Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | Apr. 30, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | CORNING INC /NY | |
Entity Central Index Key | 0000024741 | |
Trading Symbol | glw | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 784,754,231 |
Consolidated Statements of Inco
Consolidated Statements of Income (Loss) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Consolidated Statements of Income (Loss) [Abstract] | ||
Net sales | $ 2,812 | $ 2,500 |
Cost of sales | 1,713 | 1,545 |
Gross margin | 1,099 | 955 |
Operating expenses: | ||
Selling, general and administrative expenses | 401 | 501 |
Research, development and engineering expenses | 249 | 241 |
Amortization of purchased intangibles | 29 | 19 |
Operating income | 420 | 194 |
Equity in earnings of affiliated companies | 25 | 39 |
Interest income | 7 | 13 |
Interest expense | (52) | (52) |
Translated earnings contract gain (loss), net (Note 10) | 184 | (622) |
Other expense, net | (9) | (37) |
Income (loss) before income taxes | 575 | (465) |
Provision for income taxes (Note 5) | (76) | (124) |
Net income (loss) attributable to Corning Incorporated | $ 499 | $ (589) |
Earnings (loss) per common share attributable to Corning Incorporated: | ||
Basic (Note 6) | $ 0.61 | $ (0.72) |
Diluted (Note 6) | $ 0.55 | $ (0.72) |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Consolidated Statements of Comprehensive Income (Loss) [Abstract] | ||
Net income (loss) attributable to Corning Incorporated | $ 499 | $ (589) |
Foreign currency translation adjustments and other (Note 12) | (110) | 264 |
Net unrealized gains on investments | 1 | |
Unamortized (losses) gains and prior service credits for postretirement benefit plans (Note 12) | (52) | 1 |
Net unrealized gains on designated hedges | 5 | |
Other comprehensive (loss) income, net of tax | (156) | 265 |
Comprehensive income (loss) attributable to Corning Incorporated | $ 343 | $ (324) |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 1,456 | $ 2,355 |
Trade accounts receivable, net of doubtful accounts and allowances - $69 and $64 | 1,974 | 1,940 |
Inventories, net of inventory reserves - $182 and $182 (Note 7) | 2,190 | 2,037 |
Other current assets | 729 | 702 |
Total current assets | 6,349 | 7,034 |
Investments | 346 | 376 |
Property, plant and equipment, net of accumulated depreciation - $12,136 and $11,932 | 14,878 | 14,895 |
Goodwill, net | 1,930 | 1,936 |
Other intangible assets, net | 1,265 | 1,292 |
Deferred income taxes (Note 5) | 1,051 | 951 |
Other assets | 1,502 | 1,021 |
Total Assets | 27,321 | 27,505 |
Current liabilities: | ||
Current portion of long-term debt and short-term borrowings | 7 | 4 |
Accounts payable | 1,278 | 1,456 |
Other accrued liabilities (Note 3 and Note 9) | 1,774 | 1,851 |
Total current liabilities | 3,059 | 3,311 |
Long-term debt | 6,018 | 5,994 |
Postretirement benefits other than pensions (Note 8) | 659 | 662 |
Other liabilities (Note 3 and Note 9) | 3,879 | 3,652 |
Total liabilities | 13,615 | 13,619 |
Commitments, contingencies and guarantees (Note 3) | ||
Shareholders’ equity (Note 12): | ||
Convertible preferred stock, Series A – Par value $100 per share; Shares authorized 3,100; Shares issued: 2,300 | 2,300 | 2,300 |
Common stock – Par value $0.50 per share; Shares authorized 3.8 billion; Shares issued: 1,715 million and 1,713 million | 857 | 857 |
Additional paid-in capital – common stock | 14,243 | 14,212 |
Retained earnings | 16,489 | 16,303 |
Treasury stock, at cost; Shares held: 933 million and 925 million | (19,116) | (18,870) |
Accumulated other comprehensive loss | (1,166) | (1,010) |
Total Corning Incorporated shareholders’ equity | 13,607 | 13,792 |
Noncontrolling interests | 99 | 94 |
Total equity | 13,706 | 13,886 |
Total Liabilities and Equity | $ 27,321 | $ 27,505 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Consolidated Balance Sheets [Abstract] | ||
Doubtful accounts and allowances | $ 69 | $ 64 |
Inventory reserves | 182 | 182 |
Accumulated depreciation | $ 12,136 | $ 11,932 |
Convertible preferred stock, par value (in dollars per share) | $ 100 | $ 100 |
Convertible preferred stock, shares authorized (in shares) | 3,100 | 3,100 |
Convertible preferred stock, shares issued (in shares) | 2,300 | 2,300 |
Common stock, par value (in dollars per share) | $ 0.50 | $ 0.50 |
Common stock, shares authorized (in shares) | 3,800,000,000 | 3,800,000,000 |
Common stock, shares issued (in shares) | 1,715,000,000 | 1,713,000,000 |
Treasury stock, shares held (in shares) | 933,000,000 | 925,000,000 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Cash Flows from Operating Activities: | ||
Net income (loss) | $ 499 | $ (589) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation | 306 | 304 |
Amortization of purchased intangibles | 29 | 19 |
Equity in earnings of affiliated companies | (25) | (39) |
Deferred tax (benefit) provision | (40) | 16 |
Incentives and customer deposits | 2 | 276 |
Translated earnings contract (gain) loss | (184) | 622 |
Unrealized translation losses (gains) on transactions | 8 | (63) |
Changes in certain working capital items: | ||
Trade accounts receivable | (36) | 94 |
Inventories | (159) | (98) |
Other current assets | (97) | (92) |
Accounts payable and other current liabilities | (299) | (162) |
Other, net | (33) | 32 |
Net cash (used in) provided by operating activities | (29) | 320 |
Cash Flows from Investing Activities: | ||
Capital expenditures | (524) | (655) |
Realized gains on translated earnings contracts | 20 | 13 |
Other, net | 21 | (2) |
Net cash used in investing activities | (483) | (644) |
Cash Flows from Financing Activities: | ||
Proceeds from the exercise of stock options | 23 | 21 |
Repurchases of common stock for treasury | (257) | (800) |
Dividends paid | (181) | (177) |
Other, net | 22 | (3) |
Net cash used in financing activities | (393) | (959) |
Effect of exchange rates on cash | 6 | 62 |
Net decrease in cash and cash equivalents | (899) | (1,221) |
Cash and cash equivalents at beginning of year | 2,355 | 4,317 |
Cash and cash equivalents at end of year | $ 1,456 | $ 3,096 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Shareholders' Equity - USD ($) $ in Millions | Convertible Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital Common [Member] | Retained Earnings [Member] | Treasury Stock [Member] | Accumulated Other Comprehensive Loss [Member] | Total Corning Incorporated Shareholders' Equity [Member] | Non-controlling Interests [Member] | Total | |
Balance at Dec. 31, 2017 | $ 2,300 | $ 854 | $ 14,089 | $ 15,930 | $ (16,633) | $ (842) | $ 15,698 | $ 72 | $ 15,770 | |
Net (loss) income | (589) | (589) | 3 | (586) | ||||||
Other comprehensive income (loss) | 265 | 265 | 265 | |||||||
Purchase of common stock for treasury | (814) | (814) | (814) | |||||||
Shares issued to benefit plans and for option exercises | 30 | 30 | 30 | |||||||
Common Dividends | (153) | (153) | (153) | |||||||
Preferred Dividends ($10,265 per share) | (24) | (24) | (24) | |||||||
Other, net | 2 | (2) | ||||||||
Balance at Mar. 31, 2018 | 2,300 | 854 | 14,119 | 15,166 | (17,449) | (577) | 14,413 | 75 | 14,488 | |
Balance at Dec. 31, 2018 | 2,300 | 857 | 14,212 | 16,303 | (18,870) | (1,010) | 13,792 | 94 | 13,886 | |
Net (loss) income | 499 | 499 | 6 | 505 | ||||||
Other comprehensive income (loss) | (156) | (156) | (156) | |||||||
Purchase of common stock for treasury | (244) | (244) | (244) | |||||||
Shares issued to benefit plans and for option exercises | 31 | 31 | 31 | |||||||
Common Dividends | (158) | (158) | (158) | |||||||
Preferred Dividends ($10,265 per share) | (24) | (24) | (24) | |||||||
Other, net | [1] | (131) | (2) | (133) | (1) | (134) | ||||
Balance at Mar. 31, 2019 | $ 2,300 | $ 857 | $ 14,243 | $ 16,489 | $ (19,116) | $ (1,166) | $ 13,607 | $ 99 | $ 13,706 | |
[1] | Adjustments to beginning retained earnings include the impact of an accounting change recorded upon adoption of the new standard for reclassification of stranded tax effects in accumulated other comprehensive income ("AOCI") in the amount of $53 million and a net reduction of $186 million from an equity affiliate's adoption of the new revenue standard. |
Consolidated Statements of Ch_2
Consolidated Statements of Changes in Shareholders' Equity (Parentheticals) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Common Dividends (Per Share) | $ 0.20 | $ 0.18 |
Preferred Dividends (Per Share) | $ 10,625 | $ 10,625 |
Accounting Standards Update 2014-09 [Member] | ||
Effect of adoption | $ 53 | |
Effect of adoption, tax | $ 186 |
Significant Accounting Policies
Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2019 | |
Significant Accounting Policies [Abstract] | |
Significant Accounting Policies | 1. Significant Accounting Policies Basis of Presentation In these notes, the terms “Corning,” “Company,” “we,” “us,” or “our” mean Corning Incorporated and its subsidiary companies. 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. Generally Accepted Accounting Principles (“GAAP”) for interim financial information. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been omitted or condensed. These interim consolidated financial statements should be read in conjunction with Corning’s consolidated financial statements and notes thereto included in its Annual Report on Form 10-K for the year ended December 31, 2018 (“ 2018 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. Certain prior year amounts have been reclassified to conform to the current-year presentation. These reclassifications had no impact on our results of operations, financial position, or changes in shareholders’ equity. Leases Corning leases certain real estate, vehicles, and equipment from third parties. On January 1, 2019 we adopted the new leasing standard. Corning classifies leases as either financing or operating. Operating leases are included in other assets with the corresponding liability in other accrued liabilities and other liabilities on our consolidated balance sheets. Finance leases are included in property, plant and equipment with the corresponding liability in the current portion and long-term debt line items on our consolidated balance sheets. Leases where we are the lessor are not significant. Lease expense is recognized on a straight-line basis over the lease term for operating leases. Financ ing leases are recognized on the effective interest method for interest expense and straight-line method for asset amortization. Renewals and terminations are included in the calculation of the Right of Use (“ROU”) asset and lease liability when considered to be reasonably certain to be exercised. When the implicit rate is unknown, we use our incremental borrowing rate based on commencement date in determining the present value of lease payments. Our leases do not include residual value guarantees. We are not the primary beneficiary in or have other forms of variable interests with the lessor of the leased assets. The impact to the balance sheet for operating leases is a gross-up for the addition of ROU assets and liabilities relating to the operating leases in the amount of $449 million at adoption. The impact to the balance sheet for