<PAGE>1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended October 9, 1994
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________to____________
Commission file number 1-3247
CORNING INCORPORATED
(Registrant)
New York 16-0393470
(State of incorporation) (I.R.S. Employer 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
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months and (2) has been subject to
the filing requirements for at least the past 90 days.
Yes X No ____
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
227,542,353 shares of Corning's Common Stock, $0.50 Par Value, were
outstanding as of November 4, 1994.
<PAGE>2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Index to consolidated financial statements of Corning Incorporated and
Subsidiary Companies filed as part of this report:
Page
Consolidated Statements of Income for the forty and
sixteen weeks ended October 9, 1994 and October 10, 1993 3
Consolidated Balance Sheets at October 9, 1994
and January 2, 1994 4
Consolidated Statements of Cash Flows for the
forty weeks ended October 9, 1994 and
October 10, 1993 5
Notes to Consolidated Financial Statements 6
The consolidated financial statements reflect all adjustments which, in
the opinion of management, are necessary for a fair statement of the
results of operations and financial position for the interim periods
presented. All such adjustments are of a normal recurring nature. The
consolidated financial statements have been compiled without audit and
are subject to such year-end adjustments as may be considered
appropriate by the registrant or its independent accountants and should
be read in conjunction with Corning's Annual Report on Form 10-K for the
year ended January 2, 1994.
<PAGE>3
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per-share amounts)
Forty Weeks Ended Sixteen Weeks Ended
October 9,October 10, October 9,October 10,
1994 1993 1994 1993
REVENUES
Net sales $ 3,497.0 $2,921.8 $ 1,442.4 $1,198.0
Royalty, interest and
dividend income 21.5 21.8 10.3 9.4
Non-operating gains 4.2
3,518.5 2,947.8 1,452.7 1,207.4
DEDUCTIONS
Cost of sales 2,236.1 1,889.5 917.9 789.0
Selling, general, and
administrative expenses 633.2 564.8 245.2 219.5
Research and
development expenses 132.8 128.9 53.5 51.4
Provision for restructuring
and other special charges 82.3 207.0 82.3 207.0
Interest expense 85.6 63.9 33.9 28.8
Other, net 36.3 21.4 27.5 9.9
Income (loss) before
taxes on income 312.2 72.3 92.4 (98.2)
Income tax expense (benefit) 117.1 13.5 34.1 (45.1)
Income (loss) before
minority interest and
equity earnings 195.1 58.8 58.3 (53.1)
Minority interest in
earnings of subsidiaries (39.0) (9.5) (21.1) (2.6)
Dividends on convertible
preferred securities of
subsidiary (2.7) (2.7)
Equity in earnings of
associated companies 92.9 56.4 42.4 21.8
NET INCOME (LOSS) $ 246.3 $ 105.7 $ 76.9 $ (33.9)
PER COMMON SHARE:
NET INCOME (LOSS) $ 1.18 $ 0.55 $ 0.36 $ (0.18)
DIVIDENDS DECLARED $ 0.51 $ 0.51 $ 0.17 $ 0.17
<PAGE>4
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(In millions, except shares and per-share amounts)
October 9, January 2,
ASSETS 1994 1994
CURRENT ASSETS
Cash $ 37.3 $ 80.7
Short-term investments, at cost, which
approximates market value 217.4 80.1
Accounts receivable, net of doubtful accounts
and allowances-$90.4/1994;$70.5/year-end 1993 984.0 691.1
Inventories 435.9 353.9
Deferred taxes on income and other
current assets 256.9 265.9
Total current assets 1,931.5 1,471.7
INVESTMENTS
Associated companies, at equity 728.7 586.5
Others, at cost 36.3 44.2
765.0 630.7
PLANT AND EQUIPMENT, NET 1,867.2 1,759.8
GOODWILL AND OTHER INTANGIBLE ASSETS, NET 1,270.1 1,009.1
OTHER ASSETS 313.1 360.4
$6,146.9 $ 5,231.7
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Loans payable $ 329.0 $ 141.7
Accounts payable 192.5 245.1
Other accrued liabilities 778.4 633.5
Total current liabilities 1,299.9 1,020.3
OTHER LIABILITIES 658.0 668.6
LOANS PAYABLE BEYOND ONE YEAR 1,351.0 1,585.6
MINORITY INTEREST IN SUBSIDIARY COMPANIES 194.5 245.7
CONVERTIBLE PREFERRED SECURITIES OF SUBSIDIARY 364.4
CONVERTIBLE PREFERRED STOCK 25.0 25.7
COMMON STOCKHOLDERS' EQUITY
Common stock, including excess over par value
and other capital-Par value $0.50 per share;
authorized 500,000,000 shares 1,012.6 626.8
Retained earnings 1,722.4 1,581.9
Less cost of 27,513,507/1994 and 27,401,318/year-
end 1993 shares of common stock in treasury (521.1) (516.5)
Cumulative translation adjustment 40.2 (6.4)
$6,146.9 $ 5,231.7
The accompanying notes are an integral part of these statements.
<PAGE>5
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
Forty Weeks Ended
October 9, October 10,
1994 1993*
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 246.3 $ 105.7
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization 252.1 210.6
Equity in earnings of associated companies
in excess of dividends received (68.6) (33.0)
Minority interest in earnings of subsidiaries
in excess of (less than) dividends paid 24.1 (5.2)
Gains on disposition of properties and investments (8.7) (0.6)
Provision for restructuring and other special
charges (net of cash paid) 76.9 169.8
Deferred tax benefit (11.1) (78.3)
Other (0.6) 27.8
Changes in operating assets and liabilities:
Accounts receivable (232.7) (56.3)
Inventory (58.1) (38.8)
Deferred taxes and other current assets (25.3) (29.1)
Accounts payable and other current liabilities (95.1) (115.1)
NET CASH PROVIDED
BY OPERATING ACTIVITIES 99.2 157.5
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to plant and equipment (243.6) (260.8)
Acquisitions of businesses, net (241.0) (443.9)
Net proceeds from disposition
of properties and investments 144.5 16.3
Increase in long-term investments (9.6) (21.7)
Other, net (23.9) (4.5)
NET CASH USED IN INVESTING ACTIVITIES (373.6) (714.6)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of loans 291.3 1,073.2
Repayments of loans (452.0) (383.5)
Increase in minority interest due to
capital contribution 21.5
Proceeds from issuance of convertible preferred
securities of subsidiary 364.4
Proceeds from issuance of common stock 247.2 13.4
Repurchases of common stock (58.6)
Payment of dividends (105.6) (101.6)
NET CASH PROVIDED BY
FINANCING ACTIVITIES 366.8 542.9
Effect of exchange rates on cash 1.5 2.3
Net change in cash and cash equivalents 93.9 (11.9)
Cash and cash equivalents at beginning of year 160.8 133.1
CASH AND CASH EQUIVALENTS AT END OF QUARTER $ 254.7 $ 121.2
SUPPLEMENTAL DATA:
Income taxes paid $ 116.0 $ 112.7
Interest paid $ 94.2 $ 53.1
*Reclassified to conform to 1994 presentation.
