SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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): September 29, 1994
CORNING INCORPORATED
(Exact Name of Registrant as Specified in Charter)
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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)
Registrant's telephone number, including area code: (607) 974-9000
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Item 5. Other Events
On August 31, 1994, Corning Incorporated ("Corning") filed a Current Report
on Form 8-K which included Unaudited Pro Forma Combined Financial Information
as of and for the twenty-four weeks ended June 19, 1994. On September 9,
1994, Corning announced that a definitive agreement had been signed to
acquire Bioran Medical Laboratory in a pooling of interests transaction. On
September 23, 1994, Corning announced that Siecor Corporation had entered
into a definitive agreement to acquire the assets relating to the hardware
and equipment components business of Northern Telecom Limited. Corning is
filing herewith Unaudited Pro Forma Combined Financial Information as of and
for the twenty-four weeks ended June 19, 1994, which has been updated to
include these pending transactions.
Item 7. Pro Forma Financial Information:
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Corning Incorporated
Unaudited Pro Forma Combined Financial Information 4
Combined Statement of Income for the year ended January 2, 1994 5
Combined Statement of Income for the twenty-four weeks ended June 19, 1994 6
Combined Balance Sheet as of June 19, 1994 7
Notes to Unaudited Pro Forma Combined Financial Information 8
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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
By: /s/ Kathy A. Asbeck
Kathy A. Asbeck
Assistant Controller
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CORNING UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The Unaudited Pro Forma Combined Financial Information (the "Unaudited Pro
Forma Information") is presented to reflect the estimated impact on Corning's
Financial Statements of the following proposed or completed transactions
(collectively, the "Transactions"):
* The acquisition of Damon Corporation ("Damon") in August 1993, at a total
purchase price of approximately $405 million, including acquisition expenses.
The transaction has been accounted for as a purchase.
* The acquisition of Costar Corporation ("Costar") in September 1993, the
transaction with Unilab Corporation ("Unilab") in November 1993, and other
acquisitions completed in 1993 (collectively, the "Other 1993 Transactions")
which individually and in the aggregate are not significant. The Costar
merger and the Unilab transaction are described in Notes 4 and 5,
respectively.
* The acquisition of the optical-fiber and optical-cable businesses of
Northern Telecom Limited ("NTL") by Corning and Siecor Corporation ("Siecor")
for $131 million in February 1994, the Vitro, S.A. ("Vitro") transaction
completed in February 1994, the merger with Maryland Medical Laboratory, Inc.
("Maryland Medical") for 4.5 million Corning Common Shares in June 1994, and
the merger with Nichols Institute ("Nichols") for 7.5 million Corning Common
Shares and options to purchase approximately 1.1 million Corning Common
Shares (collectively, the "Completed 1994 Transactions"). The NTL transaction
completed in February 1994 has been accounted for as a purchase and the
Maryland Medical and Nichols transactions will be accounted for as poolings
of interests. The Vitro transaction is described in Note 6.
The NTL transaction completed in February 1994 and the Vitro transaction were
financed by the issuance of 8.0 million Corning Common Shares in February
1994.
* The proposed acquisition of certain assets relating to the hardware and
equipment components business of NTL by Siecor for $135 million and the
proposed merger with Bioran Medical Laboratory ("Bioran") for approximately
6.0 million Corning Common Shares (collectively, the "Pending 1994
Transactions"). The NTL transaction will be accounted for as a purchase. The
Bioran transaction will be accounted for as a pooling of interests.
* The issuance (the "MIPS Offering") by Corning Delaware L.P. ("Corning
Delaware") of $373.8 million aggregate principal amount of Convertible
Monthly Income Preferred Securities (the "Preferred Securities") completed in
July 1994 and the use of the net proceeds thereof by Corning to retire the
indebtedness incurred in connection with the Damon transaction.
The Unaudited Pro Forma Combined Statements of Income for the year ended
January 2, 1994, and the twenty-four weeks ended June 19, 1994, assume that
the Transactions had been completed on January 4, 1993. The Unaudited Pro
Forma Combined Balance Sheet at June 19, 1994, assumes that the Transactions
had been completed by that date. Corning's consolidated financial statements
for periods prior to the pooling of interests transactions will not be
restated since the acquisitions are not material to Corning's financial
position or results of operations.