financing leases was not material. Corning has elected the following practical expedients and accounting policy elections to apply the new lease accounting standard at its effective date as of January 1, 2019 : · Leases of less than 12 months in duration to be recorded as expense only; · Account for lease and non-lease components of a contract as a single lease component; and · Comparative reporting of prior periods under ASC 840 not restated due to modified retrospective implementation. At adoption, Corning recorded a nominal cumulative-effect adjustment to beginning retained earnings. Refer to Note 4 (Leases) to the consolidated financial statements for additional information. Revenue One of Corning’s equity affiliates adopted the new revenue standard on January 1, 2019. The impact of adopti ng the new standard to Corning’s financial statements was a net reduction of $186 million to 2019 beginning retained earnings. T iming of revenue recognition for certain open performance obligations as measured at January 1, 2019 under the new standard was approximately $239 million with offsetting deferred tax impacts of $53 million. Income Taxes In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income, which allows for reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the 2017 Tax Cuts and Jobs Act. We have adopted this new standard effective January 1, 2019. The impact of the new standard resulted in a reclassification of $53 million from accumulated other comprehensive income to beginning retained earnings. Other Accounting Standards No other accounting standards newly issued or adopted as of January 1, 2019, had a material impact on Corning’s financial statements or disclosures. |
Revenue
Revenue | 3 Months Ended |
Mar. 31, 2019 | |
Revenue [Abstract] | |
Revenue | 2. Revenue Revenue Disaggregation Table The following table shows revenues by major product categories, similar to our reportable segment disclosure. Within each product category, contract terms, conditions and economic factors affecting the nature, amount, timing and uncertainty around revenue recognition and cash flows are substantially similar. The commercial markets and selling channels are also similar. Except for an inconsequential amount of revenue for Telecommunications products, our product category revenues are recognized at point in time when control transfers to the customer. Revenues by product category are as follows (in millions): Three Months Ended March 31, 2019 2018 Display products $ 795 $ 732 Telecommunication products 1,064 886 Specialty glass products 309 278 Environmental substrate and filter products 351 322 Life science products 239 232 All Other 54 50 $ 2,812 $ 2,500 Contract Assets and Liabilities Contract assets, such as costs to obtain or fulfill contracts, are an insignificant component of Corning’s revenue recognition process. The majority of Corning’s cost of fulfillment as a manufacturer of products is classified as inventory, fixed assets and intangible assets, which are accounted for under the respective guidance for those asset types. Other costs of contract fulfillment are immaterial due to the nature of our products and their respective manufacturing processes. Contract liabilities include deferred revenues, other advanced payments and customer deposits. Deferred revenue and other advanced payments are not significant to our operations and are classified as part of other current liabilities in our financial statements. Customer deposits are predominately related to Display products and are classified as part of other current liabilities and other long- term liabilities as appropriate, and are disclosed below. We treat shipping and handling fees as a fulfillment cost and not as a separate performance obligation under the terms of our revenue contracts due to the perfunctory nature of the shipping and handling obligations. Customer Deposits As of March 31, 2019 and December 31, 2018, Corning had customer deposits of approximately $1.0 billion. The majority of these represent non-refundable cash deposits for customers to secure rights to an amount of glass produced by Corning under long-term supply agreements. The duration of these long-term supply agreements ranges up to ten years. As glass is shipped to customers, Corning will recognize revenue and issue credit memoranda to reduce the amount of the customer deposit liability, which are applied against customer receivables resulting from the sale of glass. In the three months ended March 31, 2019 and 2018, no credit memoranda were issued. As of March 31, 2019 and December 31, 2018, $907 million and $922 million were recorded as other long-term liabilities, respectively. The remaining $84 million and $54 million, respectively, were classified as other current liabilities . |
Commitments, Contingencies and
Commitments, Contingencies and Guarantees | 3 Months Ended |
Mar. 31, 2019 | |
Commitments, Contingencies and Guarantees [Abstract] | |
Commitments, Contingencies and Guarantees | 3. Commitments, Contingencies and Guarantees Corning is a defendant in various lawsuits and is subject to various claims that arise in the normal course of business, the most significant of which are summarized below. In the opinion of management, the likelihood that the ultimate disposition of these matters will have a material adverse effect on Corning’s consolidated financial position, liquidity, or results of operations, is remote. Asbestos Claims Corning and PPG Industries, Inc. each owned 50% of the capital stock of Pittsburgh Corning Corporation (“PCC”). PCC filed for Chapter 11 reorganization in 2000, and the Modified Third Amended Plan of Reorganization for PCC (the “Plan”) became effective in April 2016. At December 31, 2016, the Company’s liability under the Plan was $290 million, which is required to be paid through a series of fixed payments beginning in the second quarter of 2017. At March 31, 2019, the total amount of payments due in years 2019 through 2023 is $185 million, of which $50 million is due in the second quarter of 2019 and is classified as a current liability. The remaining $135 million is classified as a non-current liability. Non-PCC Asbestos Claims Corning is a defendant in certain cases alleging injuries from asbestos unrelated to PCC (the “non-PCC asbestos claims”) which had been stayed pending the confirmation of the Plan. The stay was lifted on August 25, 2016. At December 31, 2018 and March 31, 2019, the amount of the reserve for these non-PCC asbestos claims was estimated to be $146 million. The reserve balance as of March 31, 2019 represents the undiscounted projection of claims and related legal fees for the estimated life of the litigation. Dow Corning Chapter 11 Related Matters Until June 1, 2016, Corning and The Dow Chemical Company (“Dow”) each owned 50% of the common stock of Dow Corning Corporation (“Dow Corning”). On May 31, 2016, Corning and Dow realigned their ownership interest in Dow Corning. With the realignment, Corning retained its indirect ownership interest in the Hemlock Semiconductor Group (“HSG”) and formed a new entity which had been capitalized by Dow Corning with $4.8 billion. Following the realignment, Corning no longer owned any interest in Dow Corning. With the realignment, Corning agreed to indemnify Dow Corning for 50% of Dow Corning’s non-ordinary course, pre-closing liabilities to the extent such liabilities exceed the amounts reserved for them by Dow Corning as of May 31, 2016, including two legacy Dow Corning matters: the Dow Corning Breast Implant Litigation, and the Dow Corning Bankruptcy Pendency Interest Claims. Dow Corning Breast Implant Litigation In May 1995, Dow Corning filed for bankruptcy protection to address pending and claimed liabilities arising from many thousands of breast implant product lawsuits. On June 1, 2004, Dow Corning emerged from Chapter 11 with a Plan of Reorganization (the “Plan”) which provided for the settlement or other resolution of implant claims. The Plan also includes releases for Corning and Dow as shareholders in exchange for contributions to the Plan. Under the terms of the Plan, Dow Corning has established and funded a Settlement Trust and a Litigation Facility, referred to above, to provide a means for tort claimants to settle or litigate their claims. Inclusive of insurance, Dow Corning has paid approximately $1.8 billion to the Settlement Trust. As of May 31, 2016, Dow Corning had recorded a reserve for breast implant litigation of $290 million. In the event Dow Corning’s total liability for these claims exceeds such amount, Corning may be required to indemnify Dow Corning for up to 50% of the excess liability. At March 31, 2019, Dow Corning had recorded a reserve for breast implant litigation of $263 million. Dow Corning Bankruptcy Pendency Interest Claims As a separate matter arising from the bankruptcy proceedings, Dow Corning is defending claims asserted by commercial creditors who claim additional compounded interest at default and state statutory judgment rates as well as attorneys’ fees and other enforcement costs, during the period from May 1995 through June 2004. As of May 31, 2016, Dow Corning had recorded a reserve for these claims of $107 million. In the event Dow Corning’s liability for these claims exceeds such amount, Corning may be required to indemnify Dow Corning for up to 50% of the excess liability, subject to certain conditions and limits. As of March 31, 2019, Dow Corning had recorded a reserve for these claims of $83 million. Environmental Litigation Corning has been named by the Environmental Protection Agency (“the Agency”) under the Superfund Act, or by state governments under similar state laws, as a potentially responsible party for 1 5 active hazardous waste sites. Under the Superfund Act, all parties who may have contributed any waste to a hazardous waste site, identified by the Agency, are jointly and severally liable for the cost of cleanup unless the Agency agrees otherwise. It is Corning’s policy to accrue for its estimated liability related to Superfund sites and other environmental liabilities related to property owned by Corning based on expert analysis and continual monitoring by both internal and external consultants. At March 31, 2019 and December 31, 2018 , Corning had accrued approximately $28 million and $30 million, respectively, for the undiscounted estimated liability for environmental cleanup and related litigation. Based upon the information developed to date, management believes that the accrued reserve is a reasonable estimate of the Company’s liability and that the risk of an additional loss in an amount materially higher than that accrued is remote. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Leases | 4. Leases We have operating and finance leases for real estate, vehicles, and equipment. We incurred lease expense in the amount of $42 million for the three months ended March 31, 2019. Operating and Financ ing lease costs were $37 million and $5 million, respectively. Short-term rental expense, for agreements less than one year in duration, is immaterial. Financ ing lease cost was comprised of expenses for Depreciation of right-of-use assets and Interest on lease liabilities in the amounts of $2 million and $3 million, respectively. Cash paid for amounts included in the measurement of lease liabilities totaled $29 million for the three months ended March 31, 2019. Operating cash flows from operating and financing leases were $26 million and $3 million, respectively. Financing cash flows from finance leases were nominal. Supplemental balance sheet information related to leases was as follows (in millions, except lease term and discount rate): As of March 31, 2019 Operating Leases Operating lease right-of-use assets, net (1) $ 470 Other current liabilities $ 54 Operating lease liabilities (2) 421 Total operating lease liabilities $ 475 Finance Leases Property and equipment, at cost $ 171 Accumulated depreciation (49) Property and equipment, net $ 122 Current portion of long-term debt $ 5 Long-term debt 174 Total finance lease liabilities $ 179 (1) Included in other assets. (2) Included in other liabilities. The weighted average remaining lease terms for operating and financing leases are 11.9 years and 6.4 years, respectively. The weighted average discount rates for operating and financing leases are 3.9% and 6.0% , respectively. As of March 31, 2019, m aturities of lease liabilities under the new lease standard are as follows (in millions): 2019 2020 2021 2022 2023 After 2023 Gross Total Imputed Discount Total Operating Leases $ 69 $ 86 $ 70 $ 62 $ 55 $ 352 $ 694 $ (219) $ 475 Financing Leases 10 13 13 14 131 52 233 (54) 179 As of December 31, 2018, maturities of lease liabilities under the previous lease standard were as follows (in millions): Total Less than 1 year 1 to 3 years 3 to 5 years 5 years and thereafter Capital leases and financing obligations $ 393 $ 4 $ 11 $ 132 $ 246 Imputed interest on capital leases and financing obligations 205 20 38 37 110 Minimum rental commitments 581 82 133 111 255 As of March 31, 2019, we have additional operating leases, primarily for new production facilities and equipment, that have not yet commenced of approximately $450 million on an undiscounted basis . These operating leases will commence between fiscal year 2019 and fiscal year 2020 with lease terms of 10 years to 25 years. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2019 | |
Income Taxes [Abstract] | |
Income Taxes | 5. Income Taxes Our provision for income taxes and the related effective income tax rates are as follows (in millions): Three Months Ended March 31, 2019 2018 Provision for income taxes $ (76) $ (124) Effective tax rate 13.2% 26.7% For the three months ended March 31, 2019, the effective income tax rate differed from the U.S. statutory rate of 21 % primarily due to the following: · Rate differences on income (loss) of consolidated foreign companies offset by; · Expected benefits related to foreign derived intangible income (“FDII”); and · The release of foreign valuation allowances on deferred tax assets that are now considered realizable from the restructuring of certain Israeli operations. For the three months ended March 31, 2018, the effective income tax rate differed from the U.S. statutory rate of 21 % primarily due to the following: · Additional tax expense of $172 million related to a preliminary agreement with the Internal Revenue Service (“IRS”) to settle the income tax audit for the years 2013 and 2014; and · A reduction in the tax benefit from domestic losses attributable to foreign exchange and losses on translated earnings contracts due to the anticipated impacts of the base erosion and anti-deferral tax (“BEAT”). |
Earnings (Loss) Per Common Shar
Earnings (Loss) Per Common Share | 3 Months Ended |
Mar. 31, 2019 | |
Earnings (Loss) Per Common Share [Abstract] | |
Earnings (Loss) Per Common Share | 6. Earnings (Loss) per Common Share The following table sets forth the computation of basic and diluted earnings (loss) per common share (in millions, except per share amounts): Three Months Ended March 31, 2019 2018 Net income (loss) attributable to Corning Incorporated $ 499 $ (589) Less: Series A convertible preferred stock dividend 24 24 Net income (loss) available to common stockholders – basic 475 (613) Plus: Series A convertible preferred stock dividend 24 Net income (loss) available to common stockholders – diluted $ 499 $ (613) Weighted-average common shares outstanding – basic 784 848 Effect of dilutive securities: Employee stock options and other dilutive securities 9 Series A convertible preferred stock 115 Weighted-average common shares outstanding – diluted 908 848 Basic earnings (loss) per common share $ 0.61 $ (0.72) Diluted earnings (loss) per common share $ 0.55 $ (0.72) Antidilutive potential shares excluded from diluted earnings per common share: Series A convertible preferred stock (1) 115 Employee stock options and awards 11 Total 126 (1) For the quarter ended March 31, 2018 the Series A preferred stock was anti-dilutive and therefore excluded from the calculation of diluted loss per share . |
Inventories, Net of Inventory R
Inventories, Net of Inventory Reserves | 3 Months Ended |
Mar. 31, 2019 | |
Inventories, Net of Inventory Reserves [Abstract] | |
Inventories, Net of Inventory Reserves | 7. Inventories, Net of Inventory Reserves Inventories, net of inventory reserves comprise the following (in millions): March 31, December 31, 2019 2018 Finished goods $ 959 $ 854 Work in process 416 386 Raw materials and accessories 410 409 Supplies and packing materials 405 388 Total inventories, net of inventory reserves $ 2,190 $ 2,037 |
Employee Retirement Plans
Employee Retirement Plans | 3 Months Ended |
Mar. 31, 2019 | |
Employee Retirement Plans [Abstract] | |
Employee Retirement Plans | 8. Employee Retirement Plans The following table summarizes the components of net periodic benefit cost for Corning’s defined benefit pension and postretirement health care and life insurance plans (in millions): Pension benefits Postretirement benefits Three months ended Three months ended March 31, March 31, 2019 2018 2019 2018 Service cost $ 25 $ 25 $ 2 $ 3 Interest cost 37 32 7 6 Expected return on plan assets (43) (47) Amortization of prior service cost (credit) 2 2 (2) (1) Total pension and postretirement benefit expense $ 21 $ 12 $ 7 $ 8 The components of net period benefit cost other than the service cost component are included in the line item “Other expense, net” in the consolidated statements of income. |
Other Liabilities
Other Liabilities | 3 Months Ended |
Mar. 31, 2019 | |
Other Liabilities [Abstract] | |
Other Liabilities | 9. Other Liabilities Other liabilities follow (in millions): March 31, December 31, 2019 2018 Current liabilities: Wages and employee benefits $ 405 $ 642 Income taxes 237 169 Derivative instruments 43 56 Asbestos and other litigation (Note 3) 112 113 Other current liabilities 977 871 Other accrued liabilities $ 1,774 $ 1,851 Non-current liabilities: Defined benefit pension plan liabilities $ 843 $ 831 Derivative instruments 237 386 Asbestos and other litigation (Note 3) 278 279 Investment in Hemlock Semiconductor Group ("HSG") (1) 172 Customer deposits (Note 2) 907 922 Deferred tax liabilities 331 347 Other non-current liabilities 1,111 887 Other liabilities $ 3,879 $ 3,652 (1) The negative carrying value resulted from a one-time charge of $239 million to this entity in 2019 due to the adoption of the new revenue standard. This charge was offset by deferred tax impacts of $53 million. The charge relates to timing of revenue recognition for open performance obligations as measured at January 1, 2019. Most of these performance obligations are expected to be recognized within the next twelve months . |
Hedging Activities
Hedging Activities | 3 Months Ended |
Mar. 31, 2019 | |
Hedging Activities [Abstract] | |
Hedging Activities | 10. Hedging Activities Undesignated Hedges The table below includes a total gross notional value for translated earnings contracts of $12.6 billion and $13.6 billion at March 31, 2019 and December 31, 2018, respectively . These include gross notional value for average rate forwards of $10.1 billion and $11.0 billion, zero-cost collars and purchased put or call options of $2.5 billion and $2.6 billion at March 31, 2019 and December 31, 2018 , respectively. The majority of the average rate forward contracts hedge a significant portion of the Company’s exposure to the Japanese yen with maturities spanning the years 2019-2022 and with gross notional values of $8.5 billion and $9.1 billion at March 31, 2019 and December 31, 2018, respectively. The average rate forward contracts also partially hedge the impacts of the South Korean won, Chinese yuan, euro and British pound translation on the Company’s projected net income. With respect to the zero-cost collars, the gross notional amount includes the value of both the put and call options. However, due to the nature of the zero-cost collars, only the put or the call option can be exercised at maturity. The following tables summarize the notional amounts and respective fair values of Corning’s derivative financial instruments on a gross basis for March 31, 2019 and December 31, 2018 (in millions): Asset derivatives Liability derivatives Gross notional amount Balance Fair value Balance Fair value March 31, Dec. 31, sheet March 31, Dec. 31, sheet March 31, Dec. 31, 2019 2018 location 2019 2018 location 2019 2018 Derivatives designated as hedging instruments Foreign exchange contracts (1) $ 336 $ 391 Other current assets $ 7 $ 4 Other accrued liabilities $ (2) Other assets 5 2 Derivatives not designated as hedging instruments Foreign exchange contracts, other 937 900 Other current assets 2 5 Other accrued liabilities $ (1) (7) Translated earnings contracts 12,640 13,620 Other current assets 116 94 Other accrued liabilities (42) (47) Other assets 38 43 Other liabilities (237) (386) Total derivatives $ 13,913 $ 14,911 $ 168 $ 148 $ (280) $ (442) (1) Cash flow hedges with a typical duration of 24 months or less. The effect of cash flow hedges on Corning’s consolidated statements of income (loss) and other comprehensive income (loss) is not material for the three months ended March 31, 2019 and 2018. The following table summarizes the effect on the consolidated financial statements relating to Corning’s undesignated derivative financial instruments (in millions): Gain (loss) recognized in income Three months ended Location of gain/(loss) March 31, Undesignated derivatives recognized in income 2019 2018 Foreign exchange contracts – balance sheet and loans Other expense, net $ (2) $ (19) Foreign currency hedges related to translated earnings (1) Translated earnings contract gain (loss), net 184 (622) Total undesignated $ 182 $ (641) (1) The impact to income was primarily driven by yen-denominated hedges of translated earnings . |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value Measurements [Abstract] | |
