Corning 2007 Annual Report

More documents

Recommendations

Info

7. Investments (continued) Until December 31, 2007, Corning had a 50% interest in Samsung Corning Company, Ltd. (Samsung Corning), a producer of glass panels and funnels for cathode ray tubes for televisions and computer monitors, with manufacturing facilities in Korea, Germany, China and Malaysia. Samsung Electronics Company, Ltd. and affiliates owned the remaining 50% interest in Samsung Corning. On December 31, 2007, Samsung Corning Precision acquired all of the outstanding shares of Samsung Corning in a transaction accounted for by Samsung Corning Precision as a purchase. After the transaction, Corning retained its 50% interest in Samsung Corning Precision. Affiliated Companies at Equity The results of operations and financial position of the investments accounted for under the equity method follow (in millions): For the years ended December 31, 2007 2006 2005 Statement of Operations: Net sales $ 8,837 $ 8,039 $ 6,979 Gross profit $ 3,852 $ 3,368 $ 2,866 Net income $ 1,978 $ 1,968 $ 1,250 Corning’s equity in earnings of affiliated companies (1)(2) Related Party Transactions: $ 942 $ 960 $ 611 Corning sales to equity company affiliates $ 51 $ 43 $ 9 Corning purchases from equity company affiliates $ 32 $ 61 $ 101 Corning transfers of assets, at cost, to affiliates $ 110 $ 71 $ 116 Dividends received from affiliated companies $ 490 $ 363 $ 301 Royalty income from affiliated companies $ 149 $ 88 $ 75 December 31, 2007 2006 Balance Sheet: Current assets $ 5,268 $ 5,027 Noncurrent assets $ 7,521 $ 6,358 Short-term borrowings, including current portion of long-term debt $ 104 $ 94 Other current liabilities $ 2,144 $ 1,825 Long-term debt $ 72 $ 339 Other long-term liabilities $ 3,368 $ 2,879 Minority interest Related Party Transactions: $ 414 $ 346 Balances due from affiliates $ 35 $ 26 Balances due to affiliates $ 7 $ 8 (1) Equity in earnings shown above and in the consolidated statements of operations are net of amounts recorded for income tax. (2) Amounts include the following restructuring, impairment and other charges and (credits): • In 2007, equity earnings from Samsung Corning were reduced by $40 million primarily due to restructuring and impairment charges. • In 2006, Dow Corning reached settlement with the IRS regarding liabilities for tax years 1992 to 2003. Equity earnings reflected a $33 million gain as a result of the settlement which resolved all Federal tax issues related to Dow Corning’s implant settlement. • In 2006, Samsung Corning recorded the following items which increased Corning’s equity earnings by $2 million, net: a gain on the sale of land which increased Corning’s equity earnings by $61 million; an impairment charge for certain long-lived assets which reduced Corning’s equity earnings by $46 million; and the establishment of a valuation allowance for certain deferred tax assets which reduced Corning’s equity earnings by $13 million. • In 2005, Samsung Corning incurred impairment and other charges as a result of a decline in the projected operating results for its cathode ray tube (CRT) glass business. The charge, which included certain manufacturing assets and severance and exit costs, reduced Corning’s equity earnings by $106 million in the third quarter. • In 2005, Dow Corning recorded a gain on the issuance of subsidiary stock. Our equity earnings included $11 million related to this gain. We have contractual agreements with several of our equity investees which include sales, purchasing, licensing and technology agreements. At December 31, 2007, approximately $2.7 billion of equity in undistributed earnings of equity companies was included in our accumulated deficit. 62
7. Investments (continued) A discussion and summarized results of Corning’s significant investees at December 31, 2007 follows: Samsung Corning Precision Glass Co., Ltd. (Samsung Corning Precision) Samsung Corning Precision is a South Korea-based manufacturer of liquid crystal display glass for flat panel displays. Samsung Corning Precision’s financial position and results of operations follow (in millions): For the years ended December 31, 2007 2006 2005 Statement of Operations: Net sales $ 2,400 $ 2,115 $ 1,660 Gross profit $ 1,681 $ 1,510 $ 1,234 Net income $ 1,193 $ 1,128 $ 848 Corning’s equity in earnings of Samsung Corning Precision $ 582 $ 555 $ 408 Related Party Transactions: Corning sales to Samsung Corning Precision $ 20 $ 15 Corning purchases