The Unaudited Pro Forma Information gives effect only to the adjustments set
forth in the accompanying notes and does not reflect any synergies
anticipated by Corning's management as a result of these acquisitions. The
Unaudited Pro Forma Information is not necessarily indicative of the results
of operations or financial position which would have been achieved had the
Transactions been completed as of the beginning of the earliest period
presented, nor is it necessarily indicative of Corning's future results of
operations or financial position.
Corning has completed or has pending several business dispositions in 1994
which individually and in the aggregate are not significant to Corning's
consolidated financial statements. As such, pro forma data on these
transactions are not presented.
The Unaudited Pro Forma Information should be read in conjunction with the
historical financial statements of Corning and Damon. Damon's historical
financial statements are included in Corning's Current Reports on Form 8-K
dated August 4, 1993 and August 13, 1993.
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CORNING
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
YEAR ENDED JANUARY 2, 1994
(In Millions, Except Per Share Amounts)
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OTHER COMPLETED PENDING
1993 1994 1994 PRO FORMA
CORNING DAMON TRANSACTIONS TRANSACTIONS TRANSACTIONS ADJUSTMENTS AS ADJUSTED
(1) (2) (3) (4) (5) (6) (7)
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Revenues
Net sales $4,004.8 $199.9 $146.1 $448.1 $173.4 $4,972.3
Royalty,
interest and
dividend
income 29.9 29.9
Non-operating
gains 4.2 4.2
4,038.9 199.9 146.1 448.1 173.4 5,006.4
Deductions
Cost of sales 2,597.0 129.4 105.4 303.5 100.7 $ 22.5(a) 3,258.5
Selling,
general and
administrative
expenses 774.0 58.1 23.1 107.2 32.9 995.3
Research and
development
expenses 173.1 2.2 6.0 4.1 185.4
Provision for
restructuring
and other
special
charges 207.0 16.0 (48.5)(b) 174.5
Interest
expense 88.2 5.6 3.6 13.2 22.9(c)
(17.9)(d) 115.6
Other, net 42.9 1.0 0.6 2.4 (0.3) (1.0)(e) 45.6
Income (loss)
before taxes
on income 156.7 5.8 11.2 (0.2) 36.0 22.0 231.5
Tax provision
(benefit) 35.3 2.1 3.9 1.9 23.3(f) 66.5
Income (loss)
before
minority
interest and
equity
earnings 121.4 3.7 7.3 (0.2) 34.1 (1.3) 165.0
Minority
interest in
earnings of
subsidiaries (16.6) (2.2) (15.1) 3.1(g) (30.8)
Dividends on
convertible
preferred
securities of
subsidiary (14.6)(h) (14.6)
Equity in
earnings
(loss) of
associated
companies (120.0) 19.0 (101.0)
Net Income
(Loss) $ (15.2) $ 1.5 $ 7.3 $ 3.7 $ 34.1 $ (12.8) $ 18.6
Weighted Average
Shares
Outstanding 191.963 30.086(i) 222.049
Earnings Per
Common Share:
Net Income
(Loss) $ (0.09) $ 0.07
<FN>
(1)Represents the historical results of operations of Corning for the year
ended January 2, 1994.
(2)Represents the historical results of operations of Damon for the seven
months ended July 31, 1993.
(3)Represents the historical results of operations of the businesses involved
in the Other 1993 Transactions through the respective acquisition dates.
(4)Represents the historical results of operations of the businesses involved
in the Completed 1994 Transactions for the year ended December 31, 1993.
(5)Represents the historical results of operations of the businesses to be
acquired in the Pending 1994 Transactions for the year ended December 31,
1993.
(6)See Note 2 to the Unaudited Pro Forma Information--Statement of Income.
(7)Reflects the results of operations of Corning on a pro forma basis
assuming the Transactions had been completed on January 4, 1993.
