# Corning Inc: Form 10-Q for the period ended Mar 31, 2024

- Company: [Corning Inc](/companies/glw.md) (CIK 24741)
- Form: 10-Q
- Filed: 2024-05-02
- Accepted by EDGAR: May 2, 2024, 13:40 ET
- Period: 2024-03-31
- Accession: 0001437749-24-014319
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/24741/000143774924014319/glw20240331_10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/24741/000143774924014319/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-01-01 to 2024-03-31 | $2.98bn | us-gaap:Revenues |
| Cost of revenue | 3 months, 2024-01-01 to 2024-03-31 | $1.98bn | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2024-01-01 to 2024-03-31 | $993.0m | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2024-01-01 to 2024-03-31 | $451.0m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2024-01-01 to 2024-03-31 | $254.0m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2024-01-01 to 2024-03-31 | $71.0m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-01-01 to 2024-03-31 | $209.0m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-01-01 to 2024-03-31 | $0.24 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-01-01 to 2024-03-31 | $0.25 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-01-01 to 2024-03-31 | 862,000,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2024-01-01 to 2024-03-31 | $96.0m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Current assets | at 2024-03-31 | $6.97bn | us-gaap:AssetsCurrent |
| Total assets | at 2024-03-31 | $27.62bn | us-gaap:Assets |
| Current liabilities | at 2024-03-31 | $4.17bn | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-03-31 | $16.06bn | us-gaap:Liabilities |
| Current portion of debt | at 2024-03-31 | $318.0m | us-gaap:DebtCurrent |
| Shareholders' equity | at 2024-03-31 | $11.23bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 48,696 characters.

Corning Incorporated and its consolidated subsidiaries are hereinafter sometimes referred to as the “Company,” the “Registrant,” “Corning,” “we,” “our,” or “us.”

This report contains forward-looking statements that involve a number of risks and uncertainties. These statements relate to plans, objectives, expectations and estimates and may contain words such as “will,” “believe,” “anticipate,” “expect,” “intend,” “plan,” “seek,” “see,” “would,” “target,” “estimate,” “forecast,” or similar expressions. Actual results could differ materially from what is expressed or forecasted in forward-looking statements. Some of the factors that could contribute to these differences include those discussed under “Forward-Looking Statements,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere in this report.

### ORGANIZATION OF INFORMATION

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) was prepared to provide a historical and prospective narrative on our financial condition and results of operations through the eyes of management and should be read in conjunction with our MD&A of our Annual Report on Form 10-K for the year ended December 31, 2023 (“2023 Form 10-K”).

Our MD&A is organized as follows:

- Overview
- Results of Operations
- Segment Analysis
- Core Performance Measures
- Liquidity and Capital Resources
- Environment
- Critical Accounting Estimates
- Forward-Looking Statements

### OVERVIEW

Corning is vital to progress – in the industries we help advance and in the world we share. For more than 170 years, Corning has combined its unparalleled expertise in glass science, ceramic science and optical physics with deep manufacturing and engineering capabilities to develop category-defining products that transform industries and enhance people’s lives. Our materials science and manufacturing expertise, boundless curiosity and commitment to purposeful invention place us at the center of the way the world works, learns and lives. In addition, our sustained investment in research, development and engineering capabilities means we are always ready to solve the toughest challenges – alongside our customers.

Our capabilities are versatile and synergistic, allowing Corning to evolve to meet changing market needs, while also helping customers capture new opportunities in dynamic industries. Corning strives to be a catalyst for positive change and to help move the world forward. The Company drives profitable multiyear growth by inventing, making and selling life-changing products – all of which is based on a set of vital capabilities that are increasingly relevant to profound transformations that touch many facets of daily life. Today, Corning's markets include optical communications, mobile consumer electronics, display, automotive, solar, semiconductor and life sciences.

In 2023, we introduced plans to improve profitability and cash flow and we took action to increase price and improve productivity ratios. Since then, our results demonstrated that we made solid progress advancing market leadership, strengthening our profitability and improving our cash flow generation even in the lower-demand environment. Further, we entered 2024 operationally strong and our first-quarter results show encouraging signs of improving market conditions.

We remain confident that key industry growth drivers are intact: specifically, wireless, broadband, 5G, cloud computing and advanced artificial intelligence in Optical Communications, increased screen sizes in Display Technologies, tighter emission regulations that drive more and better filtration in Environmental Technologies and the need for advanced cover materials in Mobile Consumer Electronics. Additionally, we have built competitively-advantaged positions in the markets in which we participate and we believe we are the technology leader in these markets. We believe we are well-positioned with existing production capacity and technical capabilities necessary to capture this growth and deliver strong incremental profit and cash to our shareholders.

### 2024 Corporate Outlook

We expect core net sales of approximately $3.4 billion for the second quarter of 2024.

