to common shareholders - diluted

  $ 485     $ 380     $ 1,346     $ 775  
                                 

Weighted-average common shares outstanding - basic

    852       760       821       760  

Effect of dilutive securities:

                               

Stock options and other dilutive securities

    14       14       16       8  

Series A convertible preferred stock

            115       41       115  

Weighted-average common shares outstanding - diluted

    866       889       878       883  

Core basic earnings per common share

  $ 0.57     $ 0.47     $ 1.61     $ 0.92  

Core diluted earnings per common share

  $ 0.56     $ 0.43     $ 1.53     $ 0.88  

 

© 2021 Corning Incorporated. All Rights Reserved.

10

 

Use of Non-GAAP Financial Measures

 

CORE PERFORMANCE MEASURES

 

In managing the Company and assessing our financial performance, certain measures provided by our consolidated financial statements are adjusted to exclude specific items to arrive at core performance measures. These items include gains and losses on translated earnings contracts, acquisition-related costs, certain discrete tax items and other tax-related adjustments, restructuring, impairment losses, and other charges and credits, certain litigation-related expenses, pension mark-to-market adjustments and other items which do not reflect on-going operating results of the Company or our equity affiliates. Corning utilizes constant-currency reporting for our Display Technologies, Environmental Technologies, Specialty Materials and Life Sciences segments for the Japanese yen, South Korean won, Chinese yuan, new Taiwan dollar and the euro. The Company believes that the use of constant-currency reporting allows investors to understand our results without the volatility of currency fluctuations and reflects the underlying economics of the translated earnings contracts used to mitigate the impact of changes in currency exchange rates on earnings and cash flows. Corning also believes that reporting core performance measures provides investors greater transparency to the information used by the management team to make financial and operational decisions.

 

Core performance measures are not prepared in accordance with Generally Accepted Accounting Principles in the United States (“GAAP”). We believe investors should consider these non-GAAP measures in evaluating results as they are more indicative of our core operating performance and how management evaluates operational results and trends. These measures are not, and should not, be viewed as a substitute for GAAP reporting measures. With respect to the Company’s outlook for future periods, it is not possible to provide reconciliations for these non-GAAP measures because the Company does not forecast the movement of foreign currencies against the U.S. dollar, or other items that do not reflect ongoing operations, nor does it forecast items that have not yet occurred or are out of the Company’s control. As a result, the Company is unable to provide outlook information on a GAAP basis.

 

For a reconciliation of non-GAAP performance measures to their most directly comparable GAAP financial measure, please see “Reconciliation of Non-GAAP Measures”.

 

© 2021 Corning Incorporated. All Rights Reserved.

11

 

CORNING INCORPORATED AND SUBSIDIARY COMPANIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURE TO GAAP FINANCIAL MEASURE

Three Months Ended September 30, 2021 and 2020

(Unaudited; amounts in millions, except per share amounts)

 

   

Three months ended September 30, 2021

 
                   

Income

                         
                   

before

           

Effective

         
   

Net

   

Equity

   

income

   

Net

   

tax

   

Per

 
   

sales

   

earnings

   

taxes

   

income

   

rate (a)

   

share

 

As reported - GAAP

  $ 3,615     $ 16     $ 480     $ 371       22.7 %   $ 0.43  

Constant-currency adjustment (1)

    24       1       33       23               0.03  

Translation gain on Japanese yen-denominated debt (2)

                    (4 )     (4 )             (0.00 )

Translated earnings contract loss (3)

                    13       10               0.01  

Acquisition-related costs (4)

                    38       30               0.03  

Discrete tax items and other tax-related adjustments (5)

                            (1 )             (0.00 )

Pension mark-to-market adjustment (6)

                    (1 )     (1 )             (0.00 )

Restructuring, impairment and other charges and credits (7)

                    40       31               0.04  

Litigation, regulatory and other legal matters (8)

                    3       15               0.02  

Preferred stock conversion (9)

                    (4 )     (4 )             (0.00 )

Bond redemption loss (10)

                    20       15               0.02  

Core performance measures

  $ 3,639     $ 17     $ 618     $ 485       21.5 %   $ 0.56  

 

(a)

Based upon statutory tax rates in the specific jurisdiction for each event.

