SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For fiscal year ended December 31, 2005
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to _________
Commission File number 1-3247
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
THE CORNING INCORPORATED
INVESTMENT PLAN FOR UNIONIZED EMPLOYEES
B. Name of issuer of the securities held pursuant to the plan and
the address of its principal executive office:
CORNING INCORPORATED
ONE RIVERFRONT PLAZA
CORNING, NY 14831
Documents filed as part of this report:
(a) Index to financial statements filed as part of this report:
The Statement of Net Assets Available for Benefits as at December
31, 2005 and 2004, the Statement of Changes in Net Assets
Available for Benefits for the year ended December 31, 2005 and
supplementary information, together with the report thereon of
the Independent Registered Public Accounting Firm dated June 26,
2006. The required financial statement schedules, if any, are
included in the supplementary information referred to above and
should be read in conjunction with the above financial
statements.
(b) Exhibit:
Exhibit 23 - The consent of Insero & Company CPAs, P.C.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Benefits Committee has duly caused this annual report to be signed by the
undersigned thereunto duly authorized.
THE CORNING INCORPORATED
INVESTMENT PLAN FOR
UNIONIZED EMPLOYEES
By: /s/ Deborah G. Lauper
-------------------------------
Deborah G. Lauper
Chair
Benefits Committee
Date: June 27, 2006
Corning Incorporated
Investment Plan for
Unionized Employees
Financial Statements and Supplemental Schedule
December 31, 2005 and 2004
Corning Incorporated Investment
Plan for Unionized Employees
Index
December 31, 2005 and 2004
--------------------------------------------------------------------------------
Page(s)
Report of Independent Registered Public Accounting Firm......................6
Financial Statements
Statements of Net Assets Available for Benefits..............................7
Statement of Changes in Net Assets Available for Benefits....................8
Notes to Financial Statements.............................................9-13
Supplemental Schedule*
Schedule of Assets (Held at End of Year)....................................14
* Other schedules required by Section 2520.103-10 of the United States
Department of Labor's Rules and Regulations for Reporting and Disclosure
under the Employee Retirement Income Security Act of 1974 ("ERISA") have
been omitted because they are not applicable.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
-------------------------------------------------------
To the Corning Incorporated Benefits Plan Committee and the
Participants of the Corning Incorporated Investment Plan for Unionized Employees
We have audited the accompanying statements of net assets available for benefits
of Corning Incorporated Investment Plan for Unionized Employees (the "Plan") as
of December 31, 2005 and 2004, and the related statement of changes in net
assets available for benefits for the year ended December 31, 2005. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with the auditing standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of Corning
Incorporated Investment Plan for Unionized Employees as of December 31, 2005 and
2004, and the changes in net assets available for benefits for the year ended
December 31, 2005, in conformity with U.S. generally accepted accounting
principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets (held
at end of year) as of December 31, 2005, is presented for the purpose of
additional analysis and is not a required part of the basic financial
statements, but is supplementary information required by the United States
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. This supplemental schedule
is the responsibility of the Plan's management. The supplemental schedule has
been subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
Respectfully Submitted,
Insero & Company CPAs, P.C.
Certified Public Accountants
Rochester, New York
June 26, 2006
Corning Incorporated Investment
Plan for Unionized Employees
Statements of Net Assets Available for Benefits
December 31, 2005 and 2004
--------------------------------------------------------------------------------
(in thousands of dollars)
2005 2004
---- ----
Assets
Interest in Corning Incorporated
Master Investment Trust $ 330,095 $ 253,784
Loans to participants 7,576 6,647
Participant Contributions Receivable 164 165
Employer Contributions Receivable 83 83
------------ ------------
Net assets available for benefits $ 337,918 $ 260,679
============ ============
The accompanying notes are an integral part of these financial statements.