Fair Value Measurements | 11. 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 Company’s 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. The following tables provide fair value measurement information for the Company’s major categories of financial assets and liabilities measured on a recurring basis (in millions): Fair value measurements at reporting date using Quoted prices in Significant other Significant active markets for observable unobservable March 31, identical assets inputs inputs 2019 (Level 1) (Level 2) (Level 3) Current assets: Other current assets (1) $ 124 $ 124 Non-current assets: Other assets (1) $ 43 $ 43 Current liabilities: Other accrued liabilities (1) $ 43 $ 43 Non-current liabilities: Other liabilities (1)(2) $ 257 $ 237 $ 20 (1) Derivative assets and liabilities include foreign exchange contracts which are measured using observable inputs for similar assets and liabilities. (2) Other liabilities include contingent consideration that was measured using unobservable (Level 3) inp uts, in the amount of $20 million. Fair value measurements at reporting date using Quoted prices in Significant other Significant active markets for observable unobservable December 31, identical assets inputs inputs 2018 (Level 1) (Level 2) (Level 3) Current assets: Other current assets (1) $ 103 $ 103 Non-current assets: Investments (2) $ 16 $ 16 Other assets (1) $ 45 $ 45 Current liabilities: Other accrued liabilities (1) $ 56 $ 56 Non-current liabilities: Other liabilities (1)(3) $ 406 $ 386 $ 20 (1) Derivative assets and liabilities include foreign exchange contracts which are measured using observable inputs for similar assets and liabilities. (2) One of the Company’s equity securities was measured using unobservable (Level 3) inputs, in the amount of $16 million. (3) Other liabilities include contingent consideration that was measured using unobservable (Level 3) inputs, in the amount of $20 million. There were no significant financial assets and liabilities measured on a nonrecurring basis as of March 31, 2019 and December 31, 2018. |
Shareholders' Equity
Shareholders' Equity | 3 Months Ended |
Mar. 31, 2019 | |
Shareholders' Equity [Abstract] | |
Shareholders' Equity | 12. Shareholders’ Equity Fixed Rate Cumulative Convertible Preferred Stock, Series A Corning has 2,300 outstanding shares of Fixed Rate Cumulative Convertible Preferred Stock, Series A. The Preferred Stock is convertible at the option of the holder and the Company upon certain events, at a conversion rate of 50,000 shares of Corning’s common stock per one share of Preferred Stock, subject to certain anti-dilution provisions. As of March 31, 2019, the Preferred Stock has not been converted, and none of the anti-dilution provisions have been triggered. Share Repurchases In December 2016, Corning’s Board of Directors approved a $4 billion share repurchase program with no expiration (the “2016 Repurchase Program”). On April 26, 2018, Corning’s Board of Directors approved a $2 billion share repurchase program with no expiration (the “2018 Repurchase Program”). In the three months ended March 31, 2019, the Company repurchased 7.8 million shares of common stock on the open market for approximately $244 million as part of its 2018 Repurchase Program. In the three months ended March 31, 2018, the Company repurchased 27.1 million shares of common stock on the open market for approximately $814 million as part of its 2016 Repurchase Program. Accumulated Other Comprehensive Loss In the three months ended March 31, 2019 and 2018, the change in accumulated other comprehensive loss was related to the foreign currency translation adjustment and unamortized actuarial gains (losses) components. A summary of changes in the foreign currency translation adjustment component of accumulated other comprehensive loss is as follows (in millions) (1) : Three months ended March 31, 2019 2018 Beginning balance $ (714) $ (529) Other comprehensive (loss) income (2) (98) 260 Equity method affiliates (3) (12) 4 Net current-period other comprehensive (loss) income (110) 264 Ending balance $ (824) $ (265) (1) All amounts are after tax. Amounts in parentheses indicate debits to accumulated other comprehensive loss. (2) For the three months ended March 31, 2019 and 2018, amounts are net of total tax benefit of $13 million and tax expense of $10 million, respectively. (3) Tax effects are not significant. A summary of changes in the unamortized actuarial gains (losses) component of accumulated other comprehensive loss is as follows (in millions) (1) : Three months ended March 31, 2019 2018 Beginning balance $ (298) $ (317) Amounts reclassified from accumulated other comprehensive (loss) income (2) (52) 1 Net current-period other comprehensive (loss) income (52) 1 Ending balance $ (350) $ (316) (1) All amounts are after tax. Amounts in parentheses indicate debits to accumulated other comprehensive loss. For the three months ended March 31, 2019, the amount consisted of $52 million in tax loss due to reclass of stranded tax effects. Refer to Note 1 (Significant Accounting Policies) to the consolidated financial statements for additional information. (2) For the three months ended March 31, 2018, tax amounts are not significant . |
Reportable Segments
Reportable Segments | 3 Months Ended |
Mar. 31, 2019 | |
Reportable Segments [Abstract] | |
Reportable Segments | 13. Reportable Segments Our reportable segments are as follows: · Display Technologies – manufactures glass substrates for flat panel liquid crystal displays and other high-performance display panels. · Optical Communications – manufactures carrier and enterprise network components for the telecommunications industry. · 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. · Environmental Technologies – manufactures ceramic substrates and filters for automotive and diesel applications. · Life Sciences – manufactures glass and plastic labware, equipment, media and reagents enabling workflow solutions for scientific applications. All other segments that do not meet the quantitative threshold for separate reporting have been grouped as “All Other.” This group is primarily comprised of the results of the pharmaceutical technologies business and new product lines and development projects, as well as certain corporate investments such as Eurokera and Keraglass equity affiliates. We prepared the financial results for our reportable segments on a basis consistent with our internal disaggregation of financial information to assist the CODM in making internal operating decisions. T he impact of changes in the Japanese yen, Korean won, Chinese yuan and new Taiwan dollar are excluded from segment sales and segment net income for the Display Technologies and Specialty Materials segments. The impact of changes in the euro, Chinese yuan and Japanese yen are excluded from segment sales and segment net income for our Environmental Technologies and Life Sciences segments. In January 2019, we began presenting results of the Environmental Technologies and Life Sciences segments on a constant currency basis to mitigate the translation impact on these segments’ sales and net income. We have not recast prior periods as the impact of fluctuations in these currencies were not material as compared to prior periods. Ce rtain income and expenses are included in the unallocated amounts in the reconciliation of reportable segment net income to consolidated net income. These include items that are not used by our chief operating decision maker (“CODM”) in evaluating the results of or in allocating resources to our segments and include the following items: the impact of our translated earnings contracts; acquisition-related costs; discrete tax items and other tax-related adjustments; certain litigation, regulatory and other legal matters; restructuring, impairment and other charges; adjustments relating to acquisitions; and other non-recurring non-operational items. Although we exclude these amounts from segment results, they are included in reported consolidated results. We included the earnings of equity affiliates that are closely associated with our reportable segments in the respective segment’s net income. We have allocated certain common expenses among reportable segments differently than we would for stand-alone financial information. Segment net income may not be consistent with measures used by other companies. Reportable Segments (in millions ) Display Optical Specialty Environmental Life All Technologies Communications Materials Technologies Sciences Other Total Three months ended March 31, 2019 Segment net sales $ 818 $ 1,064 $ 309 $ 362 $ 243 $ 54 $ 2,850 Depreciation (1) $ 152 $ 59 $ 37 $ 31 $ 13 $ 11 $ 303 Research, development and engineering expenses (2) $ 26 $ 56 $ 41 $ 30 $ 5 $ 55 $ 213 Income tax (provision) benefit (3) $ (55) $ (39) $ (13) $ (15) $ (8) $ 19 $ (111) Segment net income (loss) (4) $ 208 $ 142 $ 49 $ 55 $ 31 $ (72) $ 413 Display Optical Specialty Environmental Life All Technologies Communications Materials Technologies Sciences Other Total Three months ended March 31, 2018 Segment net sales $ 745 $ 886 $ 278 $ 322 $ 232 $ 50 $ 2,513 Depreciation (1) $ 144 $ 52 $ 33 $ 29 $ 14 $ 11 $ 283 Research, development and engineering expenses (2) $ 23 $ 49 $ 39 $ 29 $ 5 $ 57 $ 202 Income tax (provision) benefit (3) $ (49) $ (30) $ (12) $ (14) $ (7) $ 20 $ (92) Segment net income (loss) (4) $ 185 $ 109 $ 46 $ 52 $ 27 $ (74) $ 345 (1) Depreciation expense for Corning’s reportable segments includes an allocation of depreciation of corporate property not specifically identifiable to a segment . (2) Research , development and engineering expenses include direct project spending that is identifiable to a segment. (3) Income tax provision (benefit) reflects a tax rate of 21% . (4) Many of Corning’s administrative and staff functions are performed on a centralized basis. Where practicable, Corning charges these expenses to segments based upon the extent to which each business uses a centralized function. Other staff functions , such as corporate finance, human resources and legal, are allocated to segments, primarily as a percentage of sales. Expenses that are not allocated to the segments are included in the reconciliation of reportable segment net income to consolidated net income below. A reconciliation of reportable segment and All Other net sales to consolidated net sales follows (in millions): Three months ended March 31, 2019 2018 Net sales of reportable segments and All Other $ 2,850 $ 2,513 Impact of foreign currency movements (1) (38) (13) Net sales $ 2,812 $ 2,500 (1) This amount primarily represents the impact of foreign currency adjustments in the Display Technologies and Environmental Technologies segments. A reconciliation of reportable segment net income to consolidated net income (loss) follows (in millions): Three months ended March 31, 2019 2018 Net income of reportable segments $ 485 $ 419 Net loss of All Other (72) (74) Unallocated amounts: Impact of foreign currency movements (37) (31) Gain (loss) on foreign currency hedges related to translated earnings 184 (622) Litigation, regulatory and other legal matters (136) Research, development, and engineering expenses (36) (39) Equity in earnings of affiliated companies (1) 26 (37) Amortization of intangibles (29) (19) Interest expense, net (45) (39) Income tax benefit (provision) 35 (32) Other corporate items (12) 21 Net income (loss) $ 499 $ (589) (1) Primarily represents the equity earnings of HSG. |