 

   

Three months ended September 30, 2020

 
                    Income                        
          Equity     before           Effective        
   

Net

   

(losses)

   

income

   

Net

   

tax

   

Per

 
   

sales

   

earnings

   

taxes

   

income

   

rate (a)

   

share

 

As reported - GAAP

  $ 3,001     $ (76 )   $ 450     $ 427       5.1 %   $ 0.48  

Constant-currency adjustment (1)

    6                       (14 )             (0.02 )

Translation loss on Japanese yen-denominated debt (2)

                    39       31               0.03  

Translated earnings contract loss (3)

                    99       77               0.09  

Acquisition-related costs (4)

                    47       37               0.04  

Discrete tax items and other tax-related adjustments (5)

                            (58 )             (0.07 )

Restructuring, impairment and other charges and credits (7)

                    171       129               0.15  

Litigation, regulatory and other legal matters (8)

                    83       72               0.08  

Equity in losses of affiliated companies (13)

            85       85       66               0.07  

Transaction-related gain, net (14)

                    (498 )     (387 )             (0.44 )

Core performance measures

  $ 3,007     $ 9     $ 476     $ 380       20.2 %   $ 0.43  

 

(a)

Based upon statutory tax rates in the specific jurisdiction for each event.

 

See Reconciliation of Non-GAAP Financial Measures, “Items which we exclude from GAAP measures to arrive at Core Performance measures” for the descriptions of the footnoted reconciling items.

 

© 2021 Corning Incorporated. All Rights Reserved.

12

 

CORNING INCORPORATED AND SUBSIDIARY COMPANIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURE TO GAAP FINANCIAL MEASURE

Nine Months Ended September 30, 2021 and 2020

(Unaudited; amounts in millions, except per share amounts)

 

   

Nine months ended September 30, 2021

 
                   

Income

                         
                   

before

           

Effective

         
   

Net

   

Equity

   

income

   

Net

   

tax

   

Per

 
   

sales

   

earnings

   

taxes

   

income

   

rate (a)

   

share

 

As reported – GAAP

  $ 10,406     $ 31     $ 1,821     $ 1,419       22.1 %   $ 0.71  

Preferred stock redemption (b)

                                            0.91  

Subtotal

    10,406       31       1,821       1,419       22.1 %     1.62  
                                                 

Constant-currency adjustment (1)

            2       47       29               0.03  

Translation gain on Japanese yen-denominated debt (2)

                    (127 )     (98 )             (0.12 )

Translated earnings contract gain (3)

                    (262 )     (202 )             (0.24 )

Acquisition-related costs (4)

                    123       95               0.11  

Discrete tax items and other tax-related adjustments (5)

                            5               0.01  

Pension mark-to-market adjustment (6)

                    23       18               0.02  

Restructuring, impairment and other charges and
credits (7)

                    42       33               0.04  

Litigation, regulatory and other legal matters (8)

                    11       23               0.03  

Preferred stock conversion (9)

                    17       17               0.02  

Bond redemption loss (10)

                    31       23               0.03  

Loss on investments (11)

                    39       30               0.04  

Gain on sale of business (12)

                    (54 )     (46 )             (0.05 )

Core performance measures

  $ 10,406     $ 33     $ 1,711     $ 1,346       21.3 %   $ 1.53  

 

(a)

Based upon statutory tax rates in the specific jurisdiction for each event.

(b) Corning and Samsung Display Co., Ltd. executed a Share Repurchase Agreement ("SRA"). Pursuant to the SRA, the Series A convertible preferred stock ("Preferred Stock") was converted into 115 million shares of common stock ("Common Shares"). Corning immediately repurchased 35 million of the converted Common Shares and excluded them from the weighted-average common shares outstanding for the calculation of the Company’s basic and diluted earnings per share. The redemption of these Common Shares resulted in an $803 million reduction of retained earnings which reduced the net income available to common shareholders.