The accompanying notes are an integral part of these statements.
<PAGE>6
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Earnings per common share are computed by dividing net income less
dividends on Series B preferred stock by the weighted average of
common shares outstanding during each period. Series B preferred
dividends amounted to $0.5 million and $1.5 million for the sixteen
and forty weeks ended October 9, 1994, respectively, compared with
$0.5 million and $1.6 million for the same periods ended October
10, 1993. The weighted average of common shares outstanding (in
thousands) for the sixteen and forty weeks ended October 9, 1994
were 213,353 and 207,921, respectively, and 192,132 and 190,562 for
the same periods ended October 10, 1993. The weighted average of
common shares outstanding for earnings per share calculations does
not include shares held by the Corning Stock Ownership Trust which
totaled approximately 3.0 million and 3.3 million shares during
1994 and 1993, respectively. Common stock equivalents are not
included in the earnings per share computation because they do not
result in material dilution.
Common dividends of $37.0 million and $108.7 million were declared
during the sixteen and forty weeks ended October 9, 1994,
respectively, compared with $34.1 million and $99.9 million for the
same periods ended October 10, 1993.
(2) The equity in earnings of associated companies is generally
recorded on a one-month lag. Corning's first quarter includes its
equity in earnings of Dow Corning Corporation (Dow Corning) for two
months, compared with three months in the second and fourth
quarters and four months in the third quarter. Corning is a 50-
percent owner of Dow Corning. Dow Chemical Company owns the
remaining 50 percent.
(3) Inventories shown on the accompanying balance sheets were comprised
of the following (in millions):
October 9, January 2,
1994 1994
Finished goods $ 239.0 $ 216.1
Work in process 122.8 93.6
Raw materials and accessories 87.5 68.0
Supplies and packing materials 85.7 75.6
Total inventories valued at current cost 535.0 453.3
Reduction in LIFO valuation (99.1) (99.4)
$ 435.9 $ 353.9
(4) Plant and equipment shown on the accompanying balance sheets were
comprised of the following (in millions):
October 9, January 2,
1994 1994
Land $ 62.5 $ 51.6
Buildings 844.1 742.5
Equipment 2,735.0 2,567.7
Accumulated depreciation (1,774.4) (1,602.0)
$1,867.2 $ 1,759.8
<PAGE>7
(5) Goodwill shown on the accompanying balance sheets is net of
accumulated amortization which totaled $139.6 million at October 9,
1994, and $106.8 million at January 2, 1994. During the forty
weeks ended October 9, 1994, Corning adjusted the allocation of the
original purchase price relating to the August 1993 acquisition of
Damon Corporation. As a result, goodwill associated with this
acquisition was revised to $603 million which is being amortized
over 40 years.
(6) Consolidated summarized income statement information of Dow Corning
and its subsidiary companies is presented below (in millions):
Nine Months Ended Three Months Ended
September 30, September 30,
1994 1993 1994 1993
Net sales $ 1,621.2 $1,522.7 $ 559.7 $ 512.0
Operating costs
and expenses 1,364.9 1,333.7 479.2 456.2
Operating income 256.3 189.0 80.5 55.8
Other expense (56.1) (24.2) (18.8) (4.6)
Income before
income taxes 200.2 164.8 61.7 51.2
Income taxes 78.1 55.5 24.1 17.4
Minority interest's
share of net income 9.7 12.1 2.9 3.6
$ 112.4 $ 97.2 $ 34.7 $ 30.2
In March 1994, Dow Corning, along with other defendants and
representatives of breast implant litigation plaintiffs, signed a
Breast Implant Litigation Settlement Agreement (the Settlement
Agreement). Under the Settlement Agreement and related agreements,
industry participants would contribute approximately $4.2 billion
over a period of more than thirty years to establish several
special purpose funds. In September 1994, Dow Corning
Corporation's Board of Directors approved Dow Corning's continued
participation in the global settlement for breast implant
litigation. Also in September, the U.S. District Court granted
final approval to the settlement, assessing it as fair, reasonable,
and adequate (a ruling which has subsequently been appealed by
various parties) and afforded plaintiffs who originally opted out
of the settlement the opportunity to rejoin the settlement in
specified periods which currently end no later than December 1,
1994. Corning is not a party to the Settlement Agreement and will
not make any contributions to the settlement contemplated thereby.
Dow Corning recorded an accounting charge of $415 million after tax
in the fourth quarter of 1993. As disclosed in Dow Corning's
financial statements, this charge included the net present value of
Dow Corning's best estimate of its potential liability for breast
implant litigation based on current settlement negotiations, and
also included provisions for legal, administrative, and research
costs related to breast implants, for a total of $1.24 billion,
less expected insurance recoveries of $600 million. Future
developments, including among other things, the number and extent
of claims not covered by the settlement, the amount and timing of
insurance recoveries and the allocation of insurance payments among
Dow Corning's insurance carriers, and the possibility of resolution
of the litigation through alternatives to the Settlement Agreement,
may require Dow Corning to record additional provisions.
<PAGE>8
Corning does not believe that its share of any additional
accounting charge taken by Dow Corning resulting from the breast
implant litigation will have a material adverse effect upon
Corning's overall financial condition. However it is possible that
Corning's share of any such charge taken by Dow Corning will have a
material adverse effect upon Corning's earnings in the quarter in
which any such charge is recognized by Dow Corning. The amount of
any such charge would be written off against Corning's investment
in Dow Corning which totaled $402 million at October 9, 1994.