Significant Accounting Polici_2
Significant Accounting Policies (Policy) | 3 Months Ended |
Mar. 31, 2019 | |
Significant Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation In these notes, the terms “Corning,” “Company,” “we,” “us,” or “our” mean Corning Incorporated and its subsidiary companies. 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. Generally Accepted Accounting Principles (“GAAP”) for interim financial information. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been omitted or condensed. These interim consolidated financial statements should be read in conjunction with Corning’s consolidated financial statements and notes thereto included in its Annual Report on Form 10-K for the year ended December 31, 2018 (“ 2018 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. Certain prior year amounts have been reclassified to conform to the current-year presentation. These reclassifications had no impact on our results of operations, financial position, or changes in shareholders’ equity. |
Leases | Leases Corning leases certain real estate, vehicles, and equipment from third parties. On January 1, 2019 we adopted the new leasing standard. Corning classifies leases as either financing or operating. Operating leases are included in other assets with the corresponding liability in other accrued liabilities and other liabilities on our consolidated balance sheets. Finance leases are included in property, plant and equipment with the corresponding liability in the current portion and long-term debt line items on our consolidated balance sheets. Leases where we are the lessor are not significant. Lease expense is recognized on a straight-line basis over the lease term for operating leases. Financ ing leases are recognized on the effective interest method for interest expense and straight-line method for asset amortization. Renewals and terminations are included in the calculation of the Right of Use (“ROU”) asset and lease liability when considered to be reasonably certain to be exercised. When the implicit rate is unknown, we use our incremental borrowing rate based on commencement date in determining the present value of lease payments. Our leases do not include residual value guarantees. We are not the primary beneficiary in or have other forms of variable interests with the lessor of the leased assets. The impact to the balance sheet for operating leases is a gross-up for the addition of ROU assets and liabilities relating to the operating leases in the amount of $449 million at adoption. The impact to the balance sheet for financing leases was not material. Corning has elected the following practical expedients and accounting policy elections to apply the new lease accounting standard at its effective date as of January 1, 2019 : · Leases of less than 12 months in duration to be recorded as expense only; · Account for lease and non-lease components of a contract as a single lease component; and · Comparative reporting of prior periods under ASC 840 not restated due to modified retrospective implementation. At adoption, Corning recorded a nominal cumulative-effect adjustment to beginning retained earnings. Refer to Note 4 (Leases) to the consolidated financial statements for additional information. |
Revenue | Revenue One of Corning’s equity affiliates adopted the new revenue standard on January 1, 2019. The impact of adopti ng the new standard to Corning’s financial statements was a net reduction of $186 million to 2019 beginning retained earnings. T iming of revenue recognition for certain open performance obligations as measured at January 1, 2019 under the new standard was approximately $239 million with offsetting deferred tax impacts of $53 million. |
Income Taxes | Income Taxes In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income, which allows for reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the 2017 Tax Cuts and Jobs Act. We have adopted this new standard effective January 1, 2019. The impact of the new standard resulted in a reclassification of $53 million from accumulated other comprehensive income to beginning retained earnings. |
Other Accounting Standards | Other Accounting Standards No other accounting standards newly issued or adopted as of January 1, 2019, had a material impact on Corning’s financial statements or disclosures. |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Revenue [Abstract] | |
Disaggregation of Revenue | Three Months Ended March 31, 2019 2018 Display products $ 795 $ 732 Telecommunication products 1,064 886 Specialty glass products 309 278 Environmental substrate and filter products 351 322 Life science products 239 232 All Other 54 50 $ 2,812 $ 2,500 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Supplemental Balance Sheet Information | As of March 31, 2019 Operating Leases Operating lease right-of-use assets, net (1) $ 470 Other current liabilities $ 54 Operating lease liabilities (2) 421 Total operating lease liabilities $ 475 Finance Leases Property and equipment, at cost $ 171 Accumulated depreciation (49) Property and equipment, net $ 122 Current portion of long-term debt $ 5 Long-term debt 174 Total finance lease liabilities $ 179 (1) Included in other assets. (2) Included in other liabilities. |
Maturities of Lease Liabilities | 2019 2020 2021 2022 2023 After 2023 Gross Total Imputed Discount Total Operating Leases $ 69 $ 86 $ 70 $ 62 $ 55 $ 352 $ 694 $ (219) $ 475 Financing Leases 10 13 13 14 131 52 233 (54) 179 |
Maturities of Lease Liabilities Under Previous Lease Standard | Total Less than 1 year 1 to 3 years 3 to 5 years 5 years and thereafter Capital leases and financing obligations $ 393 $ 4 $ 11 $ 132 $ 246 Imputed interest on capital leases and financing obligations 205 20 38 37 110 Minimum rental commitments 581 82 133 111 255 |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Income Taxes [Abstract] | |
Provision for Income Taxes | Three Months Ended March 31, 2019 2018 Provision for income taxes $ (76) $ (124) Effective tax rate 13.2% 26.7% |
Earnings (Loss) Per Common Sh_2
Earnings (Loss) Per Common Share (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Earnings (Loss) Per Common Share [Abstract] | |
Computation of Basic and Diluted Earnings (Loss) per Common Share | Three Months Ended March 31, 2019 2018 Net income (loss) attributable to Corning Incorporated $ 499 $ (589) Less: Series A convertible preferred stock dividend 24 24 Net income (loss) available to common stockholders – basic 475 (613) Plus: Series A convertible preferred stock dividend 24 Net income (loss) available to common stockholders – diluted $ 499 $ (613) Weighted-average common shares outstanding – basic 784 848 Effect of dilutive securities: Employee stock options and other dilutive securities 9 Series A convertible preferred stock 115 Weighted-average common shares outstanding – diluted 908 848 Basic earnings (loss) per common share $ 0.61 $ (0.72) Diluted earnings (loss) per common share $ 0.55 $ (0.72) Antidilutive potential shares excluded from diluted earnings per common share: Series A convertible preferred stock (1) 115 Employee stock options and awards 11 Total 126 For the quarter ended March 31, 2018 the Series A preferred stock was anti-dilutive and therefore excluded from the calculation of diluted loss per share |
Inventories, Net of Inventory_2
Inventories, Net of Inventory Reserves (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Inventories, Net of Inventory Reserves [Abstract] | |
Inventories, Net | March 31, December 31, 2019 2018 Finished goods $ 959 $ 854 Work in process 416 386 Raw materials and accessories 410 409 Supplies and packing materials 405 388 Total inventories, net of inventory reserves $ 2,190 $ 2,037 |
Employee Retirement Plans (Tabl
Employee Retirement Plans (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Employee Retirement Plans [Abstract] | |
Net Periodic Benefit Expense | Pension benefits Postretirement benefits Three months ended Three months ended March 31, March 31, 2019 2018 2019 2018 Service cost $ 25 $ 25 $ 2 $ 3 Interest cost 37 32 7 6 Expected return on plan assets (43) (47) Amortization of prior service cost (credit) 2 2 (2) (1) Total pension and postretirement benefit expense $ 21 $ 12 $ 7 $ 8 |
Other Liabilities (Tables)
Other Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Other Liabilities [Abstract] | |
Other Liabilities | March 31, December 31, 2019 2018 Current liabilities: Wages and employee benefits $ 405 $ 642 Income taxes 237 169 Derivative instruments 43 56 Asbestos and other litigation (Note 3) 112 113 Other current liabilities 977 871 Other accrued liabilities $ 1,774 $ 1,851 Non-current liabilities: Defined benefit pension plan liabilities $ 843 $ 831 Derivative instruments 237 386 Asbestos and other litigation (Note 3) 278 279 Investment in Hemlock Semiconductor Group ("HSG") (1) 172 Customer deposits (Note 2) 907 922 Deferred tax liabilities 331 347 Other non-current liabilities 1,111 887 Other liabilities $ 3,879 $ 3,652 (1) The negative carrying value resulted from a one-time charge of $239 million to this entity in 2019 due to the adoption of the new revenue standard. This charge was offset by deferred tax impacts of $53 million. The charge relates to timing of revenue recognition for open performance obligations as measured at January 1, 2019. Most of these performance obligations are expected to be recognized within the next twelve months . |
Hedging Activities (Tables)
Hedging Activities (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Summary of Notional Amounts and Respective Fair Values of Derivative Financial Instruments | Asset derivatives Liability derivatives Gross notional amount Balance Fair value Balance Fair value March 31, Dec. 31, sheet March 31, Dec. 31, sheet March 31, Dec. 31, 2019 2018 location 2019 2018 location 2019 2018 Derivatives designated as hedging instruments Foreign exchange contracts (1) $ 336 $ 391 Other current assets $ 7 $ 4 Other accrued liabilities $ (2) Other assets 5 2 Derivatives not designated as hedging instruments Foreign exchange contracts, other 937 900 Other current assets 2 5 Other accrued liabilities $ (1) (7) Translated earnings contracts 12,640 13,620 Other current assets 116 94 Other accrued liabilities (42) (47) Other assets 38 43 Other liabilities (237) (386) Total derivatives $ 13,913 $ 14,911 $ 168 $ 148 $ (280) $ (442) (1) Cash flow hedges with a typical duration of 24 months or less. |
Not Designated as Hedging Instrument [Member] | |
Effect on Consolidated Financial Statements | Gain (loss) recognized in income Three months ended Location of gain/(loss) March 31, Undesignated derivatives recognized in income 2019 2018 Foreign exchange contracts – balance sheet and loans Other expense, net $ (2) $ (19) Foreign currency hedges related to translated earnings (1) Translated earnings contract gain (loss), net 184 (622) Total undesignated $ 182 $ (641) (1) The impact to income was primarily driven by yen-denominated hedges of translated earnings |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value Measurements [Abstract] | |