 

   

Nine months ended September 30, 2020

 
                    Income                        
                   

before

           

Effective

         
    Net     Equity     income     Net     tax     Per  
   

sales

   

earnings

   

taxes

   

income

   

rate (a)

   

share

 

As reported - GAAP

  $ 7,953     $ 17     $ 293     $ 260       11.3 %   $ 0.24  

Constant-currency adjustment (1)

    66               25       (33 )             (0.04 )

Translation loss on Japanese yen-denominated debt (2)

                    50       39               0.05  

Translated earnings contract loss (3)

                    6       5               0.01  

Acquisition-related costs (4)

                    104       79               0.10  

Discrete tax items and other tax-related adjustments (5)

                            19               0.02  

Pension mark-to-market adjustment (6)

                    (2 )     (1 )             (0.00 )

Restructuring, impairment and other charges and
credits (7)

                    733       549               0.71  

Litigation, regulatory and other legal matters (8)

                    108       92               0.12  

Equity in losses of affiliated companies (13)

            61       61       48               0.06  

Transaction-related gain, net (14)

                    (498 )     (387 )             (0.50 )

Cumulative adjustment related to customer contract (15)

    105               105       105               0.14  

Core performance measures

  $ 8,124     $ 78     $ 985     $ 775       21.3 %   $ 0.88  

 

(a)

Based upon statutory tax rates in the specific jurisdiction for each event.

 

See Reconciliation of Non-GAAP Financial Measures, “Items which we exclude from GAAP measures to arrive at Core Performance measures” for the descriptions of the footnoted reconciling items.

 

© 2021 Corning Incorporated. All Rights Reserved.

13

 

CORNING INCORPORATED AND SUBSIDIARY COMPANIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURE TO GAAP FINANCIAL MEASURE

Three Months Ended September 30, 2021 and 2020

(Unaudited; amounts in millions, except per share amounts)

 

 

   

Three months ended

 
   

September 30, 2021

 
                   

Selling,

   

Research,

                 
                   

general

   

development

                 
           

Gross

   

and

   

and

           

Operating

 
   

Gross

   

margin

   

administrative

   

engineering

   

Operating

   

margin

 
   

margin

    %    

expenses

   

expenses

   

margin

    %  

As reported - GAAP

  $ 1,321       36.5 %   $ 486     $ 251     $ 552       15.3 %

Constant-currency adjustment (1)

    32               (1 )             33          

Acquisition-related costs (4)

                                    32          

Pension mark-to-market adjustment (6)

                    1               (1 )        

Restructuring, impairment and other charges and credits (7)

    41                       1       40          

Litigation, regulatory and other legal matters (8)

                    (3 )             3          

Core performance measures

  $ 1,394       38.3 %   $ 483     $ 252     $ 659       18.1 %

 

   

Three months ended

 
   

September 30, 2020

 
                   

Selling,

   

Research,

                 
                   

general

   

development

                 
           

Gross

   

and

   

and

           

Operating

 
   

Gross

   

margin

   

administrative

   

engineering

   

Operating

   

margin

 
   

margin

   

%

   

expenses

   

expenses

   

margin

   

%

 

As reported - GAAP

  $ 1,001       33.4 %   $ 480     $ 231     $ 257       8.6 %

Translated earnings contract gain (3)

    (2 )                             (2 )        

Acquisition-related costs (4)

    7               (7 )     (1 )     48          

Restructuring, impairment and other charges and credits (7)

    124               (21 )     (18 )     163          

Litigation, regulatory and other legal matters (8)

                    (83 )             83          

Core performance measures

  $ 1,130       37.6 %   $ 369     $ 212     $ 549       18.3 %

 

See Reconciliation of Non-GAAP Financial Measures, “Items which we exclude from GAAP measures to arrive at Core Performance measures” for the descriptions of the footnoted reconciling items.

 

© 2021 Corning Incorporated. All Rights Reserved.

