Corning Incorporated : Q2-2021 Financial Statement & Exhibits (Includes non-GAAP Reconciliations)

CORNING INCORPORATED AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(Unaudited; in millions, except per share amounts)

			Three months ended		Six months ended
			June 30,						June 30,
Net sales		2021				2020					2021				2020
$	3,501			$	2,561				$	6,791			$	4,952
Cost of sales		2,186				1,805					4,320				3,635
Gross margin		1,315				756					2,471				1,317
Operating expenses:
Selling, general and administrative expenses		465				401					865				796
Research, development and engineering expenses		242				430					464				691
Amortization of purchased intangibles		33				28					65				54
Operating income (loss)		575				(103)			1,077				(224)
Equity in earnings of affiliated companies		7				79					15				93
Interest income		2				3					5				9
Interest expense		(78)			(67)			(155)			(131)
Translated earnings contract gain, net		3				37					275				105
Other income (expense), net		7				2					124				(9)
Income (loss) before income taxes		516				(49)			1,341				(157)
Provision for income taxes		(67)			(22)			(293)			(10)
Net income (loss) attributable to Corning Incorporated	$	449			$	(71)		$	1,048			$	(167)
(Loss) earnings per common share available to common
stockholders:
Basic	$	(0.42)		$	(0.13)		$	0.27			$	(0.28)
Diluted
$	(0.42)	$	(0.13)	$	0.27			$	(0.28)
Reconciliation of net income (loss) attributable to Corning
Incorporated versus net (loss) income available to common
stockholders:
Net income (loss) attributable to Corning Incorporated	$	449			$	(71)		$	1,048			$	(167)
Series A convertible preferred stock dividend						(25)			(24)			(49)
Excess consideration paid for redemption of preferred shares		(803)								(803)
Net (loss) income available to common stockholders	$	(354)		$	(96)		$	221			$	(216)

© 2021 Corning Incorporated. All Rights Reserved.

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CORNING INCORPORATED AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

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

			June 30,		December 31,
Assets		2021			2020
Current assets:
Cash and cash equivalents	$	2,320		$	2,672
Trade accounts receivable, net of doubtful accounts		2,057			2,133
Inventories, net		2,387			2,438
Other current assets		884			761
Total current assets		7,648			8,004
Property, plant and equipment, net of accumulated depreciation		15,455			15,742
Goodwill, net		2,433			2,460
Other intangible assets, net		1,228			1,308
Deferred income taxes		1,051			1,121
Other assets		1,991			2,140
Total Assets	$	29,806		$	30,775
Liabilities and Equity
Current liabilities:
Current portion of long-term debt and short-term borrowings	$	353		$	156
Accounts payable		1,312			1,174
Other accrued liabilities		2,959			2,437
Total current liabilities		4,624			3,767
Long-term debt		7,025			7,816
Postretirement benefits other than pensions		723			727
Other liabilities		5,292			5,017
Total liabilities		17,664			17,327
Commitments and contingencies
Shareholders' equity:
Convertible preferred stock, Series A - Par value $100 per share; Shares authorized 0 and
3,100; Shares issued: 0 and 2,300					2,300
Common stock - Par value $0.50 per share; Shares authorized 3.8 billion; Shares issued:
1.8 billion and 1.7 billion		907			863
Additional paid-in capital - common stock		16,352			14,642
Retained earnings		15,739			16,120
Treasury stock, at cost; Shares held: 962 million and 961 million		(19,986)		(19,928)
Accumulated other comprehensive loss		(1,052)		(740)
Total Corning Incorporated shareholders' equity		11,960			13,257
Non-controlling interests		182			191
Total equity		12,142			13,448
Total Liabilities and Equity	$	29,806		$	30,775

© 2021 Corning Incorporated. All Rights Reserved.

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CORNING INCORPORATED AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in millions)

