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) October 13, 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)
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: October 13, 2000 By /s/ KATHERINE A. ASBECK
Katherine A. Asbeck
Vice President and Controller
This Form 8-K combines in one pro forma presentation as of and for the year
ended December 31, 1999, information previously filed with the Securities and
Exchange Commission concerning significant acquisitions completed in 2000. In
addition, a pro forma income statement for the six months ended June 30, 2000 is
also provided. All Corning share numbers give effect to a three for one stock
split effective October 3, 2000.
Item 2. Acquisition or Disposition of Assets
NetOptix
- --------
On May 12, 2000, Corning completed the acquisition of NetOptix Corporation
("NetOptix") for 33.7 million shares of Corning common stock and the assumption
of stock options convertible into 2.5 million Corning shares. Based on the
average closing price of Corning stock for a range of days surrounding the
announcement and a Black Scholes valuation of options issued, the recorded
purchase price approximated $2.1 billion. NetOptix manufactures thin film
filters for use in dense wavelength division multiplexing components.
The assets acquired by Corning pursuant to the transaction include all assets of
NetOptix which consist of accounts receivable, inventory, fixed and tangible
property (including, without limitation, all machinery, equipment, supplies,
tools, furniture, fixtures, hardware and spare parts), intangible assets and
contracts.
Siemens Transaction
- -------------------
On February 2, 2000, pursuant to the terms of the Master Sale and Purchase
Agreement dated December 8, 1999 between Corning, and Siemens A.G. ("Siemens"),
Corning acquired the worldwide optical cable and hardware businesses of Siemens
which included Siemens' optical cable and equipment businesses and the remaining
50% of Siecor Corporation and Siecor GmbH for $1.4 billion (the "Siemens
transaction"). This purchase price includes $120 million of assumed debt and
$145 million of contingent performance payments payable, if earned, over a four-
year period. Corning financed the transaction through the issuance of euro-
denominated debt and common equity.
Assets in use by the Siemens businesses acquired consist of, and are not limited
to, accounts receivable, inventory, fixed and tangible property (including,
without limitation, all machinery, equipment, supplies, tools, furniture,
fixtures, hardware and spare parts), intangible assets and contracts.
Item 7. Financial Statements, Pro Forma Information and Exhibits
(a) Financial Statements of Businesses Acquired
NetOptix
--------
This Form 8-K includes an unaudited condensed income statement of NetOptix
for the six months ended March 31, 2000 and the unaudited balance sheet as
of March 31, 2000 and incorporates by reference the noted items of the
documents set forth below that NetOptix has previously filed with the SEC.
Period
NetOptix SEC Filing (File No. 000-11309) Year Ended September 30, 1999
Annual Report on Form 10-K Filed on December 27, 1999
Part III, Item 14(a)
NetOptix SEC Filing (File No. 000-11309) Quarter Ended December 31, 1999
Quarterly Report on Form 10-Q Filed on February 11, 2000
Part I, Item 1
Siemens Transaction
-------------------
Prior to the Siemens transaction, Corning consolidated Siecor Corporation
in its financial statements and recorded its investment in Siecor GmbH on
the equity method. The historical financial statements of the combined
operations of Siecor GmbH and the worldwide cable and equipment business
owned by Siemens as of and for its most recent fiscal year ended September
30, 1999, prepared in accordance with German Generally Accepted Accounting
Principles and derived from the accounting records of Siemens, were filed
on Corning's Form 8-K/A on April 17, 2000 and are incorporated herein by
reference.
(b) Pro Forma Financial Information
(1) Unaudited pro forma combined statement of income for the six months
ended June 30, 2000
(2) Unaudited pro forma combined statement of income for the year ended
December 31, 1999
(3) Unaudited pro forma combined balance sheet as of December 31, 1999
(4) Notes to unaudited pro forma combined financial statements
(c) Exhibits
(1) Consent of Ernst & Young LLP
(2) Consent of KPMG
Item 7(a) Financial Statements of Business Acquired
NetOptix Corporation
Unaudited Statements of Income
(In millions, except per share amounts)
For the six months ended
March 31,
------------------------
2000 1999*
------ -------
Revenues
Net sales $ 10.2 $ 21.6
Royalty, interest and dividend income
------ ------
10.2 21.6
Deductions
Cost of sales 4.9 13.2
Selling, general and administrative expenses 3.2 9.0
Research, development and engineering expenses 0.1 0.9
Interest expense 0.5 0.5
Other, net (0.9) 1.8
------ ------
Income before taxes on income 2.4 (3.8)
Taxes on income 0.1 0.1
------ ------
Net income (loss) $ 2.3 $ (3.9)
====== ======
Basic earnings per share $ 0.20 $(0.45)
Diluted earnings per share $ 0.17 $(0.45)
NetOptix shares used in computing earnings per share:
Basic earnings per share 11.4 8.8
====== ======
Diluted earnings per share 13.3 8.8
====== ======
* This information is as filed by NetOptix. Subsequent to March 31, 1999,
NetOptix divested of a material business. The results of this discontinued
operation are included in this presentation.
