Q3Financial Statement & Exhibits2021 (opens in new window)

CORNING INCORPORATED AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF INCOME (Unaudited; in millions, except per share amounts)

			Three months ended		Nine months ended
			September 30,		September 30,
			2021			2020			2021			2020
Net sales	$	3,615		$	3,001		$	10,406		$	7,953
Cost of sales		2,294			2,000			6,614			5,635
Gross margin		1,321			1,001			3,792			2,318
Operating expenses:
Selling, general and administrative expenses		486			480			1,351			1,276
Research, development and engineering expenses		251			231			715			922
Amortization of purchased intangibles		32			33			97			87
Operating income		552			257			1,629			33
Equity in earnings (losses) of affiliated companies		16			(76)		31			17
Interest income		3			3			8			12
Interest expense		(72)		(70)		(227)		(201)
Translated earnings contract (loss) gain, net		(13)		(100)		262			5
Transaction-related gain, net					498						498
Other (expense) income, net		(6)		(62)		118			(71)
Income before income taxes		480			450			1,821			293
Provision for income taxes		(109)		(23)		(402)		(33)
Net income attributable to Corning Incorporated	$	371		$	427		$	1,419		$	260
Earnings per common share available to common shareholders:
Basic	$	0.44		$	0.53		$	0.72		$	0.25
Diluted	$	0.43		$	0.48		$	0.71		$	0.24
Reconciliation of net income attributable to Corning Incorporated
versus net income available to common shareholders:
Net income attributable to Corning Incorporated	$	371		$	427		$	1,419		$	260
Series A convertible preferred stock dividend								(24)		(73)
Excess consideration paid for redemption of preferred shares								(803)
Net income available to common shareholders	$	371		$	427		$	592		$	187

© 2021 Corning Incorporated. All Rights Reserved.

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CORNING INCORPORATED AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(In millions, except share and per share amounts)

			September 30,		December 31,
			2021			2020
			(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	2,212		$	2,672
Trade accounts receivable, net of doubtful accounts		2,114			2,133
Inventories, net		2,463			2,438
Other current assets		890			761
Total current assets		7,679			8,004
Property, plant and equipment, net of accumulated depreciation		15,383			15,742
Goodwill, net		2,425			2,460
Other intangible assets, net		1,192			1,308
Deferred income taxes		1,062			1,121
Other assets		1,965			2,140
Total Assets	$	29,706		$	30,775
Liabilities and Equity
Current liabilities:
Current portion of long-term debt and short-term borrowings	$	50		$	156
Accounts payable		1,396			1,174
Other accrued liabilities		2,891			2,437
Total current liabilities		4,337			3,767
Long-term debt		7,019			7,816
Postretirement benefits other than pensions		729			727
Other liabilities		5,266			5,017
Total liabilities		17,351			17,327
Commitments and contingencies
Shareholders' equity:
Convertible preferred stock, Series A - Par value $100 per share; Shares authorized 10
million; Shares issued: 0 and 2,300					2,300
Common stock - Par value $0.50 per share; Shares authorized 3.8 billion; Shares issued:
1.8 billion and 1.7 billion		907			863
Additional paid-in capital - common stock		16,398			14,642
Retained earnings		16,110			16,120
Treasury stock, at cost; Shares held: 963 million and 961 million		(20,011)		(19,928)
Accumulated other comprehensive loss		(1,259)		(740)
Total Corning Incorporated shareholders' equity		12,145			13,257
Non-controlling interests		210			191
Total equity		12,355			13,448
Total Liabilities and Equity	$	29,706		$	30,775

© 2021 Corning Incorporated. All Rights Reserved.

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CORNING INCORPORATED AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in millions)