(7) In July 1994, Corning and Corning Delaware, a special purpose
limited partnership in which Corning is the sole general partner,
completed a public offering of 7.5 million shares of Convertible
Monthly Income Preferred Securities (MIPS), guaranteed by Corning
and convertible into Corning common stock at the rate of 1.2821
shares of Corning common stock for each preferred security
(equivalent to a conversion price of $39 per share). Dividends on
the preferred securities are payable by Corning Delaware at the
annual rate of 6 percent of the liquidation preference of $50 per
preferred security. The proceeds, which totaled $364.4 million
(net of $9.4 million of underwriting commissions and expenses) were
used to retire the remaining debt incurred in the 1993 acquisition
of Damon.
After August 5, 1998, the preferred securities will be redeemable,
at the option of Corning Delaware for $51.80 per preferred security
reduced annually by $0.30 to a minimum of $50 per preferred
security. The preferred securities are subject to mandatory
redemption on July 28, 2024, at a redemption price of $50 per
preferred security.
Corning may cause Corning Delaware to delay the payment of
dividends for up to 60 months. During such period, dividends on
the MIPS will compound monthly and Corning may not declare or pay
dividends on its common stock. If Corning Delaware fails to pay
dividends on the MIPS for 15 consecutive months or upon the
occurrence of certain other events, the preferred securities may
convert, at the option of the holder, to Corning Series C
convertible preferred stock, par value $100 per share. The Series
C convertible preferred stock will have dividend, conversion,
optional redemption, and other terms substantially similar to the
terms of the MIPS, except that, among other things, the holders of
Series C preferred stock will have the right to elect two
additional directors of Corning whenever dividends are in arrears
for 18 months and the Series C preferred stock will not be subject
to mandatory redemption.
(8) In July 1994, Corning issued $100 million of 30-year debentures
with an interest rate of 7.625 percent due August 1, 2024. The
bonds are putable in 10 years at par. The proceeds from these
borrowings were used to repay short-term borrowings assumed in
connection with recent acquisitions.
(9) As described in the company's 1993 Annual Report on Form 10-K,
Corning completed five acquisitions in 1993, the most significant
of which was the acquisition of Damon Corporation (Damon) for
approximately $405 million in August 1993.
In February 1994, Corning purchased the shares of capital stock of
Corning Vitro Corporation held by Vitro S.A. completing the second
and final phase of an agreement between Corning and Vitro to end
their cross ownership in two consumer products companies. The net
cost to Corning of this transaction was $131 million. Also in
February 1994, Corning and Siecor Corporation acquired the assets
relating to the optical-fiber and optical-cable businesses of
Northern Telecom Limited. Under terms of the agreement, Corning
provided $87 million of the purchase price and Siecor provided $43
million. These transactions were financed by the issuance of 8
million shares of common stock in February 1994.
<PAGE>9
In June 1994, Corning acquired all of the outstanding shares of
Maryland Medical Laboratory, Inc. and several affiliates for
approximately 4.5 million shares of Corning Common Stock. In
August 1994, Corning acquired all of the outstanding shares of
common stock and options to purchase common stock of Nichols
Institute. Corning issued 7.5 million new shares of Corning common
stock and reserved 1.1 million shares for future issuance upon the
exercise of options issued in connection with the Nichols
transaction. In October 1994, Corning acquired all of the
outstanding shares of Bioran Medical Laboratory for approximately 6
million shares of Corning common stock. These transactions were
accounted for as poolings of interests. Corning's consolidated
financial statements for periods prior to the acquisitions have not
been restated since the combined impact of the acquisitions was not
material to Corning's historical financial position or results of
operations. Results of operations of the acquired companies have
been included in the consolidated financial statements from the
date of acquisition.
The following table presents unaudited pro forma operating results
for the forty weeks ended October 9, 1994, and October 10, 1993, as
if the acquisitions and related financing transactions completed in
1994 and 1993 had been completed on January 4, 1993 (in millions,
except per share amounts):
Forty Weeks Ended
October 9,October 10,
1994 1993
Revenues $3,780.2 $ 3,677.5
Net income 303.8 140.4
Net income
per common share 1.35 0.63
These pro forma results do not reflect the results of recent
divestitures which are individually and in the aggregate immaterial
or the impact of the formation of the jointly-owned environmental
testing company described in Note 10.
(10) In June 1994, Corning and International Technology Corporation
(International Technology) created a jointly-owned company to which
Corning transferred the net assets of its environmental testing
laboratory business and International Technology transferred the
assets of its IT Analytical Services business. Corning and
International Technology each own 50 percent of the company.
Corning will account for its investment in the newly created
company using the equity method of accounting for investments.
Corning received approximately $33 million as a result of this
transaction and recognized a gain on the transaction which, net of
its share of a one-time integration charge taken by the new
company, is immaterial and has been included in equity earnings.
(11) In September 1994, Siecor Corporation, a consolidated subsidiary,
signed a definitive agreement to purchase certain assets relating
to the telecommunications hardware and equipment components
businesses of Northern Telecom Limited for approximately $135
million. The transaction, which is subject to regulatory approval,
is expected to be completed in the fourth quarter of 1994.
(12) On October 13, 1994, Corning signed a definitive agreement to sell
its European consumer products business to Newell Co. for
approximately $80 million. The transaction is expected to be
completed in the fourth quarter of 1994 and is not expected to have
a material impact on Corning's financial statements.
<PAGE>10
Non-Operating Gains and Losses
(13) During the sixteen and forty weeks ended October 9, 1994, Corning
recorded a charge totaling $82.3 million ($55.4 million after tax)
which included $50.7 million of integration costs, $21.6 million of
investment banking, legal, and accounting fees and other
transaction expenses, and $10 million of other reserves primarily
related to the Nichols, Maryland Medical Laboratory and Bioran
acquisitions. A detailed discussion of the restructuring and other
special charges is included on page 12.
(14) During the sixteen weeks ended October 10, 1993, Corning recognized
non-recurring charges totaling $207 million ($120.5 million after
tax and minority interest) which included $156 million of
restructuring charges and $51 million of other special charges.
