Corning 2007 Annual Report

13. Commitments, Contingencies, and Guarantees
The amounts of our obligations follow (in millions):
Total
Amount of commitment and contingency expiration per period
Less than
1 year
1to2
years
2to3
years
3to4
years
5 years and
thereafter
Performance bonds and guarantees $ 77 $ 9 $ 2 $ 66
Credit facilities for equity companies 168 18 150
Stand-by letters of credit (1) 68 44 24
Loan guarantees 12 12
Subtotal of commitment expirations per period $ 325 $ 53 $ 44 $ 228
Purchase obligations 262 102 75 $ 37 $ 5 43
Capital expenditure obligations (2) 244 244
Total debt (3) 1,437 20 72 78 18 1,249
Minimum rental commitments 243 47 40 33 29 94
Capital leases (4) 97 5 6 5 34 47
Interest on long-term debt (5) 1,243 92 89 87 84 891
Uncertain tax positions (6)
Subtotal of contractual obligation payments
20 11 9
due by period 3,546 521 291 240 170 2,324
Total commitments and contingencies $ 3,871 $ 574 $ 335 $ 240 $ 170 $ 2,552
(1) At December 31, 2007, $38 million of the $68 million was included in other accrued liabilities on our consolidated balance sheets.
(2) Capital expenditure obligations, primarily related to our Display Technologies segment expansions, are included on our balance sheet.
(3) At December 31, 2007, $1,537 million was included on our balance sheet. Amounts above are stated at their maturity value.
(4) At December 31, 2007, $19 million of the $97 million represents imputed interest.
(5) The estimate of interest payments assumes interest is paid through the date of maturity/expiration of the related debt, based upon stated rates in the respective debt
instruments.
(6) At December 31, 2007, $25 million was included on our balance sheet related to uncertain tax positions. Of this amount, we are unable to estimate when $5 million
of that amount will become payable.
FASB Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others” (FIN 45), requires a company, at the time a guarantee is issued, to recognize a liability for the fair value or
market value of the obligation it assumes. In the normal course of our business, we do not routinely provide significant third-party
guarantees. Generally, third-party guarantees provided by Corning are limited to certain financial guarantees, including stand-by
letters of credit and performance bonds, and the incurrence of contingent liabilities in the form of purchase price adjustments related
to attainment of milestones. These guarantees have various terms, and none of these guarantees are individually significant.
We have agreed to provide a credit facility related to Dow Corning. The funding of the Dow Corning credit facility will be required
only if Dow Corning is not otherwise able to meet its scheduled funding obligations in its confirmed Bankruptcy Plan. The purchase
obligations primarily represent raw material and energy-related take-or-pay contracts. We believe a significant majority of these
guarantees and contingent liabilities will expire without being funded.
Minimum rental commitments under leases outstanding at December 31, 2007 follow (in millions):
2008 2009 2010 2011 2012
2013 and
thereafter
$ 47 $ 40 $ 33 $ 29 $ 26 $ 68
Total rental expense was $69 million for 2007, $65 million for 2006 and $67 million for 2005.
A reconciliation of the changes in the product warranty liability for the year ended December 31 follows (in millions):
2007 2006
Balance at January 1 $ 26 $ 27
Adjustments for warranties issued for current year sales $ 7 $ 7
Adjustments for warranties related to prior year sales $ (13) $ (6)
Settlements made during the current year $ (1) $ (2)
Balance at December 31 $ 19 $ 26
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