Item 7(a) Financial Statements of Business Acquired (Cont'd)
NetOptix Corporation
Unaudited Balance Sheet
(In millions)
March 31, September 30,
2000 1999
--------- -------------
Assets
Current assets
Cash and equivalents $ 0.1 $ 2.1
Accounts receivable, net of doubtful
accounts and allowances 7.2 2.8
Inventories 2.0 1.6
Deferred taxes on income and other
current assets 3.7 3.7
Net assets of discontinued operations 9.0
------ ------
Total current assets 13.0 19.2
------ ------
Plant and equipment net of accumulated
depreciation 17.5 10.5
Goodwill and intangible assets net of
accumulated amortization 11.6 11.8
Other assets 2.3 1.9
------ ------
$ 44.4 $ 43.4
====== ======
Liabilities and Shareholders' Equity
Current liabilities
Loans payable $ 1.9 $ 6.5
Accounts payable 1.4 3.1
Other accrued liabilities 2.6 3.6
------ ------
Total current liabilities 5.9 13.2
------ ------
Other liabilities 0.8 0.7
Loans payable beyond one year 5.3 0.6
Common shareholders' equity
Common stock, including excess over par value 62.7 61.5
Retained earnings (30.1) (32.4)
Accumulated other comprehensive income (0.2) (0.2)
------ ------
Common shareholders' equity 32.4 28.9
------ ------
$ 44.4 $ 43.4
====== ======
Divestiture
On January 31, 2000, the Company sold its LMI and related women's health
businesses and related assets. The transaction included the Company's operating
units in Germany and Canada as well as the LMI operation in Boca Raton, Florida.
The purchase price was approximately $10 million. The net proceeds were used to
reduce debt and accordingly.
Item 7(b) Pro Forma Financial Information
The following unaudited pro forma combined statements of income and unaudited
pro forma consolidated balance sheet give effect to the merger of Corning
Incorporated with NetOptix and the Siemens transaction using the purchase method
of accounting for both acquisitions. The following unaudited pro forma combined
financial information and the accompanying notes should be read in conjunction
with the historical financial statements and related notes of Corning and
NetOptix.
The unaudited pro forma combined statements of income and unaudited pro forma
consolidated balance sheet information is provided for informational purposes
only and does not purport to represent what the combined financial position and
results of operations would actually have been had the transactions in fact
occurred at the dates indicated. The following unaudited pro forma combined
statements of income and unaudited pro forma combined balance sheet illustrate
the estimated effects of the transactions as if they had occurred at the
beginning of the period presented for the statements of income and at the end of
the period for the balance sheet.
The pro forma adjustment for the NetOptix transaction has been updated from that
presented in Corning's Form S-4 filing dated March 17, 2000 to reflect the
actual common stock entry recorded upon acquisition. There are no changes to
the pro forma adjustments for the Siemens transaction from those presented in
the pro forma financial statements filed on Corning's Form 8-K/A dated April 17,
2000.
The following unaudited pro forma information was derived using the following:
. Corning's June 30, 2000 six month financial information and December 31,
1999, fiscal year end financial statements
. NetOptix financial information for the period January 1, 2000 to the date
of Merger on May 12, 2000
. Siecor GmbH's financial information as of and for the year ended September
30, 1999 and the financial information for the period from January 1, 2000 to
the date of acquisition as contained in the acquired entity's books and
records
. Siemens' worldwide optical fiber, cable and equipment businesses' financial
information as of and for the year ended September 30, 1999 and the financial
information for the period from January 1, 2000 to the date of acquisition as
contained in the acquired entities' books and records
Adjustments have been made to reclassify the presentation of the historical
financial statements of the businesses obtained in the Siemens transaction to be
consistent with Corning's presentation. The financial position and results of
Siecor GmbH and Siemens' worldwide cable and equipment businesses are presented
in the column labeled "Siemens Transaction" in the pro forma combined financial
information. The amounts presented have been adjusted for differences between
German generally accepted accounting principles and those of the United States.