The restructuring charges included costs to integrate the Damon
acquisition and costs of a planned company-wide restructuring
program to reduce assets and overhead costs during 1994. The other
special charges primarily included a charge by MetPath of $36.5
million to reflect the settlement and related legal expenses
associated with its compromise agreement with the Civil Division of
the U.S. Department of Justice, $8 million of investment banking,
legal, and accounting fees and other transaction expenses related
to the Costar acquisition. A detailed discussion of the
restructuring and other special charges is included on page 12.
Corning also recognized a $9.5 million reduction in equity earnings
as a result of a restructuring charge taken by Vitro Corning, S.A.
(15) During the forty weeks ended October 10, 1993, Corning recognized
non-recurring charges totaling $207 million ($120.5 million after
tax and minority interest), a $4.2 million ($2.6 million after tax)
non-operating gain and a $9.5 million reduction in equity earnings
as a result of a restructuring charge taken by Vitro Corning, S.A.
ITEM 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results of Operations
Consolidated sales for the third quarter and third quarter year-to-date
1994 totaled $1.4 billion and $3.5 billion, respectively, an increase of
20 percent over the same periods last year. Approximately half of the
increase in both periods was due to recent acquisitions.
Net income for the third quarter 1994 totaled $76.9 million ($0.36 per
share) compared to a net loss of $33.9 million ($0.18 per share) in the
same period of 1993. Net income for the third quarter year-to-date
1994, totaled $246.3 million ($1.18 per share) compared to $105.7
million ($0.55 per share) for the comparable period in 1993. Results in
both 1994 and 1993 were significantly impacted by restructuring and
other special charges. In the third quarter 1994 and 1993, Corning
recorded restructuring and other special charges totaling $82.3 million
($55.4 million after tax) and $207 million ($120.5 after tax and
minority interest), respectively. Also in the third quarter 1993,
Corning recorded a $9.5 million reduction in equity earnings as a result
of a restructuring charge taken by Vitro Corning, S.A. In the first
quarter 1993, Corning recorded a non-operating gain of $4.2 million
($2.6 million after tax). Excluding the impact of restructuring and net
other special charges in both years, earnings per share for the third
quarter and third quarter year-to-date 1994 was up 24 percent and 19
percent, respectively, over the same periods in 1993.
<PAGE>11
Segment Overview
Excluding the impact of restructuring and other special charges in both
years, earnings from consolidated operations in the third quarter and
third quarter year-to-date 1994 increased 43 percent and 27 percent,
respectively, over the comparable periods of 1993. Sales and
consolidated earnings growth in both the third quarter and third quarter
year-to-date 1994 primarily resulted from the impact of strategic
acquisitions and divestitures, the positive impact of cost reduction
efforts, and significant volume growth in the communications and
environmental businesses.
Sales and earnings of the specialty materials segment increased in the
third quarter and third quarter year-to-date 1994 over the same periods
in 1993. Sales and earnings growth was led by the environmental
products and science products businesses. The environmental products
business continued to experience strong demand for ceramic substrates in
its North American market. Sales and earnings of the science products
business primarily reflected the positive impact of the 1993 acquisition
of Costar Corporation.
Sales growth in the communications segment in the third quarter and
third quarter year-to-date 1994 was driven by strong volume gains in the
optical-fiber and optical-cable businesses and the conventional-video
and projection-video components businesses. Earnings increases in both
periods resulted from volume growth and manufacturing efficiencies in
those same businesses. In the third quarter 1994, Corning returned its
MemCor glass ceramic memory disk product to the development phase due to
a technical problem detected in the final stages of customer testing.
Corning is continuing to invest in the development of this business.
Sales of the laboratory services segment increased significantly in the
third quarter and third quarter year-to-date 1994 over the same periods
last year primarily due to recent acquisitions. Excluding the impact of
restructuring and other special charges in 1994 and 1993, earnings in
the third quarter and third quarter year-to-date 1994 increased slightly
over the same periods last year. Earnings increases in this segment
were attributable to the positive impact of acquisitions and ongoing
cost reduction efforts offset somewhat by the increase in goodwill
amortization.
Sales of the consumer products segment for the third quarter 1994 were
flat when compared to the prior year. Sales for the third quarter year-
to-date 1994 were up slightly over the same period in 1993 primarily due
to strong U.S. volume. Excluding the impact of restructuring charges in
1993, earnings of this segment increased significantly in both the third
quarter and third quarter year-to-date 1994. The benefits of this
segment's 1993 restructuring program, a continued focus on cost
controls, and improved domestic volume contributed to the earnings
growth of this segment.
Taxes on Income
Corning's effective tax rate for both 1994 and 1993 was impacted by
restructuring and other special charges in both years. Excluding these
items, the effective tax rate was 35 percent and 37 percent for the
third quarter and third quarter year-to-date 1994, respectively, and 31
percent and 33 percent for the same periods in 1993. The change in the
effective tax rate was primarily due to an increase in non-deductible
amortization of intangibles and other expenses.
Equity in Earnings
Excluding the impact of restructuring charges in 1993, equity company
results for the third quarter and third quarter year-to-date 1994
increased 35 percent and 41 percent, respectively, when compared to the
same periods in 1993. The increase in both periods was primarily due to
improved operating results at Dow Corning and the elimination of losses
from Vitro Corning, which was divested in late 1993. Improvements in
Corning's other specialty materials equity companies also contributed to
the increase in equity earnings.
<PAGE>12
Liquidity and Capital Resources
Corning's working capital increased from $451.4 million at the end of
1993 to $631.6 million at October 9, 1994. The ratio of current assets
to current liabilities was 1.5 at the end of the third quarter 1994
compared to 1.4 at year-end 1993. Corning's long-term debt as a
percentage of total capital was 32 percent at the end of the third
quarter, compared to 45 percent at year-end 1993. The improvement in
this ratio was due primarily to the MIPS offering completed in July 1994
(described in Note 7 of the Notes to Consolidated Financial
Statements). Corning used the proceeds from the MIPS transaction to
repay the remaining $400 million of debt incurred in the 1993
acquisition of Damon.
