SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: (Date of earliest event reported) January 24, 2000
CORNING INCORPORATED
(Exact name of registrant as specified in its charter)
New York 1-3247 16-0393470
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
One Riverfront Plaza, Corning, New York 14831
(Address of principal executive offices) (Zip Code)
(607) 974-9000
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Item 5. Other Events.
Item 7. Financial Statements.
Exhibits:
The Registrant's press release of January 24, 2000.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CORNING INCORPORATED
Registrant
Date: January 24, 2000 By /s/ KATHERINE A. ASBECK
Katherine A. Asbeck
Vice President and Controller
FOR RELEASE - JANUARY 24, 2000
Media Contact:
Robert W. DeMallie
(607) 974-8778
demallierw@corning.com
Demand for Corning's Optical-Communications Technologies
Produces Strong Fourth-Quarter Earnings
Company reports earnings 3 cents above consensus for the quarter
CORNING, N.Y. - Stating that it continues to benefit from strong demand for
optical-communications technologies used to expand the capacity of the Internet,
Corning Incorporated (NYSE:GLW) reported fourth-quarter earnings today that were
well ahead of last year and that exceeded the consensus of Wall Street analysts.
The company reported 1999 fourth-quarter diluted earnings per share from
continuing operations before special items of $0.51 per share, an increase of
28%, compared with $0.40 per share before special items in 1998. Income from
continuing operations before special items for the fourth quarter of 1999
totaled $126.7 million, an increase of 34%, compared with $94.6 million before
special items in 1998.
Commenting on the quarter, Corning Chairman and Chief Executive Officer,
Roger G. Ackerman, said, "We are clearly benefiting from our decision to
concentrate on high-growth markets, where technical innovations are rewarded.
We saw particularly strong demand for optical fiber, cable and related photonic
devices, and a dramatic increase in demand for LCD flat-panel display glass."
Fourth-quarter sales were $1.2 billion, an increase of 35% compared with
1998 fourth-quarter sales of $927 million. Excluding the impact of
acquisitions, sales increased 25%. Sales of optical fiber remained strong, with
demand for Corning-Registered Trademark- LEAF-Registered Trademark- optical
fiber more than doubling over the same quarter last year. Sales in the Photonic
Technologies Division also doubled, once again led by demand for the company's
optical amplifiers. Sales of flat-panel display glass used in computer monitors
continued to grow at a rate of 50%.
(more)
Corning Reports Q4 Earnings
Page 2
Equity earnings were up nearly 50% in the quarter, due primarily to excellent
performance at Samsung Corning Precision Glass Company, Ltd., a Korean
manufacturer of flat-panel display glass.
During the fourth quarter, Corning announced definitive agreements for a
tax-free, stock-for-stock merger with Oak Industries, and to acquire Siemens
AG's worldwide optical cable and hardware business as well as the remaining 50%
of its investments in Siecor Corporation and Siecor GmbH. Both transactions are
on track to close early in the first quarter. The company intends to fund the
Siemens transaction with a portion of the proceeds from an offering of common
stock announced on Jan. 11, 2000.
Commenting on the company's outlook for 2000, Ackerman said, "We are confident
the positive trends from 1999 will continue and, when combined with the
integration of the proposed acquisitions, will result in a very successful 2000.
We will also be adding capacity in high-growth markets and will introduce
exciting new products to meet the world's demand for more bandwidth, cleaner
air, and better computer imagery."
The company reaffirmed its 2000 guidance of 20-25% earnings-per-share
growth on fully diluted earnings from continuing operations before special
items.
Corning also recorded fourth-quarter pre-tax income of $14.1 million ($8.6
million after tax, or $0.03 per share) from a release of restructuring reserves.
Including this non-recurring item, Corning's income from continuing operations
for the fourth quarter of 1999 totaled $135.3 million, or $0.54 per share. In
addition, Corning recorded net income from discontinued operations of $4.8
million, or $0.02 per share, reporting total net income of $140.1 million, or
$0.56 per share in the quarter.