### RESULTS OF OPERATIONS

The following table presents selected highlights from our operations (in millions):

|  | Three months ended% March 31, 2024 | 2023 | change 24 vs. 23 |
| --- | ---: | ---: | ---: |
| Net sales | $2,975 | $3,178 | (6%) |
| Cost of sales | $1,982 | $2,175 | (9%) |
| Gross margin | $993 | $1,003 | (1%) |
| Gross margin % | 33% | 32% |  |
| Selling, general and administrative expenses | $451 | $421 | 7% |
| as a % of net sales | 15% | 13% |  |
| Research, development and engineering expenses | $258 | $254 | 2% |
| as a % of net sales | 9% | 8% |  |
| Translated earnings contract gain (loss), net | $39 | $(8) | \* |
| Income before income taxes | $296 | $228 | 30% |
| Provision for income taxes | $(71) | $(37) | 92% |
| Effective tax rate | 24% | 16% |  |
| Net income attributable to Corning Incorporated | $209 | $176 | 19% |
| Comprehensive (loss) income attributable to Corning Incorporated | $(118) | $109 | \* |

\* Not meaningful

### Net sales

For the three months ended March 31, 2024, net sales decreased $203 million, or 6%, when compared to the same period in 2023. The decrease was primarily driven by decreased segment sales of $195 million in Optical Communications.

Refer to the “Segment Analysis” section of our MD&A below for a discussion of net sales by segment.

### Cost of sales / Gross margin

The types of expenses included in cost of sales 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.

For the three months ended March 31, 2024, gross margin decreased $10 million, or 1%, and improved as a percentage of sales by 1 percentage point when compared to the same period in 2023. Despite the decline in sales, the improvement in gross margin as a percentage of sales is primarily driven by the actions taken throughout 2023 to improve profitability, including raising prices, restoring our productivity levels and normalizing inventory levels.

### Selling, general and administrative expenses

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 and rent for administrative facilities.

For the three months ended March 31, 2024, selling, general and administrative expenses increased $30 million and increased as a percentage of sales when compared to the same period in 2023 due to lower sales in the current period as compared to the same period in 2023.

### Research, development and engineering expenses

For the three months ended March 31, 2024, research, development and engineering expenses increased $4 million and increased as a percentage of sales when compared to the same period in 2023 due to lower sales in the current period as compared to the same period in 2023.

### Translated earnings contract gain (loss), net

Included in translated earnings contract gain (loss), net, is the impact of foreign currency contracts which economically hedge the translation exposure arising from movements in the Japanese yen, South Korean won, new Taiwan dollar, euro and Chinese yuan and its impact on net income.

The following table provides detailed information on the impact of translated earnings contract gain (loss), net (in millions):

| Hedges related to translated earnings: | Three months ended March 31, 2024 Income before tax | Net income | Three months ended March 31, 2023 Income before tax | Net income | Change 2024 vs. 2023 Income before tax | Net income |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Realized gain, net (1) | $63 | $48 | $67 | $52 | $(4) | $(4) |
| Unrealized loss, net (2) | (24) | (18) | (75) | (58) | 51 | 40 |
| Total translated earnings contract gain (loss), net | $39 | $30 | $(8) | $(6) | $47 | $36 |

(1) For the three months ended March 31, 2024 and 2023, amount includes pre-tax realized losses of $31 million and $14 million, respectively, related to the expiration of option contracts and were reflected within operating activities in the consolidated statements of cash flows.

(2) The impact to income for the three months ended March 31, 2024 was primarily driven by unrealized losses from our South Korean won-denominated hedges, partially offset by unrealized gains from our Japanese yen-denominated hedges. The impact to income for the three months ended March 31, 2023 was primarily driven by unrealized losses from our Japanese yen and South Korean won-denominated hedges.

22

### Income before income taxes

For the three months ended March 31, 2024, income before income taxes increased $68 million when compared to the same period in 2023, which is primarily driven by a $47 million improvement in translated earnings contract gains.

### Provision for Income Taxes

For the three months ended March 31, 2024, the effective tax rate differed from the United States (“U.S.”) statutory rate of 21%, primarily due to changes in tax reserves, partially offset by a net benefit due to foreign derived intangible income.

For the three months ended March 31, 2023, the effective tax rate differed from the U.S. statutory rate of 21%, primarily due to differences arising from foreign earnings and a net benefit due to foreign derived intangible income.

The effective tax rate for the three months ended March 31, 2024 increased when compared to the same period in 2023 primarily due to differences arising from foreign earnings and changes in tax reserves.