from Samsung Corning Precision $ 17 $ 39 $ 71 Corning transfer of machinery and equipment to Samsung Corning Precision at cost (1) $ 110 $ 71 $ 116 Dividends received from Samsung Corning Precision $ 217 $ 210 $ 156 Royalty income from Samsung Corning Precision $ 141 $ 82 $ 65 December 31, 2007 2006 Balance Sheet: Current assets $ 1,217 $ 606 Noncurrent assets $ 3,501 $ 2,565 Short-term borrowings, including current portion of long-term debt $ 42 $ 28 Other current liabilities $ 670 $ 256 Long-term debt $ 12 Other long-term liabilities $ 174 $ 125 (1) Corning purchases machinery and equipment on behalf of Samsung Corning Precision to support its capital expansion initiatives. The machinery and equipment are transferred to Samsung Corning Precision at our cost basis, resulting in no revenue or gain being recognized on the transaction. Balances due to and from Samsung Corning Precision were $6 million and $31 million, respectively, at December 31, 2007 and $2 million and $19 million, respectively, at December 31, 2006. In February 2006, Corning made a capital contribution to Samsung Corning Precision in the amount of 75 billion Korean won (approximately $77 million USD). On December 31, 2007, Samsung Corning Precision acquired all of the outstanding shares of Samsung Corning. After the transaction, Corning retained its 50% interest in Samsung Corning Precision. As a result of this transaction, a difference now exists between the carrying amount of Corning’s investment in Samsung Corning Precision and 50% of the net assets of Samsung Corning Precision because Samsung Corning Precision accounted for the transaction at fair value while Corning accounted for the transaction at historical cost. As of December 31, 2007, Samsung Corning Precision was one of approximately thirty co-defendants in a lawsuit filed by Seoul Guarantee Insurance Co. and 13 other creditors. Refer to Samsung Corning Co., Ltd. Section of this note for additional information. 63
Page 1 and 2:
Corning 2007 Annual Report Environm
Page 3 and 4:
To our shareholders: Corning Incorp
Page 5 and 6:
Live the Values We also sustained o
Page 7 and 8:
Corning Incorporated 2007 Annual Re
Page 9 and 10:
Telecommunications Segment The Tele
Page 11 and 12:
Competition Corning competes across
Page 13 and 14:
Many of these patents are used in C
Page 15 and 16:
Document Availability A copy of Cor
Page 17 and 18: We face risks related to our intern
Page 19 and 20: We are subject to strict environmen
Page 21 and 22: Pittsburgh Corning Corporation. Cor
Page 23 and 24: Market for Registrant’s Common Eq
Page 25 and 26: Selected Financial Data (Unaudited)
Page 27 and 28: We also remain committed to investi
Page 29 and 30: Effective January 1, 2006, the Comp
Page 31 and 32: The liability expected to be settle
Page 33 and 34: In 2004, significant events occurre
Page 35 and 36: When compared to 2006, income befor
Page 37 and 38: Telecommunications segment net sale
Page 39 and 40: Life Sciences The following table p
Page 41 and 42: In 2007 and 2006, we issued $231 mi
Page 43 and 44: Contractual Obligations The amounts
Page 45 and 46: Probability of litigation outcomes
Page 47 and 48: Quantitative and Qualitative Disclo
Page 49 and 50: Report of Independent Registered Pu
Page 51 and 52: Consolidated Balance Sheets Corning
Page 53 and 54: Consolidated Statements of Changes
Page 55 and 56: 1. Summary of Significant Accountin
Page 61 and 62: 2. Restructuring, Impairment and Ot
Page 63 and 64: 4. Significant Customer Corning’s
Page 65 and 66: 6. Income Taxes (continued) The tax
Page 67: 6. Income Taxes (continued) We do n
Page 71 and 72: 7. Investments (continued) Prior to
Page 73 and 74: 7. Investments (continued) On Decem
Page 75 and 76: 10. Other Liabilities (continued) C
Page 77 and 78: 12. Employee Retirement Plans Defin
Page 79 and 80: 12. Employee Retirement Plans (cont
Page 81 and 82: 12. Employee Retirement Plans (cont
Page 83 and 84: 13. Commitments, Contingencies, and
Page 85 and 86: 15. Shareholders’ Equity The foll
Page 87 and 88: 16. Earnings Per Common Share Basic
Page 89 and 90: 17. Share-based Compensation (conti
Page 91 and 92: 17. Share-based Compensation (conti
Page 93 and 94: 18. Operating Segments (continued)
Page 95 and 96: 18. Operating Segments (continued)
Page 97 and 98: QUARTERLY OPERATING RESULTS (unaudi
Page 99 and 100: Board of Directors John Seely Brown
show all

Corning 2007 Annual Report

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?