Sales for the year were $4.3 billion, an increase of 23% compared with $3.5
billion in 1998. Excluding the impact of acquisitions, 1999 sales increased 17%
over 1998. Corning reported full-year 1999 income from continuing operations of
$476.9 million, or $1.93 per share, compared to $327.5 million, or $1.39 per
share, from the same operations in 1998. Net income and diluted earnings per
share in 1999 were $481.7 million, or $1.95 per share, and included $4.8 million
or $0.02 per share of income from discontinued operations in the fourth quarter.
This compares with 1998 net income of $394 million, or $1.67 per share, which
included $66.5 million, or $0.28 per share from discontinued operations, related
primarily to the sale of the consumer products business.
(more)
Corning Reports Q4 Earnings
Page 3
Established in 1851, Corning Incorporated creates leading-edge technologies
for the fastest-growing markets of the world's economy. Corning manufactures
optical fiber, cable and photonic products for the telecommunications industry;
and high-performance displays and components for television and other
communications-related industries. The company also uses advanced materials to
manufacture products for scientific, semiconductor and environmental markets.
More information on the company is available at www.corning.com.
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Investor Relations Contact:
Katherine M. Dietz
(607) 974-8217
dietzkm@corning.com
Forward-Looking and Cautionary Statements
Except for historical information and discussions contained herein,
statements included in this release may constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
These statements involve a number of risks, uncertainties and other factors that
could cause results to differ materially, as discussed in the company's filing
with the Securities and Exchange Commission.
Corning Incorporated and Subsidiary Companies
Consolidated Statements of Income
(Unaudited; in millions, except per share amounts)
Year Ended Three Months Ended
Dec. 31, Dec. 31,
------------------- -------------------
1999 1998 1999 1998
-------- -------- -------- --------
Revenues
Net sales $4,297.2 $3,484.0 $1,248.4 $ 926.8
Royalty, interest, and
dividend income 40.9 48.4 11.3 15.5
Non-operating gains 30.0 39.7 19.2
-------- -------- -------- --------
4,368.1 3,572.1 1,259.7 961.5
Deductions
Cost of sales 2,639.4 2,138.1 777.8 554.7
Selling, general and
administrative expenses 602.5 487.7 174.1 135.6
Research, development
and engineering expenses 362.6 293.9 101.7 80.1
Provision for impairment
and restructuring 1.4 84.6 (14.1)
Amortization of purchased
intangibles 20.7 15.8 4.8 4.0
Interest expense 79.9 56.7 23.8 12.9
Other, net 40.8 55.7 8.3 15.3
-------- -------- -------- --------
Income from continuing
operations before
taxes on income 620.8 439.6 183.3 158.9
Taxes on income from
continuing operations 188.6 132.8 56.2 48.7
-------- -------- -------- --------
Income from continuing
operations before minority
interest and equity earnings 432.2 306.8 127.1 110.2
Minority interest in earnings
of subsidiaries (66.8) (60.9) (20.7) (22.3)
Dividends on convertible
preferred securities of
subsidiary (2.3) (13.7) (3.4)
Equity in earnings of
associated companies 113.8 95.3 28.9 19.8
-------- -------- -------- --------
Income from continuing
operations 476.9 327.5 135.3 104.3
Income from discontinued
operations, net of taxes 4.8 66.5 4.8
-------- -------- -------- --------
Net Income $ 481.7 $ 394.0 $ 140.1 $ 104.3
======== ======== ======== ========
Basic Earnings Per Share
Continuing operations $ 1.98 $ 1.42 $ 0.55 $ 0.45
Discontinued operations 0.02 0.29 0.02
-------- -------- -------- --------
Net Income $ 2.00 $ 1.71 $ 0.57 $ 0.45
======== ======== ======== ========
Diluted Earnings Per Share
Continuing operations $ 1.93 $ 1.39 $ 0.54 $ 0.44
Discontinued operations 0.02 0.28 0.02
-------- -------- -------- --------
Net Income $ 1.95 $ 1.67 $ 0.56 $ 0.44
======== ======== ======== ========
Dividends Declared $ 0.72 $ 0.72 $ 0.18 $ 0.18
======== ======== ======== ========
Shares used in computing
earnings per share
Basic earnings per share 240.6 229.6 243.3 229.4
======== ======== ======== ========
Diluted earnings per share 247.7 243.9 249.2 243.8
======== ======== ======== ========
The accompanying notes are an integral part of these statements.
