Document and Entity Information
Document and Entity Information | ||
3 Months Ended
Mar. 31, 2010 | Apr. 16, 2010
| |
Entity Registrant Name | CORNING INC /NY | |
Entity Central Index Key | 0000024741 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,010 | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 1,560,761,299 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | 2010-03-31 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME (USD $) | ||
In Millions, except Per Share data | 3 Months Ended
Mar. 31, 2010 | 3 Months Ended
Mar. 31, 2009 |
Net sales | $1,553 | $989 |
Cost of sales | 822 | 719 |
Gross margin | 731 | 270 |
Operating expenses: | ||
Selling, general and administrative expenses | 235 | 207 |
Research, development and engineering expenses | 145 | 151 |
Amortization of purchased intangibles | 2 | 3 |
Restructuring, impairment and other (credits) and charges (Note 2) | (2) | 165 |
Asbestos litigation (credit) charge (Note 3) | (52) | 4 |
Operating income (loss) | 403 | (260) |
Equity in earnings of affiliated companies (Note 9) | 469 | 195 |
Interest income | 3 | 7 |
Interest expense | (26) | (14) |
Other-than-temporary impairment (OTTI) losses: | ||
Total OTTI losses | (5) | |
Portion of OTTI losses recognized in other comprehensive income (before taxes) | 5 | |
Net OTTI losses recognized in earnings | 0 | |
Other income, net (Note 1) | 64 | 20 |
Income (loss) before income taxes | 913 | (52) |
(Provision) benefit for income taxes (Note 5) | (97) | 66 |
Net income attributable to Corning Incorporated | $816 | $14 |
Earnings per common share attributable to Corning Incorporated: | ||
Basic (Note 6) | 0.52 | 0.01 |
Diluted (Note 6) | 0.52 | 0.01 |
Dividends declared per common share | 0.05 | 0.05 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | ||
In Millions | Mar. 31, 2010
| Dec. 31, 2009
|
Assets | ||
Cash and cash equivalents | $3,075 | $2,541 |
Short-term investments, at fair value (Note 7) | 798 | 1,042 |
Total cash, cash equivalents and short-term investments | 3,873 | 3,583 |
Trade accounts receivable, net of doubtful accounts and allowances - $22 and $20 | 860 | 753 |
Inventories (Note 8) | 604 | 579 |
Deferred income taxes (Note 5) | 392 | 235 |
Other current assets | 323 | 371 |
Total current assets | 6,052 | 5,521 |
Investments (Note 9) | 4,296 | 3,992 |
Property, net of accumulated depreciation - $5,640 and $5,503 (Note 11) | 7,847 | 7,995 |
Goodwill and other intangible assets, net (Note 12) | 674 | 676 |
Deferred income taxes (Note 5) | 2,733 | 2,982 |
Other assets | 125 | 129 |
Total Assets | 21,727 | 21,295 |
Liabilities and Equity | ||
Current portion of long-term debt | 23 | 74 |
Accounts payable | 459 | 550 |
Other accrued liabilities (Notes 3 and 13) | 796 | 915 |
Total current liabilities | 1,278 | 1,539 |
Long-term debt (Note 4) | 1,919 | 1,930 |
Postretirement benefits other than pensions | 866 | 858 |
Other liabilities (Notes 3 and 13) | 1,311 | 1,373 |
Total liabilities | 5,374 | 5,700 |
Commitments and contingencies (Note 3) | ||
Shareholders' equity: | ||
Common Stock - Par value $0.50 per share; Shares authorized: 3.8 billion; Shares issued: 1,621 million and 1,617 million | 811 | 808 |
Additional paid-in capital | 12,759 | 12,707 |
Retained earnings | 4,374 | 3,636 |
Treasury stock, at cost; Shares held: 65 million and 64 million | (1,223) | (1,207) |
Accumulated other comprehensive loss (Note 18) | (419) | (401) |
Total Corning Incorporated shareholders' equity | 16,302 | 15,543 |
Noncontrolling interests | 51 | 52 |
Total equity | 16,353 | 15,595 |
Total Liabilities and Equity | $21,727 | $21,295 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | ||
In Millions, except Per Share data | Mar. 31, 2010
| Dec. 31, 2009
|
Allowance for doubtful accounts and allowances | $22 | $20 |
Accumulated depreciation | $5,640 | $5,503 |
Common Stock, Par value | 0.5 | 0.5 |
Common Stock, Shares authorized | 3,800 | 3,800 |
Common Stock, Shares issued | 1,621 | 1,617 |
Treasury Stock, at cost, Shares held | 65 | 64 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | ||
In Millions | 3 Months Ended
Mar. 31, 2010 | 3 Months Ended
Mar. 31, 2009 |
Cash Flows from Operating Activities: | ||
Net income | $816 | $14 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 206 | 175 |
Amortization of purchased intangibles | 2 | 3 |
Asbestos litigation (credits) charges | (52) | 4 |
Restructuring, impairment and other (credits) charges | (2) | 165 |
Stock compensation charges | 29 | 35 |
Earnings of affiliated companies (in excess of) less than dividends received | (241) | 208 |
Deferred tax provision (benefit) | 50 | (119) |
Restructuring payments | (31) | (12) |
Credits issued against customer deposits | (30) | (103) |
Employee benefit expense, net of payments | 26 | 17 |
Changes in certain working capital items: | ||
Trade accounts receivable | (120) | (111) |
Inventories | (31) | 39 |
Other current assets | 32 | (23) |
Accounts payable and other current liabilities, net of restructuring payments | (74) | (89) |
Other, net | 63 | 61 |
Net cash provided by operating activities | 643 | 264 |
Cash Flows from Investing Activities: | ||
Capital expenditures | (173) | (276) |
Net proceeds from sale or disposal of assets | 12 | |
Short-term investments - acquisitions | (224) | (104) |
Short-term investments - liquidations | 472 | 242 |
Other, net | 2 | |
Net cash provided by (used in) investing activities | 77 | (126) |
Cash Flows from Financing Activities: | ||
Net repayments of short-term borrowings and current portion of long-term debt | (58) | (63) |
Principal payments under capital lease obligations | (9) | |
Proceeds from issuance of common stock, net | 4 | 5 |
Proceeds from the exercise of stock options | 21 | 1 |
Dividends paid | (78) | (78) |
Other, net | 1 | |
Net cash used in financing activities | (111) | (143) |