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CORNING
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
TWENTY-FOUR WEEKS ENDED JUNE 19, 1994
(In millions, except per share amounts)
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COMPLETED PENDING
1994 1994 PRO FORMA
CORNING (1) TRANSACTIONS(2) TRANSACTIONS (3) ADJUSTMENTS (4) AS ADJUSTED (5)
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Revenues
Net sales $2,054.6 $190.4 $90.9 $2,335.9
Royalty, interest
and dividend income 11.2 11.2
2,065.8 190.4 90.9 2,347.1
Deductions
Cost of sales 1,318.2 126.8 52.5 $ 5.1(a) 1,502.6
Selling, general and
administrative
expenses 388.0 55.7 16.3 460.0
Research and
development
expenses 79.3 2.1 1.8 83.2
Provision for
restructuring and
other special
charges 3.8 3.8
Interest expense 51.7 6.1 4.0(c)
(5.8)(d) 56.0
Other, net 8.8 1.0 0.1 9.9
Income (loss) before
taxes on income 219.8 (5.1) 20.2 (3.3) 231.6
Tax provision
(benefit) 83.0 0.2 1.1 5.4(f) 89.7
Income (loss) before
minority interest
and equity earnings 136.8 (5.3) 19.1 (8.7) 141.9
Minority interest in
earnings of
subsidiaries (17.9) (0.3) 0.5(g) (17.7)
Dividends on
convertible
preferred
securities of
subsidiary (6.7)(h) (6.7)
Equity in earnings of
associated
companies 50.5 50.5
Net Income (Loss) $ 169.4 $ (5.6) $19.1 $ (14.9) $ 168.0
Weighted Average
Shares Outstanding 204.286 18.995(i) 223.281
Earnings Per Common
Share:
Net Income $ 0.82 $ 0.75
<FN>
(1)Represents the historical results of operations of Corning for the
twenty-four weeks ended June 19, 1994.
(2)Represents the historical results of operations of the businesses involved
in the Completed 1994 Transactions through the earlier of June 19, 1994, or
the respective acquisition dates.
(3)Represents the historical results of operations of the businesses to be
acquired in the Pending 1994 Transactions for the six months ended June 30,
1994.
(4)See Note 2 to the Unaudited Pro Forma Information--Statement of Income.
(5)Reflects the results of operations of Corning on a pro forma basis
assuming the Corning Transactions had been completed on January 4, 1993.
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CORNING
UNAUDITED PRO FORMA COMBINED CONSOLIDATED BALANCE SHEET
JUNE 19, 1994
(In millions)
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COMPLETED PENDING
1994 1994 PRO FORMA
CORNING (1) TRANSACTIONS (2) TRANSACTIONS (3) ADJUSTMENTS (4) AS ADJUSTED (5)
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Assets
Current Assets
Cash and
short-term
investments $ 121.0 $ 14.3 $ 0.3 $ (50.0)(j) $ 85.6
Receivables, net 845.6 52.3 10.5 908.4
Inventories 408.7 10.7 21.1 440.5
Deferred taxes on
income and other
current assets 224.3 7.2 0.7 232.2
Total Current
Assets 1,599.6 84.5 32.6 $ (50.0) 1,666.7
Investments 676.6 676.6
Plant and Equipment,
net 1,797.5 87.9 22.5 1,907.9
Goodwill and
Intangibles, net 1,217.1 65.7 0.2 119.5(k) 1,402.5
Other Assets 330.3 1.8 332.1
$5,621.1 $239.9 $55.3 $ 69.5 $5,985.8
Liabilities and
Stockholders'
Equity
Current Liabilities
Loans payable $ 238.5 $ 60.7 $ 299.2
Accounts payable 143.4 20.2 $ 8.1 171.7
Other accrued
liabilities 681.8 25.7 4.5 $ 9.0(l) 721.0
Total Current
Liabilities 1,063.7 106.6 12.6 $ 9.0 1,191.9
Other Liabilities 665.9 9.3 675.2
Loans Payable Beyond
One Year 1,605.6 36.6 (365.4)(m)
35.0(n) 1,311.8
Minority Interest in
Subsidiary
Companies 186.2 50.0(o) 236.2
Convertible Preferred
Securities of
Subsidiary 365.4(m) 365.4
Convertible Preferred
Stock 25.0 25.0
Common Stockholders'
Equity 2,074.7 87.4 42.7 (24.5)(p) 2,180.3
$5,621.1 $239.9 $55.3 $ 69.5 $5,985.8
<FN>
(1)Represents the historical financial position of Corning at June 19, 1994.
(2)Represents the historical financial position of the business involved in
the Completed 1994 Transactions at June 30, 1994.
(3)Represents the historical financial position of the businesses to be
acquired in the Pending 1994 Transactions at June 30, 1994.
