CORNING INCORPORATED ORGANIZATION OF INFORMATION
Management's Discussion and Analysis of Financial Condition and Results of
Operations ("MD&A") provides a historical and prospective narrative on the
Company's financial condition and results of operations. This interim MD&A
should be read in conjunction with the MD&A in Corning's 2020 Form 10-K. The
various sections of this MD&A contain forward-looking statements that involve
risks and uncertainties. Words such as "anticipates," "expects," "intends,"
"plans," "goals," "believes," "seeks," "estimates," "continues," "may," "will,"
"should," and variations of such words and similar expressions are intended to
identify such forward-looking statements. In addition, any statements that refer
to projections of the Company's future financial performance, anticipated growth
and trends in the businesses, uncertain events or assumptions, and other
characterizations of future events or circumstances are forward-looking
statements. Such statements are based on current expectations and could be
affected by the uncertainties and risk factors described throughout this filing
and particularly in "Risk Factors" in Part I, Item 1A of Corning's 2020 Form
10-K, and as may be updated in the Forms 10-Q. Actual results may differ
materially, and these forward-looking statements do not reflect the potential
impact of any divestitures, mergers, acquisitions, or other business
combinations that had not been completed as of September 30, 2021 .
MD&A includes the following sections:
? Overview
? Results of Operations
? Core Performance Measures
? Reportable Segments
? Capital Resources and Liquidity
? Critical Accounting Estimates
? Environment
? Forward-Looking Statements
OVERVIEW
In response to the COVID-19 pandemic ("the pandemic") and the ensuing economic
uncertainty, including changing market conditions, the Company has and will
continue to focus on three core priorities: preserving the financial health of
the Company; protecting employees and communities; and delivering on customer
commitments. We are continuing to build a stronger, more resilient company that
is committed to rewarding shareholders and supporting all global stakeholders.
Despite the pandemic and resulting global disruptions, Corning adapted rapidly
and remained resilient. We acted quickly to preserve our financial strength by
executing well and advancing major innovations with industry leaders. We have
continued to effectively leverage our focused and cohesive portfolio to create
value and outperform our underlying markets, contributing to sales and earnings
growth and strong free cash flow in the second half of 2020 and the first nine
months of 2021.
Corning announced the Strategy & Growth Framework in 2019, highlighting
significant opportunities to sell more Corning content through each of our
Market-Access Platforms. The Company is focused on our cohesive portfolio and
the utilization of our financial strength, supported by strong operating cash
flow generation, which we expect to continue. Corning has and will continue to
use its cash to grow, extend its leadership and reward shareholders. Our key
growth drivers remain intact, and some are accelerating as key trends converge
around Corning's capabilities.
Corning will continue to advance the objectives of the Strategy & Growth
Framework, which sets its leadership priorities and articulates opportunities
across its businesses. Our probability of success increases as we invest in our
world-class capabilities. Corning is concentrating approximately 80% of its
research, development and engineering investment along with capital spending on
a cohesive set of three core technologies, four manufacturing and engineering
platforms, and five market-access platforms. This strategy allows us to quickly
apply our talents and repurpose our assets across the company, as needed, to
capture high-return opportunities.
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Summary of results for the three and nine months ended
In the third quarter, net sales were$3,615 million , compared to$3,001 million during the same period in 2020, a net increase of$614 million , or 20%. Net sales for the nine months endedSeptember 30, 2021 were$10,406 million , compared to$7,953 million during the same period in 2020, a net increase of$2,453 million , or 31%, driven by increases in all segments.
In the third quarter of 2021,
? The absence of an after-tax gain recorded on a previously held equity investment in HSG of$387 million .
The negative impacts to net income, outlined above, were partially offset by the following items:
? Higher segment net income primarily driven by higher sales; net income increases by segment were$51 million ,$24 million ,$17 million and
and "All Other", respectively; ? Lower severance charges, impairment losses, capacity realignment and other
costs of
quarter of 2020; and ? Equity in losses of affiliated companies were$66 million lower.
In the first nine months of 2021,
? Higher segment net income of
net income increases by segment were
Display Technologies,
Life Sciences and "All Other", respectively; ? The absence of after-tax asset impairment losses related to investments in
research and development programs within our All Other segment of
million;
? Lower severance charges, capacity realignment and other costs of
million;
? Translated earnings contract gains in the current period were
higher than prior year; ? The absence of a negative impact of a cumulative adjustment recorded during
the first quarter of 2020 to reduce revenue
The positive impacts to net income, outlined above, were partially offset by the following items:
? The absence of an after-tax gain recorded on a previously held equity investment in HSG of$387 million . The change in diluted earnings per share for the three months endedSeptember 30, 2021 , was primarily driven by changes in net income, outlined above. The change in diluted earnings per share for the nine months endedSeptember 30, 2021 , was primarily driven by the changes in net income, outlined above, as well as the conversion of the Preferred Stock into 115 million Common Shares. The immediate repurchase and retirement of 35 million Common Shares resulted in an$803 million one-time reduction to net income available to common shareholders during the second quarter of 2021. Refer to Note 6 (Earnings per Common Share) and Note 14 (Shareholders' Equity) to the consolidated financial statements for additional information. The translation impact of fluctuations in foreign currency exchange rates, including the impact of hedges realized in the current quarter, adversely impactedCorning's consolidated net income by$19 million and$20 million in the three and nine months endedSeptember 30, 2021 , respectively, when compared to the same periods in 2020. 2021 Corporate Outlook
We expect core net sales of approximately
© 2021 Corning Incorporated . All Rights Reserved.
