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 14, 2002
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. Current Events
Corning will adopt Statement of Financial Accounting Standards (SFAS) No. 142 ,
"Business Combinations" effective January 1, 2002. SFAS No. 142 eliminates the
amortization of goodwill. The standard does not call for the restatement of
prior period earnings, but does require transitional disclosures for earnings
per share and adjusted net income under the revised rules.
In the fourth quarter of 2001, Corning revised its pro forma net income
definition. Corning previously excluded the amortization of intangible assets
including goodwill in its calculation of pro forma net income and pro forma
earnings per share. Corning will now include the amortization of intangible
assets other than goodwill in pro forma results. Beginning with the reporting of
2002 first quarter results, Corning will no longer report pro forma earnings.
Segment net income was also revised in the fourth quarter to include the
amortization of intangible assets.
On January 14, 2002, Corning issued a press release, attached hereto as Exhibit
99.1.
Filed herewith is the following historical financial information:
(1) Net income and earnings per share as if SFAS No. 142 had been in effect for
the quarters and year to date periods ended September 30, 2001 and 2000,
June 30, 2001 and 2000, March 31, 2001 and 2000, and December 31, 2000.
(2) Pro forma net income and earnings per share restated for the inclusion of
amortization of intangible assets for the quarters and year to date periods
ended September 30, 2001 and 2000, June 30, 2001 and 2000, March 31, 2001
and 2000, and December 31, 2000.
(3) Segment information restated for the inclusion of amortization of
intangible assets for the quarters ended September 30, 2001 and 2000, June
30, 2001 and 2000, March 31, 2001 and 2000, and for the year ended December
31, 2000.
Exhibits
Exhibit 99.1 Press Release of Corning Incorporated dated January 14, 2002.
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 14, 2002 By /s/ KATHERINE A. ASBECK
Katherine A. Asbeck
Senior Vice President and Controller
Corning Incorporated
Adjusted Net Income (Loss) and Earnings (Loss) Per Share Under SFAS No. 142
Dollars in millions, except per share amounts
Unaudited
2000 2001
------------------------------------------------------ ---------------------------------------------
Q1 Q2 Q2 YTD Q3 Q3 YTD Q4(b) Q4 YTD(b) Q1 Q2 Q2 YTD Q3 Q3 YTD
-- -- ------ -- ------ -- ------ -- -- ------ -- ------
Net income (loss) from
continuing operations
as reported $ 77 $ 149 $ 226 $ 254 $ 480 $ (71) $ 409 $ 132 $(4,755) $(4,623) $ (220) $(4,843)
Adjustments:
After tax amortization
of goodwill 9 68 77 60 137 66 203 136 103 239 75 314
----- ----- ------ ----- ----- ------ ------ ----- ------- ------- ------- -------
NET INCOME (LOSS) FROM
CONTINUING OPERATIONS
ADJUSTED FOR SFAS 142 (a) $ 86 $ 217 $ 303 $ 314 $ 617 $ (5) $ 612 $ 268 $(4,652) $(4,384) $ (145) $(4,529)
===== ===== ====== ===== ===== ====== ====== ===== ======= ======= ======= =======
Basic EPS (LPS) from
continuing operations
as reported $0.09 $0.18 $ 0.27 $0.29 $0.57 $(0.08) $ 0.48 $0.14 $ (5.13) $ (5.01) $ (0.24) $(5.21)
Basic EPS (LPS) from
continuing operations
adjusted for
SFAS 142 (a) 0.11 0.26 0.37 0.36 0.73 (0.01) 0.71 0.29 (5.02) (4.75) (0.15) (4.88)
Diluted EPS (LPS) from
continuing operations
as reported $0.09 $0.17 $ 0.27 $0.28 $0.55 $(0.08) $ 0.46 $0.14 $ (5.13) $ (5.01) $ (0.24) $(5.21)
Diluted EPS (LPS) from
continuing operations
adjusted for
SFAS 142 (a) 0.10 0.25 0.36 0.35 0.71 (0.01) 0.69 0.29 (5.02) (4.75) (0.15) (4.88)
(a) Corning will adopt SFAS No. 142 prospectively, effective January 1, 2002.
The adjusted figures above are transitional disclosures to be used for
comparative purposes only.
(b) Corning's adjusted income from discontinued operations, net of tax, was $13
million, or $0.02 per share for the fourth quarter and full year of 2000.
Corning's adjusted net income and diluted EPS including discontinued
operations for the fourth quarter and full year of 2000 was $8 million, or
$0.01 and $625 million, or $0.71, respectively.
