glw-20200930x10q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from		To

Commission file number: 1-3247

CORNING INCORPORATED

(Exact name of registrant as specified in its charter)


	New York		16-0393470
	(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

	One Riverfront Plaza, Corning, New York		14831
	(Address of principal executive offices)		(Zip Code)

607-974-9000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	GLW	New York Stock Exchange (NYSE)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).


	Yes	x		No	¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer	x	Accelerated Filer	¨
Non-Accelerated Filer	¨	Smaller Reporting Company	¨
		Emerging Growth Company	¨

If an emerging growth company, indicated by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act.


	Yes	¨		No	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).


	Yes	¨		No	x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


	Class		Outstanding as of October 22, 2020
	Corning’s Common Stock, $0.50 par value per share		764,010,029 shares

‎

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,
	2020		2019		2020		2019
Net sales	$	3,001	$	2,934	$	7,953	$	8,686
Cost of sales		2,000		1,917		5,635		5,505

Gross margin		1,001		1,017		2,318		3,181

Operating expenses:
Selling, general and administrative expenses		480		369		1,276		1,184
Research, development and engineering expenses		231		255		922		753
Amortization of purchased intangibles		33		28		87		85

Operating income		257		365		33		1,159

Equity in (losses) earnings of affiliated companies (Note 3)		(76)		23		17		81
Interest income		3		4		12		16
Interest expense		(70)		(55)		(201)		(161)
Translated earnings contract (loss) gain, net (Note 14)		(100)		86		5		163
Transaction-related gain, net (Note 4)		498				498
Other expense, net		(62)		(15)		(71)		(59)

Income before income taxes		450		408		293		1,199
Provision for income taxes (Note 8)		(23)		(71)		(33)		(271)

Net income attributable to Corning Incorporated	$	427	$	337	$	260	$	928

Earnings per common share attributable to ‎ Corning Incorporated:
Basic (Note 10)	$	0.53	$	0.40	$	0.25	$	1.10
Diluted (Note 10)	$	0.48	$	0.38	$	0.24	$	1.03

The accompanying notes are an integral part of these consolidated financial statements.

‎

CORNING INCORPORATED AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited; in millions)



	Three months ended				Nine months ended
	September 30,				September 30,
	2020		2019		2020		2019

Net income attributable to Corning Incorporated	$	427	$	337	$	260	$	928

Foreign currency translation adjustments and other		283		(238)		76		(310)
Net unrealized (losses) gains on investments				(1)				1
Unamortized gains (losses) and prior service credits (costs) ‎ for postretirement benefit plans		4		4		(8)		(48)
Net unrealized gains (losses) on designated hedges		11		(22)		(31)		(20)
Other comprehensive income (loss), net of tax (Note 16)		298		(257)		37		(377)

Comprehensive income attributable to ‎ Corning Incorporated	$	725	$	80	$	297	$	551

The accompanying notes are an integral part of these consolidated financial statements.

‎

CORNING INCORPORATED AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

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


	September 30,		December 31,
	2020		2019
Assets

Current assets:
Cash and cash equivalents	$	2,514	$	2,434
Trade accounts receivable, net of doubtful accounts and allowances - $43 and $41		2,099		1,836
Inventories, net of inventory reserves - $252 and $201 (Note 11)		2,581		2,320
Other current assets		864		873
Total current assets		8,058		7,463

Investments		354		334
Property, plant and equipment, net of accumulated depreciation - $13,874 and $12,995		15,449		15,337
Goodwill, net (Note 9)		2,427		1,935
Other intangible assets, net (Note 9)		1,332		1,185
Deferred income taxes (Note 8)		1,173		1,157
Other assets		1,474		1,487

Total Assets	$	30,267	$	28,898

Liabilities and Equity

Current liabilities:
Current portion of long-term debt and short-term borrowings	$	256	$	11
Accounts payable		1,176		1,587
Other accrued liabilities (Note 6 and Note 13)		2,417		1,923
Total current liabilities		3,849		3,521

Long-term debt (Note 12)		7,822		7,729
Postretirement benefits other than pensions		667		671
Other liabilities (Note 6 and Note 13)		5,072		3,980
Total liabilities		17,410		15,901

Commitments, contingencies and guarantees (Note 6)
Shareholders’ equity (Note 16):
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: 1,722 million and 1,718 million		861		859
Additional paid-in capital – common stock		14,494		14,323
Retained earnings		16,065		16,408
Treasury stock, at cost; Shares held: 961 million and 956 million		(19,926


PART I – FINANCIAL INFORMATION
		Page
Item 1. Financial Statements

Consolidated Statements of Income (Unaudited) for the three and nine months ended September 30, 2020 and 2019		3

Consolidated Statements of Comprehensive Income (Unaudited) for the three and nine months ended September 30, 2020 and 2019		4

Consolidated Balance Sheets (Unaudited) at September 30, 2020 and December 31, 2019		5

Consolidated Statements of Cash Flows (Unaudited) for the nine months ended September 30, 2020 and 2019		6

Consolidated Statements of Changes to Shareholders’ Equity (Unaudited) for the three and nine months ended September 30, 2020 and 2019		7

Notes to Consolidated Financial Statements (Unaudited)		9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		32

Item 3. Quantitative and Qualitative Disclosures About Market Risk		56

Item 4. Controls and Procedures		56

PART II – OTHER INFORMATION

Item 1. Legal Proceedings		57

Item 1A. Risk Factors		57

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		58

Item 6. Exhibits		59

Signatures		60