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Table of Contents RESULTS OF OPERATIONS
Selected highlights from operations are as follows (in millions):
Three months ended % Nine months ended %
September 30, change September 30, change
2021 2020 21 vs. 20 2021 2020 21 vs. 20
Net sales $ 3,615 $ 3,001 20 % $ 10,406 $ 7,953 31 %
Gross margin $ 1,321 $ 1,001 32 % $ 3,792 $ 2,318 64 %
(gross margin %) 37 % 33 % 36 % 29 %
Selling, general and
administrative
expenses $ 486 $ 480 1 % $ 1,351 $ 1,276 6 %
(as a % of net sales) 13 % 16 % 13 % 16 %
Research, development
and engineering
expenses $ 251 $ 231 9 % $ 715 $ 922 (22 %)
(as a % of net sales) 7 % 8 % 7 % 12 %
Translated earnings
contract (loss) gain,
net $ (13 ) $ (100 ) (87 %) $ 262 $ 5 *
(as a % of net sales) 0 % (3 %) 3 % 0 %
Transaction-related
gain, net $ 498 * $ 498 *
(as a % of net sales) 17 % 6 %
Income before income
taxes $ 480 $ 450 7 % $ 1,821 $ 293 522 %
(as a % of net sales) 13 % 15 % 17 % 4 %
Provision for income
taxes $ (109 ) $ (23 ) 374 % $ (402 ) $ (33 ) 1118 %
(as a % of net sales) (3 %) (1 %) (4 %) 0 %
Net income
attributable to
Corning Incorporated $ 371 $ 427 (13 %) $ 1,419 $ 260 446 %
(as a % of net sales) 10 % 14 % 14 % 3 %
* Not meaningful
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Table of Contents SegmentNet Sales The following table presents segment net sales by reportable segment and All Other (in millions): Three months ended % Nine months ended % September 30, change September 30, change 2021 2020 21 vs. 20 2021 2020 21 vs. 20 Display Technologies$ 956 $ 827 16 %$ 2,758 $ 2,331 18 % Optical Communications 1,131 909 24 % 3,143 2,587 21 % Specialty Materials 556 570 (2 %) 1,490 1,339 11 % Environmental Technologies 385 379 2 % 1,233 925 33 % Life Sciences 305 223 37 % 917 724 27 % All Other (1) 306 99 209 % 865 218 297 % Net sales of reportable segments and All Other 3,639 3,007 21 % 10,406 8,124 28 % Impact of foreign currency movements (2) (24 ) (6 ) (300 %) (66 ) * Cumulative adjustment related to customer contract (3) (105 ) * Consolidated net sales$ 3,615 $ 3,001 20 %$ 10,406 $ 7,953 31 %
(1) The Company obtained a controlling interest in HSG during the third quarter of
2020 and has consolidated results in "All Other" as of
the Display Technologies segment. (3) Amount represents the negative impact of a cumulative adjustment recorded
during the first quarter of 2020 to reduce revenue by
adjustment was associated with a previously recorded commercial benefit asset,
reflected as a prepayment, to a customer with a long-term supply agreement
that substantially exited its production of LCD panels.
* Not meaningful
In the third quarter, net sales of reportable segments were
? Display Technologies' net sales increased by
to volume growth of more than 10 percent and increased price in the low-single digits in percentage terms;
?
volumes increased$179 million and$43 million for carrier products and enterprise products, respectively, primarily driven by 5G, broadband and cloud computing;
? Specialty Materials' net sales decreased by
to extremely strong demand for cover materials in support of customer product
launches experienced during the third quarter of 2020; ? Net sales for Environmental Technologies increased by$6 million , or 2%,
driven by higher diesel product sales, partially offset by lower automotive
product sales, which were significantly impacted by an industry-wide shortage
of automotive components and semiconductor chips; ? Net sales for Life Sciences increased by$82 million , or 37%, primarily driven by the ongoing recovery in academic and pharmaceutical research labs and continued strong demand for bioproduction vessels and
diagnostic-related consumables; and
? Net sales for "All Other" increased by
consolidation of HSG, as ofSeptember 9, 2020 . © 2021Corning Incorporated . All Rights Reserved. 33
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In the nine months endedSeptember 30, 2021 , net sales of reportable segments were$10,406 million , compared to$8,124 million during the same period in 2020, a net increase of$2,282 million , or 28%. Changes in net sales were as follows:
? Display Technologies' net sales increased by
to mid-teens volume growth, in percentage terms, and consistent pricing;
?
volumes increased$372 million and$184 million for carrier products and enterprise products, respectively, primarily driven by 5G, broadband and cloud computing;
? Specialty Materials' net sales increased by
driven by strong demand for premium cover materials, strength in the IT market, and greater optical content in semiconductor manufacturing;
? Net sales for Environmental Technologies increased by
primarily driven by improving markets and increased
with strong demand for diesel products inChina andNorth America ; ? Net sales for Life Sciences increased by$193 million , or 27%, primarily
driven by the ongoing recovery in academic and pharmaceutical research labs
and continued strong demand for bioproduction vessels and diagnostic-related
consumables; and
? Net sales for "All Other" increased by
consolidation of HSG. Movements in foreign exchange rates adversely impactedCorning's consolidated net sales by$24 million and positively by$53 million , in the three and nine months endedSeptember 30, 2021 , respectively, when compared to the same periods in 2020. Cost of Sales The types of expenses included in the cost of sales line item are: raw materials consumption, including direct and indirect materials; salaries, wages and benefits; depreciation and amortization; production utilities; production-related purchasing; warehousing (including receiving and inspection); repairs and maintenance; inter-location inventory transfer costs; production and warehousing facility property insurance; rent for production facilities; freight and logistics costs; and other production overhead. Gross Margin In the three and nine months endedSeptember 30, 2021 , gross margin increased by$320 million , or 32% and$1,474 million , or 64%, respectively. Gross margin as a percentage of sales increased by 4 percentage points and 7 percentage points, respectively. The increase in gross margin was primarily driven by higher sales, as well as lower charges for restructuring and capacity realignment of$124 million and$383 million , respectively. These increases were partially offset by increased expenses due to elevated freight and logistics costs, as well as higher inflation. The translation impact of fluctuations in foreign currency exchange rates, including the impact of hedges realized in the current quarter, adversely impactedCorning's consolidated gross margin by$42 million and$40 million in the three and nine months endedSeptember 30, 2021 , respectively, when compared to the same periods in 2020.
Selling, General and Administrative Expenses
In the three and nine months endedSeptember 30, 2021 , selling, general and administrative expenses increased by$6 million , or 1%, and$75 million , or 6%, respectively, and declined by 3 percentage points as a percentage of sales, when compared to the prior periods. Increases in these costs were primarily driven by higher compensation and benefit expenses and the consolidation of HSG, partially offset by lower restructuring and other charges and credits of$21 million and$91 million , respectively, when compared to the same periods in 2020. The types of expenses included in the selling, general and administrative expenses line item are: salaries, wages and benefits; share-based compensation expense; travel; sales commissions; professional fees; and depreciation and amortization, utilities, rent for administrative facilities and restructuring, impairment and other charges and credits. © 2021Corning Incorporated . All Rights Reserved. 34
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Research, Development and Engineering Expenses
In the three and nine months endedSeptember 30, 2021 , research, development and engineering expenses increased by$20 million , or 9%, and decreased$207 million , or 22%, respectively, when compared to the same periods last year. The primary driver was lower restructuring, impairment, and other charges and credits of$18 million and$243 million , respectively. As a percentage of sales, these expenses were 1 and 5 percentage points lower, respectively, for the three and nine months endedSeptember 30, 2021 , when compared to the same periods last year.