Corning Incorporated and Subsidiary Companies
Condensed Consolidated Balance Sheets
(Unaudited; in millions)
Dec. 31, 1999 Dec. 31, 1998
------------- -------------
Assets
Current Assets
Cash and short-term investments $ 253.4 $ 45.4
Accounts receivable, net 797.5 636.0
Inventories 525.3 458.7
Deferred taxes on income and
other current assets 206.3 170.2
-------- --------
Total current assets 1,782.5 1,310.3
Investments 494.9 366.2
Plant and equipment, net 3,103.1 2,684.9
Goodwill and other intangible
assets, net 319.3 309.7
Other assets 312.4 310.8
-------- --------
Total Assets $6,012.2 $4,981.9
======== ========
Liabilities and Shareholders' Equity
Current Liabilities
Loans payable $ 418.5 $ 204.6
Accounts payable 390.9 291.7
Other accrued liabilities 678.6 578.4
-------- --------
Total current liabilities 1,488.0 1,074.7
Other liabilities 710.0 674.1
Loans payable beyond one year 1,288.7 998.3
Minority interest in subsidiary
companies 284.8 346.1
Convertible preferred securities
of subsidiary 365.2
Convertible preferred stock 13.5 17.9
Common shareholders' equity 2,227.2 1,505.6
-------- --------
Total Liabilities and
Shareholders' Equity $6,012.2 $4,981.9
======== ========
The accompanying notes are an integral part of these statements.
Corning Incorporated and Subsidiary Companies
Notes to Consolidated Financial Statements
Quarter 4, 1999
(1) Information about the performance of Corning's three operating segments for
the fourth quarter and full years ended December 31, 1999 and 1998 are
below. These amounts do not include revenues, expenses and equity earnings
not specifically identifiable to segments.
Year ended Three months ended
Dec. 31, Dec. 31,
----------------- ---------------
1999 1998 1999 1998
-------- -------- -------- ------
Telecommunications
Net sales $2,514.3 $1,791.7 $ 748.3 $479.3
Research, development and
engineering expenses $ 245.2 $ 190.2 $ 69.4 $ 53.7
Income from continuing
operations before minority
interest and equity earnings $ 273.0 $ 221.9 $ 82.7 $ 55.3
Minority interest in
earnings of subsidiaries (34.6) (37.3) (14.2) (6.9)
Equity in earnings of
associated companies 16.4 20.7 4.1 6.3
-------- -------- -------- ------
Segment net income $ 254.8 $ 205.3 $ 72.6 $ 54.7
======== ======== ======== ======
Advanced Materials
Net sales $1,053.9 $1,020.1 $ 279.4 $252.4
Research, development and
engineering expenses $ 94.5 $ 80.0 $ 25.7 $ 19.7
Income from continuing
operations before minority
interest and equity earnings $ 90.9 $ 75.9 $ 19.3 $ 20.2
Minority interest in
earnings of subsidiaries 0.3
Equity in earnings of
associated companies 21.7 17.6 8.0 6.4
-------- -------- -------- ------
Segment net income $ 112.6 $ 93.8 $ 27.3 $ 26.6
======== ======== ======== ======
Information Display
Net sales $ 701.2 $ 644.7 $ 210.8 $185.4
Research, development and
engineering expenses $ 22.9 $ 23.7 $ 6.5 $ 6.8
Income from continuing
operations before minority
interest and equity earnings $ 57.6 $ 39.2 $ 17.5 $ 23.9
Minority interest in
earnings of subsidiaries (22.7) (27.6) (6.5) (15.4)
Equity in earnings of
associated companies 67.8 44.9 14.9 4.4
-------- -------- -------- ------
Segment net income $ 102.7 $ 56.5 $ 25.9 $ 12.9
======== ======== ======== ======
Total segments
Net sales $4,269.4 $3,456.5 $1,238.5 $917.1
Research, development and
engineering expenses $ 362.6 $ 293.9 $ 101.6 $ 80.2
Income from continuing
operations before minority
interest and equity earnings $ 421.5 $ 337.0 $ 119.5 $ 99.4
Minority interest in
earnings of subsidiaries (57.3) (64.6) (20.7) (22.3)
Equity in earnings of
associated companies 105.9 83.2 27.0 17.1
-------- -------- -------- ------
Segment net income (1)(2)(3)(4) $ 470.1 $ 355.6 $ 125.8 $ 94.2
======== ======== ======== ======
(1) 1999 year to date segment income does not include a non-operating gain
and an impairment charge described in Footnotes 9 and 10,
respectively.