### Net income attributable to Corning Incorporated

As a result of the items discussed above, net income attributable to Corning Incorporated and per share data were as follows (in millions, except per share amounts):

|  | Three months ended March 31, 2024 | 2023 |
| --- | ---: | ---: |
| Net income attributable to Corning Incorporated | $209 | $176 |
| Basic earnings per common share | $0.25 | $0.21 |
| Diluted earnings per common share | $0.24 | $0.20 |
| Weighted-average common shares outstanding - basic | 852 | 844 |
| Weighted-average common shares outstanding - diluted | 862 | 859 |

### Comprehensive (loss) income attributable to Corning Incorporated

Comprehensive loss attributable to Corning Incorporated for the three months ended March 31, 2024 was $118 million compared to comprehensive income of $109 million for the three months ended March 31, 2023. This movement is driven by the increase in net losses on foreign currency translation adjustments of $246 million, primarily driven by the Japanese yen, Chinese yuan and euro.

### SEGMENT ANALYSIS

Financial results for the reportable segments and Hemlock and Emerging Growth Businesses are prepared on a basis consistent with the internal disaggregation of financial information to assist the chief operating decision maker (“CODM”) in making internal operating decisions, which is more fully discussed within Note 14 (Reportable Segments) in the accompanying notes to the consolidated financial statements and includes a reconciliation of our segment information to the corresponding amounts in our consolidated statements of income.

Segment net income may not be consistent with measures used by other companies.

The following table presents segment net sales by reportable segment and Hemlock and Emerging Growth Businesses (in millions):

|  | Three months ended March 31, 2024 | 2023 | $% change 24 vs. 23 | change 24 vs. 23 |
| --- | ---: | ---: | ---: | ---: |
| Optical Communications | $930 | $1,125 | $(195) | (17)% |
| Display Technologies | 872 | 763 | 109 | 14% |
| Specialty Materials | 454 | 406 | 48 | 12% |
| Environmental Technologies | 455 | 431 | 24 | 6% |
| Life Sciences | 236 | 256 | (20) | (8)% |
| Net sales of reportable segments | 2,947 | 2,981 | (34) | (1)% |
| Hemlock and Emerging Growth Businesses | 311 | 386 | (75) | (19)% |
| Net sales of reportable segments and Hemlock and Emerging Growth Businesses (1) | $3,258 | $3,367 | $(109) | (3)% |

(1) Refer to Note 14 (Reportable Segments) in the accompanying notes to the consolidated financial statements for the reconciliation to consolidated net sales.

### Optical Communications

The decrease in segment net sales was primarily driven by a decline in sales volume due to lower carrier demand as carrier customers continue to draw down inventory.

### Display Technologies

The increase in segment net sales was primarily due to higher sales volume, attributable to increased panel maker utilization driven by growth in retail demand, as well as pricing actions taken in the second half of 2023.

### Specialty Materials

The increase in segment net sales was due to continued strong demand for premium smartphone cover materials as well as semiconductor-related products.

### Environmental Technologies

The increase in segment net sales was primarily due to increased gasoline particulate filter adoption in China, partially offset by a decline in heavy-duty diesel.

### Life Sciences

The decrease in segment net sales was primarily due to customers in North America and Europe continuing their inventory drawdowns.

### Hemlock and Emerging Growth Businesses

The decrease in segment net sales was primarily due to a decrease in our HSG business driven by lower pricing for solar-grade polysilicon and lower sales in our Pharmaceutical Technologies business from the completion of volume commitments for COVID-related products.

The following table presents segment net income by reportable segment and Hemlock and Emerging Growth Businesses (in millions):

|  | Three months ended March 31, 2024 | 2023 | $% change 24 vs. 23 | change 24 vs. 23 |
| --- | ---: | ---: | ---: | ---: |
| Optical Communications | $100 | $159 | $(59) | (37)% |
| Display Technologies | 201 | 160 | 41 | 26% |
| Specialty Materials | 44 | 39 | 5 | 13% |
| Environmental Technologies | 105 | 82 | 23 | 28% |
| Life Sciences | 13 | 9 | 4 | 44% |
| Net income of reportable segments | 463 | 449 | 14 | 3% |
| Hemlock and Emerging Growth Businesses | (10) | 16 | (26) | \* |
| Net income of reportable segments and Hemlock and Emerging Growth Businesses (1) | $453 | $465 | $(12) | (3)% |

\* Not meaningful

(1) Refer to Note 14 (Reportable Segments) in the accompanying notes to the consolidated financial statements for the reconciliation to net income attributable to Corning Incorporated.

### Optical Communications

The decrease in segment net income was primarily driven by a decline in sales volume, as outlined above.

### Display Technologies

The increase in segment net income was primarily driven by the increase in sales volume, as outlined above, and improved profitability from pricing actions taken.

### Specialty Materials

The increase in segment net income was primarily driven by the increase in sales, as outlined above.

### Environmental Technologies

The increase in segment net income was primarily driven by the increase in sales, as outlined above, and improved operating performance.

### Life Sciences

The increase in segment net income was primarily driven by profitability improvements from productivity actions taken.