Effect of exchange rates on cash | (75) | (88) |
Net increase (decrease) in cash and cash equivalents | 534 | (93) |
Cash and cash equivalents at beginning of period | 2,541 | 1,873 |
Cash and cash equivalents at end of period | $3,075 | $1,780 |
Significant Accounting Policies
Significant Accounting Policies | |
3 Months Ended
Mar. 31, 2010 | |
Significant Accounting Policies [Text Block] | 1. Significant Accounting Policies Basis of Presentation In these notes, the terms Corning, Company, we, us, or our mean Corning Incorporated and subsidiary companies. Effective September 30, 2009, the Financial Accounting Standards Board (FASB) established TheFASB Accounting Standards Codification (ASC) as the source of authoritative accounting to be applied by nongovernmental entities in the preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP). Except for newly issued standards which have not been codified, references to codified literature have been updated to reflect this change. The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) and in accordance with U.S. GAAP for interim financial information. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted or condensed. These interim consolidated financial statements should be read in conjunction with Cornings consolidated financial statements and notes thereto included in its Annual Report on Form 10-K for the year ended December 31, 2009 (2009 Form 10-K). The unaudited consolidated financial statements reflect all adjustments which, in the opinion of management, are necessary for a fair statement of the results of operations, financial position and cash flows for the interim periods presented. All such adjustments are of a normal recurring nature. The results for interim periods are not necessarily indicative of results which may be expected for any other interim period or for the full year. Effective April 1, 2009, the Company adopted the following which resulted from the issuance of new fair value accounting standards under U.S. GAAP: We changed the method for determining whether an other-than temporary impairment exists for debt securities and for determining the amount of an impairment charge to be recorded in earnings; We adopted new guidance for addressing the determination of (a) when a market for an asset or a liability is active or inactive and (b) when a particular transaction is distressed; and If applicable, we will provide required disclosures about fair value of financial instruments for interim reporting periods as well as in annual financial statements. The impact of adopting these fair value standards was not significant to Cornings consolidated results of operations or financial condition. Effective January 1, 2010, the Company adopted required changes to consolidation guidance for variable interest entities which require an enterprise to perform an analysis to determine whether the enterprises variable interest or interests give it a controlling financial interest in a variable interest entity. This analysis identifies the primary beneficiary of a variable interest entity as the enterprise that has (1) the power to direct the activities of a variable interest entity that most significantly impact the entitys economic perform |
Restructuring, Impairment and O
Restructuring, Impairment and Other Charges (Credits) | |
3 Months Ended
Mar. 31, 2010 | |
Restructuring, Impairment and Other Charges (Credits) [Text Block] | 2. Restructuring, Impairment and Other Charges (Credits) 2010 Activities The following table summarizes the restructuring reserve activity for the three months ended March 31, 2010 (in millions): ReserveatJanuary1,2010 Non-cashpayments Netcharges/(reversals) Cashpayments Reserveat March 31 ,2010 Restructuring: Employee related costs $ 80 $ (2) $ (2) $ (28) $ 48 Other charges (credits) 20 (3) 17 Total restructuring charges $ 100 $ (2) $ (2) $ (31) $ 65 Cash payments for employee-related costs will be substantially complete by the end of 2010, while payments for exit activities will be substantially complete by the end of 2011. 2009 Activities In the first quarter of 2009, we recorded a charge of $165 million associated with a corporate-wide restructuring plan to reduce our global workforce in response to anticipated lower sales in 2009.The charge included costs for severance, special termination benefits, outplacement services, and the impact of a $30 million curtailment loss for postretirement benefits.Total cash expenditures associated with this plan are expected to be approximately $105 million. The following table summarizes the restructuring, impairment and other charges (credits) as of and for the three months ended March 31, 2009 (in millions): ReserveatJan.1,2009 Charges Non-CashSettlements CashPayments ReserveatMarch31,2009 Restructuring: Employee related costs $ 17 $ 148 $ (46) $ (11) $ 108 Other charges (credits) 17 5 (1) 21 Total restructuring charges $ 34 $ 153 $ (46) $ (12) $ 129 Impairment of long-lived assets: Assets to be disposed of $ 12 Total impairment charges $ 12 Total restructuring, impairment and other charges and (credits) $ 165 The cost of this plan for each of our reportable operating segments was as follows: Operating segment Employee-relatedandothercosts Display Technologies $ 34 Telecommunications 15 Environmental Technologies 19 Specialty Materials 18 Life Sciences 7 Corporate and All Other 72 Total restructuring, impairment and other charges $ 165 |
Commitments and Contingencies
Commitments and Contingencies | |
3 Months Ended
Mar. 31, 2010 | |