Cash and short-term investments increased by $93.9 million in the third
quarter year-to-date 1994 compared to a decrease of $11.9 million in the
third quarter year-to-date 1993. The $93.9 million increase was due to
operating and financing activities which provided cash of $99.2 million
and $366.8 million, respectively, offset by investing activities which
used cash of $373.6 million. The $11.9 million decrease in the third
quarter year-to-date 1993 was due to investing activities which used
cash of $714.6 million offset by operating and financing activities
which provided cash of $157.5 million and $542.9 million, respectively.
Net cash provided by operating activities decreased in the third quarter
year-to-date compared to the same period in 1993 due primarily to an
increase in working capital offset somewhat by higher earnings before
depreciation and amortization. Net cash used in investing activities
decreased significantly in the third quarter year-to-date 1994 compared
to the same period of 1993 primarily due to a lower level of spending
for acquisitions than in 1993, which included the acquisition of Damon
for $405 million, and an increase in proceeds from asset dispositions in
1994. Net cash provided by financing activities decreased in the third
quarter year-to-date compared to 1993 primarily due to a significantly
reduced level of borrowings offset by the issuance of common stock in
February 1994 to finance two acquisitions and the MIPS offering in July
1994.
Provision for Restructuring and Other Special Charges
In the third quarter 1994, Corning recorded a charge of $82.3 million
($55.4 million after tax) which included $50.7 million of integration
costs, $21.6 million of investment banking, legal, and accounting fees
and other transaction expenses, and $10 million of other reserves
primarily related to the Nichols, Maryland Medical and Bioran
acquisitions.
The costs to integrate the Nichols, Maryland Medical and Bioran
operations included the costs of shutting down laboratories in certain
markets where duplicate MetPath and Nichols, Maryland Medical or Bioran
facilities existed at the time of the acquisitions. Management believes
that the integration of the Nichols, Maryland Medical and Bioran
facilities should significantly reduce operating costs of the combined
companies and will be substantially complete within a year. At October
9, 1994, no significant amounts had been charged against the reserve.
The integration charge included severance related to approximately 2,000
employees who will be terminated in the next year. A summary of the
integration costs included in the charge is as follows:
Employee termination costs $23.8
Write-off of fixed assets 15.9
Costs of exiting leased facilities 4.9
Contractual obligations 5.1
Other 1.0
Total $50.7
<PAGE>13
Current $49.0
Non-current 1.7
Total $50.7
In the third quarter 1993, Corning recorded a charge of $207.0 million
($120.5 million after tax of $79.1 million and minority interest of $7.4
million) which included $156 million of restructuring charges and $51
million of other special charges. The restructuring charges included
costs to integrate the Damon acquisition and costs of a planned company-
wide restructuring program to reduce assets and overhead costs during
1994. The other special charges primarily included a charge by MetPath
of $36.5 million to reflect the settlement and related legal expenses
associated with its compromise agreement with the Civil Division of the
Department of Justice to settle claims brought on behalf of the Inspector
General, U.S. Department of Health and Human Services, and $8 million of
investment banking, legal and accounting fees and other transaction
expenses related to the Costar acquisition.
The costs to integrate the Damon acquisition totaled $40.6 million and
included the costs of shutting down MetPath facilities in certain markets
where duplicate MetPath and Damon facilities existed at the time of the
transaction. The costs incurred in the company-wide restructuring
program totaled $115.4 million and included, among other items, severance
and other employee termination benefits related to a company-wide program
to reduce employment levels (and thus operating costs), facility and
other costs to consolidate the North American packaging and worldwide
Pyroceram manufacturing operations in the consumer products segment, and
facility and other costs to restructure or close several environmental
and pharmaceutical testing facilities.
The 1993 restructuring and integration charges included severance and
other termination benefits related to approximately 1,600 employees.
Employee reductions primarily included employees at various MetPath
laboratory locations, salaried employees at Corning Consumer Products
Company and salaried employees in various line, research and staff
organizations throughout the company where business conditions required
reduced staff levels. At October 9, 1994, approximately 1,300 employees
across the company had been terminated or notified of their termination.
A summary of the integration and restructuring reserves established in
1993 and charges through October 9, 1994 is as follows:
Charges through Balance at
Original ReserveOctober 9, 1994October 9, 1994
Employee termination costs $74.2 $34.3 $39.9
Write-off of fixed assets 29.3 13.2 16.1
Costs of exiting leased space 15.1 6.3 8.8
Contractual obligations 11.0 5.5 5.5
Consulting fees 11.8 9.2 2.6
Continuing employee costs 6.7 2.9 3.8
Other 7.9 7.9 0.0
Total $156.0 $79.3 $76.7
Current $59.9
Non-current 16.8
Total $76.7
The consulting fees are associated with the company-wide in-depth study
aimed at re-engineering the organization and operating practices of the
company. The company's re-engineering studies are expected to be
complete in the first half of 1995. It is possible that these studies
will result in additional employee terminations, asset write-offs and
other cost reduction activities. It is currently not possible to
estimate the costs or benefits of these terminations, write-offs or other
activities.
<PAGE 14>
Corning management believes these costs will be financed with cash from
operations and does not anticipate any significant impact on its
liquidity as a result of the current or potential future restructuring
plans.
Part II - Other Information
ITEM 1. LEGAL PROCEEDINGS
Breast Implant Litigation. Corning continues to be a defendant in two
types of cases previously reported involving the silicone-gel breast
implant products or materials formerly manufactured or supplied by Dow
Corning or a Dow Corning subsidiary. These cases include (1) several
purported federal securities class action lawsuits and shareholder
derivative lawsuits filed against Corning by shareholders of Corning
alleging, among other things, misrepresentations and omissions of
material facts, breach of duty to shareholders and waste of corporate
assets relative to the silicone-gel breast implant business conducted by
holders and waste of corporate assets relative to the silicone-gel breast
implant business conducted by Dow Corning and (2) multiple lawsuits filed
in various courts against Corning and others (including Dow Corning) by
persons claiming injury from the silicone-gel breast implant products or
materials formerly manufactured by Dow Corning or a Dow Corning
subsidiary. Several of such suits have been styled as class actions and
others involve multiple plaintiffs.