### Hemlock and Emerging Growth Businesses

The decrease in segment net income was primarily driven by our HSG and Pharmaceutical Technologies business due to lower sales, as outlined above.

### CORE PERFORMANCE MEASURES

In managing the Company and assessing our financial performance, we adjust certain measures included in 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 the 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 euro, as applicable to the segment. In addition, effective January 1, 2024, the Company began utilizing constant-currency reporting for the Optical Communications segment to exclude the impact from the Mexican peso on segment results. Prior periods were not recasted as the impact was not material. The most significant constant-currency adjustment relates to the Japanese yen exposure within the Display Technologies segment.

The constant-currency rates established for our core performance measures are internally derived long-term management estimates, which are closely aligned with our hedging instrument rates. These hedging instruments may include, but are not limited to, foreign exchange forward or option contracts and foreign-denominated debt. 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 fluctuations, analyze underlying trends in the businesses and establish operational goals and forecasts.

Core performance measures are not prepared in accordance with GAAP. We provide investors with these non-GAAP measures to evaluate our results as we believe they are indicative of our core operating performance and provide greater transparency to how management evaluates our results and trends and makes financial and operational decisions. 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.”

**Results of Operations – Core Performance Measures**

The following table presents selected highlights from our operations, excluding certain items (in millions, except per share amounts):

|  | Three months ended% March 31, 2024 | 2023 | change 24 vs. 23 |
| --- | ---: | ---: | ---: |
| Core net sales | $3,258 | $3,367 | (3)% |
| Core net income | $330 | $350 | (6)% |
| Core earnings per share | $0.38 | $0.41 | (7)% |

### Core Net Sales

For the three months ended March 31, 2024, we generated core net sales of $3.3 billion compared to core net sales of $3.4 billion for the same period in 2023. The decrease in core net sales of $0.1 billion was primarily driven by decreased segment sales of $195 million in Optical Communications and $75 million in Hemlock and Emerging Growth Businesses, partially offset by increased segment sales of $109 million in Display and $48 million in Specialty Materials. Net sales by reportable segment and Hemlock and Emerging Growth Businesses are discussed in detail in the “Segment Analysis” section of our MD&A.

### Core Net Income

For the three months ended March 31, 2024, we generated core net income of $330 million compared to core net income generated for the three months ended March 31, 2023 of $350 million. The decrease of $20 million was primarily due to lower segment net income for Optical Communications of $59 million, partially offset by higher segment net income for Display Technologies of $41 million. Net income by reportable segment and Hemlock and Emerging Growth Businesses are discussed in detail in the “Segment Analysis” section of our MD&A.

### Core Earnings per Share

Core earnings per share decreased for the three months ended March 31, 2024 to $0.38 per share, primarily as a result of the changes in core net income, outlined above.

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

|  | Three months ended March 31, 2024 | 2023 |
| --- | ---: | ---: |
| Core net income | $330 | $350 |
| Weighted-average common shares outstanding - basic | 852 | 844 |
| Effect of dilutive securities: |  |  |
| Stock options and other awards | 10 | 15 |
| Weighted-average common shares outstanding - diluted | 862 | 859 |
| Core earnings per share | $0.38 | $0.41 |

27

### Reconciliation of Non-GAAP Measures

We utilize certain financial measures and key performance indicators that are not calculated in accordance with GAAP to assess our 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 net income and core earnings per share are non-GAAP financial measures utilized by our 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 our operations.

The following tables reconcile our non-GAAP financial measures to their most directly comparable GAAP financial measure (amounts in millions, except percentages and per share amounts):

|  | Three months ended March 31, 2024 Net sales | Income before income taxes | Net income attributable to Corning Incorporated | Effective tax rate (a)(b) | Per share |
| --- | ---: | ---: | ---: | ---: | ---: |
| **As reported – GAAP** | **$2,975** | **$296** | **$209** | **24.0%** | **$0.24** |
| Constant-currency adjustment (1) | 283 | 226 | 172 |  | 0.20 |
| Translation gain on Japanese yen-denominated debt (2) |  | (81) | (62) |  | (0.07) |
| Translated earnings contract gain (3) |  | (39) | (30) |  | (0.03) |
| Acquisition-related costs (4) |  | 32 | 24 |  | 0.03 |
| Discrete tax items and other tax-related adjustments (5) |  |  | 15 |  | 0.02 |
| Restructuring, impairment and other charges and credits (6) |  | (9) | (7) |  | (0.01) |
| Litigation, regulatory and other legal matters (7) |  | (5) | (4) |  | (0.00) |
| Pension mark-to-market adjustment (8) |  | 11 | 8 |  | 0.01 |
| Loss on investments (9) |  | 5 | 5 |  | 0.01 |
| Core performance measures | $3,258 | $436 | $330 | 20.2% | $0.38 |

(a) Based upon statutory tax rates in the specific jurisdiction for each event.