Commitments and Contingencies [Text Block] | 3. Commitments and Contingencies Asbestos Litigation Pittsburgh Corning Corporation. Corning and PPG Industries, Inc. (PPG) each own 50% of the capital stock of Pittsburgh Corning Corporation (PCC). Over a period of more than two decades, PCC and several other defendants have been named in numerous lawsuits involving claims alleging personal injury from exposure to asbestos. On April 16, 2000, PCC filed for Chapter 11 reorganization in the U.S. Bankruptcy Court for the Western District of Pennsylvania. At the time PCC filed for bankruptcy protection, there were approximately 11,800 claims pending against Corning in state court lawsuits alleging various theories of liability based on exposure to PCCs asbestos products and typically requesting monetary damages in excess of one million dollars per claim. Corning has defended those claims on the basis of the separate corporate status of PCC and the absence of any facts supporting claims of direct liability arising from PCCs asbestos products. Corning is also currently involved in approximately 10,300 other cases (approximately 38,800 claims) alleging injuries from asbestos and similar amounts of monetary damages per case. Those cases have been covered by insurance without material impact to Corning to date. As described below, several of Cornings insurance carriers have filed a legal proceeding concerning the extent of any insurance coverage for these claims. Asbestos litigation is inherently difficult, and past trends in resolving these claims may not be indicators of future outcomes. On March 28, 2003, Corning announced that it had reached agreement with the representatives of asbestos claimants for the resolution of all current and future asbestos claims against it and PCC, which might arise from PCC products or operations (the 2003 Plan). The 2003 Plan would have required Corning to relinquish its equity interest in PCC, contribute its equity interest in Pittsburgh Corning Europe N.V. (PCE), a Belgian corporation, contribute 25 million shares of Corning common stock, and pay a total of $140 million in six annual installments (present value $131 million at March 2003), beginning one year after the plans effective date, with 5.5 percent interest from June 2004. In addition, the 2003 Plan provided that Corning would assign certain insurance policy proceeds from its primary insurance and a portion of its excess insurance. On December 21, 2006, the Bankruptcy Court issued an order denying confirmation of the 2003 Plan for reasons it set out in a memorandum opinion. Several parties, including Corning, filed motions for reconsideration. These motions were argued on March 5, 2007, and the Bankruptcy Court reserved decision. On January 10, 2008, some of the parties in the proceeding advised the Bankruptcy Court that they had made substantial progress on a proposed amended plan of reorganization (the Amended PCC Plan) that resolved issues raised by the Court in denying the confirmation of the 2003 Plan and that would therefore make it unnecessary for the Bankruptcy Court to decide the motion for reconsideration. On March 27, 2008 and May 22, 2008, the parties furthe |
Debt
Debt | |
3 Months Ended
Mar. 31, 2010 | |
Debt [Text Block] | 4. Debt In the first quarter of 2010, Corning repaid $58 million of debt which included the redemption of $48 million principal amount of our 6.25% notes due February 18, 2010. Based on borrowing rates currently available to us for loans with similar terms and maturities, the fair value of long-term debt was $2.0 billion at March 31, 2010 and December 31, 2009. In the first quarter of 2009, Corning also repaid $72 million of debt which included the redemption of $54 million principal amount of our 6.3% notes due March 1, 2009. |
Income Taxes
Income Taxes | |
3 Months Ended
Mar. 31, 2010 | |
Income Taxes [Text Block] | 5. Income Taxes Our provision for income taxes and the related effective income tax rates were as follows (in millions): ThreemonthsendedMarch31, 2010 2009 (Provision) benefit for income taxes $ (97) $ 66 Effective tax rate 10.6% 126.9% For the three months ended March 31, 2010 , the effective income tax rate differed from the U.S. statutory rate of 35% primarily due to the following items: Rate differences on income/(losses) of consolidated foreign companies; The impact of equity in earnings of affiliated companies; The benefit of tax holidays and investment credits in foreign jurisdictions; The benefit of excess foreign tax credits from repatriation of current year earnings of certain foreign subsidiaries; and The impact of discrete items including a $56 million charge from the reversal of the deferred tax asset associated with a subsidy for certain retiree medical benefits. Discrete items increased our effective tax rate by 8.3 percentage points. For the three months ended March 31, 2009, the effective income tax rate differed from the U.S. statutory rate of 35% primarily due to the following items: Rate differences on income/(losses) of consolidated foreign companies; The impact of equity in earnings of affiliated companies; The benefit of tax holidays and investment credits in foreign jurisdictions; and The impact of discrete items, including a restructuring charge of $165 million and our share of Dow Cornings restructuring charge of $29 million. Refer to Note 2 (Restructuring, Impairment and Other Charges (Credits)) for additional information about the restructuring charge. Discrete items had a favorable impact on our effective tax rate of 128.3 percentage points. U.S. profits of approximately $8.3 billion will be required to fully realize the deferred tax assets as of December 31, 2009. Of that amount, $3.6 billion of U.S. profits will be required over the next 16 years to fully realize the deferred tax assets associated with federal net operating loss carry forwards. During 2010, Corning plans to repatriate to the U.S. up to $1 billion of current year earnings from certain foreign subsidiaries. As a result of this plan, a tax benefit from excess foreign tax credits is included in the full year effective tax rate. The impact of this item in the first quarter of 2010 was a $74 million reduction to our tax provision. We continue to maintain our permanent reinvestment assertion with regards to the remaining unremitted earnings of our foreign subsidiaries. At December 31, 2009, taxes had not been provided on approximately $7.3 billion of accumulated foreign unremitted earnings that are expected to remain invested indefinitely. It is not practical to calculate the unrecognized deferred tax liability on those earnings. Certain foreign subsidiaries in China and Taiwan are operating under tax holiday arrangements. The nature and extent of such arrangements vary, and the benefits of such arrangements phase out through 2015 according to the specific terms and schedu |