			Three months ended		Nine months ended
			September 30,		September 30,
			2021			2020			2021			2020
Cash Flows from Operating Activities:
Net income	$	371		$	427		$	1,419		$	260
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation		339			361			1,005			1,041
Amortization of purchased intangibles		32			33			97			87
Loss on disposal of assets		7			32			8			107
Severance charges		(1)		6						141
Severance payments		(4)		(29)		(24)		(126)
Share-based compensation expense		39			62			117			127
Equity in (earnings) losses of affiliated companies		(16)		76			(31)		(17)
Translation (gain) loss on Japanese yen-denominated debt		(4)		39			(127)		50
Deferred tax provision (benefit)		12			34			68			(96)
Pension plan contributions					(60)					(80)
Customer deposits and government incentives		54			59			168			184
Translated earnings contract loss (gain)		13			100			(262)		(5)
Unrealized translation losses (gains) on transactions		14			(65)		65			(54)
Tax assessment refunds											101
Asset impairment					22						217
Transaction-related gain, net					(498)					(498)
Changes in certain working capital items:
Trade accounts receivable		(97)		(308)		(146)		(281)
Inventories		(90)		187			(72)		240
Other current assets		(57)		(39)		(210)		(19)
Accounts payable and other current liabilities		269			96			425			(139)
Other, net		14			73			(111)		166
Net cash provided by operating activities		895			608			2,389			1,406
Cash Flows from Investing Activities:
Capital expenditures		(401)		(153)		(1,014)		(986)
Proceeds from sale or disposal of assets								17			27
Proceeds from sale of business								102
Proceeds from and investment in unconsolidated entities, net		2			(2)		87			(7)
Realized gains (losses) on translated earnings contract		17			(2)		30			10
Other, net		(6)		9			(25)		24
Net cash used in investing activities		(388)		(148)		(803)		(932)
Cash Flows from Financing Activities:
Repayments of short-term borrowings		(69)					(144)
Repayments of long-term debt		(331)					(716)
Proceeds from issuance of long-term debt		19			3			19			212
Payment for redemption of preferred stock								(507)
Payments of employee withholding tax on stock awards		(2)		(2)		(57)		(10)
Proceeds from exercise of stock options		9			36			91			49
Purchases of common stock for treasury		(21)					(22)		(105)
Dividends paid		(217)		(204)		(659)		(587)
Other, net		11			24			5			26
Net cash used in financing activities		(601)		(143)		(1,990)		(415)
Effect of exchange rates on cash		(14)		39			(56)		21
Net (decrease) increase in cash and cash equivalents		(108)		356			(460)		80
Cash and cash equivalents at beginning of period		2,320			2,158			2,672			2,434
Cash and cash equivalents at end of period	$	2,212		$	2,514		$	2,212		$	2,514

© 2021 Corning Incorporated. All Rights Reserved.

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CORNING INCORPORATED AND SUBSIDIARY COMPANIES

(Unaudited)

GAAP Earnings per Common Share

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

		Three months ended				Nine months ended
		September 30,				September 30,
		2021	2020			2021		2020
Net income attributable to Corning Incorporated	$	371	$	427	$	1,419	$	260
Less: Series A convertible preferred stock dividend				24			24		73
Less: Excess consideration paid for redemption of preferred shares							803
Net income available to common shareholders - basic		371		403			592		187
Plus: Series A convertible preferred stock dividend				24
Net income available to common shareholders - diluted	$	371	$	427	$	592	$	187
Weighted-average common shares outstanding - basic		852		760			821		760
Effect of dilutive securities:
Employee stock options and other dilutive securities		14		14			16		8
Series A convertible preferred stock				115
Weighted-average common shares outstanding - diluted		866		889			837		768
Basic earnings per common share	$	0.44	$	0.53	$	0.72	$	0.25
Diluted earnings per common share	$	0.43	$	0.48	$	0.71	$	0.24

Core Earnings per Common Share

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

		Three months ended			Nine months ended
		September 30,			September 30,
		2021		2020			2021		2020
Core net income attributable to Corning Incorporated	$	485	$	380	$	1,346	$	775
Less: Series A convertible preferred stock dividend				24			24		73
Core net income available to common shareholders - basic		485		356			1,322		702
Plus: Series A convertible preferred stock dividend				24			24		73
Core net income available to common shareholders - diluted	$	485	$	380	$	1,346	$	775
Weighted-average common shares outstanding - basic		852		760			821		760
Effect of dilutive securities:
Stock options and other dilutive securities		14		14			16		8
Series A convertible preferred stock				115			41		115
Weighted-average common shares outstanding - diluted		866		889			878		883
Core basic earnings per common share	$	0.57	$	0.47	$	1.61	$	0.92
Core diluted earnings per common share	$	0.56	$	0.43	$	1.53	$	0.88

© 2021 Corning Incorporated. All Rights Reserved.

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Use of Non-GAAP Financial Measures

CORE PERFORMANCE MEASURES

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

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

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

© 2021 Corning Incorporated. All Rights Reserved.

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