(b) The calculation of the effective tax rate for GAAP and Core excludes net income attributable to non-controlling interest of approximately $16 million and $17 million, respectively.

|  | Three months ended March 31, 2023 Net sales | Income before income taxes | Net income attributable to Corning Incorporated | Effective tax rate (a)(b) | Per share |
| --- | ---: | ---: | ---: | ---: | ---: |
| **As reported - GAAP** | **$3,178** | **$228** | **$176** | **16.2%** | **$0.20** |
| Constant-currency adjustment (1) | 189 | 149 | 114 |  | 0.13 |
| Translation gain on Japanese yen-denominated debt (2) |  | (18) | (14) |  | (0.02) |
| Translated earnings contract loss (3) |  | 8 | 6 |  | 0.01 |
| Acquisition-related costs (4) |  | 34 | 20 |  | 0.02 |
| Discrete tax items and other tax-related adjustments (5) |  |  | (2) |  | (0.00) |
| Restructuring, impairment and other charges and credits (6) |  | 66 | 53 |  | 0.06 |
| Pension mark-to-market adjustment (8) |  | 10 | 8 |  | 0.01 |
| Loss on investments (9) |  | 4 | 4 |  | 0.00 |
| Gain on sale of assets (10) |  | (20) | (15) |  | (0.02) |
| Core performance measures | $3,367 | $461 | $350 | 19.4% | $0.41 |

(a) Based upon statutory tax rates in the specific jurisdiction for each event.

(b) The calculation of the effective tax rate for GAAP and Core excludes net income attributable to non-controlling interest of approximately $15 million and $21 million, respectively.

See “Items Adjusted from GAAP Measures” for the descriptions of the footnoted reconciling items.

### Items Adjusted from GAAP Measures

Items adjusted from GAAP measures to arrive at core performance measures are as follows:

|  | Constant-currency adjustment: As a significant portion of 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. The Company utilizes constant-currency reporting for Display Technologies, Specialty Materials, Environmental Technologies and Life Sciences segments for the Japanese yen, Korean won, Chinese yuan, New Taiwan dollar and euro, as applicable to the segment. In addition, effective January 1, 2024, the Company began utilizing constant-currency reporting for the Optical Communications segment to exclude the impact from the Mexican peso on segment results. Prior periods were not recasted as the impact was not material. The constant-currency rates established for our core performance measures are internally derived long-term management estimates, which are closely aligned with our hedging instrument rates. These hedging instruments may include, but are not limited to, foreign exchange forward or option contracts and foreign-denominated debt. For the three months ended March 31, 2024, the adjustment primarily relates to our Japanese yen exposure due to the difference in the average spot rate compared to our core rate. 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. Constant-currency rates used are as follows and are applied to all periods presented and to all foreign exchange exposures during the period, even though we may be less than 100% hedged: Currency Japanese yen Korean won Chinese yuan New Taiwan dollar Euro Mexican peso |
| ---: | --- |
|  | Rate ¥107 ₩1,175 ¥6.7 NT$31 €.81 MX$20 |
| (2) | Translation of Japanese yen-denominated debt: Amount reflects the gain or loss on the translation of our yen-denominated debt to U.S. dollars. |
| (3) | Translated earnings contract: Amount reflects the impact of the realized and unrealized gains and losses from the Japanese yen, South Korean won, Chinese yuan, euro and New Taiwan dollar-denominated foreign currency hedges related to translated earnings, as well as the unrealized gains and losses of our British pound-denominated foreign currency hedges related to translated earnings. |
| (4) | Acquisition-related costs: Amount reflects intangible amortization, inventory valuation adjustments and external acquisition-related deal costs, as well as other transaction related costs. |
| (5) | Discrete tax items and other tax-related adjustments: Amount reflects certain discrete period tax items such as changes in tax law, the impact of tax audits, changes in tax reserves and changes in deferred tax asset valuation allowances, as well as other tax-related adjustments. |
| (6) | Restructuring, impairment and other charges and credits: Amount reflects certain restructuring, impairment losses and other charges and credits, as well as other expenses, including severance, accelerated depreciation, asset write-offs and facility repairs resulting from power outages, which are not related to ongoing operations. |
| (7) | Litigation, regulatory and other legal matters: Amount reflects developments in commercial litigation, intellectual property disputes, adjustments to our estimated liability for environmental-related items and other legal matters. |
| (8) | Pension mark-to-market adjustment: Amount primarily reflects 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. |
| (9) | Loss on investments: Amount reflects the gain or loss recognized on investments due to mark-to-market adjustments for the change in fair value or the disposition of an investment. |
| (10) | Gain on sale of assets: Amount represents the gain recognized for the sale of assets. |

29

### LIQUIDITY AND CAPITAL RESOURCES

Our financial condition and liquidity are strong. We are not aware of any known trends, demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in a material decrease in our liquidity. In addition, other than items discussed, there are no known material trends, favorable or unfavorable, in our capital resources and no expected material changes in the mix of such resources.