Earnings Per Common Share
Earnings Per Common Share | |
3 Months Ended
Mar. 31, 2010 | |
Earnings per Common Share [Text Block] | 6. Earnings per Common Share The reconciliation of the amounts used in the basic and diluted earnings per common share computations follows (in millions, except per share amounts): ThreemonthsendedMarch 31, 2010 2009 NetincomeattributabletoCorningIncorporated Weighted-averageshares Pershareamount NetincomeattributabletoCorningIncorporated Weighted-averageshares Pershareamount Basic earnings per common share $ 816 1,555 $ 0.52 $ 14 1,548 $ 0.01 Effect of dilutive securities: Stock options and other dilutive securities 24 11 Diluted earnings per common share $ 816 1,579 $ 0.52 $ 14 1,559 $ 0.01 The following potential common shares were excluded from the calculation of diluted earnings per common share because their inclusion would have been anti-dilutive. In addition, the following performance-based restricted stock awards have been excluded from the calculation of diluted earnings per common share because the number of shares ultimately issued is contingent on our performance against certain targets established for the performance period (in millions): ThreemonthsendedMarch31, 2010 2009 Potential common shares excluded from the calculation of diluted earnings per share: Employee stock options and awards 51 79 Performance-based restricted stock awards 4 Total 51 83 |
Available-for-Sale Investments
Available-for-Sale Investments | |
3 Months Ended
Mar. 31, 2010 | |
Available-for-Sale Investments [Text Block] | 7. Available-for-Sale Investments The following is a summary of the fair value of available-for-sale investments (in millions): Amortizedcost Fairvalue March31,2010 December31,2009 March31 ,2010 December31,2009 Bonds, notes and other securities: U.S. government and agencies $ 772 $ 973 $ 774 $ 975 Other debt securities 19 66 24 67 Total short-term investments $ 791 $ 1,039 $ 798 $ 1,042 Asset-backed securities $ 73 $ 75 $ 45 $ 42 Total long-term investments $ 73 $ 75 $ 45 $ 42 We do not intend to sell, nor do we believe it is more likely than not that we would be required to sell, the long-term investment asset-backed securities (which are collateralized by mortgages) before recovery of their amortized cost basis. It is possible that a significant degradation in the delinquency or foreclosure rates in the underlying assets could cause further temporary or other-than-temporary impairments in the future. The following tables provide the fair value and gross unrealized losses of the Companys investments aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at March 31, 2010 and December 31, 2009 (in millions): March 31, 2010 Lessthan12months 12monthsorgreater Total Fairvalue Unrealizedlosses Fairvalue Unrealizedlosses Fairvalue Unrealizedlosses U.S. government and agencies $ 375 $ 0 $ 375 $ 0 Total short-term investments $ 375 $ 0 $ 375 $ 0 Asset-backed securities $ 45 $ (28) $ 45 $ (28) Total long-term investments $ 45 $ (28) $ 45 $ (28) December 31, 2009 Lessthan12months 12monthsorgreater Total Fairvalue Unrealizedlosses Fairvalue Unrealizedlosses Fairvalue Unrealizedlosses U.S. government and agencies $ 320 $ 0 $ 320 $ 0 Total short-term investments $ 320 $ 0 $ 320 $ 0 Asset-backed securities $ 42 $ (33) $ 42 $ (33) Total long-term investments $ 42 $ (33) $ 42 $ (33) Gross realized gains and losses for the three months ended March 31, 2010 and 2009 were not significant. A reconciliation of the changes in credit losses recognized in earnings for the three months ended March 31, 2010 (in millions): Beginning balance of credit losses, January 1, 2010 $2 Additions for credit losses not previously recognized in earnings |
Inventories
Inventories | |
3 Months Ended
Mar. 31, 2010 | |
Inventories [Text Block] | 8. Inventories Inventories comprise the following (in millions): March 31,2010 December31,2009 Finished goods $ 177 $ 175 Work in process 124 113 Raw materials and accessories 123 114 Supplies and packing materials 180 177 Total inventories $ 604 $ 579 |
Investments
Investments | |
3 Months Ended
Mar. 31, 2010 | |
Investments [Text Block] | 9. Investments Investments comprise the following (in millions): OwnershipInterest (1) March 31 ,2010 December31,2009 Affiliated companies accounted for by the equity method Samsung Corning Precision Glass Co., Ltd. 50% $ 3,042 $ 2,772 Dow Corning Corporation 50% 1,031 992 All other 20-50% 220 224 4,293 3,988 Other investments 3 4 Total $ 4,296 $ 3,992 (1) Amounts reflect Cornings direct ownership interests in the respective affiliated companies. Corning does not control any of these entities. Related party information for these investments in affiliates follows (in millions): Threemonthsended March 31, 2010 2009 Related Party Transactions: Corning sales to affiliated companies $ 5 $ 4 Corning purchases from affiliated companies $ 25 $ 4 Corning transfers of assets, at cost, to affiliated companies $ 27 $ 13 Dividends received from affiliated companies $ 228 $ 403 Royalty income from affiliated companies $ 65 $ 43 Corning services to affiliates $ 7 As of March 31, 2010, balances due to and due from affiliates were $3 million and $103 million, respectively. As of December 31, 2009, balances due to and due from affiliates were $2 million and $122 million, respectively. We have contractual agreements with several of our equity affiliates which include sales, purchasing, licensing and technology agreements. Summarized results of operations for our two significant investments accounted for by the equity method follow: Samsung Corning Precision Glass Co., Ltd. (Samsung Corning Precision) Samsung Corning Precision is a South Korea-based manufacturer primarily of liquid crystal display (LCD) glass for flat panel displays. Samsung Corning Precisions results of operations follow (in millions): ThreemonthsendedMarch31, 2010 2009 Statement of Operations: Net sales $ 1,198 $ 755 Gross profit $ 925 $ 510 Net income attributable to Samsung Corning Precision $ 701 $ 371 Corning s equity in earnings of Samsung Corning Precision $ 350 $ 187 Related Party Transactions: Corning purchases from Samsung Corning Precision $ 18 Corning sales to Samsung Corning Precision $ 0 Dividends received from Samsung Corning Precision $ 173 $ 181 Royalty income from Samsung Corning Precision $ 65 $ 42 Corning transfers of machinery and equipment to Samsung Corning Precision at cost (1) $ 27 $ 13 (1) Corning purchases machinery and equipment on behalf of Samsung Corning Precision to support its capital expansion initiatives. The machinery and e |
Acquisition
Acquisition | |
3 Months Ended
Mar. 31, 2010 | |
Acquisition [Text Block] | 10. Acquisition On September 15, 2009, Corning acquired all of the shares of Axygen Bioscience, Inc. and its subsidiaries from American Capital Ltd. for $410 million, net of $7 million cash received. Axygen is a leading manufacturer and distributor of high-quality life sciences plastic consumable labware, liquid handling products, and bench-top laboratory equipment. The purchase price of the acquisition was allocated to the net tangible and other intangible assets acquired with the remainder recorded as goodwill on the basis of fair value. While our valuation is substantially complete, the following amounts are subject to revision until finalized (in millions): Total current assets $ 63 Other tangible assets 49 Other intangible assets 153 Current and non-current liabilities (80) Net tangible and intangible assets $ 185 Purchase price, including cash received 417 Goodwill (1) $ 232 (1) None of the goodwill recognized is deductible for U.S. income tax purposes. The goodwill was allocated to the Life Sciences segment. Goodwill is primarily related to the value of Axygens product portfolio and distribution network and its combination with Cornings existing life science platform, as well as synergies and other intangibles that do not qualify for separate recognition. Supplemental pro forma information was not provided because Axygen is not material to Cornings consolidated financial statements. |
Property, Net of Accumulated De
Property, Net of Accumulated Depreciation | |
3 Months Ended
Mar. 31, 2010 | |
Property, Net of Accumulated Depreciation [Text Block] | 11. Property, Net of Accumulated Depreciation Property, net follows (in millions): March31 ,2010 December31,2009 Land $ 104 $ 96 Buildings 3,438 3,443 Equipment 9,382 9,237 Construction in progress 563 722 13,487 13,498 Accumulated depreciation (5,640) (5,503) Total $ 7,847 $ 7,995 In the three months ended March 31, 2010 and 2009, interest costs capitalized as part of property, net, were $4 million and $10 million, respectively. Manufacturing equipment includes certain components of production equipment that are constructed of precious metals. At March 31, 2010 and December 31, 2009, the recorded value of precious metals totaled $1.8 billion. Depletion expense for precious metals in the three months ended March 31, 2010 and 2009 totaled $3 million and $1 million, respectively. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | |
3 Months Ended
Mar. 31, 2010 | |
Goodwill and Other Intangible Assets [Text Block] | 12. Goodwill and Other Intangible Assets There were no significant changes in the carrying amount of goodwill for the three months ended March 31, 2010. Balances by segment are as follows (in millions): Telecom-munications DisplayTechnologies SpecialtyMaterials LifeSciences Total Balance at March 31, 2010 $118 $9 $150 $232 $509 Other intangible assets are as follows (in millions): March 31 ,2010 December31,2009 Gross Accumulatedamortization Net Gross Accumulatedamortization Net Amortized intangible assets: Patents, trademarks, and trade names (1) $ 205 $ 123 $ 82 $ 206 $ 122 $ 84 Non-competition agreements 97 91 6 98 93 5 Other (1) 81 4 77 80 2 78 Total $ 383 $ 218 $ 165 $ 384 $ 217 $ 167 (1) The Company recorded other identifiable intangible assets associated with the purchase of Axygen Bioscience, Inc. in the third quarter of 2009. Refer to Note 10 (Acquisition) for additional information. Amortized intangible assets are primarily related to the Telecommunications and Life Sciences segments. Amortization expense related to these intangible assets is estimated to be approximately $6 million for 2010 and $6 million annually, thereafter. |
Customer Deposits
Customer Deposits | |
3 Months Ended
Mar. 31, 2010 | |