Translated earnings contract (loss) gain, net
Included in the line item translated earnings contract (loss) gain, net, is the impact of foreign currency hedges which hedge translation exposure arising from movements in the Japanese yen, South Korean won, newTaiwan dollar, euro, Chinese yuan and British pound and its impact on net income. The following table provides detailed information on the impact of translated earnings contract gains and losses: Three months ended Three months ended Change September 30, 2021 September 30, 2020 2021 vs. 2020 Income Income Income before Net before Net before Net (in millions) taxes income taxes income taxes income Hedges related to translated earnings: Realized gain (loss), net (1)$ 12 $ 9 $ (7 ) $ (5 ) $ 19 $ 14 Unrealized loss, net (2) (25 ) (19 ) (93 ) (73 ) 68 54 Total translated earnings contract loss, net$ (13 ) $ (10 ) $ (100 ) $ (78 ) $ 87 $ 68 Nine months ended Nine months ended Change September 30, 2021 September 30, 2020 2021 vs. 2020 Income Income Income before Net before Net before Net (in millions) taxes income taxes income taxes income Hedges related to translated earnings: Realized gain (loss), net (1)$ 11 $ 9 $ (9 ) $ (6 ) $ 20 $ 15 Unrealized gain, net (2) 251 193 14 10 237 183 Total translated earnings contract gain, net$ 262 $ 202 $ 5$ 4 $ 257 $ 198
(1) Includes before tax realized losses related to the expiration of option
contracts for the three and nine months ended
been reflected in operating activities in the consolidated statements of cash
flows.
(2) The impact to income was primarily driven by yen-denominated hedges of
translated earnings.
Income Before Income Taxes
The translation impact of fluctuations in foreign currency exchange rates,
including the impact of hedges realized in the current quarter, adversely
impacted
Provision for Income Taxes
The provision for income taxes and the related effective income tax rates are as
follows (in millions):
Three months ended Nine months ended
September 30, September 30,
2021 2020 2021 2020
Provision for income taxes $ (109 ) $ (23 ) $ (402 ) $ (33 )
Effective tax rate 22.7 % 5.1 % 22.1 % 11.3 %
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For the three months endedSeptember 30, 2021 , the effective income tax rate differed from theU.S. statutory rate of 21%, primarily due to non-deductible expenses for tax purposes, foreign rate differential, and tax reform items.
For
the nine months endedSeptember 30, 2021 , the effective income tax rate differed from theU.S. statutory rate of 21% primarily due to an adjustment to the permanently reinvested foreign income position, excess tax benefit related to share-based compensation payments, foreign rate differential, and tax reform items related to The Tax Cuts and Jobs Act of 2017. For the three and nine months endedSeptember 30, 2020 , the effective income tax rate differed from theU.S. statutory rate of 21%, primarily due to an estimate of income tax benefits generated by a current year net operating loss that will be carried-back to prior years as allowed under the CARES Act and changes of estimates based on the final 2019 U.S. tax return which were partially offset by additional income tax reserves. For the nine months endedSeptember 30, 2020 , the effective income tax rate differed from theU.S. statutory rate of 21% primarily due to an estimate of income tax benefits generated by a current year net operating loss that will be carried-back to prior years as allowed under the CARES Act and changes of estimates based on the final 2019 U.S. tax return which were partially offset by income tax reserves, an adjustment to the permanently reinvested foreign income position and foreign valuation allowances on deferred tax assets.
Refer to Note 5 (Income Taxes) to the consolidated financial statements for additional information.
Net Income Attributable to
Net income and per share data is as follows (in millions, except per share
amounts):
Three months ended Nine months ended
September 30, September 30,
2021 2020 2021 2020
Net income attributable to Corning
Incorporated $ 371 $ 427 $ 1,419 $ 260
Less: Series A convertible preferred stock
dividend (24 ) (24 ) (73 )
Less: Excess consideration paid for
redemption of preferred shares (1) (803 )
Net income available to common shareholders
used in basic earnings per common share
calculation (1) $ 371 $ 403 Net income available to common shareholders used in diluted earnings per common share calculation (1)$ 371 $ 427
Basic earnings per common share$ 0.44 $ 0.53 $ 0.72 $ 0.25 Diluted earnings per common share$ 0.43 $ 0.48
Weighted-average common shares outstanding - basic 852 760 821 760 Weighted-average common shares outstanding - diluted 866 889 837 768
(1) Refer to Note 6 (Earnings per Common Share) to the consolidated financial
statements for additional information.
Comprehensive Income
For the three months ended September 30, 2021 , comprehensive income decreased by
$561 million when compared to the same period in 2020, primarily due to a
decline in net income of $56 million and a net loss on foreign currency
translation adjustments of $475 million , largely driven by the Japanese yen,
South Korean won and euro.
For the nine months ended September 30, 2021 , comprehensive income increased by
$603 million when compared to the same period in 2020, primarily due to an
increase in net income of $1,159 million . The increase in comprehensive income
was partially offset by the net loss on foreign currency translation adjustments
of $591 million , primarily driven by the Japanese yen, South Korean won, and
euro.
Refer to Note 14 (Shareholders' Equity) to the consolidated financial statements for additional information.
© 2021 Corning Incorporated . All Rights Reserved.
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Table of Contents CORE PERFORMANCE MEASURES In managing the Company and assessing our financial performance, certain measures provided by our consolidated financial statements are adjusted to exclude specific items to arrive at core performance measures. These items include gains and losses on translated earnings contracts, acquisition-related costs, certain discrete tax items and other tax-related adjustments, restructuring, impairment losses, and other charges and credits, certain litigation-related expenses, pension mark-to-market adjustments and other items which do not reflect on-going operating results of the Company or our equity affiliates.Corning utilizes constant-currency reporting for our Display Technologies, Environmental Technologies, Specialty Materials and Life Sciences segments for the Japanese yen, South Korean won, Chinese yuan, newTaiwan dollar and the euro. The Company believes that the use of constant-currency reporting allows investors to understand our results without the volatility of currency fluctuations and reflects the underlying economics of the translated earnings contracts used to mitigate the impact of changes in currency exchange rates on earnings and cash flows.Corning also believes that reporting core performance measures provides investors greater transparency to the information used by the management team to make financial and operational decisions. Core performance measures are not prepared in accordance with GAAP. We believe investors should consider these non-GAAP measures in evaluating results as they are more indicative of our core operating performance and how management evaluates operational results and trends. These measures are not, and should not, be viewed as a substitute for GAAP reporting measures. With respect to the Company's outlook for future periods, it is not possible to provide reconciliations for these non-GAAP measures because the Company does not forecast the movement of foreign currencies against theU.S. dollar, or other items that do not reflect ongoing operations, nor does it forecast items that have not yet occurred or are out of the Company's control. As a result, the Company is unable to provide outlook information on a GAAP basis.