Major Categories of Financial Assets and Liabilities Measured on a Recurring Basis | Fair value measurements at reporting date using Quoted prices in Significant other Significant active markets for observable unobservable March 31, identical assets inputs inputs 2019 (Level 1) (Level 2) (Level 3) Current assets: Other current assets (1) $ 124 $ 124 Non-current assets: Other assets (1) $ 43 $ 43 Current liabilities: Other accrued liabilities (1) $ 43 $ 43 Non-current liabilities: Other liabilities (1)(2) $ 257 $ 237 $ 20 (1) Derivative assets and liabilities include foreign exchange contracts which are measured using observable inputs for similar assets and liabilities. (2) Other liabilities include contingent consideration that was measured using unobservable (Level 3) inp uts, in the amount of $20 million. Fair value measurements at reporting date using Quoted prices in Significant other Significant active markets for observable unobservable December 31, identical assets inputs inputs 2018 (Level 1) (Level 2) (Level 3) Current assets: Other current assets (1) $ 103 $ 103 Non-current assets: Investments (2) $ 16 $ 16 Other assets (1) $ 45 $ 45 Current liabilities: Other accrued liabilities (1) $ 56 $ 56 Non-current liabilities: Other liabilities (1)(3) $ 406 $ 386 $ 20 (1) Derivative assets and liabilities include foreign exchange contracts which are measured using observable inputs for similar assets and liabilities. (2) One of the Company’s equity securities was measured using unobservable (Level 3) inputs, in the amount of $16 million. (3) Other liabilities include contingent consideration that was measured using unobservable (Level 3) inputs, in the amount of $20 million. |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Reclassifications Out of Accumulated Other Comprehensive Income by Component | Three months ended March 31, 2019 2018 Beginning balance $ (298) $ (317) Amounts reclassified from accumulated other comprehensive (loss) income (2) (52) 1 Net current-period other comprehensive (loss) income (52) 1 Ending balance $ (350) $ (316) (1) All amounts are after tax. Amounts in parentheses indicate debits to accumulated other comprehensive loss. For the three months ended March 31, 2019, the amount consisted of $52 million in tax loss due to reclass of stranded tax effects. Refer to Note 1 (Significant Accounting Policies) to the consolidated financial statements for additional information. For the three months ended March 31, 2018, tax amounts are not significant |
Accumulated Foreign Currency Adjustment Attributable to Parent [Member] | |
Accumulated Other Comprehensive Income (Loss) | Three months ended March 31, 2019 2018 Beginning balance $ (714) $ (529) Other comprehensive (loss) income (2) (98) 260 Equity method affiliates (3) (12) 4 Net current-period other comprehensive (loss) income (110) 264 Ending balance $ (824) $ (265) (1) All amounts are after tax. Amounts in parentheses indicate debits to accumulated other comprehensive loss. (2) For the three months ended March 31, 2019 and 2018, amounts are net of total tax benefit of $13 million and tax expense of $10 million, respectively. (3) Tax effects are not significant. |
Reportable Segments (Tables)
Reportable Segments (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Reportable Segments [Abstract] | |
Reportable Segments | Display Optical Specialty Environmental Life All Technologies Communications Materials Technologies Sciences Other Total Three months ended March 31, 2019 Segment net sales $ 818 $ 1,064 $ 309 $ 362 $ 243 $ 54 $ 2,850 Depreciation (1) $ 152 $ 59 $ 37 $ 31 $ 13 $ 11 $ 303 Research, development and engineering expenses (2) $ 26 $ 56 $ 41 $ 30 $ 5 $ 55 $ 213 Income tax (provision) benefit (3) $ (55) $ (39) $ (13) $ (15) $ (8) $ 19 $ (111) Segment net income (loss) (4) $ 208 $ 142 $ 49 $ 55 $ 31 $ (72) $ 413 Display Optical Specialty Environmental Life All Technologies Communications Materials Technologies Sciences Other Total Three months ended March 31, 2018 Segment net sales $ 745 $ 886 $ 278 $ 322 $ 232 $ 50 $ 2,513 Depreciation (1) $ 144 $ 52 $ 33 $ 29 $ 14 $ 11 $ 283 Research, development and engineering expenses (2) $ 23 $ 49 $ 39 $ 29 $ 5 $ 57 $ 202 Income tax (provision) benefit (3) $ (49) $ (30) $ (12) $ (14) $ (7) $ 20 $ (92) Segment net income (loss) (4) $ 185 $ 109 $ 46 $ 52 $ 27 $ (74) $ 345 (1) Depreciation expense for Corning’s reportable segments includes an allocation of depreciation of corporate property not specifically identifiable to a segment . (2) Research , development and engineering expenses include direct project spending that is identifiable to a segment. (3) Income tax provision (benefit) reflects a tax rate of 21% . (4) Many of Corning’s administrative and staff functions are performed on a centralized basis. Where practicable, Corning charges these expenses to segments based upon the extent to which each business uses a centralized function. Other staff functions , such as corporate finance, human resources and legal, are allocated to segments, primarily as a percentage of sales. Expenses that are not allocated to the segments are included in the reconciliation of reportable segment net income to consolidated net income below. |
Reconciliation of Reportable Segment and All Other Net Sales to Consolidated Net Sales | Three months ended March 31, 2019 2018 Net sales of reportable segments and All Other $ 2,850 $ 2,513 Impact of foreign currency movements (1) (38) (13) Net sales $ 2,812 $ 2,500 (1) This amount primarily represents the impact of foreign currency adjustments in the Display Technologies and Environmental Technologies segments. |
Reconciliation of Reportable Segment Net Income to Consolidated Net Income (Loss) | Three months ended March 31, 2019 2018 Net income of reportable segments $ 485 $ 419 Net loss of All Other (72) (74) Unallocated amounts: Impact of foreign currency movements (37) (31) Gain (loss) on foreign currency hedges related to translated earnings 184 (622) Litigation, regulatory and other legal matters (136) Research, development, and engineering expenses (36) (39) Equity in earnings of affiliated companies (1) 26 (37) Amortization of intangibles (29) (19) Interest expense, net (45) (39) Income tax benefit (provision) 35 (32) Other corporate items (12) 21 Net income (loss) $ 499 $ (589) Primarily represents the equity earnings of HSG. |
Significant Accounting Polici_3
Significant Accounting Policies (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Accounting Standards Update 2014-09 [Member] | ||
Effect of adoption | $ 53 | $ 239,000 |
Effect of adoption, tax | $ 186 | 53,000 |
Cumulative effect of new accounting principle in period of adoption | 186,000 | |
Accounting Standards Update 2016-02 [Member] | ||
Adjustment | 449,000 | |
Accounting Standards Update 2018-02 [Member] | ||
Adjustment | $ 53,000 |
Revenue (Narrative) (Details)
Revenue (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Revenue [Abstract] | ||
Customer deposits | $ 1,000 | $ 1,000 |
Long-term supply commitment | 10 years | |
Credit memoranda issued | $ 0 | 0 |
Long-term liabilities | 907 | 922 |
Short-term liabilities | $ 84 | $ 54 |
Revenue (Disaggregation of Reve
Revenue (Disaggregation of Revenue) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Revenues by Products Categories | $ 2,812 | $ 2,500 |
Display Products [Member] | ||
Revenues by Products Categories | 795 | 732 |
Telecommunication Products [Member] | ||
Revenues by Products Categories | 1,064 | 886 |
Specialty Glass Products [Member] | ||
Revenues by Products Categories | 309 | 278 |
Environmental Substrate and Filter Products [Member] | ||
Revenues by Products Categories | 351 | 322 |
Life Science Products [Member] | ||
Revenues by Products Categories | 239 | 232 |
All Other [Member] | ||
Revenues by Products Categories | $ 54 | $ 50 |
Commitments, Contingencies an_2
Commitments, Contingencies and Guarantees (Details) $ in Millions | 3 Months Ended | |||
Mar. 31, 2019USD ($)item | Dec. 31, 2018USD ($) | Dec. 31, 2016USD ($) | May 31, 2016USD ($) | |
Loss Contingency, Accrual, Current | $ 112 | $ 113 | ||
Loss Contingency, Accrual, Noncurrent | 278 | 279 | ||
Dow Corning Breast Implant Litigation [Member] | ||||
Payment of claims | 1,800 | |||
Loss Contingency, Accrual | 263 | $ 290 | ||
Dow Corning Bankruptcy Pendency Interest Claims [Member] | ||||
Loss Contingency, Accrual | $ 83 | $ 107 | ||
Indemnification of excess liability | 50.00% | |||
Amended Pittsburgh Corning Corporation Plan [Member] | Asbestos Litigation [Member] | ||||
Loss Contingency, Accrual | $ 185 | |||
Loss Contingency, Accrual, Current | 50 | |||
Loss Contingency, Accrual, Noncurrent | $ 135 | |||
Pittsburgh Corning Corporation PCC [Member] | Asbestos Litigation [Member] | ||||
Equity Method Investment, Ownership Percentage | 50.00% | |||
Loss Contingency, Accrual | $ 290 | |||
Dow Corning Corporation [Member] | ||||
Equity Method Investment, Ownership Percentage | 50.00% | |||
Investment in affiliated companies, at equity | $ 4,800 | |||
Environmental Cleanup and Related Litigation [Member] | ||||
Number of Hazardous Waste Sites | item | 15 | |||
Accrual for Environmental Loss Contingencies | $ 28 | 30 | ||
Non-PCC Asbestos Litigation [Member] | ||||
Loss Contingency, Accrual, Noncurrent | $ 146 | $ 146 |
Leases (Narrative) (Details)
Leases (Narrative) (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Lessee, Lease, Description [Line Items] | |
Lease expense | $ 42 |
Operating lease cost | 37 |
Finance lease cost | 5 |
Depreciation of right-of-use assets | 2 |
Interest on lease liabilities | 3 |
Lease liabilities | 29 |
Operating cash flows from operating leases | 26 |
Operating cash flows from finance leases | $ 3 |
Operating leases weighted average remaining term | 11 years 10 months 24 days |
Finance leases weighted average remaining term | 6 years 4 months 24 days |
Operating leases weighted average discount rate | 3.90% |
Finance leases weighted average discount rate | 6.00% |
Lease not yet commenced | $ 450 |
Minimum [Member] | |
Lessee, Lease, Description [Line Items] | |
Lease term | 10 years |
Maximum [Member] | |
Lessee, Lease, Description [Line Items] | |
Lease term | 25 years |
Leases (Supplemental Balance Sh
Leases (Supplemental Balance Sheet Information) (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2019 | Dec. 31, 2018 | ||
Operating Leases: | |||
Operating lease right-of-use assets | [1] | $ 470 | |
Other current liabilities | 54 | ||
Operating lease liabilities | [2] | 421 | |
Total operating lease liabilities | 475 | ||
Finance Leases: | |||
Accumulated depreciation | (12,136) | $ (11,932) | |
Property and equipment, net | 14,878 | $ 14,895 | |
Current portion of long-term debt | 5 | ||
Long-term debt | 174 | ||
Total finance lease liabilities | 179 | ||
Right-of-use assets obtained in exchange for lease obligations: | |||
Operating leases | $ 29 | ||
Weighted Average Remaining Lease Term | |||
Operating leases weighted average remaining term | 11 years 10 months 24 days | ||
Finance leases weighted average remaining term | 6 years 4 months 24 days | ||
Weighted Average Discount Rate | |||
Operating leases weighted average discount rate | 3.90% | ||