Customer Deposits [Text Block] | 13. Customer Deposits In 2005 and 2004, several of Cornings customers entered into long-term purchase and supply agreements in which Cornings Display Technologies segment would supply large-size glass substrates to these customers over periods of up to six years. As part of the agreements, these customers agreed to advance cash deposits to Corning for a portion of the contracted glass to be purchased. Between 2004 and 2007, we received a total of $937 million for customer deposit agreements. We do not expect to receive additional deposits related to these agreements. Upon receipt of the cash deposits made by customers, we recorded a customer deposit liability. This liability is reduced at the time of future product sales over the life of the agreements. As product is shipped to a customer, Corning recognizes revenue at the selling price and issues credit memoranda for an agreed amount of the customer deposit liability. The credit memoranda are applied against customer receivables resulting from the sale of product, thus reducing operating cash flows in later periods as these credits are applied for cash deposits received in earlier periods. During the three months ended March 31, 2010 and 2009, we issued $30 million and $103 million, respectively, in credit memoranda. Customer deposit liabilities were $74 million and $104 million at March 31, 2010 and December 31, 2009, respectively, of which $56 million and $80 million, respectively, were recorded in the current portion of other accrued liabilities in our consolidated balance sheets. Because these liabilities are denominated in Japanese yen, changes in the balances include the impact of movements in the Japanese yenU.S. dollar exchange rate. In the event customers do not purchase the agreed upon quantities of product, subject to specific conditions outlined in the agreements, Corning may retain certain amounts of the customer deposits. If Corning does not deliver agreed upon product quantities, subject to specific conditions outlined in the agreements, Corning may be required to return certain amounts of customer deposits. |
Employee Retirement Plans
Employee Retirement Plans | |
3 Months Ended
Mar. 31, 2010 | |
Employee Retirement Plans [Text Block] | 14. Employee Retirement Plans The following table summarizes the components of net periodic benefit cost for Cornings defined benefit pension and postretirement health care and life insurance plans (in millions): Pensionbenefits Postretirementbenefits ThreemonthsendedMarch31, ThreemonthsendedMarch31, 2010 2009 2010 2009 Service cost $ 12 $ 13 $ 3 $ 4 Interest cost 39 38 13 12 Expected return on plan assets (42) (45) Amortization of net loss 13 7 4 3 Amortization of prior service cost 2 2 (1) (1) Total pension and postretirement benefit expense $ 24 $ 15 $ 19 $ 18 Curtailment charge 22 8 Total expense $ 24 $ 37 $ 19 $ 26 Corning and certain of its domestic subsidiaries offer postretirement plans that provide health care and life insurance benefits for retirees and eligible dependents. Certain employees may become eligible for such postretirement benefits upon reaching retirement age and service requirements. In response to rising health care costs, we changed our cost-sharing approach for retiree medical coverage. For current retirees (including surviving spouses) and active employees eligible for the salaried retiree medical program, we placed a cap on the amount we will contribute toward retiree medical coverage in the future. The cap equals 120% of our 2005 contributions toward retiree medical benefits. Once our contributions toward salaried retiree medical costs reach this cap, impacted retirees will have to pay the excess amount in addition to their regular contributions for coverage. This cap was attained for post-65 retirees in 2008 and has impacted their contribution rate in 2009 and going forward. The pre-65 retirees are expected to trigger the cap in 2010 which will impact their contribution rate in 2011. Further, employees hired or rehired on or after January 1, 2007 will be eligible for Corning retiree medical upon retirement; however, these employees will pay 100% of the cost. In the three months ended March 31, 2009, Corning recorded restructuring charges of $44 million for pension and postretirement benefit plans. This included a curtailment charge of $30 million for the domestic qualified defined benefit plan (U.S. pension plan) and the domestic postretirement benefit plan. Accordingly, we remeasured the U.S. pension and postretirement benefit plans as of March 31, 2009. The remeasurement resulted in an increase of $115 million to the Companys U.S. pension liability and a decrease of $12 million to the domestic postretirement benefit plan liability. As part of the remeasurement, we updated the assumed discount rate for both plans to 6.25%, which reflects a 25 basis point increase from December 31, 2008. |
Hedging Activities
Hedging Activities | |
3 Months Ended
Mar. 31, 2010 | |
Hedging Activities [Text Block] | 15. Hedging Activities Corning operates in many foreign countries and as a result is exposed to movements in foreign currency exchange rates. The areas in which exchange rate fluctuations affect us include: Financial instruments and transactions denominated in foreign currencies, which impact earnings; and The translation of net assets in foreign subsidiaries for which the functional currency is not the U.S. dollar, which impacts our net equity. Our most significant foreign currency exposures relate to the Japanese yen, Korean won, New Taiwan dollar and the Euro. We manage our foreign currency exposure primarily by entering into foreign exchange forward contracts with durations of generally 18 months or less to hedge foreign currency risk. The hedges are scheduled to mature coincident with the timing of the underlying foreign currency commitments and transactions. The objective of these contracts is to neutralize the impact of exchange rate movements on our operating results. The forward contracts we use in managing our foreign currency exposures contain an element of risk in that the counterparties may be unable to meet the terms of the agreements. However, we minimize this risk by limiting the