The unaudited pro forma combined condensed consolidated statements of income and
unaudited pro forma consolidated balance sheet have been adjusted to give effect
to the three-for-one stock split effective October 3, 2000, to Corning
shareholders of record on September 5, 2000.
Unaudited Pro Forma Combined Statement of Income
For the six months ended June 30, 2000
(In millions, except per share amounts)
Siemens NetOptix
Siemens Pro Forma Pro Forma Combined
Corning Transaction Adjustments NetOptix Adjustments Pro Forma
------- ----------- ----------- -------- ----------- ---------
Revenues
Net sales $3,127.0 $169.7 $ 6.6 $3,303.3
Royalty, interest
and dividend income 50.4 50.4
Non-operating gain 6.8 6.8
-------- ------ ------ ----- ------ --------
3,184.2 169.7 6.6 3,360.5
Deductions
Cost of sales 1,817.7 159.2 1.9(A) 2.5 1,981.3
Selling, general and
administrative expenses 457.8 1.8 459.6
Research, development
and engineering expenses 230.2 230.2
Non-recurring charges 62.3 62.3
Amortization of purchased
intangibles including
goodwill 52.7 8.6(A) 75.7(G) 137.0
Interest expense 139.7 3.8(B) 0.3 143.8
Other, net 32.7 (1.4) 31.3
-------- ------ ------ ----- ------ --------
Income from continuing
operations before taxes
on income 391.1 10.5 (14.3) 3.4 (75.7) 315.0
Taxes on income from
continuing operations 191.8 (5.4) 0.1 (1.5) 185.0
-------- ------ ------ ----- ------ --------
Income before minority
interest and equity
earnings 199.3 10.5 (8.9) 3.3 (74.2) 130.0
Minority interest in
earnings of subsidiaries (10.1) (3.0)(F) (13.1)
Impairment of equity
investment (36.3) (36.3)
Equity in earnings of
associated companies 73.2 (0.7)(C) 72.5
-------- ------ ------ ----- ------ --------
Income from continuing
operations $ 226.1 $ 10.5 $(12.6) $ 3.3 $(74.2) $ 153.1
======== ====== ====== ===== ====== ========
Basic earnings per share
from continuing operations $ 0.27 $ 0.18
Diluted earnings per share
from continuing operations $ 0.27 $ 0.17
Weighted average shares
outstanding-basic 827.7 2.6(B) 28.0(H) 858.3
Weighted average shares
outstanding-diluted 848.1 2.6(B) 28.0(H) 878.7
Unaudited Pro Forma Combined Statement of Income
For the year ended December 31, 1999
(In millions, except per share amounts)
Siemens NetOptix
Siemens Pro Forma Pro Forma Combined
Corning Transaction Adjustments NetOptix Adjustments Pro Forma
------- ----------- ----------- -------- ----------- ---------
Revenues
Net sales $4,741.1 $758.6 $ 14.4 $5,514.1
Royalty, interest and
dividend income 41.4 1.2 42.6
Non-operating gain 30.0 30.0
-------- ------ ------ ------ ------- --------
4,812.5 759.8 14.4 5,586.7
Deductions
Cost of sales 2,930.3 586.9 8.8(A) 9.5 3,535.5
Selling, general and
administrative expenses 667.4 115.0 8.8 791.2
Research, development
and engineering expenses 378.2 29.8 0.2 408.2
Provision for restructuring
and impairment 1.4 6.4 7.8
Amortization of purchased
intangibles including
goodwill 27.8 56.2(A) 0.7 210.5(G) 294.5
(0.7)(G)
Interest expense 93.2 1.8 30.2(B) 0.9 126.1
Other, net 39.3 0.4 (0.8) 38.9
-------- ------ ------ ------ ------- --------
Income from continuing
operations before taxes
on income 674.9 25.9 (95.2) (11.3) (209.8) 384.5
Taxes on income from
continuing operations 207.1 3.9 (26.8) (4.2) 180.0
-------- ------ ------ ------ ------- --------
Income before minority
interest and equity
earnings 467.8 22.0 (68.4) (11.3) (205.6) 204.5
Minority interest in
earnings of subsidiaries (66.8) 45.0(F) (21.8)
Dividends on convertible
preferred securities of
subsidiary (2.3) (2.3)
Equity in earnings of
associated companies 112.3 (14.6)(C) 97.7
-------- ------ ------ ------ ------- --------
Income from continuing
operations $ 511.0 $ 22.0 $(38.0) $(11.3) $(205.6) $ 278.1
======== ====== ====== ====== ======= ========
Basic earnings per share
from continuing operations $ 0.66 $ 0.34
Diluted earnings per share
from continuing operations $ 0.65 $ 0.33
Weighted average shares
outstanding-basic 765.3 18.0(B) 33.6(H) 816.9
Weighted average shares
outstanding-diluted 795.0 18.0(B) 35.1(H) 834.0
Unaudited Pro Forma Combined Balance Sheet