Our major sources of funding for 2024 and beyond will be our operating cash flow, our existing balances of cash and cash equivalents and proceeds from any issuances of debt. We believe we have sufficient liquidity to fund operations and meet our obligations for the foreseeable future. Such obligations may include requirements for acquisitions, capital expenditures, debt repayments, dividend payments and share repurchases. We will continue to generate cash from operations and maintain access to our revolving credit facilities and commercial paper programs as discussed in more detail below.

### Key Balance Sheet Data

We fund our working capital with cash from operations and, periodically, short-term and long-term borrowings. In addition, from time to time, we receive upfront cash from customers relating to long-term supply agreements, as well as cash incentives from government entities generally for capital expansion and related expenses.

The following table presents balance sheet and working capital measures (in millions):

|  | March 31, 2024 | December 31, 2023 |
| --- | ---: | ---: |
| Working capital | $2,796 | $2,893 |
| Current ratio | 1.7:1 | 1.7:1 |
| Trade accounts receivable, net of doubtful accounts | $1,621 | $1,572 |
| Days sales outstanding | 49 | 47 |
| Inventories | $2,713 | $2,666 |
| Inventory turns | 3.1 | 3.2 |
| Days payable outstanding (1) | 55 | 52 |
| Long-term debt | $7,050 | $7,206 |
| Total debt | $7,368 | $7,526 |
| Total debt to total capital | 39% | 39% |

(1) Includes trade payables only.

We perform comprehensive reviews of our significant customers and their creditworthiness by analyzing their financial strength at least annually or more frequently for customers where we have identified a measure of increased risk. We closely monitor payments and developments to identify potential customer credit issues. We are not aware of any customer credit issues that could have a material impact on our liquidity.

We participate in accounts receivable management programs, including factoring arrangements to sell certain accounts receivable to third-party financial institutions or accelerate collections through our customer’s supply chain financing arrangements. Sales of accounts receivable are reflected as a reduction of accounts receivable in the consolidated balance sheets and the proceeds are included in cash flows from operating activities in the consolidated statements of cash flows. By utilizing these types of programs, we have accelerated the collection of $380 million of accounts receivable during the three months ended March 31, 2024. We believe these accounts receivables would have been collected during the normal course of business in the following quarter.

### Cash Flows

The following table presents a summary of cash flow data (in millions):

|  | Three months ended March 31, 2024 | 2023 |
| --- | ---: | ---: |
| Net cash provided by (used in) operating activities | $96 | $(49) |
| Net cash used in investing activities | $(184) | $(228) |
| Net cash used in financing activities | $(308) | $(248) |

Net cash provided by (used in) operating activities for the three months ended March 31, 2024 increased $145 million when compared to the same period in the prior year primarily driven by improvements in working capital.

Net cash used in investing activities for the three months ended March 31, 2024 improved by $44 million when compared to the same period last year, primarily driven by lower capital expenditures of $130 million and higher realized gains on translated earnings contracts of $13 million, partially offset by $67 million in proceeds from the sale of equipment in the prior period.

Net cash used in financing activities for the three months ended March 31, 2024 increased by $60 million when compared to the same period last year, primarily driven by the $54 million in proceeds received in the prior year from other financing arrangements.

### Sources of Liquidity

As of March 31, 2024, our cash and cash equivalents and available credit capacity included (in millions):

|  | March 31, 2024 |
| --- | ---: |
| Cash and cash equivalents | $1,365 |
| Available credit capacity: |  |
| U.S. dollar revolving credit facility | $1,500 |
| Chinese yuan facilities | $105 |

### Cash and Cash Equivalents

As of March 31, 2024, we had $1.4 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. As of March 31, 2024, approximately 62% of the consolidated cash and cash equivalents were held outside the U.S.

As of December 31, 2023, Corning had approximately $1.4 billion of indefinitely reinvested foreign earnings. If we distribute our foreign cash balances to the U.S. or to other foreign subsidiaries, we could be required to accrue and pay withholding taxes. We do not foresee a need to repatriate any earnings for which we asserted permanent reinvestment. However, to help fund cash needs of the U.S. or other international subsidiaries as they arise, we repatriate available cash from certain foreign subsidiaries whose earnings are not permanently reinvested.

### Debt Facilities and Other Sources of Liquidity

We have 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, we may issue commercial paper from time to time and will use the proceeds for general corporate purposes. As of March 31, 2024, we did not have outstanding commercial paper.

Our $1.5 billion Revolving Credit Agreement is available to support obligations under the commercial paper program and for general corporate purposes, if needed. As of March 31, 2024, there were no amounts outstanding under this facility.