counterparties to a diverse group of highly-rated major domestic and international financial institutions with which we have other financial relationships. We are exposed to potential losses in the event of non-performance by these counterparties; however, we do not expect to record any losses as a result of counterparty default. Neither we nor our counterparties are required to post collateral for these financial instruments. The amount of hedge ineffectiveness at March 31, 2010 and at December 31, 2009 was insignificant. Cash Flow Hedges Our cash flow hedging activities utilize foreign exchange forward contracts to reduce the risk that movements in exchange rates will adversely affect the eventual net cash flows resulting from the sale of products to foreign customers and purchases from foreign suppliers. Corning uses a regression analysis to monitor the effectiveness of its cash flow hedges both prospectively and retrospectively. Corning defers net gains and losses from cash flow hedges into accumulated other comprehensive income on the consolidated balance sheet until such time as the hedged item impacts earnings. At March 31, 2010, the amount of net gains expected to be reclassified into earnings within the next 12 months is $17 million. Undesignated Hedges Corning uses other foreign exchange forward contracts that are not designated as hedging instruments for accounting purposes. The undesignated hedges limit exposures to foreign currency fluctuations related to certain monetary assets, monetary liabilities and net earnings in foreign currencies. Net Investment in Foreign Operations In February 2000, we issued $500 million of Euro-denominated notes that were designated as a hedge of a net investment in foreign operations. The effective portion of the changes in fair value of the outstanding debt balance have been included as a component of the foreign currency translation adju |
Fair Value Measurements
Fair Value Measurements | |
3 Months Ended
Mar. 31, 2010 | |
Fair Value Measurements [Text Block] | 16. Fair Value Measurements Fair value standards under U.S. GAAP define fair value, establish a framework for measuring fair value in applying generally accepted accounting principles, and require disclosures about fair value measurements. The standards also identify two kinds of inputs that are used to determine the fair value of assets and liabilities: observable and unobservable. Observable inputs are based on market data or independent sources while unobservable inputs are based on the Companys own market assumptions. Once inputs have been characterized, the inputs are prioritized into one of three broad levels (provided in the table below) used to measure fair value. Fair value standards apply whenever an entity is measuring fair value under other accounting pronouncements that require or permit fair value measurement and require the use of observable market data when available. As of March 31, 2010 and December 31, 2009, the Company did not have any financial assets or liabilities that were measured using unobservable (or Level 3) inputs. The following tables provide fair value measurement information for the Companys major categories of financial assets and liabilities measured on a recurring basis (in millions): March31 ,2010 Fairvaluemeasurementsatreportingdateusing Quotedpricesinactivemarketsforidenticalassets(Level1) Significantotherobservableinputs(Level2) Significantunobservableinputs(Level3) Assets Short-term investments $ 798 $ 774 $ 24 (2) Other assets $ 45 $ 45 Derivatives (1) $ 37 $ 37 Liabilities Derivatives (1) $ 20 $ 20 (1) Derivative assets and liabilities include foreign exchange contracts which are measured using observable quoted prices for similar assets and liabilities. (2) Short-term investments are measured using observable quoted prices for similar assets. December31,2009 Fairvaluemeasurementsatreportingdateusing Quotedpricesinactivemarketsforidenticalassets(Level1) Significantotherobservableinputs(Level2) Significantunobservableinputs(Level3) Assets Short-term investments $ 1,042 $ 969 $ 73 (2) Other assets $ 42 $ 42 Derivatives (1) $ 53 $ 53 Liabilities Derivatives (1) $ 14 $ 14 (1) Derivative assets and liabilities include foreign exchange contracts which are measured using observable quoted prices for similar assets and liabilities. (2) Short-term investments are measured using observable quoted prices for similar assets. |
Share-based Compensation
Share-based Compensation | |
3 Months Ended
Mar. 31, 2010 | |
Share-based Compensation [Text Block] | 17. Share-based Compensation Stock Compensation Plans The Company measures and recognizes compensation cost for all share-based payment awards made to employees and directors, including grants of employee stock options and employee stock purchases related to the Worldwide Employee Share Purchase Plan (WESPP), based on estimated fair values. Fair values for stock options granted prior to January 1, 2010 were estimated using a lattice-based binomial valuation model. In 2010, Corning began estimating fair values for stock options granted using a multiple point Black Scholes model. Both models incorporate the required assumptions and meet the fair value measurement objective under U.S. GAAP. Share-based compensation cost was approximately $29 million and $35 million for the three months ended March 31, 2010 and 2009, respectively, and included (1) employee stock options, (2) time-based restricted stock and restricted stock units, (3) performance-based restricted stock and restricted stock units, and (4) WESPP shares. Stock Options Our Stock Option Plans provide non-qualified and incentive stock options to purchase authorized but unissued shares or treasury shares at the market price on the grant date and generally become exercisable in installments from one to five