As of November 6, 1994, Corning had been named in approximately 11,000
state and federal tort lawsuits. More than 4,000 tort lawsuits filed
against Corning in federal courts were consolidated in the United States
District Court, Northern District of Alabama, and in early December 1993,
Corning was dismissed from these cases. This decision by the District
Court is non-appealable and, although the District Court noted that it
was "highly unlikely" that additional discovery would produce new
evidence, the decision is subject to reconsideration if additional
information is discovered or if there is a change in state law. The
District Court has agreed to hear plaintiffs' motion of reconsideration
and Corning is seeking to have the dismissal decision made final.
Certain state court tort cases against Corning have also been
consolidated for the purposes of discovery and pretrial matters. During
1994, Corning has made several motions for summary judgment in state
courts and judges have dismissed Corning from over 5,000 tort cases filed
in California, Michigan, New Jersey, New York, Pennsylvania and Dallas
and Harris Counties, Texas, some of which are on appeal. Corning's
motions seeking dismissal remain pending in various other states.
The federal securities suits are all pending in the United States
District Court for the Southern District of New York. Corning's
management does not believe that the purported securities class action
lawsuits or the purported shareholder derivative lawsuits or the tort
actions filed against Corning described above will have a material
adverse effect on Corning's financial condition or the results of its
operations.
Dow Corning has informed Corning that as of October 14, 1994, Dow Corning
has been named in 45 purported breast implant product liability class
action lawsuits and approximately 18,100 individual breast implant
product liability lawsuits (which number includes all or substantially
all of the 11,000 lawsuits referred to above) and that Dow Corning
anticipates that it will be named as a defendant in additional breast
implant lawsuits in the future. Dow Corning has also stated that it is
vigorously defending this litigation.
Verdicts in breast implant litigation against Dow Corning and other
defendants which have gone to judgment have varied widely, ranging from
dismissal to the award of significant compensatory and punitive damages.
<PAGE>15
Dow Corning has also informed Corning that Dow Corning believes that a
substantial portion of the indemnity and defense costs related to the
breast implant litigation brought and to be brought against it is and
will be covered by product liability insurance available to it but that
the insurance companies issuing the policies in question have reserved
the right to deny coverage under various theories and in many cases have
refused to pay defense and indemnity costs which have been incurred by
Dow Corning. In this regard, on June 30, 1993, Dow Corning instituted
litigation in California against certain insurance companies which had
issued product liability insurance policies to it from 1962 through 1985
seeking declaratory judgments that the insurance company defendants are
liable to indemnify Dow Corning for such liabilities and costs and, in
the case of certain insurance company defendants, damages including
punitive damages. In September 1993, several of Dow Corning's insurers
filed a complaint against Dow Corning and other insurers for declaratory
relief in Michigan and moved for the action brought by Dow Corning in
California to be dismissed in favor of the Michigan litigation. In
October 1993, this motion was granted. In March 1994, the Michigan court
ruled that certain of Dow Corning's primary insurers had a duty to defend
Dow Corning with respect to certain breast implant product liability
lawsuits. These insurers were directed to reimburse Dow Corning for
certain defense costs previously incurred. Dow Corning has informed
Corning that it is continuing negotiations with such insurance companies
to obtain an agreement on a formula for the allocation among these
insurers of payments of defense and indemnity expenses related to breast
implant products liability lawsuits and claims.
In March 1994, Dow Corning, along with other defendants and
representatives of breast implant litigation plaintiffs, signed a Breast
Implant Litigation Settlement Agreement (the "Settlement Agreement").
The Settlement Agreement is subject to court approval and to withdrawal
by Dow Corning and other defendants and plaintiffs. Under the Settlement
Agreement and related agreements, industry participants (the "Funding
Participants") would contribute approximately $4.2 billion over a period
of more than thirty years to establish several special purpose funds.
The Settlement Agreement, if implemented, would provide for a claims
based structured resolution of claims arising out of silicone breast
implants, define the circumstances under which payments from the funds
would be made and include a number of other provisions related to claims
and administration. Dow Corning did not exercise its right to "opt out"
of the Settlement Agreement as a result of initial "opt outs" by
plaintiffs during the period ended July 1, 1994. The Court has offered
initial "opt out" plaintiffs an opportunity to rejoin the settlement by
December 1, 1994.
The Court is currently in the process of evaluating claims for
compensation submitted by plaintiffs and determining whether the disease
compensation settlement fund to be established under the Settlement
Agreement will be sufficient to pay validated claims. If any
insufficiency cannot be resolved, claimants may have an additional
opportunity to "opt out" of the Settlement Agreement. In this event, if
Dow Corning considered that the number of such "opt out" plaintiffs with
claims against it was excessive, Dow Corning would have the right to
withdraw from participation in the settlement. Corning is not a party to
the Settlement Agreement and will not make any contribution to the
settlement contemplated thereby.
In April 1994, the U.S. District Court for the Northern District of
Alabama preliminarily approved the Settlement Agreement and temporarily
stayed and suspended federal and state class action certification or
notice proceedings relative to federal or state class action lawsuits
filed by plaintiffs included in the settlement class.
On September 1, 1994, the Court granted final approval to the Settlement
Agreement, determining that it was fair, reasonable and adequate. In
large part, the settlement covers claims of breast implant recipients
which could be litigated in the courts of U.S. federal and state
jurisdictions. The settlement does not cover claims of breast implant
recipients who the Court has specifically excluded from the settlement
(unless these potential claimants affirmatively join the settlement) or
who have chosen not to participate in the settlement. The settlement
also does not cover the claims of breast implant recipients which could
be litigated in jurisdictions outside the U.S. (unless payments received
by those potential claimants from the settlement fund, and related
<PAGE> 16
releases, serve to preclude them from bringing legal actions in these
other jurisdictions). The Court's final approval of the Settlement
Agreement has been appealed to the U.S. Court of Appeals for the Eleventh
Circuit primarily by certain providers of health care indemnity payments
or services by certain foreign claimants.
Dow Corning has previously recorded charges against earnings to reflect
its best estimates of costs as a result of its involvement in the breast
implant litigation and Corning has recorded its share of such charges
based upon its ownership interest in Dow Corning. As the Settlement
Agreement process continues, additional circumstances may develop at Dow
Corning which could cause Dow Corning to revise its current estimate of
the costs of resolving the breast implant litigation and claims not
covered by the settlement. Dow Corning is currently evaluating the
claims of the initial "opt out" plaintiffs and the claims of plaintiffs
excluded from the Settlement Agreement. As a result of this review, Dow
Corning may decide to record additional charges against its earnings in
the future. Corning would record its share of any such additional
charges.
