Business Context and Reporting Period
Company: Corning Incorporated
Filing Type: Form 8-K (Current Report)
Date of Report: January 30, 2018
Subject: Regulation FD Disclosure regarding a change in the methodology for calculating core performance measures.
Key Financial Metrics
This filing does not report new GAAP financial results, revenue, profit, cash flow, or debt figures. Instead, it details a change in the non-GAAP "constant currency" exchange rates used to calculate core performance measures for the Display Technologies and Specialty Materials segments.
- Previous Constant-Yen Rate: ¥99 (used for 2015–2017).
- New Constant-Yen Rate: ¥107 (effective Q1 2018).
- Previous Constant-Won Rate: ₩1,100 (used since 2014).
- New Constant-Won Rate: ₩1,175 (effective Q1 2018).
Material Changes Versus Prior Period
The material change is the adjustment of the constant currency rates used for non-GAAP reporting to align with the Company's current foreign currency hedge portfolio for the years 2018 through 2020.
- Recasting of Historical Data: Exhibit 99 provides recast core performance measures for the years ended December 31, 2017 and 2016, and all quarters within those years, to reflect the new rates.
- GAAP Impact: The filing explicitly states that this change does not represent a restatement of previously issued financial statements. Reported GAAP sales, gross margin, expenses, net income, and earnings per share remain unchanged.
Guidance, Outlook, and Management Commentary
Management Rationale: Corning states that using constant currency reporting allows investors to understand results without the impact of volatile currency exchange rates. The new rates (¥107 and ₩1,175) closely align with yen-denominated and won-denominated hedges entered into for the 2018–2020 period.
Scope: The change applies to the Display Technologies and Specialty Materials segments. Remaining segments are not impacted by the change in constant-yen and constant-won rates.
Risks and Contingencies: The filing notes that the information is furnished pursuant to Regulation FD and shall not be deemed "filed" for purposes of Section 18 of the Exchange Act, limiting liability under that section.
Investor Verification Checklist
- Verify the specific impact of the new exchange rates (¥107 and ₩1,175) on the recast core performance measures in Exhibit 99.
- Confirm that GAAP financial statements for 2016 and 2017 remain unaffected by this methodology change.
- Review the reconciliation of non-GAAP financial measures to GAAP measures provided in the attached Exhibit 99.
- Assess how the new constant currency rates align with the Company's hedging strategy for 2018–2020.