Finance leases weighted average discount rate | 6.00% | ||
Leasehold Improvements [Member] | |||
Finance Leases: | |||
Property and equipment, at cost | $ 171 | ||
Accumulated depreciation | (49) | ||
Property and equipment, net | $ 122 | ||
[1] | Included in other assets. | ||
[2] | Included in other liabilities. |
Leases (Maturities of Lease Lia
Leases (Maturities of Lease Liabilities) (Details) $ in Millions | Mar. 31, 2019USD ($) |
Operating Leases | |
2019 | $ 69 |
2020 | 86 |
2021 | 70 |
2022 | 62 |
2023 | 55 |
After 2023 | 352 |
Gross Total | 694 |
Imputed Discount | (219) |
Total | 475 |
Finance Leases | |
2019 | 10 |
2020 | 13 |
2021 | 13 |
2022 | 14 |
2023 | 131 |
After 2023 | 52 |
Gross Total | 233 |
Imputed Discount | (54) |
Total | $ 179 |
Leases (Maturities of Lease L_2
Leases (Maturities of Lease Liabilities Under Previous Lease Standard) (Details) $ in Millions | Dec. 31, 2018USD ($) |
Capital Leases And Financing Obligations [Abstract] | |
Total | $ 393 |
Less than 1 year | 4 |
1 to 3 years | 11 |
3 to 5 years | 132 |
5 years and thereafter | 246 |
Imputed Interest On Capital Leases And Financing Obligations [Abstract] | |
Total | 205 |
Less than 1 year | 20 |
1 to 3 years | 38 |
3 to 5 years | 37 |
5 years and thereafter | 110 |
Minimum Rental Commitments [Abstract] | |
Total | 581 |
Less than 1 year | 82 |
1 to 3 years | 133 |
3 to 5 years | 111 |
5 years and thereafter | $ 255 |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Income Taxes [Abstract] | ||
Statutory U.S. income tax rate | 21.00% | 21.00% |
Additional income tax as result of agreement with IRS | $ 172 |
Income Taxes (Provision for Inc
Income Taxes (Provision for Income Taxes) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Income Taxes [Abstract] | ||
Provision for income taxes | $ (76) | $ (124) |
Effective tax rate | 13.20% | 26.70% |
Earnings (Loss) Per Common Sh_3
Earnings (Loss) Per Common Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Net income (loss) attributable to Corning Incorporated | $ 499 | $ (589) | |
Less: Series A convertible preferred stock dividend | 24 | 24 | |
Net income (loss) available to common stockholders – basic | 475 | (613) | |
Plus: Series A convertible preferred stock dividend | 24 | ||
Net income (loss) available to common stockholders – diluted | $ 499 | $ (613) | |
Weighted-average common shares outstanding - basic (in shares) | 784 | 848 | |
Effect of dilutive securities: | |||
Weighted-average common shares outstanding - diluted (in shares) | 908 | 848 | |
Basic earnings (loss) per common share (in dollars per share) | $ 0.61 | $ (0.72) | |
Diluted earnings (loss) per common share (in dollars per share) | $ 0.55 | $ (0.72) | |
Anti-dilutive potential shares excluded from diluted earnings per common share: | |||
Anti-dilutive potential shares excluded from diluted earnings (loss) per common share (in shares) | 126 | ||
Stock Compensation Plan [Member] | |||
Effect of dilutive securities: | |||
Effect of dilutive securities (in shares) | 9 | ||
Anti-dilutive potential shares excluded from diluted earnings per common share: | |||
Anti-dilutive potential shares excluded from diluted earnings (loss) per common share (in shares) | 11 | ||
Series A Convertible Preferred Stock [Member] | |||
Effect of dilutive securities: | |||
Effect of dilutive securities (in shares) | 115 | ||
Anti-dilutive potential shares excluded from diluted earnings per common share: | |||
Anti-dilutive potential shares excluded from diluted earnings (loss) per common share (in shares) | [1] | 115 | |
[1] | Three Months EndedMarch 31,2019 2018Net income (loss) attributable to Corning Incorporated$ 499$ (589)Less: Series A convertible preferred stock dividend 24 24Net income (loss) available to common stockholders - basic 475 (613)Plus: Series A convertible preferred stock dividend 24Net income (loss) available to common stockholders - diluted$ 499$ (613)Weighted-average common shares outstanding - basic 784 848Effect of dilutive securities:Employee stock options and other dilutive securities 9Series A convertible preferred stock 115Weighted-average common shares outstanding - diluted 908 848Basic earnings (loss) per common share$ 0.61$ (0.72)Diluted earnings (loss) per common share$ 0.55$ (0.72)Antidilutive potential shares excluded from diluted earnings per common share:Series A convertible preferred stock (1) 115Employee stock options and awards 11Total 126For the quarter ended March 31, 2018 the Series A preferred stock was anti-dilutive and therefore excluded from the calculation of diluted loss per share |
Inventories, Net of Inventory_3
Inventories, Net of Inventory Reserves (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Inventories, Net of Inventory Reserves [Abstract] | ||
Finished goods | $ 959 | $ 854 |
Work in process | 416 | 386 |
Raw materials and accessories | 410 | 409 |
Supplies and packing materials | 405 | 388 |
Total inventories, net of inventory reserves | $ 2,190 | $ 2,037 |
Employee Retirement Plans (Deta
Employee Retirement Plans (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Pension Benefits [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Service cost | $ 25 | $ 25 |
Interest cost | 37 | 32 |
Expected return on plan assets | (43) | (47) |
Amortization of prior service cost (credit) | 2 | 2 |
Total pension and postretirement benefit expense | 21 | 12 |
Postretirement Benefits [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Service cost | 2 | 3 |
Interest cost | 7 | 6 |
Amortization of prior service cost (credit) | (2) | (1) |
Total pension and postretirement benefit expense | $ 7 | $ 8 |
Other Liabilities (Details)
Other Liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | ||
Other Liabilities [Line Items] | |||
Wages and employee benefits | $ 405,000 | $ 642,000 | |
Income taxes | 237,000 | 169,000 | |
Derivative instruments | 43,000 | 56,000 | |
Asbestos and other litigation (Note 3) | 112,000 | 113,000 | |
Other current liabilities | 977,000 | 871,000 | |
Other accrued liabilities | 1,774,000 | 1,851,000 | |
Defined benefit pension plan liabilities | 843,000 | 831,000 | |
Derivative instruments | 237,000 | 386,000 | |
Asbestos and other litigation (Note 3) | 278,000 | 279,000 | |
Investment in Hemlock Semiconductor Group ("HSG") | [1] | 172,000 | |
Customer deposits (Note 2) | 907,000 | 922,000 | |
Deferred tax liabilities | 331,000 | 347,000 | |
Other non-current liabilities | 1,111,000 | 887,000 | |
Other liabilities | 3,879,000 | 3,652,000 | |
Accounting Standards Update 2014-09 [Member] | |||
Other Liabilities [Line Items] | |||
Effect of adoption | 53 | 239,000 | |
Effect of adoption, tax | $ 186 | $ 53,000 | |
[1] | The negative carrying value resulted from a one-time charge of $239 million to this entity in 2019 due to the adoption of the new revenue standard. This charge was offset by deferred tax impacts of $53 million. The charge relates to timing of revenue recognition for open performance obligations as measured at January 1, 2019. Most of these performance obligations are expected to be recognized within the next twelve months. |
Hedging Activities (Narrative)
Hedging Activities (Narrative) (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Derivative Asset, Notional Amount | $ 13,913 | $ 14,911 |
Gross Notional Value, Translated Earnings Contracts [Member] | ||
Derivative Asset, Notional Amount | 12,600 | 13,600 |
Gross Notional Value, Collar Options [Member] | ||
Derivative Asset, Notional Amount | 2,500 | 2,600 |
Gross Notional Value, Foreign Exchange Forward [Member] | ||
Derivative Asset, Notional Amount | 10,100 | 11,000 |
Gross Notional Value, Foreign Exchange Forward [Member] | Not Designated as Hedging Instrument [Member] | ||
Derivative Asset, Notional Amount | $ 8,500 | $ 9,100 |
Hedging Activities (Summary of
Hedging Activities (Summary of Notional Amounts and Respective Fair Values of Derivative Financial Instruments) (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 | |
Notional amount | $ 13,913 | $ 14,911 | |
Asset derivatives, fair value | 168 | 148 | |
Liability derivatives, fair value | (280) | (442) | |
Foreign Exchange Contracts [Member] | Designated as Hedging Instrument [Member] | |||
Notional amount | [1] | 336 | 391 |
Foreign Exchange Contracts [Member] | Designated as Hedging Instrument [Member] | Other Current Assets [Member] | |||
Asset derivatives, fair value | [1] | 7 | 4 |
Foreign Exchange Contracts [Member] | Designated as Hedging Instrument [Member] | Other Assets [Member] | |||
Asset derivatives, fair value | 5 | 2 | |
Foreign Exchange Contracts [Member] | Designated as Hedging Instrument [Member] | Other Accrued Liabilities [Member] | |||
Liability derivatives, fair value | [1] | (2) | |
Foreign Exchange Contracts [Member] | Not Designated as Hedging Instrument [Member] | |||
Notional amount | 937 | 900 | |
Foreign Exchange Contracts [Member] | Not Designated as Hedging Instrument [Member] | Other Current Assets [Member] | |||
Asset derivatives, fair value | 2 | 5 | |
Foreign Exchange Contracts [Member] | Not Designated as Hedging Instrument [Member] | Other Accrued Liabilities [Member] | |||
Liability derivatives, fair value | (1) | (7) | |
Translated Earnings Contracts [Member] | Not Designated as Hedging Instrument [Member] | |||
Notional amount | 12,640 | 13,620 | |
Translated Earnings Contracts [Member] | Not Designated as Hedging Instrument [Member] | Other Current Assets [Member] | |||
Asset derivatives, fair value | 116 | 94 | |
Translated Earnings Contracts [Member] | Not Designated as Hedging Instrument [Member] | Other Assets [Member] | |||
Asset derivatives, fair value | 38 | 43 | |
Translated Earnings Contracts [Member] | Not Designated as Hedging Instrument [Member] | Other Accrued Liabilities [Member] | |||
Liability derivatives, fair value | (42) | (47) | |
Translated Earnings Contracts [Member] | Not Designated as Hedging Instrument [Member] | Other Liabilities [Member] | |||
Liability derivatives, fair value | $ (237) | $ (386) | |
[1] | Cash flow hedges with a typical duration of 24 months or less. |
Hedging Activities (Effect on C
Hedging Activities (Effect on Consolidated Financial Statements) (Details) - Not Designated as Hedging Instrument [Member] - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | ||
Gain (loss) recognized in income | $ 182 | $ (641) | |
Foreign Exchange Contracts, Balance Sheet [Member] | Other Expense [Member] | |||
Gain (loss) recognized in income | (2) | (19) | |
Foreign Exchange Contracts, Loans [Member] | Translated Earnings Contract Gain (Loss), Net [Member] | |||
Gain (loss) recognized in income | [1] | $ 184 | $ (622) |
[1] | The impact to income was primarily driven by yen-denominated hedges of translated earnings |
Fair Value Measurements (Narrat
Fair Value Measurements (Narrative) (Details) - Fair Value, Nonrecurring [Member] - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Assets, Fair Value Disclosure | $ 0 | $ 0 |
Liabilities, Fair Value Disclosure | $ 0 | $ 0 |
Fair Value Measurements (Major
Fair Value Measurements (Major Categories of Financial Assets and Liabilities Measured on a Recurring Basis) (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 | |||