December 31, 1999
(In millions)
Siemens NetOptix
Siemens Pro Forma Pro Forma Combined
Corning Transaction Adjustments NetOptix Adjustments Pro Forma
------- ----------- ----------- -------- ----------- ---------
Assets
Current assets
Cash $ 121.8 $ 9.8 $1,135.0(A) $ 2.1 $ 133.7
(1,135.0)(A)
Short-term investments,
at cost which
approximates market value 158.6 5.9 265.0 (F) 429.5
Accounts receivable, net
of doubtful accounts and
allowances 872.4 236.3 2.8 1,111.5
Inventories 602.2 106.4 1.6 710.2
Deferred taxes on income
and other current asset 229.2 6.3 3.7 239.2
Net assets of discontinued
operations 9.0 9.0
-------- ------ -------- ----- -------- ---------
Total current assets 1,984.2 364.7 265.0 19.2 2,633.1
-------- ------ -------- ----- -------- ---------
Investments
Associated companies,
at equity 421.9 30.3 (20.3)(B) 431.9
Others, at cost 82.5 82.5
-------- ------ -------- ----- -------- ---------
504.4 30.3 (20.3) 514.4
-------- ------ -------- ----- -------- ---------
Plant and equipment net of
accumulated depreciation 3,201.7 151.5 107.3(A) 10.5 3,471.0
Goodwill and intangible
assets net of accumulated
amortization 506.7 1.1 723.9(A) 11.8 2,093.6(G) 3,337.1
Other assets 329.0 19.6 1.9 350.5
-------- ------ -------- ----- -------- ---------
$6,526.0 $567.2 $1,075.9 $43.4 $2,093.6 $10,306.1
======== ====== ======== ===== ======== =========
Liabilities and Shareholders' Equity
Current liabilities
Loans payable $ 420.7 $ 2.3 $ 6.5 $ 429.5
Accounts payable 418.0 39.7 3.1 460.8
Other accrued liabilities 715.3 124.9 145.0(C) 3.6 988.8
-------- ------ -------- ----- -------- ---------
Total current liabilities 1,554.0 166.9 145.0 13.2 1,879.1
-------- ------ -------- ----- -------- ---------
Other liabilities 720.6 88.2 0.7 809.5
Loans payable beyond one year 1,490.4 3.9 488.7(A) 0.6 1,983.6
Minority interest in
subsidiary companies 284.8 (160.9)(D) 123.9
Convertible preferred stock 13.5 13.5
Common shareholders' equity
Common stock, including
excess over par value
and other capital 1,359.3 121.0 911.3(F) 61.5 2,122.5(H) 4,393.1
(121.0) (61.5)
Retained earnings 1,790.0 187.2 (187.2) (32.4) 32.4 1,790.0
Less cost of common
stock in treasury (656.0) (656.0)
Accumulated other
comprehensive income (30.6) (0.2) 0.2 (30.6)
-------- ------ -------- ----- -------- ---------
Common shareholders' equity 2,462.7 308.2 603.1 28.9 2,093.6 5,496.5
-------- ------ -------- ----- -------- ---------
$6,526.0 $567.2 $1,075.9 $43.4 $2,093.6 $10,306.1
======== ====== ======== ===== ======== =========
CORNING INCORPORATED
Notes to Unaudited Pro Forma Combined Financial Information
Siemens Transaction
- -------------------
(A) The total purchase price of the Siemens transaction approximates $1.4
billion, which includes $120 million of assumed debt and $145 million in
contingent performance payments. Portions of the Siemens transaction are
expected to close at future dates into 2001. The pro forma presentation
assumes all portions of the transaction have been closed. The excess of the
purchase price over the fair value of net assets acquired was allocated as
follows (amounts in millions):
Annual
Depreciation or Useful
Amount Amortization Lives
------ ------------ -----
Property, plant and equipment $107.3 $ 8.8 5-20 years
Goodwill and other intangibles $723.9 $56.2 5-20 years
(B) Corning financed the Siemens transaction with a combination of euro-
denominated debt and common equity. In the first quarter of 2000, Corning
completed a debt offering generating net proceeds of $488.7 million and
consisting of 200 million EURO bonds with an interest rate of 4.25% maturing
in 5 years and 300 million EURO bonds with an interest rate of 5.375%
maturing in 10 years. In addition, Corning completed an equity offering of
approximately 44.85 million shares of common stock which generated net
proceeds of approximately $2.2 billion. This pro forma presentation
reflects a portion of this offering (18 million shares with proceeds of
$911.3 million) being used to fund the remaining portion of the $1.4 billion
acquisition.