For a reconciliation of non-GAAP performance measures to their most directly comparable GAAP financial measure, please see "Reconciliation of Non-GAAP Measures".
RESULTS OF OPERATIONS - CORE PERFORMANCE MEASURES
Selected highlights from continuing operations, excluding certain items, follow
(in millions):
Three months ended % Nine months ended %
September 30, change September 30, change
2021 2020 21 vs. 20 2021 2020 21 vs. 20
Core net sales $ 3,639 $ 3,007 21 % $ 10,406 $ 8,124 28 %
Core equity in earnings of
affiliated companies $ 17 $ 9 89 % $ 33 $ 78 (58 )%
Core net income $ 485 $ 380 28 % $ 1,346 $ 775 74 %
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Table of Contents CoreNet Sales
Core net sales are consistent with net sales by reportable segment. Net sales by reportable segment are presented below (in millions):
Three months ended % Nine months ended %
September 30, change September 30, change
2021 2020 21 vs. 20 2021 2020 21 vs. 20
Display Technologies $ 956 $ 827 16 % $ 2,758 $ 2,331 18 %
Optical Communications 1,131 909 24 % 3,143 2,587 21 %
Specialty Materials 556 570 (2 )% 1,490 1,339 11 %
Environmental Technologies 385 379 2 % 1,233 925 33 %
Life Sciences 305 223 37 % 917 724 27 %
All Other (1) 306 99 209 % 865 218 297 %
Net sales of reportable
segments and All Other $ 3,639 $ 3,007 21 % $ 10,406 $ 8,124 28 %
(1) The Company obtained a controlling interest in HSG during the third quarter
of 2020 and has consolidated results in "All Other" as of
Core Net Income In the three months endedSeptember 30, 2021 , we generated core net income of$485 million , or$0.56 per diluted share, compared to core net income generated in the three months endedSeptember 30, 2020 of$380 million , or$0.43 per diluted share. The increase of$105 million , or$0.13 per diluted share, was primarily due to higher segment net income when compared to the same period in 2020. Net income increases by reportable segment are as follows:
? Display Technologies' net income increased by
by increased volume;
?
by volume, partially offset by increased raw material and shipping costs; and
? Life Sciences' and "All Other" net income increased by$17 million , and$45 million , respectively.
The increases to segment net income were partially offset by income declines of
In the nine months endedSeptember 30, 2021 , we generated core net income of$1,346 million , or$1.53 per diluted share, compared to core net income generated in the nine months endedSeptember 30, 2020 of$775 million , or$0.88 per diluted share. The increase of$571 million , and$0.65 per diluted share, was primarily due to higher earnings across most operating segments when compared to the same period in 2020. Net income changes by reportable segment are as follows:
? Display Technologies' net income increased by
by increased volume;
?
by volume, partially offset by increased raw material and shipping costs; ? Specialty Materials' net income decreased by$8 million ; ? Environmental Technologies' net income increased by$111 million ; and ? Life Sciences' and "All Other" net income increased by$48 million and$141 million , respectively. © 2021Corning Incorporated . All Rights Reserved. 38
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The change in diluted earnings per share was primarily driven by changes in net income, outlined above, and the Company's repurchase and retirement of 35 million Common Shares. Refer to Note 6 (Earnings per Common Share) and Note 14 (Shareholders' Equity) to the consolidated financial statements for additional information. Net periodic pension expense of$1 million and$2 million , respectively, and$13 million and$38 million , respectively, is included in core net income for the three and nine months endedSeptember 30, 2021 andSeptember 30, 2020 .
Core Earnings per Common Share
The following table sets forth the computation of core basic and core diluted earnings per common share (in millions, except per share amounts):
Three months ended Nine months ended
September 30, September 30,
2021 2020 2021 2020
Core net income attributable to Corning
Incorporated $ 485 $ 380 $ 1,346 $ 775
Less: Series A convertible preferred
stock dividend 24 24 73
Core net income available to common
shareholders - basic 485 356 1,322 702
Plus: Series A convertible preferred
stock dividend 24 24 73
Core net income available to common
shareholders - diluted $ 485 $ 380 Weighted-average common shares outstanding - basic 852 760 821 760 Effect of dilutive securities: Stock options and other dilutive securities 14 14 16 8 Series A convertible preferred stock 115 41 115 Weighted-average common shares outstanding - diluted 866 889 878 883
Core basic earnings per common share
Reconciliation of Non-GAAP Measures
Corning utilizes certain financial measures and key performance indicators that are not calculated in accordance with GAAP to assess financial and operating performance. A non-GAAP financial measure is defined as a numerical measure of a company's financial performance that (i) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the comparable measure calculated and presented in accordance with GAAP in the consolidated statements of income or statements of cash flows, or (ii) includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the comparable measure as calculated and presented in accordance with GAAP in the consolidated statements of income or statements of cash flows. Core net sales, core equity in earnings of affiliated companies and core net income are non-GAAP financial measures utilized by management to analyze financial performance without the impact of items that are driven by general economic conditions and events that do not reflect the underlying fundamentals and trends in the Company's operations. © 2021Corning Incorporated . All Rights Reserved. 39
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The following tables reconcile the non-GAAP financial measures to their most directly comparable GAAP financial measure (amounts in millions except percentages and per share amounts):
Three months ended September 30, 2021
Income
before Effective
Net Equity income Net tax Per
sales earnings taxes income rate (a) share
As reported - GAAP $ 3,615 $ 16 $ 480 $ 371 22.7 % $ 0.43
Constant-currency adjustment (1) 24 1 33 23 0.03
Translation gain on Japanese
yen-denominated debt (2) (4 ) (4 ) (0.00 )
Translated earnings contract
loss (3) 13 10 0.01
Acquisition-related costs (4) 38 30 0.03
Discrete tax items and other
tax-related adjustments (5) (1 ) (0.00 )
Pension mark-to-market
adjustment (6) (1 ) (1 ) (0.00 )
Restructuring, impairment and
other charges and credits (7) 40 31 0.04
Litigation, regulatory and other
legal matters (8) 3 15 0.02
Preferred stock conversion (9) (4 ) (4 ) (0.00 )
Bond redemption loss (10) 20 15 0.02
Core performance measures $ 3,639 $ 17 $ 618 $ 485 21.5 % $ 0.56
(a) Based upon statutory tax rates in the specific jurisdiction for each event.