If the tort actions filed against Dow Corning or any settlement of the
breast implant controversy should require Dow Corning to record any
additional charges against income, the effect on Corning of any such
additional charges would be limited to their consequent impact (in the
amount of approximately 50% of the amount thereof) on Corning's reported
equity in earnings of associated companies for the period such charges
were recognized, on the book value of Corning's equity investment in Dow
Corning and on Corning's retained earnings. Corning does not believe
that its share of any additional charges taken by Dow Corning resulting
from the breast implant controversy will have a material adverse effect
upon Corning's financial condition. However, it is possible that
Corning's share of any such additional charges taken by Dow Corning could
have a material adverse effect upon Corning's earnings in the quarters in
which any such charges were recognized by Dow Corning.
Other Dow Corning Matters. Dow Corning received a request dated July 9,
1993 from the Boston Regional Office of the Commission for certain
documents and information related to silicone breast implants. The
request stated that the Boston Regional Office was conducting an informal
investigation which "concerns Dow Corning, its subsidiary Dow Corning
Wright and parent corporations, Dow Chemical Co. and Corning Inc." Dow
Corning has informed Corning that Dow Corning has responded to this
request enclosing the documents and information requested along with
related information and will continue to cooperate with the Boston
Regional Office.
During the first quarter of 1993, Dow Corning received two federal grand
jury subpoenas initiated by the United States Department of Justice
("DOJ") seeking documents and information related to silicone breast
implants. Dow Corning has informed Corning that it has delivered the
documents and information requested and will continue to cooperate with
the DOJ as this grand jury investigation proceeds.
Department of Justice Investigations. In September 1993, MetPath and
MetWest Inc. ("MetWest"), a wholly owned subsidiary of Unilab, in which
Corning had at the time an interest of approximately 43%, entered into a
Settlement Agreement (the "MetPath Settlement Agreement") with the DOJ
and the Inspector General of the Department of Health and Human Services
(the "Inspector General"). Pursuant to the MetPath Settlement Agreement,
MetPath and MetWest paid to the United States a total of $39.8 million in
settlement of civil claims by the DOJ and the Inspector General that
MetPath and MetWest had wrongfully induced physicians to order certain
laboratory tests without realizing that such tests would be billed to
Medicare at rates higher than those the physicians believed were
applicable.
Several state and private insurers have made claims based on the
practices covered by the MetPath Settlement Agreement. Several have
settled but it is not clear at this time what, if any, additional
exposure Corning may have to these entities and to other persons who may
assert claims on the basis of these or other practices.
<PAGE>17
During August 1993, MetPath, MetWest and Damon (which was acquired by
Corning in that month) together with other participants in the industry
received subpoenas from the Inspector General seeking information
regarding their practices with respect to 14 enumerated tests offered in
conjunction with automatic chemical test panels. Of these 14 tests, 5
were covered by the MetPath Settlement Agreement and consequently MetPath
and MetWest are not being required to provide further information with
regard to them. MetPath, MetWest and Damon have completed this process
of complying with these subpoenas. Corning understands that the DOJ is
now examining the methodology employed by Damon and by Nichols Institute
(which Corning acquired in August 1994) to comply with the subpoenas and
also is examining the materials submitted by Damon in response to its
subpoena. MetPath also received in May 1994 two subpoenas from the
Inspector General concerning, in one case, an investigation into billings
for tests not performed or reported for which MetPath had voluntarily
made corrective payments in 1993 and, in the other, an investigation into
whether separate billings for tests which should have been grouped
together had occurred. In addition, a federal grand jury in New Jersey
is investigating the billings for tests not performed or reported. The
results of these investigations cannot currently be predicted but the
possibility that they may result in additional claims by the DOJ or the
Inspector General or additional claims or settlements with parties other
than the DOJ and the Inspector General cannot be excluded.
Other Legal Proceedings. During September 1993, two individuals filed in
the Supreme Court of the State of New York (one in New York County and
one in Suffolk County) separate purported derivative actions against
Corning, as nominal defendant, and Corning's Directors and certain of its
officers seeking on behalf of Corning compensatory and punitive damages
in unspecified amounts (and plaintiffs' costs and disbursements including
attorneys' and experts' fees) by reason of the alleged responsibility of
the actual defendants for the conduct which gave rise to the settlement
in the MetPath litigation described above and their alleged failure to
cause Corning to make timely disclosure thereof. Such actions have been
consolidated into a single action before the Supreme Court of the State
of New York in New York County.
During October 1993, two individuals instituted in the United States
District Court for the Southern District of New York separate purported
class actions on behalf of purchasers of Corning securities in the open
market during the period from September 17 to October 6, 1993 against
Corning, certain of its Directors and officers and the underwriters of
Corning's offering, on September 17, 1993, of $100 million of 6.75%
Debentures due on September 15, 2013. The complaints generally allege
that the defendants failed to make timely disclosures of adverse
developments in Corning's business and seek compensatory and punitive
damages in unspecified amounts (and plaintiffs' costs and expenses
including attorneys' fees and disbursements). These two actions, with
respect to which the underwriters have been dismissed, have been
consolidated.
Two nearly identical class actions filed (one in the Court of Chancery
for the State of Delaware and the other in the United States District
Court for the Southern District of New York) against Damon and certain of
its officers and directors remain outstanding. These suits allege
damages arising from Damon's failure to mention in the press release that
announced the initial merger agreement it had reached with a company
other than Corning that an unnamed bidder (Corning) had also expressed
interest in acquiring Damon. The class of plaintiffs are those who sold
their stock at the price offered by the other company, rather than the
higher amount later offered and paid by Corning.
Corning's management does not believe that the purported class action
lawsuits or the purported shareholder derivative lawsuits described above
will have a material adverse effect on Corning's financial condition or
the results of its operations.
<PAGE>18
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
See the Exhibit Index which is located on page 20.
(b) Reports on Form 8-K
A report on Form 8-K dated June 28, 1994, was filed in
connection with the Registrant's medium-term notes facility.