(4)See Note 2 to Unaudited Pro Forma Information--Balance Sheet.
(5)Reflects the financial position of Corning on a pro forma basis assuming
the Corning Transactions had been completed by June 19, 1994.
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CORNING
Notes to Unaudited Pro Forma Combined Financial Information
Note 1.--Basis of Presentation:
The Unaudited Pro Forma Combined Statements of Income reflect Corning's
results of operations for the year ended January 2, 1994, and the twenty-four
weeks ended June 19, 1994, on a pro forma basis assuming the Transactions had
been completed as of January 4, 1993. The Unaudited Pro Forma Combined
Balance Sheet at June 19, 1994, assumes that the Transactions had been
completed by that date.
Corning's management believes that the assumptions used in preparing the
Unaudited Pro Forma Information provide a reasonable basis for presenting all
of the significant effects of the Transactions, that the pro forma
adjustments give appropriate effect to those assumptions and that the pro
forma adjustments are properly applied in the Unaudited Pro Forma
Information.
Note 2.--Pro Forma Adjustments:
Statement of Income
(a) The pro forma adjustment to cost of sales represents the increase in
amortization of the excess of cost over fair value of tangible net assets
acquired in the Damon transaction, the Other 1993 Transactions, the Completed
1994 Transactions, and the Pending 1994 Transactions of $6.5 million, $1.8
million, $6.0 million, and $8.2 million, respectively, for the year ended
January 2, 1994, and $1.3 million and $3.8 million for the Completed 1994
Transactions and the Pending 1994 Transactions, respectively, for the
twenty-four weeks ended June 19, 1994.
The excess of cost over fair value of tangible net assets acquired in the
Damon transaction is $603 million. The excess of cost over fair value of
tangible net assets acquired has been allocated to goodwill with a life of
forty years. Management believes that fair value approximates book value for
all tangible assets acquired in the Damon transaction.
Goodwill totaling $258 million and $190 million resulted from the Other 1993
Transactions and the Completed 1994 Transactions, respectively, and is being
amortized over 25 to 40 years. Goodwill totaling $119.5 million is expected
to result from the Pending 1994 Transactions and will be amortized over 15
years.
(b) The pro forma adjustment represents the elimination of one-time
restructuring costs of $40.6 million related to closing MetPath facilities as
a result of the integration of Damon and MetPath and $7.9 million of Costar
transaction costs recorded in Corning's results for the year ended January 2,
1994.
(c) The pro forma adjustment to interest expense represents the interest on
the debt incurred in connection with the Damon transaction, the Other 1993
Transactions, and the Pending 1994 Transactions of $11.9 million, $2.3
million, and $8.7 million, respectively, for the year ended January 2, 1994,
and $4.0 million for the Pending 1994 Transactions for the twenty-four weeks
ended June 19, 1994. The weighted average interest rate on the debt incurred
in connection with the Damon transaction is 4.9% and on the Other 1993
Transactions ranges from 3.5% to 6.7%. The interest rate on the debt expected
to be incurred in connection with the Pending 1994 Transactions is 8%.
Corning financed the Damon acquisition and the refinancing of approximately
$167 million of indebtedness of Damon under short-term financing agreements
entered into with certain banks to effect this transaction. During the third
quarter of 1993, Corning refinanced a portion of this short-term financing by
issuing approximately $200 million of longer-term debt. During the fourth
quarter of 1993, Corning extended the terms of the financing agreements to
December 31, 1995. The pro forma adjustment to interest expense related to
the Damon transaction is calculated as the weighted average of short-term and
longer-term interest rates.
(d) The pro forma adjustment to interest expense reflects the decrease in
interest expense assuming the issuance by Corning Delaware on January 4,
1993, of $373.8 million of Preferred Securities pursuant to the MIPS Offering
(net of $8.4 million of underwriting commissions and expenses), and the use
of the net proceeds thereof by Corning to retire the indebtedness incurred in
connection with the Damon transaction.
(e) The pro forma adjustment represents the elimination of approximately $1
million of one-time costs incurred by Damon in connection with a terminated
merger agreement with National Health Laboratories Incorporated which were
charged to results of operations for the seven months ended July 31, 1993.