Three months ended September 30, 2020
Income
Equity before Effective
Net (losses) income Net tax Per
sales earnings taxes income rate (a) share
As reported - GAAP $ 3,001 $ (76 ) $ 450 $ 427 5.1 % $ 0.48
Constant-currency adjustment (1) 6 (14 ) (0.02 )
Translation loss on Japanese
yen-denominated debt (2) 39 31 0.03
Translated earnings contract
loss (3) 99 77 0.09
Acquisition-related costs (4) 47 37 0.04
Discrete tax items and other
tax-related adjustments (5) (58 ) (0.07 )
Restructuring, impairment and
other charges and credits (7) 171 129 0.15
Litigation, regulatory and other
legal matters (8) 83 72 0.08
Equity in losses of affiliated
companies (13) 85 85 66 0.07
Transaction-related gain, net
(14) (498 ) (387 ) (0.44 )
Core performance measures
380 20.2 %$ 0.43
(a) Based upon statutory tax rates in the specific jurisdiction for each event.
See Part 1, Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations, Results of Operations - Core Performance Measures,
Reconciliation of Non-GAAP Measures, "Items which we exclude from GAAP measures
to report core performance measures" for the descriptions of the footnoted
reconciling items.
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Nine months ended September 30, 2021
Income
before Effective
Net Equity income Net tax Per
sales earnings taxes income rate (a) share
As reported - GAAP $ 10,406 $ 31 $ 1,821 $ 1,419 22.1 % $ 0.71
Preferred stock redemption (b) 0.91
Subtotal 10,406 31 1,821 1,419 22.1 % 1.62
Constant-currency adjustment (1) 2 47 29 0.03
Translation gain on Japanese
yen-denominated debt (2) (127 ) (98 ) (0.12 )
Translated earnings contract
gain (3) (262 ) (202 ) (0.24 )
Acquisition-related costs (4) 123 95 0.11
Discrete tax items and other
tax-related adjustments (5) 5 0.01
Pension mark-to-market
adjustment (6) 23 18 0.02
Restructuring, impairment and
other charges and credits (7) 42 33 0.04
Litigation, regulatory and other
legal matters (8) 11 23 0.03
Preferred stock conversion (9) 17 17 0.02
Bond redemption loss (10) 31 23 0.03
Loss on investments (11) 39 30 0.04
Gain on sale of business (12) (54 ) (46 ) (0.05 )
Core performance measures $ 10,406 $ 33 $ 1,711 $ 1,346 21.3 % $ 1.53 (a) Based upon statutory tax rates in the specific jurisdiction for each event. (b) Pursuant to the SRA, the Preferred Stock was converted into 115 million Common
Shares.
Shares and excluded them from the weighted-average common shares outstanding
for the calculation of the Company's basic and diluted earnings per share. The
redemption of these Common Shares resulted in an $803 million reduction of
retained earnings which reduced the net income available to common
shareholders.
Nine months ended September 30, 2020
Income
before Effective
Net Equity income Net tax Per
sales earnings taxes income rate (a) share
As reported - GAAP $ 7,953 $ 17 $ 293 $ 260 11.3 % $ 0.24
Constant-currency adjustment (1) 66 25 (33 ) (0.04 )
Translation loss on Japanese
yen-denominated debt (2) 50 39 0.05
Translated earnings contract
loss (3) 6 5 0.01
Acquisition-related costs (4) 104 79 0.10
Discrete tax items and other
tax-related adjustments (5) 19 0.02
Pension mark-to-market
adjustment (6) (2 ) (1 ) (0.00 )
Restructuring, impairment and
other charges and credits (7) 733 549 0.71
Litigation, regulatory and other
legal matters (8) 108 92 0.12
Equity in losses of affiliated
companies (13) 61 61 48 0.06
Transaction-related gain, net
(14) (498 ) (387 ) (0.50 )
Cumulative adjustment related to
customer contract (15) 105 105 105 0.14
Core performance measures $ 8,124 $ 78 $ 985 $ 775 21.3 % $ 0.88 (a) Based upon statutory tax rates in the specific jurisdiction for each event.
See Part 1, Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations, Results of Operations - Core Performance Measures,
Reconciliation of Non-GAAP Measures, "Items which we exclude from GAAP measures
to report core performance measures" for the descriptions of the footnoted
reconciling items.
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Items which we exclude from GAAP measures to arrive at core performance measures are as follows:
(1) Constant-currency adjustment: Because a significant portion of segment revenues and
expenses are denominated in currencies other than the
is important to understand the impact on core net income of translating these currencies
into
denominated in Japanese yen, but also impacted by the South Korean won, Chinese yuan, and
new
income are primarily impacted by the euro and Chinese yuan. Presenting results on a
constant-currency basis mitigates the translation impact and allows management to evaluate
performance period over period, analyze underlying trends in the businesses, and establish
operational goals and forecasts. We establish constant-currency rates based on internally
derived management estimates which are closely aligned with the currencies we have hedged.
Constant-currency rates are as follows:
Currency Japanese yen Korean won Chinese yuan New Taiwan dollar Euro
Rate ¥107 ?1,175 ¥6.7 NT$31 €.81
(2) Translation (gain) loss on Japanese yen-denominated debt: We have excluded the gain or loss
on the translation of the yen-denominated debt to
unrealized gains and losses of the Japanese yen, South Korean won, Chinese yuan, euro and
new
well as the unrealized gains and losses of the British pound-denominated foreign currency
hedges related to translated earnings. (4) Acquisition-related costs: These expenses include intangible amortization, inventory
valuation adjustments, external acquisition-related deal costs, and other transaction
related costs. (5) Discrete tax items and other tax-related adjustments: These include discrete period tax
items such as changes of tax reserves and changes in our permanently reinvested foreign
income position. (6) Pension mark-to-market adjustment: Defined benefit pension mark-to-market gains and losses,
which arise from changes in actuarial assumptions and the difference between actual and
expected returns on plan assets and discount rates. (7) Restructuring, impairment and other charges and credits: This amount includes
restructuring, impairment losses and other charges and credits, primarily accelerated
depreciation and asset write-offs, which are not related to continuing operations and are
not classified as restructuring expense. During the third quarter of 2021, we recorded
asset write-offs and charges related to facility repairs resulting from the impact of power
outages. The Company is pursuing recoveries under its applicable property insurance
policies.
(8) Litigation, regulatory and other legal matters: Includes amounts that reflect developments
in commercial litigation, intellectual property disputes, adjustments to the estimated
liability for environmental-related items and other legal matters. (9) Preferred stock conversion: This amount includes the put option from the Share Repurchase
Agreement with Samsung Display Co., Ltd.