14

 

CORNING INCORPORATED AND SUBSIDIARY COMPANIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURE TO GAAP FINANCIAL MEASURE

Nine Months Ended September 30, 2021 and 2020

(Unaudited; amounts in millions, except per share amounts)

 

 

   

Nine months ended

 
   

September 30, 2021

 
                   

Selling,

   

Research,

                 
                   

general

   

development

                 
           

Gross

   

and

   

and

           

Operating

 
   

Gross

   

margin

   

administrative

   

engineering

   

Operating

   

margin

 
   

margin

   

%

   

expenses

   

expenses

   

margin

   

%

 

As reported - GAAP

  $ 3,792       36.4 %   $ 1,351     $ 715     $ 1,629       15.7 %

Constant-currency adjustment (1)

    42               (3 )             45          

Acquisition-related costs (4)

    18               (2 )     (1 )     118          

Pension mark-to-market adjustment (6)

                    (11 )     (3 )     14          

Restructuring, impairment and other charges and credits (7)

    35               (4 )     (3 )     42          

Litigation, regulatory and other legal matters (8)

                    (11 )             11          

Core performance measures

  $ 3,887       37.4 %   $ 1,320     $ 708     $ 1,859       17.9 %

 

   

Nine months ended

 
   

September 30, 2020

 
                   

Selling,

   

Research,

                 
                   

general

   

development

                 
           

Gross

   

and

   

and

           

Operating

 
   

Gross

   

margin

   

administrative

   

engineering

   

Operating

   

margin

 
   

margin

   

%

   

expenses

   

expenses

   

margin

   

%

 

As reported - GAAP

  $ 2,318       29.1 %   $ 1,276     $ 922     $ 33       0.4 %

Constant-currency adjustment (1)

    28               3               25          

Translated earnings contract gain (3)

    (4 )                             (4 )        

Acquisition-related costs (4)

    7               (8 )     (1 )     103          

Restructuring, impairment and other charges and credits (7)

    383               (91 )     (243 )     717          

Litigation, regulatory and other legal matters (8)

                    (108 )             108          

Cumulative adjustment related to customer contract (15)

    105                               105          

Core performance measures

  $ 2,837       34.9 %   $ 1,072     $ 678     $ 1,087       13.4 %

 

See Reconciliation of Non-GAAP Financial Measures, “Items which we exclude from GAAP measures to arrive at Core Performance measures” for the descriptions of the footnoted reconciling items.

 

© 2021 Corning Incorporated. All Rights Reserved.

15

 

CORNING INCORPORATED AND SUBSIDIARY COMPANIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURE TO GAAP FINANCIAL MEASURE

Three and Nine Months Ended September 30, 2021 and 2020

(Unaudited; amounts in millions)

 

   

Three months ended

   

Nine months ended

 
   

September 30,

   

September 30,

 
   

2021

   

2020

   

2021

   

2020

 

Cash flows from operating activities

  $ 895     $ 608     $ 2,389     $ 1,406  

Realized gains (losses) on translated earnings contracts

    17       (2 )     30       10  

Translation (losses) gains on cash balances

    (14 )     65       (65 )     54  
                                 

Adjusted cash flows from operating activities

  $ 898     $ 671     $ 2,354     $ 1,470  
                                 

Less: Capital expenditures

  $ 401     $ 153     $ 1,014     $ 986  
                                 

Free cash flow

  $ 497     $ 518     $ 1,340     $ 484  

 

© 2021 Corning Incorporated. All Rights Reserved.

16

 

Items which we exclude from GAAP measures to arrive at core performance measures are as follows:

 

(1)

Constant-currency adjustment:  Because a significant portion of segment revenues and expenses are denominated in currencies other than the U.S. dollar, management believes it is important to understand the impact on core net income of translating these currencies into U.S. dollars.  Display Technologies’ segment sales and net income are primarily denominated in Japanese yen, but also impacted by the South Korean won, Chinese yuan, and new Taiwan dollar.  Environmental Technologies and Life Science segments sales and net income are primarily impacted by the euro and Chinese yuan.  Presenting results on a constant-currency basis mitigates the translation impact and allows management to evaluate performance period over period, analyze underlying trends in the businesses, and establish operational goals and forecasts.  We establish constant-currency rates based on internally derived management estimates which are closely aligned with the currencies we have hedged.