Corning Incorporated
Adjusted Pro Forma Net Income and Earnings Per Share
Dollars in millions, except per share amounts
Unaudited
2000 2001
------------------------------------------------------ -----------------------------------------
Q1 Q2 Q2 YTD Q3 Q3 YTD Q4 Q4 YTD Q1 Q2 Q2 YTD Q3 Q3 YTD
-- -- ------ -- ------ -- ------ -- -- ------ -- ------
Pro forma net income as
reported (a) $ 188 $ 271 $ 459 $ 317 $ 776 $ 315 $ 1,091 $ 277 $ 80 $ 357 $ 85 $ 442
Adjustments:
After tax amortization
of intangible assets (2) (3) (5) (3) (8) (8) (16) (9) (6) (15) (9) (24)
----- ----- ------ ----- ----- ------ ------- ----- ----- ------ ------ -----
ADJUSTED PRO FORMA
NET INCOME $ 186 $ 268 $ 454 $ 314 $ 768 $ 307 $ 1,075 $ 268 $ 74 $ 342 $ 76 $ 418
===== ===== ====== ===== ===== ====== ======= ===== ===== ====== ====== =====
Diluted pro forma EPS
as reported $0.23 $0.31 $ 0.54 $0.35 $0.89 $ 0.34 $ 1.23 $0.29 $0.09 $ 0.38 $ 0.09 $0.47
Diluted pro forma EPS
adjusted 0.22 0.31 0.53 0.35 0.88 0.33 1.22 0.29 0.08 0.37 0.08 0.45
(a) Pro forma net income excludes impairment and amortization of goodwill and
intangible assets, restructuring actions, purchased in-process research and
development, acquisition-related costs and non-recurring items. Adjusted
pro forma net income includes the amortization of intangible assets.
Corning Incorporated
Adjusted Segment Net Income (Loss)
Dollars in millions
Unaudited
2000 2001
---------------------------------------------- -------------------------------------
Q1 Q2 Q3 Q4 Q4 YTD Q1 Q2 Q3 Q3 YTD
-- -- -- -- ------ -- -- -- ------
Telecommunications
Segment net income as reported $ 115 $ 178 $ 203 $ 216 $ 712 $ 189 $ 7 $ 27 $ 223
------ ------- ------- ------- ------- ------- ------- ------ -------
ADJUSTED SEGMENT NET
INCOME $ 113 $ 175 $ 200 $ 208 $ 696 $ 180 $ 1 $ 18 $ 199
------ ------- ------- ------- ------- ------- ------- ------ -------
Advanced Materials
Segment net income as reported $ 23 $ 24 $ 25 $ 8 $ 80 $ 32 $ 18 $ 8 $ 58
------ ------- ------- ------- ------- ------- ------- ------ -------
ADJUSTED SEGMENT NET
INCOME $ 23 $ 24 $ 25 $ 8 $ 80 $ 32 $ 18 $ 8 $ 58
------ ------- ------- ------- ------- ------- ------- ------ -------
Information Display
Segment net income as reported $ 41 $ 60 $ 74 $ 57 $ 232 $ 41 $ 47 $ 39 $ 127
------ ------- ------- ------- ------- ------- ------- ------ -------
ADJUSTED SEGMENT NET
INCOME $ 41 $ 60 $ 74 $ 57 $ 232 $ 41 $ 47 $ 39 $ 127
------ ------- ------- ------- ------- ------- ------- ------ -------
Total Segments
Segment net income as reported $ 179 $ 262 $ 302 $ 281 $ 1,024 $ 262 $ 72 $ 74 $ 408
====== ======= ======= ======= ======= ======= ======= ====== =======
ADJUSTED SEGMENT NET
INCOME $ 177 $ 259 $ 299 $ 273 $ 1,008 $ 253 $ 66 $ 65 $ 384
------ ------- ------- ------- ------- ------- ------- ------ -------
Non-segment loss and other (2) (2) (1) 10 5 (1) (2) (1) (4)
Nonoperating gain 7 7
Amortization of goodwill (10) (44) (76) (86) (216) (143) (150) (35) (328)
Acquisition-related charges (89) (51) (323) (463)
Interest income 15 19 20 50 104 24 11 15 50
Income tax 14 (33) 10 4 (5) (1) 90 73 162
Equity in earnings of associated
companies 1 1 2 1 5 2 2 4
Impairment of equity investment (36) (36)
Provisions for impairment
and restructuring (4,772) (339) (5,111)
------ ------- ------- ------- ------- ------- ------- ------ -------
Net income (loss) $ 77 $ 149 $ 254 $ (71) $ 409 $ 132 $(4,755) $ (220) $(4,843)
====== ======= ======= ======= ======= ======= ======= ====== =======
Exhibit 99.1
FOR RELEASE - JANUARY 14, 2002
Corning Contacts:
Media Relations Investor Relations
Daniel F. Collins Katherine M. Dietz
(607) 974-4197 (607) 974-8217
collinsdf@corning.com dietzkm@corning.com
Corning to Take Additional Charges in Fourth-Quarter
Business Performance on Track
CORNING, N.Y.-Corning Incorporated (NYSE: GLW) today announced that it will take
pre-tax operating charges of approximately $178 million ($109 million
after-tax), or $0.12 per share, in the fourth quarter of 2001. With today's
charges, Corning now expects a pro forma net loss in the range of $0.28 to $0.29
per share for the fourth quarter ended December 31, 2001, compared to its
previous guidance of a pro forma net loss of $0.20 to $0.25 per share.