(2) 1999 fourth quarter and year date segment income does not include the
release of restructuring reserves described in Footnote 8.
(3) 1998 year to date segment net income does not include the net impact
of several non-recurring items totaling $44.9 million ($26.3 million
after tax and minority interest), or $0.11 per share.
(4) Fourth quarter 1998 segment net income does not include a
non-operating gain of $19.2 million ($9.7 million after tax), or $0.04
per share.
(2) Depreciation and amortization charged to continuing operations during
the years ended December 31, 1999 and 1998 totaled $380.7 million and
$298 million, respectively.
(3) Corning's effective tax rate for continuing operations, excluding the
impact of special items, was 30.0% for the fourth quarter and year ended
December 31, 1999, and 28.1% and 30.5% for the same periods in 1998.
(4) During the fourth quarter of 1999, Corning announced a definitive agreement
for a tax-free, stock-for-stock merger with Oak Industries. Under this
agreement, Oak Industries' shareholders will receive 0.83 of a share of
Corning stock for each share of Oak Industries stock they own. At the date
of the announcement, the transaction was valued at $1.8 billion. The
transaction is expected to be consummated in the first quarter of 2000 and
be accounted for as a pooling of interests. Corning will restate its
financial statements after the consummation of the merger to present the
combined results of the merged companies.
(5) During the fourth quarter of 1999, Corning announced that it had signed a
definitive agreement to acquire Siemens AG's worldwide optical cable and
hardware business and the remaining 50% of its investments in Siecor
Corporation and Siecor GmbH for $1.4 billion. The purchase includes
approximately $120 million in assumed debt and $145 million in contingent
performance payments to be paid, if earned, over a four-year period.
Corning will account for the transaction under the purchase method of
accounting and expects it to close in the first quarter of 2000 after
customary regulatory approvals.
(6) Corning announced an equity offering of 13 million shares of its common
stock on January 11, 2000. If the underwriters involved in the equity
offering exercise their option to purchase Corning common stock, the total
number of shares issued could total 15 million. This offering is expected
to close by January 31, 2000.
(7) During the fourth quarter of 1999, certain indemnification agreements
related to the April 1998 sale of Corning's consumer housewares business
expired. As a result, Corning recognized income from discontinued
operations of $7.8 million ($4.8 million after tax) or $0.02 per share in
the fourth quarter from the release of reserves provided at the date of the
transaction.
(8) In the second quarter of 1998, Corning recorded a restructuring charge of
$84.6 million ($49.2 million after tax and minority interests), or $0.21
per share. During the fourth quarter of 1999, Corning determined that the
actual costs of certain benefits included in the retirement incentive
program were less than estimated in the second quarter of 1998 and released
restructuring reserves totaling $14.1 million ($8.6 million after tax) or
$0.03 per share.