(C) Reflects the elimination of Corning's 50% investment in and equity earnings
from Siecor GmbH which was previously accounted for under the equity method.
(D) The increase to marketable securities reflects liquid assets from financing
transactions that will be used to repay assumed debt and fund contingent
performance payments.
(E) Includes the assumption that contingent purchase price of approximately $145
million will be earned.
(F) Reflects the elimination of minority interest related to Siemens' 50%
ownership of Siecor Corporation, which is consolidated in Corning's
historical financial statements.
NetOptix
- --------
(G) On May 12, 2000, Corning completed the acquisition of NetOptix Corporation
in a merger transaction accounted for under the purchase method of
accounting. The merger was effected by Corning issuing shares and options
at an exchange ratio of 0.90 for each share or right to acquire shares of
NetOptix common stock on the closing date. Based on the average closing
price of Corning stock for a range of days surrounding the announcement and
a Black Scholes valuation of options issued, the recorded purchase price
approximated $2.1 billion. NetOptix manufactures thin film filters for use
in dense wavelength division multiplexing components. The excess of the
purchase price over the estimated fair value of tangible assets acquired was
allocated to goodwill. Goodwill of approximately $2.093 billion will be
amortized on a straight-line basis over ten years. The pro forma adjustment
to revenues for the six months ended June 30, 2000 reflects sales for the
period January 1, 2000 through May 11, 2000.
(H) Adjustments reflect the issuance of 33,719,067 shares of Corning common
stock to effect the exchange of NetOptix common stock and the assumption of
stock options convertible into 2,487,240 Corning shares to acquire NetOptix
common stock at the exchange ratio of 0.90 a share.
The pro forma combined per share amounts and weighted average common shares
outstanding reflect the combined weighted average of Corning and NetOptix
common shares outstanding for the periods presented, after adjusting the
number of NetOptix common shares to reflect the exchange ratio of 0.90 of a
share of Corning common stock for each share of NetOptix common stock. The
diluted unaudited pro forma per share information for Corning is based on
the weighted average number of outstanding shares of Corning common stock
adjusted to include (1) the dilutive effect of Corning employee stock
options and (2) the number of shares of Corning common stock issued in the
merger. The effect of NetOptix employee stock options was not dilutive.
Exhibit 1 Consent of Ernst & Young LLP
Consent of Independent Auditors
We consent to the incorporation by reference in Form 8-K of Corning Incorporated
of our report dated December 21, 1999, with respect to the consolidated
financial statements and schedule of NetOptix Corporation included in its Annual
Report on Form 10-K for the year ended September 30, 1999, filed with the
Securities and Exchange Commission on October 13, 2000.
By /s/ ERNST & YOUNG LLP
Ernst & Young LLP
Providence, Rhode Island
October 12, 2000
Exhibit 2 Consent of KPMG
October 12, 2000
Consent of Independent Accountants
We hereby consent to the incorporation by reference in this Form 8-K of Corning
Incorporated of our report dated March 31, 2000 relating to the combined
financial statements of the Lichtwellenleiter Group of Siemens AG.
KPMG Deutsche Treuhand-Gesellschaft
Aktiengesellschaft
Wirtschaftsprufungsgesellschaft
By /s/ DR. MARIANNE SCHRAMM /s/ DR. HELMUT ELLROTT
Dr. Marianne Schramm Dr. Helmut Ellrott