"While these charges will result in a slightly higher than expected fourth
quarter loss," James B. Flaws, Corning's chief financial officer said, "our
businesses performed as expected for the quarter. Revenues and cost controls are
in line with our expectations." Flaws added that he expects sales for the fourth
quarter to be in the range of $975 million.
Overview of Fourth-quarter Charges
Corning expects to record a fourth-quarter pre-tax charge of $90 million related
to the release of restrictions on Corning common stock held by employees, a $60
million pre-tax charge to write off inventory in the telecommunications segment,
primarily in the Photonic Technologies business, and a $28 million write-off of
an intellectual property investment.
As part of changes to Corning's compensation program, the company's Board of
Directors recently released restrictions on 4.8 million shares held by
employees. The $90 million charge represents the unamortized expense associated
with the grants which was measured at the fair market value of the stock on the
dates granted to employees. The current fair market value of the shares is
approximately $48 million.
(more)
Corning to Take Additional Charges in Fourth-Quarter
Page Two
The company said its fourth-quarter results will include a charge of $60 million
to reserve for excess and obsolete inventory, primarily in the Photonics
Technologies business. After this reserve, Corning's 2001 year-end photonics
inventory is expected to be reduced to approximately $70 million. The company
previously recorded a charge of $283 million in the second quarter of 2001 for
excess and obsolete inventory. The $28 million intellectual property charge is
related to the company's optical networking business.
Flaws said, "In addition to the charges we announced today, Corning continues to
move forward with its previously announced plan and will record a fourth-quarter
pre-tax restructuring charge of approximately $600 million ($360 million
after-tax and minority interest), or $0.38 per share. We are making significant
progress with our efforts to reduce operating expenses, control costs and
restore profitability."
Including the restructuring charge of $0.38 per share and the amortization of
goodwill totaling $0.03 per share, Corning expects to report a 2001
fourth-quarter net loss of $0.69 to $0.70 per share.
Corning will release its fourth-quarter results after the close of the
New York Stock Exchange on January 23, 2002. The company will hold an
investor meeting on February 8, 2002 at the Plaza Hotel in New York
City, at which time it expects to provide details on its business
outlook.
Financial Reporting
Corning will adopt Statement of Financial Accounting Standard (SFAS) No. 142
effective January 1, 2002. Corning said it does not anticipate a charge as a
result of the adoption of the new accounting standard. Under SFAS 142, the
company will no longer amortize goodwill but will continue to amortize purchased
intangible assets. "As goodwill amortization is the largest recurring difference
between pro forma and reported results, Corning will discontinue the use of pro
forma earnings as its primary performance measure in 2002," Flaws said.
The company also said that effective with the reporting of fourth quarter 2001
results, it will revise its current pro forma net income definition to include
the amortization of intangible assets, which it previously excluded. "The
revision will decrease Corning's full year 2001 pro forma net income per share
by $0.03 and will make comparisons of 2001 pro forma results consistent with
2002 reported results," Flaws said. The impact of this change is detailed in a
Form 8-K filed today with the Securities and Exchange Commission.
(more)
Corning to Take Additional Charges in Fourth-Quarter
Page Three
Separately, Corning announced that its Board of Directors had accepted the
resignation of John H. Foster, managing partner of Foster Management Company,
effective December 31, 2001. Foster, who resigned for personal reasons, had
served as a director since 1994. The board has been reduced from 16 to 15
members as a result.
About Corning Incorporated
Established in 1851, Corning Incorporated (www.corning.com) 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, information technology and other communications-related industries.
The company also uses advanced materials to manufacture products for scientific,
semiconductor and environmental markets. Corning revenues for 2000 were $7.1
billion.
Pro Forma Statement
Pro forma net income excludes impairment and amortization of goodwill,
restructuring actions, purchased in-process research and development, one-time
acquisition costs, discontinued operations and other non-recurring items.
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 filings with
the Securities and Exchange Commission.