Corning Incorporated Investment
Plan for Unionized Employees
Statements of Changes in Net Assets Available for Benefits
Year Ended December 31, 2005
--------------------------------------------------------------------------------
(in thousands of dollars)
Additions to net assets attributed to:
Investment income
Interest in the Corning Incorporated Master
Investment Trust, investment income $ 91,533
Interest from participant loans 375
-------------
91,908
-------------
Contributions
Employer, net of forfeitures 4,518
Participant 9,300
-------------
13,818
-------------
Total additions 105,726
-------------
Deductions from net assets attributed to:
Benefits paid directly to participants 28,303
Administrative expenses 184
-------------
Total deductions 28,487
-------------
Net increase 77,239
Net assets available for benefits
Beginning of year 260,679
-------------
End of year $ 337,918
=============
The accompanying notes are an integral part of these financial statements.
Corning Incorporated Investment
Plan for Unionized Employees
Notes to Financial Statements
December 31, 2005 and 2004
--------------------------------------------------------------------------------
1. Description of Plan
General
The following brief description of the Corning Incorporated Investment Plan
for Unionized Employees (the "Plan") is provided for general information
purposes only. Participants should refer to the Plan document and summary
plan description for a more complete description of the Plan's provisions.
The Plan is a defined contribution profit-sharing plan established in
January 1984 and is subject to the provisions of the Employee Retirement
Income Security Act of 1974 ("ERISA"), as amended.
Administration
The Plan is administered by the Corning Incorporated Benefits Committee
(the "Committee"), which is appointed by the Board of Directors of Corning
Incorporated (the "Company"). The Committee administers the Plan in
accordance with its terms and applicable laws and has all necessary and
appropriate powers to carry out the provisions of the Plan.
Trustee and Recordkeeper
The Plan's assets are held by JPMorgan Chase Bank (the "Trustee"), as
trustee. The recordkeeper is Affiliated Computer Services, Inc.
Eligibility
The Plan covers all union represented employees of participating unions
which contract with the Company. An employee is eligible for participation
in the Plan upon reaching the age of 18 and completing one year of eligible
service. Notwithstanding the foregoing, an employee who has attained age 18
and is scheduled on a normal basis to work at least 16 hours a week shall
be immediately eligible. As of December 31, 2005, the union employees at
the following locations participated in the Plan:
Blacksburg, Virginia Erwin, New York
Canton, New York Harrodsburg, Kentucky
Corning Valley, New York Oneonta, New York
Danville, Virginia Wilmington, North Carolina
Participant Accounts
Each participant's account is credited with the participant's contribution
and allocations of (a) the Company's contribution and (b) Plan earnings,
and charged for administrative expenses. Trustee and investment management
fees are deducted from the earnings credited to participants' accounts. A
flat monthly fee is charged to each participant's account to subsidize
administrative expenses of the Plan and is determined by the plan
administrator. Investment management fees are pro-rated among the
investment funds as of the last business day of each month. The benefit to
which a participant is entitled is the benefit that can be provided from
the participant's vested balance.
Corning Incorporated Investment
Plan for Unionized Employees
Notes to Financial Statements
December 31, 2005 and 2004
--------------------------------------------------------------------------------
Vesting
Participants are vested immediately in their contributions plus actual
earnings thereon. Company contributions to the Plan are fully vested after
three years of service. All Company contributions become fully vested upon
total and permanent disability, death or retirement.
Contributions - Employer
The Company makes matching contributions as a percentage of a participant's
first 5% of eligible pay contributed according to years of service as of
December 31 of the prior year as follows:
Less than 19 years of service 50%
19 but less than 24 years of service 75%
24 or more years of service 100%
With respect to all employees eligible to participate in the Plan,
beginning in January of the year the participant is expected to reach ten
years of vested service and irrespective of whether such employee has
elected to contribute to the Plan, the Company contributes weekly or
monthly (based on employee's pay frequency) a supplemental contribution to
the Corning Common Stock Fund equal to 1.175% of such employee's eligible
compensation.
All Company contributions are invested in the Corning Common Stock Fund.
Participants may transfer Company contributions and associated earnings
into any other plan fund. Effective January 1, 2006, all Company
contributions will be allocated based on the participants' elections.
Forfeiture balances of terminated participants' nonvested accounts are used
to reduce future employer contributions to the plan.