years from the grant date. The maximum term of non-qualified and incentive stock options is 10 years from the grant date. The following table summarizes information concerning options outstanding including the related transactions under the Stock Option Plans for the three months ended March 31, 2010: NumberofShares(inthousands) Weighted-AverageExercisePrice Weighted-AverageRemainingContractualTerminYears AggregateIntrinsicValue(inthousands) Options Outstanding as of December 31, 2009 92,504 $ 25.83 4.48 $425,427 Granted 5,570 $ 18.52 Exercised (2,396) $ 9.35 Forfeited and Expired (673) $ 38.76 Options Outstanding as of March 31 , 2010 95,005 $ 25.73 4.57 $464,744 Options Exercisable as of March 31 , 2010 75,455 $ 28.21 3.49 $368,795 The aggregate intrinsic value (market value of stock less option exercise price) in the preceding table represents the total pretax intrinsic value, based on the Companys closing stock price on March 31, 2010 , which would have been received by the option holders had all option holders exercised their options as of that date. As of March 31, 2010, there was approximately $61 million of unrecognized compensation cost related to stock options granted under the Plans. The cost is expected to be recognized over a weighted-average period of 2 years. Compensation cost related to stock options was approximately $15 million and $18 million for the three months ended March 31, 2010 and 2009, respectively. Proceeds received from the exercise of stock options were $21 million and $1 million for the three months ended March 31, 2010 and 2009, respectively. Proceeds received from t |
Comprehensive Income
Comprehensive Income | |
3 Months Ended
Mar. 31, 2010 | |
Comprehensive Income Note [Text Block] | 18. Comprehensive Income Components of comprehensive income on an after-tax basis, where applicable, follow (in millions): Three monthsendedMarch31, 2010 2009 Net income $ 815 $ 14 Other comprehensive income, net of taxes (1) : Net change in unrealized gain (loss) on investments securities 11 (14) Net change in unrealized gain (loss) on derivative hedging instruments 2 13 Foreign currency translation adjustment (22) (728) Amortization of postretirement benefit plan losses and prior service costs (9) (37) Comprehensive income $ 797 $ (752) Comprehensive income attributable to noncontrolling interests 1 0 Comprehensive income attributable to Corning $ 798 $ (752) (1) Other comprehensive income items for the three months ended March 31 , 2010 and 2009 include net tax effects of $5 million and $16 million, respectively. Refer to Note 5 (Income Taxes) for additional information. |
Significant Customers
Significant Customers | |
3 Months Ended
Mar. 31, 2010 | |
Significant Customers [Text Block] | 19. Significant Customers For the three months ended March 31, 2010, Cornings sales to each of the following three customers of the Display Technologies segment were equal to or greater than ten percent of the Companys consolidated net sales: AU Optronics Corporation (AUO), Chimei Innolux Corporation, and Sharp Electronics Corporation. For the three months ended March 31, 2009, Cornings sales to AUO were equal to or greater than ten percent of the Companys consolidated net sales. |
Operating Segments
Operating Segments | |
3 Months Ended
Mar. 31, 2010 | |
Operating Segments [Text Block] | 20. Operating Segments Our reportable operating segments are as follows: Display Technologies manufactures liquid crystal display (LCD) glass for flat panel displays. Telecommunications manufactures optical fiber and cable and hardware and equipment components for the telecommunications industry. Environmental Technologies manufactures ceramic substrates and filters for automotive and diesel applications. This reportable operating segment is an aggregation of our Automotive and Diesel operating segments as these two segments share similar economic characteristics, products, customer types, production processes and distribution methods. Specialty Materials manufactures products that provide more than 150 material formulations for glass, glass ceramics and fluoride crystals to meet demand for unique customer needs. Life Sciences manufactures glass and plastic consumables for scientific applications. All other operating segments that do not meet the quantitative threshold for separate reporting are grouped as All Other. This group is primarily comprised of development projects and results for new product lines. We prepared the financial results for our reportable segments on a basis that is consistent with the manner in which we internally disaggregate financial information to assist in making internal operating decisions. We included the earnings of equity affiliates that are closely associated with our operating segments in the respective segments net income. We have allocated certain common expenses among segments differently than we would for stand-alone financial information prepared in accordance with U.S. GAAP. Segment net income may not be consistent with measures used by other companies. The accounting policies of our reportable segments are the same as those applied in the consolidated financial statements. Operating Segments (in millions) DisplayTechnologies Telecom-munications EnvironmentalTechnologies SpecialtyMaterials LifeSciences AllOther Total Three months ended March31,2010 Net sales $ 782 $ 364 $ 192 $ 96 $ 118 $ 1 $ 1,553 Depreciation (1) $ 128 $ 30 $ 26 $ 11 $ 8 $ 3 $ 206 Amortization of purchased intangibles $ 1 $ 1 $ 2 Research, development and engineering expenses (2) $ 23 $ 29 $ 23 $ 16 $ 4 $ 28 $ 123 Restructuring, impairment and other credits $ (2) $ (2) Equity in earnings of affiliated companies $ 344 $ 3 $ 11 $ 358 Income tax (provision) benefit $ (132) $ (4) $ (5) $ 3 $ (8) $ 11 $ (135) Net income (loss) (3) $ 703 $ 8 $ |