(10) Bond redemption loss: Amount represents premiums on redemption of debentures
(11) Loss on investments: Amount represents the loss recognized due to mark-to-mark adjustments
capturing the change in fair value based on the closing stock market price. (12) Gain on sale of business: Amount represents the gain recognized for the sale of certain
businesses.
(13) Equity in losses of affiliated companies: These adjustments relate to costs not related to
continuing operations of our affiliated companies, such as restructuring, impairment
losses, inventory adjustments, other charges and credits and settlements under
"take-or-pay" contracts, including
relationship of its long-term supply contract related to the HSG's acquisition of TCS. (14) Transaction-related gain, net: Amount represents the pre-tax gain recorded on a previously
held equity investment in HSG. (15) Cumulative adjustment related to customer contract: The negative impact of a cumulative
adjustment recorded during the first quarter of 2020 to reduce revenue by
adjustment was associated with a previously recorded commercial benefit asset, reflected as
a prepayment, to a customer with a long-term supply agreement that substantially exited its
production of LCD panels.
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Table of Contents REPORTABLE SEGMENTS
Reportable segments are as follows:
? Display Technologies - manufactures glass substrates for flat panel liquid
crystal displays and other high-performance display panels.
?
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,
serum and reagents enabling workflow solutions for drug discovery and bioproduction. All other businesses 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, auto glass, new product lines, development projects, and certain corporate investments. The Company obtained a controlling interest in HSG during the third quarter of 2020 and has consolidated results in "All Other" as ofSeptember 9, 2020 . Refer to Note 3 (HSG Transactions) to the consolidated financial statements for additional information on this transaction. Financial results for the reportable segments are prepared on a basis consistent with the internal disaggregation of financial information to assist the CODM in making internal operating decisions. A significant portion of segment revenues and expenses are denominated in currencies other than theU.S. dollar. Management believes it is important to understand the impact on core net income of translating these currencies intoU.S. dollars. The Company uses constant currency reporting for Display Technologies, Specialty Materials, Environmental Technologies and Life Sciences.Corning excludes the impact of these currencies from segment sales and net income. The adjustment for constant currency is primarily related to the Display Technologies' segment and excludes the impact of the fluctuation of the Japanese yen, South Korean won, Chinese yuan, and newTaiwan dollar. Certain income and expenses are included in the unallocated amounts in the reconciliation of reportable segment net income (loss) to consolidated net income. These include items that are not used by the CODM in evaluating the results of or in allocating resources to the segments and include the following items: the impact of translated earnings contracts; acquisition-related costs; discrete tax items and other tax-related adjustments; certain litigation, regulatory and other legal matters; restructuring, impairment losses and other charges and credits; adjustments relating to acquisitions; and other non-recurring non-operational items. Although these amounts are excluded from segment results, they are included in reported consolidated results. Earnings of equity affiliates that are closely associated with the reportable segments are included in the respective segment's net income (loss). Certain common expenses among reportable segments have been allocated differently than they would for stand-alone financial information. Segment net income (loss) may not be consistent with measures used by other companies. Display Technologies
The following table provides net sales and net income for the Display Technologies segment (in millions):
Three months ended % Nine months ended %
September 30, change September 30, change
2021 2020 21 vs. 20 2021 2020 21 vs. 20
Segment net sales $ 956 $ 827 16 % $ 2,758 $ 2,331 18 %
Segment net income $ 247 $ 196 26 % $ 708 $ 500 42 %
Net sales in the Display Technologies segment increased by
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Net income in the Display Technologies segment increased by
Optical Communications
The following table provides net sales and net income for the
Three months ended % Nine months ended %
September 30, change September 30, change
2021 2020 21 vs. 20 2021 2020 21 vs. 20
Segment net sales $ 1,131 $ 909 24 % $ 3,143 $ 2,587 21 %
Segment net income $ 139 $ 115 21 % $ 398 $ 225 77 %
Optical Communications' net sales increased by $222 million and $556 million ,
respectively, in the three and nine months ended September 30, 2021 . Net sales
of carrier products increased by $179 million and $372 million , respectively,
and enterprise products were $43 million and $184 million higher, respectively,
primarily driven by 5G, broadband and cloud computing.
Net income increased by
Movements in foreign currency exchange rates did not materially impact net
income in this segment in the three and nine months ended
Specialty Materials
The following table provides net sales and net income for the Specialty Materials segment (in millions):
Three months ended % Nine months ended %
September 30, change September 30, change
2021 2020 21 vs. 20 2021 2020 21 vs. 20
Segment net sales $ 556 $ 570 (2 %) $ 1,490 $ 1,339 11 %
Segment net income $ 107 $ 146 (27 %) $ 279 $ 287 (3 %)
Net sales in the Specialty Materials segment declined by $14 million and
increased $151 million , respectively, for the three and nine months ended
September 30, 2021 . Net sales declined slightly for the three months ended
September 30, 2021 , primarily due to extremely strong demand for cover materials
in support of customer product launches experienced during the third quarter of
2020. Strong demand for premium cover materials, strength in the IT market and
greater optical content in semiconductor manufacturing were the primary drivers
of the increase for the nine months ended September 30, 2021 .
Net income decreased by $39 million and $8 million , respectively, for the three
and nine months ended September 30, 2021 , primarily driven by increased
investments in innovation programs that are moving towards commercialization and
higher inflationary and logistics costs.
Environmental Technologies
The following table provides net sales and net income for the Environmental Technologies segment (in millions):
Three months ended % Nine months ended %
September 30, change September 30, change
2021 2020 21 vs. 20 2021 2020 21 vs. 20
Segment net sales $ 385 $ 379 2 % $ 1,233 $ 925 33 %
Segment net income $ 60 $ 69 (13 %) $ 215 $ 104 107 %
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Net sales in the Environmental Technologies segment increased by$6 million and$308 million , respectively, for the three and nine months endedSeptember 30, 2021 . Sales of diesel products grew$38 million and$176 million , respectively, primarily driven by customers continuing to adopt more advanced aftertreatment inChina and continued strength in the North American heavy-duty truck market. Automotive sales declined$32 million and increased$132 million , respectively. In the first half of 2021, we saw year-over-year growth versus 2020, primarily driven by improving markets and increasedCorning content, along with strong demand for diesel products inChina andNorth America . In the third quarter of 2021, diesel product sales were higher, partially offset by lower automotive product sales, which were significantly impacted by an industry-wide shortage of automotive components and semiconductor chips.