Contributions - Participants
Generally, participants may contribute up to 75% of their eligible
compensation to the Plan on a before-tax basis, after-tax basis or any
combination of the two.
The maximum amount a participant can contribute to the Plan on a before-tax
basis is $14,000 per year in 2005 as adjusted by the Internal Revenue Code
("IRC"). The Plan permits employees who have attained age 50 or older
during a given year to contribute additional before-tax amounts up to the
prescribed IRC limitation for "catch-up contributions."
Participants may also elect to have their contributions invested in the
Corning Common Stock Fund on a before or after-tax basis. Contributions
into the Corning Common Stock Fund are limited to 20% of a participant's
annual contributions.
Corning Incorporated Investment
Plan for Unionized Employees
Notes to Financial Statements
December 31, 2005 and 2004
--------------------------------------------------------------------------------
Fund Transfers
Participants are allowed to transfer their accumulated contributions
between funds. Effective January 1, 2005 the Plan was amended to limit
employees' elections to invest future contributions into the Corning Common
Stock Fund.
Payment of Benefits
Benefit payments are made upon retirement (i.e., at least age 55 with five
years of service), or in the event of a participant's total and permanent
disability, death or other termination of employment. A retired participant
can elect to receive distributions in a lump sum, installments, or
intermittent withdrawals. The Plan also provides for withdrawals by
participants prior to termination.
Effective March 28, 2005, the mandatory lump-sum distribution threshold was
lowered to $1,000 from $5,000 to comply with the restrictions set forth
under The Economic Growth and Tax Relief Reconciliation Act of 2001
("EGTRRA").
Participant Loans
Participants are eligible to obtain loans from the Plan. Loans are limited
to one loan per participant with a repayment term not to exceed 4.5 years,
except for primary residence loans in which the term may not exceed ten
years. The maximum amount of any loan is the lesser of one-half of the
vested account balance or $50,000 (with a $1,000 minimum). The interest
rate on a loan is established by the Committee. Participants are charged a
fee on all loans, which reduces the loan proceeds.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying financial statements are prepared on the accrual basis of
accounting.
Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of net assets available for benefits and changes therein. Due to
the inherent uncertainty involved in making estimates, actual results
reported in future periods could differ from those estimates.
Basis of Allocation from the Corning Incorporated Master Investment Trust
The Plan has a specific interest in the Corning Incorporated Master
Investment Trust (the "Master Trust") in which another plan sponsored by
the Company also participates. The Plan's specific interest in the Master
Trust is credited or charged for contributions, transfers and benefit
payments relating to its participants. Realized gains and losses and
changes in net unrealized appreciation or depreciation on investments,
income from investments and expenses are allocated to the Plan based on the
Plan's specific interest in the net assets of the Master Trust. At December
31, 2005 and 2004, the Plan's percentage interest in the net assets of the
Master Trust was approximately 17% and 16%, respectively.
Corning Incorporated Investment
Plan for Unionized Employees
Notes to Financial Statements
December 31, 2005 and 2004
--------------------------------------------------------------------------------
Valuation of Master Trust Investments (in thousands)
Master Trust investments in mutual and collective trust funds are recorded
at fair value based upon the net asset value announced by the fund on the
last business day of the year. Current value of common stock are based on
active market quotations. Short-term investment funds are recorded at cost
which approximates fair market value due to short maturities. Investment
contracts are valued at contract value, representing contributions made
plus interest at the contract rate, less funds withdrawn and administrative
expenses. There are no reserves against contract values for credit risk of
the contract issuers or otherwise. Investment contracts are fully
benefit-responsive. The Company does not expect any employer initiated
events that may cause premature liquidation of a contract at market value.
At December 31, 2005 and 2004, investment contracts held by the Master
Trust were $452,411, and $422,902, respectively, at contract value. The
contract values approximate fair value. The average yield and crediting
interest rate was approximately 5% and 6% for 2005 and 2004, respectively.
The crediting interest rates are based on a formula agreed upon with the
issuers.
Interest is accrued by the Master Trust as earned, and dividends are
recorded on the ex-dividend date.