Our 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%. As of March 31, 2024, our leverage using this measure was approximately 39%. As of March 31, 2024, we were in compliance.

Our 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 our debt instruments contain a cross default provision, whereby an uncured default exceeding a specified amount on one debt obligation, also would be considered a default under the terms of another debt instrument. As of March 31, 2024, we were in compliance with all such provisions.

We have access to certain Chinese yuan-denominated unsecured variable rate loan facilities, whose proceeds are used for capital investment and general corporate purposes. As of March 31, 2024, borrowings totaled $255 million and these facilities had variable interest rates ranging from 3.2% to 4.1% and maturities ranging from 2024 to 2032. As of March 31, 2024, Corning had 757 million Chinese yuan of unused capacity, equivalent to approximately $105 million.

As a well-known seasoned issuer, we filed an automatic shelf registration with the SEC on December 1, 2023. Under this shelf registration we may offer, from time to time, debt securities, common stock, preferred stock, depositary shares and warrants.

### Uses of Cash

### Fixed Rate Cumulative Convertible Preferred Stock, Series A

We had 2,300 outstanding shares of Fixed Rate Cumulative Convertible Preferred Stock, Series A (the “Preferred Stock”) as of December 31, 2020. On January 16, 2021, the Preferred Stock became convertible into 115 million common shares. On April 5, 2021 we executed the Share Repurchase Agreement (“SRA”) with Samsung Display Co., Ltd. (“SDC”) and the Preferred Stock was fully converted as of April 8, 2021. Immediately following the conversion, we repurchased and retired 35 million of the common shares held by SDC for an aggregate purchase price of approximately $1.5 billion, of which approximately $507 million was paid in April in each of 2023, 2022 and 2021.

Pursuant to the SRA, with respect to the remaining 80 million common shares outstanding held by SDC:

- SDC has the option to sell an additional 22 million common shares to Corning in specified tranches from time to time in calendar years 2024 through 2027. Corning may, at its sole discretion, elect to repurchase such common shares. If Corning elects not to repurchase the common shares and SDC sells the common shares on the open market, Corning will be required to pay SDC a make-whole payment, subject to a 5% cap of the repurchase proceeds that otherwise would have been paid by Corning.
- The remaining 58 million common shares are subject to a seven-year lock-up period expiring in 2027.

Refer to Note 14 (Shareholders’ Equity) in the notes to the consolidated financial statements within the 2023 Form 10-K for additional information.

### Share Repurchases

In 2019, the Board authorized the repurchase of up to $5.0 billion of common stock (“2019 Authorization”). As of March 31, 2024, approximately $3.3 billion remains available under our 2019 Authorization, which does not have an expiration date and may be amended or terminated by the Board of Directors at any time without prior notice.

### Common Stock Dividends

On May 2, 2024, Corning’s Board of Directors declared a dividend of $0.28 per share of common stock. The dividend will be payable on June 27, 2024.

### Capital Expenditures

Capital expenditures were $0.3 billion for the three months ended March 31, 2024. We expect our 2024 full year capital expenditures to be lower than 2023.

### Current Maturities of Short and Long-Term Debt

As of March 31, 2024, we had $318 million of long-term debt that is due in less than one year.

Refer to Note 10 (Debt) in the notes to the consolidated financial statements within the 2023 Form 10-K for additional information, including a summary of our debt maturities by year.

### Defined Benefit Pension Plans

Our global pension plans, including our unfunded and non-qualified plans, were 81% funded as of December 31, 2023. Our largest single pension plan is our U.S. qualified plan, which accounted for 77% of our consolidated defined benefit pension plans’ projected benefit obligation, was 92% funded as of December 31, 2023.

The funded status of our pension plans is dependent upon multiple factors including actuarial assumptions, interest rates at year-end, prior investment returns and contributions made to the plans. During 2024, the Company anticipates making cash contributions of $11 million to its international pension plans.

### Commitments, Contingencies and Guarantees

On March 12, 2024, Corning entered into a synthetic lease for a solar manufacturing facility in Hemlock, Michigan (the “Facility”), for which we are the construction agent on behalf of the lessor, with an estimated construction cost of approximately $835 million.

The lease will commence upon completion of construction of the Facility, which is expected to be in the later part of 2025, and has a lease term of five years with options to renew the lease or purchase the facility. The lease is expected to be classified as a finance lease and the amount of right-of-use asset and lease liability will be determined and recorded upon lease commencement. The estimated undiscounted lease payments, inclusive of a residual value guarantee, are approximately $1.1 billion, of which $35 million, $103 million, $99 million and $96 million is to be paid in 2025, 2026, 2027 and 2028, respectively, and $780 million is to be paid thereafter. The transaction agreements contain covenants that are consistent with our Revolving Credit Agreement as disclosed in the 2023 Form 10-K.