Other current assets | $ 124 | [1] | $ 103 | [2] | |
Investments | [3] | 16 | |||
Other assets | 43 | [1] | 45 | [2] | |
Other accrued liabilities | 43 | [1] | 56 | [2] | |
Other liabilities | 257 | [1],[4] | 406 | [2],[5] | |
Significant Other Observable Inputs (Level 2) [Member] | |||||
Other current assets | 124 | [1] | 103 | [2] | |
Other assets | 43 | [1] | 45 | [2] | |
Other accrued liabilities | 43 | [1] | 56 | [2] | |
Other liabilities | 237 | [1],[4] | 386 | [2],[5] | |
Significant Unobservable Inputs (Level 3) [Member] | |||||
Investments | [3] | 16 | |||
Other liabilities | 20 | [1],[4] | 20 | [2],[5] | |
Investments [Member] | Significant Unobservable Inputs (Level 3) [Member] | |||||
Contingent consideration | 16 | ||||
Other Liabilities [Member] | Significant Unobservable Inputs (Level 3) [Member] | |||||
Contingent consideration | $ 20 | $ 20 | |||
[1] | Derivative assets and liabilities include foreign exchange contracts which are measured using observable inputs for similar assets and liabilities. | ||||
[2] | Derivative assets and liabilities include foreign exchange contracts which are measured using observable inputs for similar assets and liabilities. | ||||
[3] | One of the Company's equity securities was measured using unobservable (Level 3) inputs, in the amount of $16 million. | ||||
[4] | Other liabilities include contingent consideration that was measured using unobservable (Level 3) inputs, in the amount of $20 million. | ||||
[5] | Other liabilities include contingent consideration that was measured using unobservable (Level 3) inputs, in the amount of $20 million. |
Shareholders' Equity (Narrative
Shareholders' Equity (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | |||
Mar. 31, 2019 | Mar. 31, 2018 | Apr. 26, 2018 | Dec. 31, 2016 | |
Treasury Stock, Value, Acquired | $ 244 | $ 814 | ||
The 2016 Repurchase Program [Member] | ||||
Stock Repurchase Program, Authorized Amount | $ 4 | |||
Treasury Stock, Shares, Acquired | 27,100,000 | |||
Treasury Stock, Value, Acquired | $ 814 | |||
The 2018 Repurchase Program [Member] | ||||
Stock Repurchase Program, Authorized Amount | $ 2 | |||
Treasury Stock, Shares, Acquired | 7,800,000 | |||
Treasury Stock, Value, Acquired | $ 244 | |||
Common Stock [Member] | ||||
Convertible Preferred Stock, Shares Issued upon Conversion | 50,000 | |||
Series A Convertible Preferred Stock [Member] | ||||
Convertible Preferred Stock, Shares Issued upon Conversion | 2,300 |
Shareholders' Equity (Accumulat
Shareholders' Equity (Accumulated Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | ||
Balance | $ 13,886 | $ 15,770 | |
Net current-period other comprehensive (loss) income | (156) | 265 | |
Balance | 13,706 | 14,488 | |
Accumulated Foreign Currency Adjustment Attributable to Parent [Member] | |||
Balance | [1] | (714) | (529) |
Other comprehensive (loss) income | [1],[2] | (98) | 260 |
Equity method affiliates | [1],[3] | (12) | 4 |
Net current-period other comprehensive (loss) income | [1] | (110) | 264 |
Balance | [1] | (824) | (265) |
Other Comprehensive Income, Tax | 13 | 10 | |
Accumulated Net Investment Gain (Loss) Attributable to Parent [Member] | |||
Balance | [4] | (298) | (317) |
Amounts reclassified from accumulated other comprehensive income (loss) | [4],[5] | (52) | 1 |
Net current-period other comprehensive (loss) income | [4] | (52) | 1 |
Balance | [4] | (350) | $ (316) |
Amounts reclassified from accumulated other comprehensive income, Tax | $ 52 | ||
[1] | All amounts are after tax. Amounts in parentheses indicate debits to accumulated other comprehensive loss. | ||
[2] | For the three months ended March 31, 2019 and 2018, amounts are net of total tax benefit of $13 million and tax expense of $10 million, respectively. | ||
[3] | Tax effects are not significant. | ||
[4] | All amounts are after tax. Amounts in parentheses indicate debits to accumulated other comprehensive loss. For the three months ended March 31, 2019, the amount consisted of $52 million in tax loss due to reclass of stranded tax effects. Refer to Note 1 (Significant Accounting Policies) to the consolidated financial statements for additional information. | ||
[5] | For the three months ended March 31, 2018, tax amounts are not significant |
Reportable Segments (Narrative)
Reportable Segments (Narrative) (Details) | 3 Months Ended |
Mar. 31, 2019item | |
Reportable Segments [Abstract] | |
Number of Material Formulations | 150 |
Reportable Segments (Reportable
Reportable Segments (Reportable Segments) (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | ||
Segment net sales | $ 2,812 | $ 2,500 | |
Depreciation | 306 | 304 | |
Research, development and engineering expenses | 249 | 241 | |
Income tax benefit (provision) | (76) | (124) | |
Net income (loss) attributable to Corning Incorporated | $ 499 | $ (589) | |
Statutory U.S. income tax rate | 21.00% | 21.00% | |
Operating Segments [Member] | |||
Segment net sales | $ 2,850 | $ 2,513 | |
Depreciation | [1] | 303 | 283 |
Research, development and engineering expenses | [2] | 213 | 202 |
Income tax benefit (provision) | [3] | (111) | (92) |
Net income (loss) attributable to Corning Incorporated | [4] | 413 | 345 |
Display Technologies [Member] | Operating Segments [Member] | |||
Segment net sales | 818 | 745 | |
Depreciation | [1] | 152 | 144 |
Research, development and engineering expenses | [2] | 26 | 23 |
Income tax benefit (provision) | [3] | (55) | (49) |
Net income (loss) attributable to Corning Incorporated | [4] | 208 | 185 |
Optical Communications [Member] | Operating Segments [Member] | |||
Segment net sales | 1,064 | 886 | |
Depreciation | [1] | 59 | 52 |
Research, development and engineering expenses | [2] | 56 | 49 |
Income tax benefit (provision) | [3] | (39) | (30) |
Net income (loss) attributable to Corning Incorporated | [4] | 142 | 109 |
Specialty Materials [Member] | Operating Segments [Member] | |||
Segment net sales | 309 | 278 | |
Depreciation | [1] | 37 | 33 |
Research, development and engineering expenses | [2] | 41 | 39 |
Income tax benefit (provision) | [3] | (13) | (12) |
Net income (loss) attributable to Corning Incorporated | [4] | 49 | 46 |
Environmental Technologies [Member] | Operating Segments [Member] | |||
Segment net sales | 362 | 322 | |
Depreciation | [1] | 31 | 29 |
Research, development and engineering expenses | [2] | 30 | 29 |
Income tax benefit (provision) | [3] | (15) | (14) |
Net income (loss) attributable to Corning Incorporated | [4] | 55 | 52 |
Life Sciences [Member] | Operating Segments [Member] | |||
Segment net sales | 243 | 232 | |
Depreciation | [1] | 13 | 14 |
Research, development and engineering expenses | [2] | 5 | 5 |
Income tax benefit (provision) | [3] | (8) | (7) |
Net income (loss) attributable to Corning Incorporated | [4] | 31 | 27 |
All Other [Member] | Operating Segments [Member] | |||
Segment net sales | 54 | 50 | |
Depreciation | [1] | 11 | 11 |
Research, development and engineering expenses | [2] | 55 | 57 |
Income tax benefit (provision) | [3] | 19 | 20 |
Net income (loss) attributable to Corning Incorporated | [4] | $ (72) | $ (74) |
[1] | Depreciation expense for Corning's reportable segments includes an allocation of depreciation of corporate property not specifically identifiable to a segment. | ||
[2] | Research, development and engineering expenses include direct project spending that is identifiable to a segment. | ||
[3] | Income tax provision (benefit) reflects a tax rate of 21%. | ||
[4] | Many of Corning's administrative and staff functions are performed on a centralized basis. Where practicable, Corning charges these expenses to segments based upon the extent to which each business uses a centralized function. Other staff functions, such as corporate finance, human resources and legal, are allocated to segments, primarily as a percentage of sales. Expenses that are not allocated to the segments are included in the reconciliation of reportable segment net income to consolidated net income below. |
Reportable Segments (Reconcilia
Reportable Segments (Reconciliation of Reportable Segment and All Other Net Sales to Consolidated Net Sales) (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | ||
Reportable Segments [Abstract] | |||
Net sales of reportable segments and All Other | $ 2,850 | $ 2,513 | |
Impact of foreign currency movements | [1] | (38) | (13) |
Net sales | $ 2,812 | $ 2,500 | |
[1] | This amount primarily represents the impact of foreign currency adjustments in the Display Technologies and Environmental Technologies segments. |
Reportable Segments (Reconcil_2
Reportable Segments (Reconciliation of Reportable Segment Net Income to Consolidated Net Income) (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||
Research, development, and engineering expense | $ (249) | $ (241) | |
Equity in earnings of affiliated companies | 25 | 39 | |
Amortization of intangibles | (29) | (19) | |
Interest expense, net | (52) | (52) | |
Income tax benefit (provision) | (76) | (124) | |
Net income (loss) attributable to Corning Incorporated | 499 | (589) | |
Operating Segments [Member] | |||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||
Research, development, and engineering expense | [1] | (213) | (202) |
Income tax benefit (provision) | [2] | (111) | (92) |
Net income (loss) attributable to Corning Incorporated | [3] | 413 | 345 |
Operating Segments [Member] | Reportable Segments [Member] | |||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||
Net income (loss) attributable to Corning Incorporated | 485 | 419 | |
Operating Segments [Member] | Non Reportable Segments [Member] | |||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||
Net income (loss) attributable to Corning Incorporated | (72) | (74) | |
Segment Reconciling Items [Member] | |||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||
Impact of foreign currency movements | (37) | (31) | |
Gain (loss) on foreign currency hedges related to translated earnings | 184 | (622) | |
Litigation, regulatory and other legal matters | (136) | ||
Research, development, and engineering expense | (36) | (39) | |
Equity in earnings of affiliated companies | [4] | 26 | (37) |
Amortization of intangibles | (29) | (19) | |
Interest expense, net | (45) | (39) | |
Income tax benefit (provision) | 35 | (32) | |
Other corporate items | (12) | 21 | |
Net income (loss) attributable to Corning Incorporated | $ 499 | $ (589) | |
[1] | Research, development and engineering expenses include direct project spending that is identifiable to a segment. | ||
[2] | Income tax provision (benefit) reflects a tax rate of 21%. | ||
[3] | Many of Corning's administrative and staff functions are performed on a centralized basis. Where practicable, Corning charges these expenses to segments based upon the extent to which each business uses a centralized function. Other staff functions, such as corporate finance, human resources and legal, are allocated to segments, primarily as a percentage of sales. Expenses that are not allocated to the segments are included in the reconciliation of reportable segment net income to consolidated net income below. | ||
[4] | Primarily represents the equity earnings of HSG. |