Purchases and sales of securities are recorded by the Master Trust on a
trade-date basis. Realized gains and losses for security transactions are
reported using the average cost method. Unrealized gains and losses
represent the difference between the cost and fair value of securities.
Valuation of Participant Loans
Participant loans are valued at cost which approximates fair value.
Payment of Benefits
Benefits are recorded when paid.
Risks and Uncertainties
The Plan's investment securities are exposed to various risks, such as
changes in interest rates and market returns. Due to the level of risk
associated with certain investments and the level of uncertainty related to
changes in the value of these investments, it is at least reasonably
possible that changes in valuations in the near term would materially
affect participants' account balances and the amounts of such investments
reported in the Plan's financial statements.
3. Investments (in thousands)
The following presents the Master Trust's investments at December 31:
2005 2004
---- ----
Fixed Income Funds $ 452,411 $ 422,902
Mutual Funds 706,594 601,636
Collective Trust Fund 49,473 50,130
Short-Term Investment Funds 7,557 5,990
Corning Common Stock 723,908 497,250
------------- -------------
$ 1,939,943 $ 1,577,908
============= =============
Corning Incorporated Investment
Plan for Unionized Employees
Notes to Financial Statements
December 31, 2005 and 2004
--------------------------------------------------------------------------------
Investments that represent 5% or more of net assets available for benefits
as of December 31, 2005 and 2004 were the Plan's interest in the Master
Trust.
During 2005, the Master Trust's investments (including gains and losses on
investments bought and sold, as well as held during the year) appreciated
in value, as follows:
Mutual Funds $ 33,408
Corning Common Stock 314,228
-------------
$ 347,636
=============
During 2005, the Master Trust's investments earned interest and dividends
in the amount of $44,687. For 2005, investment expenses totaled $1,083.
4. Plan Termination
Although it has not expressed any intent to do so, the Company has the
right to terminate the Plan subject to the provisions of ERISA. In the
event of Plan termination, all amounts credited to participants' accounts
will become 100% vested and will be distributed to participants in
accordance with Plan provisions.
5. Tax Status
The Plan received a favorable determination letter dated November 5, 2003
from the Internal Revenue Service indicating that it meets the requirements
of Section 401(a) and 501(a) of the IRC and has qualified status as an
employee retirement plan. The Plan has been amended since receiving the
determination letter. However, the plan administrator and the Plan's
benefits counsel believe that the Plan is designed and is currently being
operated in compliance with the applicable provisions of the IRC.
6. Reconciliation of Financial Statements to Form 5500 (in thousands)
The following is a reconciliation of net assets available for benefits per
the financial statements at December 31, 2005 to Form 5500:
Net assets available for benefits per the financial
statements $ 337,918
Amounts allocated to withdrawing participants (889)
-------------
Net assets available for benefits per the Form 5500 $ 337,029
=============
The following is a reconciliation of benefits paid to participants per the
financial statements for the year ended December 31, 2005 to Form 5500:
Benefits paid to participants per the financial
statements $ 28,303
Add: Amounts allocated to withdrawing participants
at December 31, 2005 889
-------------
Benefits paid to participants per Form 5500 $ 29,192
=============
Corning Incorporated Investment
Plan for Unionized Employees
Schedule of Assets (Held at End of Year)
December 31, 2005
--------------------------------------------------------------------------------
(in thousands of dollars)
Identity of Issuer, Description of Investment Including
Borrower, Lessor or Maturity Date, Rate of Interest, Current
Similar Party Collateral, Par, or Maturity Value Value
------------------- ---------------------------------------- --------
Participant loans Maturity dates through 2015 and interest $ 7,576
rates ranging from 4.75% - 10.50%
Exhibit 23
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
--------------------------------------------------------
We consent to the incorporation by reference in the Registration Statement of
Corning Incorporated on Form S-8 (No. 333-82926 and No. 333-26049) of our
report, dated June 26, 2006, relating to the financial statements of Corning
Incorporated Investment Plan for Unionized Employees, which appears in this
Annual Report on Form 11-K.
Respectfully Submitted,
Insero & Company CPAs, P.C.
Certified Public Accountants
Rochester, New York
June 27, 2006