			Three months ended		Six months ended
			June 30,						June 30,
Cash Flows from Operating Activities:		2021				2020					2021				2020
Net income (loss)	$	449			$	(71)		$	1,048			$	(167)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation		336				324					666				680
Amortization of purchased intangibles		33				28					65				54
Loss on disposal of assets		1				15					1				75
Severance charges		1				58					1				135
Severance payments		(7)			(22)			(20)			(97)
Share-based compensation expense		44				55					78				65
Equity in earnings of affiliated companies		(7)			(79)			(15)			(93)
Translation (gain) loss on Japanese yen-denominated debt		(5)			(3)			(123)			11
Deferred tax (benefit) provision		(65)			(90)			56				(130)
Customer deposits and government incentives		102									114				125
Translated earnings contract gain		(3)			(37)			(275)			(105)
Unrealized translation (gains) losses on transactions		(8)			(22)			51				11
Tax assessment refunds															101
Asset impairment						195									195
Changes in certain working capital items:
Trade accounts receivable		(158)			(16)			(49)			27
Inventories		(26)			120					18				53
Other current assets		(127)			30					(153)			20
Accounts payable and other current liabilities		183				(28)			156				(235)
Other, net		28				93					(125)			73
Net cash provided by operating activities		771				550					1,494				798
Cash Flows from Investing Activities:
Capital expenditures		(324)			(288)			(613)			(833)
Proceeds from sale or disposal of assets		10				16					17				27
Proceeds from sale of business		78									102
Investment in and proceeds from unconsolidated entities, net		87				(4)			85				(5)
Realized gains on translated earnings contract		16				1					13				12
Other, net		6				30					(19)			15
Net cash used in investing activities		(127)				(245)				(415)				(784)
Cash Flows from Financing Activities:
Repayments of short-term borrowings and current portion of long-
term debt		(435)								(460)
Proceeds from issuance of long-term debt, net						9									209
Payment for redemption of preferred stock		(507)								(507)
Payments of employee withholding tax on stock awards		(51)			(6)			(55)			(8)
Proceeds from the exercise of stock options		31				6					82				13
Purchases of common stock for treasury		(1)								(1)			(105)
Dividends paid		(234)			(191)			(442)			(383)
Other, net		(2)			4					(6)			2
Net cash used in financing activities		(1,199)				(178)				(1,389)				(272)
Effect of exchange rates on cash		7				6					(42)				(18)
Net (decrease) increase in cash and cash equivalents		(548)				133					(352)				(276)
Cash and cash equivalents at beginning of period		2,868				2,025					2,672				2,434
Cash and cash equivalents at end of period	$	2,320			$	2,158				$	2,320			$	2,158

© 2021 Corning Incorporated. All Rights Reserved.

3

CORNING INCORPORATED AND SUBSIDIARY COMPANIES

(Unaudited)

GAAP (Loss) Earnings per Common Share

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

		Three months ended		Six months ended
		June 30,				June 30,
		2021		2020			2021		2020
Net income (loss) attributable to Corning Incorporated	$	449	$	(71)	$	1,048	$	(167)
Less: Series A convertible preferred stock dividend				25			24		49
Less: Excess consideration paid for redemption of preferred shares		803					803
Net (loss) income available to common stockholders - basic		(354)		(96)		221		(216)
Net (loss) income available to common stockholders - diluted	$	(354)	$	(96)	$	221	$	(216)
Weighted-average common shares outstanding - basic		844		759			805		760
Effect of dilutive securities:
Stock options and other dilutive securities							17
Weighted-average common shares outstanding - diluted		844		759			822		760
Basic (loss) earnings per common share	$	(0.42)	$	(0.13)	$	0.27	$	(0.28)
Diluted (loss) earnings per common share	$	(0.42)	$	(0.13)	$	0.27	$	(0.28)

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			Six months ended
		June 30,				June 30,
		2021		2020			2021		2020
Core net income attributable to Corning Incorporated	$	459	$	218	$	861	$	395
Less: Series A convertible preferred stock dividend				25			24		49
Core net income available to common stockholders - basic		459		193			837		346
Plus: Series A convertible preferred stock dividend				25			24		49
Core net income available to common stockholders - diluted	$	459	$	218	$	861	$	395
Weighted-average common shares outstanding - basic		844		759			805		760
Effect of dilutive securities:
Stock options and other dilutive securities		16		6			17		6
Series A convertible preferred stock		9		115			62		115
Weighted-average common shares outstanding - diluted		869		880			884		881
Core basic earnings per common share	$	0.54	$	0.25	$	1.04	$	0.46
Core diluted earnings per common share	$	0.53	$	0.25	$	0.97	$	0.45

© 2021 Corning Incorporated. All Rights Reserved.

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Use of Non-GAAP Financial Measures

CORE PERFORMANCE MEASURES

In managing the Company and assessing financial performance, certain measures provided by the consolidated financial statements are adjusted to exclude specific items to report 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 its equity affiliates. Corning utilizes constant- currency reporting for the Display Technologies, Environmental Technologies, Specialty Materials and Life Sciences segments for the Japanese yen, South Korean won, Chinese yuan, new Taiwan dollar and the euro. The Company believes that the use of constant-currency reporting allows investors to understand the results without the volatility of currency fluctuations and reflects the underlying economics of the translated earnings contracts used to mitigate the impact of changes in currency exchange rates on earnings and cash flows. Corning also believes that reporting core performance measures provides investors greater transparency to the information used by the management team to make financial and operational decisions.

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

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

© 2021 Corning Incorporated. All Rights Reserved.

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