The Registrant's second quarter press release of June 28,
1994, was filed as an exhibit to this Form 8-K.
A report on Form 8-K dated July 26, 1994, was filed in
connection with the public offering by Corning Incorporated of
$100 million principal amount of 7.625 percent Debentures due
August 1, 2024. The report included Corning's Unaudited Pro
Forma Combined Financial Information as of and for the twenty-
four weeks ended June 19, 1994.
A report on Form 8-K dated August 3, 1994, was filed in
connection with the public offering by Corning Incorporated of
$100 million principal amount of 7.625 percent Debentures due
August 1, 2024. Certain agreements relating to such offering
were filed as exhibits to this Form 8-K.
A report on Form 8-K dated August 31, 1994, was filed to
update Corning's Unaudited Pro Forma Combined Financial
Information as of and for the twenty-four weeks ended June 19,
1994, for Nichols' second quarter 1994 results and for the
final number of shares issued in the Nichols transaction.
A report on Form 8-K dated September 29, 1994, was filed to
update Corning's Unaudited Pro Forma Combined Financial
Information as of and for the twenty-four weeks ended June 19,
1994, for the recently announced definitive agreement to
acquire Bioran Medical Laboratory and the recently announced
definitive agreement by Siecor Corporation to acquire certain
assets relating to the hardware and equipment components
business of Northern Telecom Limited.
Other items under Part II are not applicable.
<PAGE>19
SIGNATURES
Pursuant to the requirements of the Securities and 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)
November 14, 1994 JAMES R. HOUGHTON
Date J. R. Houghton
Chairman and Chief Executive Officer
November 14, 1994 VAN C. CAMPBELL
Date V. C. Campbell
Vice Chairman and Principal Financial Officer
November 14, 1994 LARRY AIELLO, JR.
Date L. Aiello, Jr.
Vice President and Controller
<PAGE>20
CORNING INCORPORATED
EXHIBIT INDEX
This exhibit is numbered in accordance
with Exhibit Table I of item 601 of Regulation S-K
Page number
in manually
Exhibit # Description signed original
12 Computation of ratio of earnings to 21
fixed charges
Exhibit #12
Corning Incorporated and Subsidiary Companies
<TABLE>
Computation of Ratio of Earnings to Fixed Charges:
(Dollars in millions, except ratios)
<CAPTION>
40 Weeks Ended Fiscal Year Ended
Oct. 9, Oct. 10, Jan. 2, Jan. 3, Dec. 29, Dec. 30, Dec. 31,
1994 1993 1994 1993 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C>
Income before taxes on income $ 312.2 $ 72.3 $156.7 $336.6 $327.4 $328.1 $253.8
Adjustments:
Share of earnings (losses) before
taxes of 50% owned companies 147.7 140.3 (137.0) 103.2 165.4 175.9 206.9
Loss before taxes of greater than
50% owned unconsolidated subsidiaries (2.3) (1.5) (3.1) (2.1) (2.2) (2.0) (1.3)
Distributed income of less than 50%
owned companies and share of loss if
debt is guaranteed 1.2 3.2 4.5 (4.3) 6.6 0.9 3.3
Amortization of capitalized interest 10.4 10.0 13.0 11.8 10.2 8.8 7.2
Fixed charges net of capitalized
interest 149.1 115.6 155.8 130.3 126.4 112.5 91.2
Earnings before taxes and fixed charges
as adjusted $ 618.3 $ 339.9 $189.9 $575.5 $633.8 $624.2 $561.1
Fixed charges $ 162.3 $ 130.6 $176.6 $150.2 $141.3 $132.7 $111.2
Ratio of earnings to fixed charges 3.8x 2.6x 1.1x 3.8x 4.5x 4.7x 5.0x
Fixed charges:
Interest incurred $ 88.4 $ 68.0 $ 94.0 $ 68.9 $ 60.4 $ 58.6 $ 53.0
Share of interest incurred of 50%
owned companies and interest on
guaranteed debt of less than 50%
owned companies 43.6 30.9 40.9 42.0 47.5 45.3 33.9
Interest incurred by greater than
50% owned unconsolidated subsidiaries 0.6 0.6 0.8 0.9 0.9 1.0 1.2
Portion of rent expense which represents
interest factor 21.7 22.9 29.9 27.6 23.0 19.7 15.8
Share of portion of rent expense which
represents interest factor for 50%
owned companies 6.4 6.7 9.1 9.2 9.0 7.6 6.9
Portion of rent expense which represents
interest factor for greater than 50%
owned unconsolidated subsidiaries 0.1 0.1 0.1 0.1 0.1 0.1
Amortization of debt costs 1.6 1.4 1.8 1.5 0.4 0.4 0.3
Total fixed charges 162.3 130.6 176.6 150.2 141.3 132.7 111.2
Capitalized interest (13.2) (15.0) (20.8) (19.9) (14.9) (20.2) (20.0)
Total fixed charges net of capitalized
interest $149.1 $115.6 $155.8 $130.3 $126.4 $112.5 $91.2
</TABLE>
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<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-01-1995
<PERIOD-START> JAN-03-1994
<PERIOD-END> OCT-09-1994
<CASH> 37,300
<SECURITIES> 217,400
<RECEIVABLES> 1,074,400
<ALLOWANCES> 90,400
<INVENTORY> 435,900
<CURRENT-ASSETS> 1,931,500
<PP&E> 3,641,600
<DEPRECIATION> 1,774,400
<TOTAL-ASSETS> 6,146,900
<CURRENT-LIABILITIES> 1,299,900
<BONDS> 1,351,000
<COMMON> 1,012,600
364,400
25,000
<OTHER-SE> 1,241,500
<TOTAL-LIABILITY-AND-EQUITY> 6,146,900
<SALES> 3,497,000
<TOTAL-REVENUES> 3,518,500
<CGS> 2,236,100
<TOTAL-COSTS> 2,236,100
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 46,017
<INTEREST-EXPENSE> 85,600
<INCOME-PRETAX> 312,200
<INCOME-TAX> 117,100
<INCOME-CONTINUING> 246,300
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<NET-INCOME> 246,300
<EPS-PRIMARY> 1.18
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