(9) During the third quarter of 1999, Corning sold Republic Wire and Cable, a
manufacturer of elevator cables and a subsidiary of Siecor Corporation, for
approximately $52 million in cash and short-term notes. Corning recorded a
non-operating gain of $30 million ($9.5 million after tax and minority
interest) or $0.04 per share as a result of this transaction.
(10) In the third quarter of 1999, Corning recognized an impairment loss of
$15.5 million pretax ($10.0 million after tax), or $0.04 per share, in
connection with management's decision to sell or dispose of certain assets
within the Advanced Materials segment. The impairment loss reduces
Corning's investment in these assets to an amount equal to management's
current estimate of fair value. Disposition of the business is expected in
the first quarter of 2000.
(11) During the third quarter of 1999, Corning acquired the 21% interest in
Corning Japan KK it did not own for cash consideration of approximately $32
million. The excess purchase price over the fair value of the net assets
acquired, accounted for as goodwill, was approximately $18 million and is
being amortized over 20 years. Corning Japan KK produces flat panel
display glass within the Information Display Segment, and will continue to
be consolidated within Corning's operating results.
(12) On April 30, 1999, Corning acquired BICC's telecommunications cable
business and the 50 percent equity interest in Optical Waveguides
Australia, Pty. Ltd. it did not already own for cash consideration of
approximately $135 million. The excess purchase price over the fair
value of the net assets acquired, accounted for as goodwill and other
intangible assets, was approximately $30 million and is being amortized
over periods ranging from 5 to 25 years.
(13) During the first quarter of 1999, Corning issued $300 million of debt
securities under a shelf registration agreement previously filed with
the Securities and Exchange Commission. This issuance consisted of $150
million of notes with a 6.30% coupon due in 2009, and $150 million of
debentures with a 6.85% coupon due in 2029. The proceeds from these
borrowings have been used for the repayment of short and long-term debt,
working capital, capital spending and acquisitions.
(14) During the first quarter of 1999, Corning Delaware L.P., a special
purpose limited partnership in which Corning was the sole general
partner, called for the redemption of all Convertible Monthly Income
Preferred Securities (MIPS). The MIPS were guaranteed by Corning and
convertible into Corning common stock at a rate of 1.534 shares of
Corning common stock for each MIPS. As of March 31, 1999, all of the
MIPS were converted into 11.5 million shares of Corning common stock.
The conversion has caused Corning's reported income to increase in
comparison to 1998, but has had no impact on Corning's diluted earnings
per share.
(15) On November 30, 1999, the United States Bankruptcy Court for the Northern
District of Michigan entered an order confirming the plan of reorganization
(the Joint Plan) filed jointly by Dow Corning Corporation and the Committee
of Tort Claimants (the Proponents). Corning and The Dow Chemical Company
each own 50% of the shares of Dow Corning. Despite the broad terms of its
confirmation order, the Bankruptcy Court issued an opinion on December 21,
1999 which limited the third-party releases provided in the Joint Plan in
favor of the shareholders (Corning and Dow) and certain other parties. The
Court ruled that these releases would apply to all claimants who voted in
favor of the Joint Plan and not to those who voted no or abstained. All
other aspects of the December 21, 1999 Opinion were favorable to the
Proponents. Opponents of the Joint Plan have filed appeals on a variety of
grounds to the United States District Court for the Eastern District of
Michigan. Dow Corning and the Committee of Tort Claimants have filed a
notice of appeal (as well as motions to vacate and for related relief)
seeking review of the ruling limiting the scope of the shareholder
releases. Corning and Dow Chemical filed separate notices of appeal on
this issue and each joined in the motions by the Proponents of the Joint
Plan. It is probable that these appeals and motions will be set for
coordinated argument, but the District Court has not yet issued a schedule
for briefing and argument. The Proponents contend that the Bankruptcy
Court misconstrued the release provisions in the Joint Plan and that the
Plan cannot be confirmed without the shareholder releases. The timing and
eventual outcome of these proceedings, including any subsequent appeals,
remain uncertain.
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