Other than the above matter, there were no material changes outside the ordinary course of business in the obligations disclosed in the 2023 Form 10-K under the caption “Commitments, Contingencies and Guarantees.”

### Off Balance Sheet Arrangements

There were no material changes outside the ordinary course of business in off balance sheet arrangements as disclosed in the 2023 Form 10-K under the caption “Off Balance Sheet Arrangements.”

### ENVIRONMENT

Refer to Item 1. Legal Proceedings or Note 10 (Commitments and Contingencies) in the accompanying notes to the consolidated financial statements for information.

### CRITICAL ACCOUNTING ESTIMATES

Our consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America. This requires us to make estimates and assumptions that affect reported amounts and related disclosures. Actual results could differ from those estimates. The estimates that are considered by management to be the most critical to the understanding of the consolidated financial statements as they require significant judgments that could materially impact our results of operations, financial position and cash flows are described in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. Since the date of the Company’s most recent Annual Report, there were no material changes in the Company’s critical accounting estimates or assumptions.

### FORWARD-LOOKING STATEMENTS

The statements in this Quarterly Report on Form 10-Q, in reports subsequently filed by Corning with the Securities and Exchange Commission (“SEC”) on Forms 10-Q and 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,” “target,” “estimate,” “forecast” or 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, the Company’s expected capital expenditure 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, there can be no assurance that these forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. The Company undertakes no obligation to update forward-looking statements if circumstances or management’s estimates or opinions should change except as required by applicable securities laws.

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:

- global economic trends, competition and geopolitical risks, or an escalation of sanctions, tariffs or other trade tensions between the U.S. and China or 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 health crisis events, inflation, interest rates, the value of securities and other financial assets, precious metals, oil, natural gas, raw materials and other commodity prices and exchange rates (particularly between the U.S. dollar and the Japanese yen, New Taiwan dollar, euro, Chinese yuan and South Korean won), the availability of government incentives, decreases or sudden increases of consumer demand, and the impact of such changes and volatility on our financial position and businesses;
- the duration and severity of health crisis events, such as an epidemic or pandemic, and its impact across our businesses on demand, personnel, operations, our global supply chains and stock price;
- 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;
- ability to enforce patents and protect intellectual property and trade secrets;
- disruption to Corning’s, our suppliers’ and manufacturers’ supply chain, equipment, facilities, IT systems or operations;
- product demand and industry capacity;
- competitive products and pricing;
- availability and costs of critical components, materials, equipment, natural resources and utilities;
- 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;
- the amount and timing of any future dividends;
- the effects of acquisitions, dispositions and other similar transactions;
- the 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;
- adverse litigation;
- product and component 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, regulations and international tax standards;
- the impacts of audits by taxing authorities; and
- the potential impact of legislation, government regulations, and other government action and investigations.

## Market risk

As filed, 717 characters.

As noted in the 2023 Form 10-K, we operate and conduct business in many foreign countries and as a result are exposed to movements in foreign currency exchange rates. Our exposure to exchange rates has the following effects:

- Exchange rate movements on financial instruments and transactions denominated in foreign currencies that impact earnings; and
- Exchange rate movements upon conversion of net assets and net income of foreign subsidiaries for which the functional currency is not the U.S. dollar.

For a discussion of the Company’s exposure to market risk and how we mitigate that risk, refer to Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risks, contained in the 2023 Form 10-K.

## Controls and procedures

As filed, 1,681 characters.

### Disclosure Controls and Procedures

Under the supervision of and with the participation of Corning’s management, including the chief executive officer and chief financial officer, we evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended), as of March 31, 2024, the end of the period covered by this report. Based on that evaluation, we have concluded that the Company’s disclosure controls and procedures were effective as of that date. Corning’s disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by Corning in the reports that it files or submits under the Exchange Act is accumulated and communicated to Corning’s management, including Corning’s principal executive and principal financial officers, or other persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

### Internal Control Over Financial Reporting

An evaluation of internal controls over financial reporting was performed to determine whether any changes have occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the internal control over financial reporting. The chief executive officer and chief financial officer concluded that there was no change in Corning’s internal control over financial reporting that materially affected, or is reasonably likely to materially affect, internal control over financial reporting.

## Risk factors

As filed, 538 characters.

In addition to other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A. Risk Factors in Corning’s 2023 Form 10-K, which could materially impact the Company’s business, financial condition or future results. Risks disclosed in the 2023 Form 10-K are not the only risks facing the Company. Additional risks and uncertainties not currently known to us or that we currently deem immaterial may materially adversely impact Corning’s business, financial condition or operating results.

Filed May 2, 2024.
Source: SEC EDGAR, the filing index for accession 0001437749-24-014319. Last ingested by Listed: Oct 29, 2026, 10:56 ET. No prices; not investment advice.