Net income decreased by
Life Sciences
The following table provides net sales and net income for the Life Sciences
segment (in millions):
Three months ended % Nine months ended %
September 30, change September 30, change
2021 2020 21 vs. 20 2021 2020 21 vs. 20
Segment net sales $ 305 $ 223 37 % $ 917 $ 724 27 %
Segment net income $ 45 $ 28 61 % $ 145 $ 97 49 %
Net sales in the Life Sciences segment increased by $82 million and $193 million
for the three and nine months ended September 30, 2021 , respectively, primarily
driven by the ongoing recovery in academic and pharmaceutical research labs and
continued strong demand for bioproduction vessels and diagnostic-related
consumables.
Net income increased by
All Other All other businesses that do not meet the quantitative threshold for separate reporting have been grouped as "All Other." This group is primarily comprised of the results of the pharmaceutical technologies, auto glass, new product lines and development projects, as well as certain corporate investments. The Company obtained a controlling interest in HSG during the third quarter of 2020 and has consolidated results in "All Other" as ofSeptember 9, 2020 . Refer to Note 3 (HSG Transactions) to the consolidated financial statements for additional information on this transaction. The following table provides net sales and net loss for All Other (in millions): Three months ended % Nine months ended % September 30, change September 30, change 2021 2020 21 vs. 20 2021 2020 21 vs. 20 Segment net sales$ 306 $ 99 209 %$ 865 $ 218 297 % Segment net loss$ (5 ) $ (50 ) 90 %$ (44 ) $ (185 ) 76 % Net sales of this segment increased by$207 million and$647 million for the three and nine months endedSeptember 30, 2021 , respectively, when compared to the same periods in 2020, driven mainly by the consolidation of HSG. Net loss decreased by$45 million and$141 million , also primarily driven by the consolidation of HSG. © 2021 Corning Incorporated. All Rights Reserved. 45
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CAPITAL RESOURCES AND LIQUIDITY
Financing and Capital Resources
2021 In the third quarter of 2021,Corning redeemed$250 million of 3.7% debentures due in 2023, paying a premium of$19 million by exercising our make-whole call. The bond redemption resulted in a$20 million loss during the same quarter. In the second quarter of 2021,Corning redeemed$375 million of 2.9% debentures due in 2022, paying a premium of$10 million by exercising our make-whole call. The bond redemption resulted in an$11 million loss during the same quarter. Share Repurchase Program
On
For the three and nine months endedSeptember 30, 2021 , the Company repurchased 629 thousand and 668 thousand shares of common stock on the open market for approximately$24 million and$25 million , respectively, as part of its 2019 Repurchase Program. During the three months endedJune 30, 2021 , the Company repurchased 35 million shares of common stock, under the 2018 and 2019 Repurchase Programs. These shares were repurchased immediately following the conversion of preferred shares, for an aggregate purchase price of approximately$1.5 billion , of which approximately$507 million was paid on the Initial Closing Date. Subsequent payments of approximately$507 million will be paid on each of the first and second anniversaries of the Initial Closing Date. The Company made no share repurchases for the three months endedSeptember 30, 2020 . For the nine months endedSeptember 30, 2020 , the Company repurchased 4.1 million shares of common stock on the open market for approximately$105 million , as part of its 2018 Repurchase Program.
Refer to Note 6 (Earnings per Share) and Note 14 (Shareholders' Equity) to the consolidated financial statements for additional information.
Capital Spending
Capital spending totaled
Cash Flow
Summary of cash flow data (in millions):
Nine months ended
September 30,
2021 2020
Net cash provided by operating activities
Net cash provided by operating activities increased by$983 million in the nine months endedSeptember 30, 2021 , when compared to the same period in the prior year, primarily driven by an increase in net income. Net cash used in investing activities decreased by$129 million in the nine months endedSeptember 30, 2021 , when compared to the same period last year. The decrease was primarily driven by higher proceeds from the sales of businesses and investments in unconsolidated entities of$102 million and$94 million , respectively, partially offset by an increase in capital expenditures of$28 million . © 2021Corning Incorporated . All Rights Reserved. 46
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Net cash used in financing activities increased by$1.6 billion in the nine months endedSeptember 30, 2021 , when compared to the same period last year. The increase was primarily driven by higher debt repayments of$860 million , the payment for conversion of the Preferred Stock of$507 million , lower proceeds of long-term debt and repurchases of common stock of$193 million and$83 million , respectively.
Defined Benefit Pension Plans
Key Balance Sheet Data
Balance sheet and working capital measures are provided in the following table
(in millions):
September 30, December 31,
2021 2020
Working capital $ 3,342 $ 4,237
Current ratio 1.8:1 2.1:1Trade accounts receivable, net of doubtful accounts $ 2,114
$ 2,133 Days sales outstanding 53 57 Inventories, net $ 2,463$ 2,438 Inventory turns 3.6 3.2 Days payable outstanding (1) 48 44 Long-term debt $ 7,019$ 7,816 Total debt $ 7,069$ 7,972 Total debt to total capital 36 % 37 %
(1) Includes trade payables only.
Management Assessment of Liquidity
We ended the third quarter of 2021 with approximately$2.2 billion of cash and cash equivalents. Our cash and cash equivalents are held in various locations throughout the world and are generally unrestricted. We utilize a variety of strategies to ensure that our worldwide cash is available in the locations in which it is needed. AtSeptember 30, 2021 , approximately 74% of the consolidated amount was held outside theU.S. Corning has a commercial paper program pursuant to which we may issue short-term, unsecured commercial paper notes up to a maximum aggregate principal amount outstanding at any one time of$1.5 billion . Under this program, the Company may issue the paper from time to time and will use the proceeds for general corporate purposes. As ofSeptember 30, 2021 ,Corning had no outstanding commercial paper.
The Company's
Other Comprehensive reviews of significant customers and their creditworthiness are completed by analyzing their financial strength, at least annually or more frequently, for customers whereCorning has identified an increased measure of risk. The Company closely monitors payments and developments which may signal possible customer credit issues. During the three months endedSeptember 30, 2021 ,Corning sold accounts receivable and accelerated collections for the period by$80 million . Sales of accounts receivable during the first and second quarter of 2021, were$133 million and$192 million , respectively, which the Company believes would have been collected during the normal course of business in the quarter following the respective sales.Corning has not currently identified any potential material impact on our liquidity resulting from customer credit issues. © 2021Corning Incorporated . All Rights Reserved. 47
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We believe we have sufficient liquidity to fund operations, acquisitions, capital expenditures, scheduled debt repayments and dividend payments
The Revolving Credit Agreement includes affirmative and negative covenants with which we must comply, including a leverage (debt to capital ratio) financial covenant. The required leverage ratio is a maximum of 60%. AtSeptember 30, 2021 , the leverage using this measure was approximately 36%. As ofSeptember 30, 2021 , we were in compliance and no amounts were outstanding under the Company's Revolving Credit Agreement. The Company's debt instruments contain customary event of default provisions, which allow the lenders the option of accelerating all obligations upon the occurrence of certain events. In addition, some of the debt instruments contain a cross default provision, whereby an uncured default of a specified amount on one debt obligation of the Company, would be considered a default under the terms of another debt instrument. As ofSeptember 30, 2021 , we were in compliance with all such provisions. Other than discussed, management is not aware of any known trends or any known demands, commitments, events or uncertainties that will, or are reasonably likely to, result in insufficient liquidity. There are no known trends, favorable or unfavorable, that would have a material change in the overall cost of liquidity.
