Corning Incorporated : Q4Financial Statement & Exhibits2022

CORNING INCORPORATED AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENTS OF (LOSS) INCOME (Unaudited; in millions, except per share amounts)

		Three months ended		Year ended
		December 31,		December 31,
Net sales		2022			2021			2022			2021
$	3,406		$	3,676		$	14,189		$	14,082
Cost of sales		2,491			2,405			9,683			9,019
Gross margin		915			1,271			4,506			5,063
Operating expenses:
Selling, general and administrative expenses		517			476			1,898			1,827
Research, development and engineering expenses		281			280			1,047			995
Amortization of purchased intangibles		31			32			123			129
Operating income		86			483			1,438			2,112
Interest income		6			3			15			11
Interest expense		(76)		(73)		(292)		(300)
Translated earnings contract gain, net		94			92			351			354
Other (expense) income, net		(106)		80			285			249
Income before income taxes		4			585			1,797			2,426
Provision for income taxes		(31)		(89)		(411)		(491)
Net (loss) income		(27)		496			1,386			1,935
Net income attributable to non-controlling interest		(9)		(9)		(70)		(29)
Net (loss) income attributable to Corning Incorporated	$	(36)	$	487		$	1,316		$	1,906
(Loss) earnings per common share available to common
shareholders:
Basic	$	(0.04)	$	0.57		$	1.56		$	1.30
Diluted	$	(0.04)	$	0.56		$	1.54		$	1.28
Reconciliation of net (loss) income attributable to Corning
Incorporated versus net (loss) income available to common
shareholders:
Net (loss) income attributable to Corning Incorporated	$	(36)	$	487		$	1,316		$	1,906
Series A convertible preferred stock dividend											(24)
Excess consideration paid for redemption of preferred shares											(803)
Net (loss) income available to common shareholders	$	(36)	$	487		$	1,316	$	1,079

© 2023 Corning Incorporated. All Rights Reserved

CORNING INCORPORATED AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

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

			December 31,
Assets		2022			2021
Current assets:
Cash and cash equivalents	$	1,671		$	2,148
Trade accounts receivable, net of doubtful accounts		1,664			2,004
Inventories		2,904			2,481
Other current assets		1,157			1,026
Total current assets		7,396			7,659
Property, plant and equipment, net of accumulated depreciation		15,371			15,804
Goodwill, net		2,394			2,421
Other intangible assets, net		1,029			1,148
Deferred income taxes		1,073			1,066
Other assets		2,179			2,056
Total Assets	$	29,442		$	30,154
Liabilities and Equity
Current liabilities:
Current portion of long-term debt and short-term borrowings	$	224		$	55
Accounts payable		1,804			1,612
Other accrued liabilities		3,090			3,139
Total current liabilities		5,118			4,806
Long-term debt		6,687			6,989
Postretirement benefits other than pensions		407			622
Other liabilities		4,955			5,192
Total liabilities		17,167			17,609
Commitments and contingencies
Shareholders' equity:
Common stock - Par value $0.50 per share; Shares authorized 3.8 billion;
Shares issued: 1.8 billion and 1.8 billion		910			907
Additional paid-in capital - common stock		16,682			16,475
Retained earnings		16,778			16,389
Treasury stock, at cost; Shares held: 977 million and 970 million		(20,532)		(20,263)
Accumulated other comprehensive loss		(1,830)		(1,175)
Total Corning Incorporated shareholders' equity		12,008			12,333
Non-controlling interest		267			212
Total equity		12,275			12,545
Total Liabilities and Equity	$	29,442		$	30,154

© 2023 Corning Incorporated. All Rights Reserved

CORNING INCORPORATED AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in millions)

			Three months ended		Year ended
			December 31,		December 31,
Cash Flows from Operating Activities:		2022				2021				2022				2021
Net (loss) income	$	(27)		$	496			$	1,386			$	1,935
Adjustments to reconcile net (loss) income to net cash provided by
operating activities:
Depreciation		315				347				1,329				1,352
Amortization of purchased intangibles		31				32				123				129
Loss on disposal of assets		79				49				189				57
Severance charges (reversals)		62				(13)			70				(13)
Share-based compensation expense		30				73				175				190
Translation loss (gain) on Japanese yen-denominated debt		130				(53)			(191)			(180)
Deferred tax (benefit) provision		(104)			(52)			(46)			16
Translated earnings contract gain		(94)			(92)			(351)			(354)
Unrealized translation (gain) loss on transactions		(72)			12				68				77
Changes in certain working capital items:
Trade accounts receivable		9				92				170				(54)
Inventories		115				(31)			(522)			(103)
Other current assets		(134)			(14)			(139)			(224)
Accounts payable and other current liabilities		267				301				292			772
Customer deposits and government incentives		(34)			(34)			110			28
Deferred income		(34)			(24)			(49)			(116)
Other, net		78				(66)			1				(100)
Net cash provided by operating activities		617				1,023				2,615				3,412
Cash Flows from Investing Activities:
Capital expenditures		(403)			(623)			(1,604)			(1,637)
(Payments) proceeds from sale of business		(1)			1				76				103
Investments in and proceeds from unconsolidated entities, net		(28)			(3)			(38)			84
Realized gains on translated earnings contracts		91				37				300				67
Premiums paid on hedging contracts		(49)			(20)			(75)			(48)
Other, net		4				(8)			(14)			12
Net cash used in investing activities		(386	)			(616	)			(1,355	)			(1,419	)
Cash Flows from Financing Activities:
Repayments of short-term borrowings										(87)			(144)
Repayments of long-term debt														(716)
Proceeds from issuance of short-term debt										70
Proceeds from issuance of long-term debt		20				3				57				22
Payment for redemption of preferred stock										(507)			(507)
Payments of employee withholding tax on stock awards		(3)			(4)			(47)			(61)
Proceeds from exercise of stock options		5				6				40				97
Purchases of common stock for treasury						(252)			(221)			(274)
Dividends paid		(236)			(212)			(932)			(871)
Other, net		(5)			(3)			(22)			2
Net cash used in financing activities		(219	)			(462	)			(1,649	)			(2,452	)
Effect of exchange rates on cash		29				(9	)			(88	)			(65	)
Net increase (decrease) in cash and cash equivalents		41				(64	)			(477	)			(524	)
Cash and cash equivalents at beginning of year		1,630				2,212				2,148				2,672
Cash and cash equivalents at end of year	$	1,671			$	2,148			$	1,671			$	2,148