   
 

Constant-currency rates are as follows:

 

Currency

 

Japanese yen

 

Korean won

 

Chinese yuan

 

New Taiwan dollar

 

Euro

 

Rate

 

¥107

 

₩1,175

 

¥6.7

 

NT$31

 

€.81

   

(2)

Translation (gain) loss on Japanese yen-denominated debt: We have excluded the gain or loss on the translation of the yen-denominated debt to U.S. dollars.

(3)

Translated earnings contract (loss) gain: We have excluded the impact of the realized and unrealized gains and losses of the Japanese yen, South Korean won, Chinese yuan, euro and new Taiwan dollar-denominated foreign currency hedges related to translated earnings, as well as the unrealized gains and losses of the British pound-denominated foreign currency hedges related to translated earnings.

(4)

Acquisition-related costs: These expenses include intangible amortization, inventory valuation adjustments, external acquisition-related deal costs, and other transaction related costs.

(5)

Discrete tax items and other tax-related adjustments: These include discrete period tax items such as changes of tax reserves and changes in our permanently reinvested foreign income position.

(6)

Pension mark-to-market adjustment: Defined benefit pension mark-to-market gains and losses, which arise from changes in actuarial assumptions and the difference between actual and expected returns on plan assets and discount rates.

(7)

Restructuring, impairment and other charges and credits: This amount includes restructuring, impairment losses and other charges and credits, primarily accelerated depreciation and asset write-offs, which are not related to continuing operations and are not classified as restructuring expense. During the third quarter of 2021, we recorded asset write-offs and charges related to facility repairs resulting from the impact of power outages.  The Company is pursuing recoveries under its applicable property insurance policies.

(8)

Litigation, regulatory and other legal matters: Includes amounts that reflect developments in commercial litigation, intellectual property disputes, adjustments to the estimated liability for environmental-related items and other legal matters.

(9)

Preferred stock conversion: This amount includes the put option from the Share Repurchase Agreement with Samsung Display Co., Ltd.

(10) Bond redemption loss: Amount represents premiums on redemption of debentures. 

(11)

Loss on investments: Amount represents the loss recognized due to mark-to-mark adjustments capturing the change in fair value based on the closing stock market price.

(12)

Gain on sale of business:  Amount represents the gain recognized for the sale of certain businesses.

(13)

Equity in losses of affiliated companies: These adjustments relate to costs not related to continuing operations of our affiliated companies, such as restructuring, impairment losses, inventory adjustments, other charges and credits and settlements under "take-or-pay" contracts, including Corning's share of HSG's settlement of its pre-existing relationship of its long-term supply contract related to the HSG's acquisition of TCS. 

(14)

Transaction-related gain, net:  Amount represents the pre-tax gain recorded on a previously held equity investment in HSG.

(15)

Cumulative adjustment related to customer contract: The negative impact of a cumulative adjustment recorded during the first quarter of 2020 to reduce revenue by $105 million. The adjustment was associated with a previously recorded commercial benefit asset, reflected as a prepayment, to a customer with a long-term supply agreement that substantially exited its production of LCD panels. 

 

© 2021 Corning Incorporated. All Rights Reserved.

17
false 0000024741 0000024741 2021-10-26 2021-10-26
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
 
Date of Report: (Date of earliest event reported)
October 26, 2021
 
CORNING INC NY
CORNING INCORPORATED
(Exact name of registrant as specified in its charter)
 
New York
‎(State or other jurisdiction ‎of incorporation)
1-3247
‎(Commission ‎File Number)
16-0393470
‎(I.R.S. Employer ‎Identification No.)
 
One Riverfront Plaza, Corning, New York
‎(Address of principal executive offices)