(f) The pro forma adjustment to tax expense represents the tax effect of the
adjustments detailed in notes (a), (b), (c), (d) and (e) above. In addition,
tax expense has been adjusted to provide taxes on the income of one of the
Completed 1994 Transactions and the Pending 1994 Transactions which were not
reflected in the historical financial statements. These adjustments are
calculated at Corning's historical effective tax rate.
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(g) The pro forma adjustment to minority interest represents the applicable
minority interest on the historical earnings and pro forma adjustments of the
Other 1993 Transactions, the Completed 1994 Transactions, and the Pending
1994 Transactions.
(h) The pro forma adjustment to dividends on convertible preferred securities
of subsidiary represents the after-tax dividends payable on the $373.8
million of Preferred Securities pursuant to the MIPS Offering.
(i) The pro forma adjustment to weighted average shares outstanding
represents the issuance of 5.5 million shares to complete the Costar
acquisition in September 1993, 20.0 million shares in conjunction with the
Completed 1994 Transactions, and 6.0 million shares in conjunction with the
Bioran transaction.
Balance Sheet
(j) The pro forma adjustment represents the cash used to fund a portion of
the purchase price of one of the Pending 1994 Transactions.
(k) The pro forma adjustment to goodwill represents the incremental goodwill
arising from the Pending 1994 Transactions of $119.5 million.
(l) The pro forma adjustment to other liabilities relates to reserves for
integration costs of the Pending 1994 Transactions.
(m) The pro forma adjustment to loans payable beyond one year and preferred
securities of subsidiaries assumes the issuance on June 19, 1994, of $373.8
million of Preferred Securities pursuant to the MIPS Offering (net of $8.4
million of underwriting commissions and expenses), and the use of the net
proceeds thereof by Corning to retire the indebtedness incurred in connection
with the Damon transaction.
(n) The pro forma adjustment to loans payable beyond one year represents a
portion of the debt to be incurred to finance the Pending 1994 Transactions.
(o) The pro forma adjustment to minority interest represents a capital
contribution by a partner to finance one of the Pending 1994 Transactions.
(p) The pro forma adjustment to common stockholders' equity represents the
elimination of the net assets of the Pending 1994 Transactions accounted for
using the purchase method of accounting.
Note 3.--Earnings Per Share:
Earnings per common share are computed by dividing net income less preferred
dividends on Corning's Series B Preferred Stock by the weighted average of
common shares outstanding during each period. Preferred dividends amounted to
$2.1 million and $1.0 million during the year ended January 2, 1994, and the
twenty-four weeks ended June 19, 1994, respectively.
Note 4.--Costar Merger:
In September 1993, Corning acquired all of the outstanding shares of common
stock and options to purchase common stock of Costar for approximately 5.5
million Corning Common Shares and options to purchase approximately 300,000
Corning Common Shares. This acquisition has been accounted for as a pooling
of interests. Corning's consolidated financial statements for periods prior
to the acquisition have not been restated since the acquisition is not
material to Corning's financial position or results of operations.
Note 5.--Unilab Transaction:
Corning, through a wholly owned subsidiary, owned 43% of Unilab. In November
1993, Corning acquired 100 percent of certain Unilab facilities in exchange
for a majority of the Unilab shares owned by Corning, the assumption of
approximately $70 million of Unilab debt and Corning's investment in J.S.
Pathology PLC ("J.S. Pathology"). Corning retained a 12% equity investment in
Unilab.
Note 6.--Vitro Transaction:
On January 2, 1992, Corning entered into an alliance with Vitro, by
transferring 49% of its consumer-housewares businesses to Vitro, in exchange
for 49% of Vitro's consumer-products businesses and approximately $137
million in cash. The alliance consisted of two jointly owned companies.
Corning owned 51% of Corning Vitro Corporation ("Corning Vitro") and
consolidated its financial statements and 49% of Vitro Corning, S.A. de C.V.
("Vitro Corning") and accounted for its investment under the equity method.
In December 1993, Vitro and Corning reached an agreement whereby, in two
separate transactions, Vitro purchased in December 1993, the shares of
capital stock of Vitro Corning owned by Corning and Corning purchased
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in February 1994 the shares of capital stock of Corning Vitro held by Vitro.
The net cost to Corning of the two transactions was $131 million. Corning and
Vitro are continuing their consumer products alliance through cross-
distribution and supply agreements.
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