© 2023 Corning Incorporated. All Rights Reserved

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		Year ended
		December 31,		December 31,
		2022		2021		2022		2021
Net (loss) income attributable to Corning Incorporated	$	(36)	$	487	$	1,316	$	1,906
Less: Series A convertible preferred stock dividend								24
Less: Excess consideration paid for redemption of preferred shares								803
Net (loss) income available to common shareholders - basic		(36)		487		1,316		1,079
Net (loss) income available to common shareholders - diluted	$	(36)	$	487	$	1,316	$	1,079
Weighted-average common shares outstanding - basic		843		849		843		828
Effect of dilutive securities:
Stock options and other dilutive securities				15		14		16
Weighted-average common shares outstanding - diluted		843		864		857		844
Basic (loss) earnings per common share	$	(0.04)	$	0.57	$	1.56	$	1.30
Diluted (loss) earnings per common share	$	(0.04)	$	0.56	$	1.54	$	1.28

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		Year ended
		December 31,		December 31,
		2022		2021		2022		2021
Core net income attributable to Corning Incorporated	$	402	$	465	$	1,794	$	1,811
Less: Series A convertible preferred stock dividend								24
Core net income available to common shareholders - basic		402		465		1,794		1,787
Plus: Series A convertible preferred stock dividend								24
Core net income available to common shareholders - diluted	$	402	$	465	$	1,794	$	1,811
Weighted-average common shares outstanding - basic		843		849		843		828
Effect of dilutive securities:
Stock options and other dilutive securities		13		15		14		16
Series A convertible preferred stock								31
Weighted-average common shares outstanding - diluted		856		864		857		875
Core basic earnings per common share	$	0.48	$	0.55	$	2.13	$	2.16
Core diluted earnings per common share	$	0.47	$	0.54	$	2.09	$	2.07

© 2023 Corning Incorporated. All Rights Reserved

CORE PERFORMANCE MEASURES

In managing the Company and assessing our financial performance, we adjust certain measures provided by our consolidated financial statements to exclude specific items to arrive at our core performance measures. These items include the impact of translating the Japanese yen-denominated debt, the impact of the translated earnings contracts, acquisition-related costs, certain discrete tax items and other tax-related adjustments, restructuring, impairment, and other charges and credits, certain litigation, regulatory and other legal matters, pension mark-to-market adjustments and other items which do not reflect the ongoing operating results of the Company.

In addition, because a significant portion of our revenues and expenses are denominated in currencies other than the U.S. dollar, management believes it is important to understand the impact on sales and net income of translating these currencies into U.S. dollars. Therefore, management utilizes constant-currency reporting for Display Technologies, Specialty Materials, Environmental Technologies and Life Sciences segments to exclude the impact from the Japanese yen, South Korean won, Chinese yuan, new Taiwan dollar and the euro, as applicable to the segment. The most significant constant-currency adjustment relates to the Japanese yen exposure within the Display Technologies segment. We establish constant-currency rates based on internally derived management estimates which are closely aligned with the currencies we have hedged. For details of the rates used, please see the footnotes to the "Reconciliation of Non-GAAP Measures" section.

We believe that the use of constant-currency reporting allows management to understand our results without the volatility of currency fluctuation, analyze underlying trends in the businesses, and establish operational goals and forecasts. Further, it reflects the underlying economics of the translated earnings contracts used to mitigate the impact of changes in currency exchange rates on our earnings and cash flows.

Core performance measures are not prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"), but management believes that reporting core performance measures provides investors with greater transparency to the information used by our management team to make financial and operational decisions. We believe investors should consider these non-GAAP measures in evaluating our results as they are more indicative of our core operating performance and how management evaluates our operational results and trends. These measures are not, and should not be viewed as a substitute for, GAAP reporting measures. With respect to the outlook for future periods, it is not possible to provide reconciliations for these non-GAAP measures because management 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 management's control. As a result, management 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".

© 2023 Corning Incorporated. All Rights Reserved