Off Balance Sheet Arrangements
There have been no material changes outside the ordinary course of business in off balance sheet arrangements as disclosed in the 2020 Form 10-K under the caption "Off Balance Sheet Arrangements."
Contractual Obligations There have been no material changes outside the ordinary course of business in the contractual obligations disclosed in the 2020 Form 10-K under the caption "Contractual Obligations". CRITICAL ACCOUNTING ESTIMATES The preparation of financial statements requires management to make estimates and assumptions that affect amounts reported therein. The estimates that require management's most difficult, subjective or complex judgments are described in the 2020 Form 10-K and remain unchanged through the first nine months of 2021. For certain items, additional details are provided below.
Impairment of Assets Held for Use
We are required to assess the recoverability of the carrying value of long-lived assets when an indicator of impairment has been identified. We review long-lived assets in each quarter in which impairment indicators are present. We must exercise judgment in assessing whether an event of impairment has occurred. Manufacturing equipment includes certain components of production equipment that are constructed of precious metals, primarily platinum and rhodium. These metals are not depreciated because they have very low physical losses and are repeatedly reclaimed and reused in the manufacturing process and have a very long useful life. Precious metals are reviewed for impairment as part of the assessment of long-lived assets. This review considers all the Company's precious metals that are either in place in the production process; in reclamation, fabrication, or refinement in anticipation of re-use; or awaiting use to support increased capacity. Precious metals are acquired to support the manufacturing operations and are not held for trading or other purposes. AtSeptember 30, 2021 andDecember 31, 2020 , the carrying value of precious metals was$3.3 billion and$3.4 billion , respectively, and significantly lower than the fair market value. Most of these precious metals are utilized by the Display Technologies and Specialty Materials segments. The potential for impairment exists in the future if negative events significantly decrease the cash flow of these segments. Such events include, but are not limited to, a significant decrease in demand for products or a significant decrease in profitability in these segments. © 2021Corning Incorporated . All Rights Reserved. 48
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Table of Contents NEW ACCOUNTING STANDARDS
Refer to Note 1 (Significant Accounting Policies) to the consolidated financial statements.
ENVIRONMENTCorning has been named by theEnvironmental Protection Agency (the Agency) under the Superfund Act, or by state governments under similar state laws, as a potentially responsible party for 15 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 isCorning's policy to accrue for its estimated liability related to Superfund sites and other environmental liabilities related to property owned byCorning based on expert analysis and continual monitoring by both internal and external consultants. AtSeptember 30, 2021 andDecember 31, 2020 ,Corning had accrued approximately$60 million and$68 million , respectively, for the estimated undiscounted 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. © 2021Corning Incorporated . All Rights Reserved. 49
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Table of Contents FORWARD-LOOKING STATEMENTS The statements in this Quarterly Report on Form 10-Q, in reports subsequently filed byCorning with theSEC on Forms 8-K, and related comments by management that are not historical facts or information and contain words such as "will," "believe," "anticipate," "expect," "intend," "plan," "seek," "see," "would," and "target" and similar expressions are forward-looking statements. Such statements relate to future events that by their nature address matters that are, to different degrees, uncertain. These forward-looking statements relate to, among other things, the Company's future operating performance, the Company's share of new and existing markets, the Company's revenue and earnings growth rates, the Company's ability to innovate and commercialize new products, and the Company's implementation of cost-reduction initiatives and measures to improve pricing, including the optimization of the Company's manufacturing capacity. Although the Company believes that these forward-looking statements are based upon reasonable assumptions regarding, among other things, current estimates and forecasts, general economic conditions, its knowledge of its business, and key performance indicators that impact the Company, actual results could differ materially. The Company does not undertake to update forward-looking statements. Some of the risks, uncertainties and other factors that could cause actual results to differ materially from those expressed in or implied by the forward-looking statements include, but are not limited to:
- the duration and severity of the COVID-19 pandemic, and its impact across our
businesses on demand, operations, our global supply chains and stock price; - the effects of acquisitions, dispositions and other similar transactions; - global economic trends, competition and geopolitical risks, or an escalation
of sanctions, tariffs or other trade tensions between the
other countries, and related impacts on our businesses' global supply chains
and strategies; - changes in macroeconomic and market conditions and market volatility
(including developments and volatility arising from the COVID-19 pandemic),
including inflation, interest rates, the value of securities and other
financial assets, precious metals, oil, natural gas and other commodity prices
and exchange rates (particularly between the
new
such changes and volatility on our financial position and businesses; - product demand and industry capacity; - competitive products and pricing; - availability and costs of critical components and materials; - new product development and commercialization; - order activity and demand from major customers; - the amount and timing of our cash flows and earnings and other conditions,
which may affect our ability to pay our quarterly dividend at the planned
level or to repurchase shares at planned levels; - possible disruption in commercial activities or our supply chain due to
terrorist activity, cyber-attack, armed conflict, political or financial
instability, natural disasters, international trade disputes or major health
concerns;
- loss of intellectual property due to theft, cyber-attack, or disruption to our
information technology infrastructure; - unanticipated disruption to our supply chain, equipment, facilities, IT systems or operations; - effect of regulatory and legal developments; - ability to pace capital spending to anticipated levels of customer demand; - our ability to increase margins through implementation of operational changes, pricing actions and cost reduction measures; - rate of technology change; - ability to enforce patents and protect intellectual property and trade
secrets;
- adverse litigation; - product and components performance issues; - retention of key personnel; - customer ability to maintain profitable operations and obtain financing to
fund ongoing operations and manufacturing expansions and pay receivables when
due;
- loss of significant customers; - changes in tax laws and regulations; - the impacts of audits by taxing authorities; and the potential impact of
legislation, government regulations, and other government action and
investigations; and - other risks detailed inCorning's SEC filings. © 2021Corning Incorporated . All Rights Reserved. 50
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