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) July 22, 1996
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)
<PAGE>2
Item 5. Other Events
As previously announced, in May 1996, Corning's Board of Directors approved a
plan to distribute to its shareholders on a pro rata basis all of the shares
of Corning Clinical Laboratories Inc. and Corning Pharmaceutical Services
Inc. (the "Distributions"). The result of the plan will be the creation of
two independent, publicly-owned (but as yet unnamed) companies. Corning has
submitted to the Internal Revenue Service a request for a ruling that the
Distributions will qualify as tax-free distributions under the Internal
Revenue Code of 1986. The final terms of the Distributions, which are
subject to approval by Corning's Board of Directors, will be set forth in
registration statements to be filed with the Securities and Exchange
Commission and in an Information Statement to be distributed to Corning's
shareholders. The Distributions are expected to occur by the end of 1996.
As a result of the plan to distribute the clinical-laboratory and
pharmaceutical-services businesses, Corning's consolidated financial
statements will report these businesses, which comprised Corning's Health
Care Services segment, as discontinued operations.
The attached exhibit presents the restated income statements, selected
footnotes and other analysis reflecting the Health Care Services segment as
discontinued operations for the fiscal years 1991 through 1995. Income
from operations of the discontinued businesses includes an allocation
of Corning's interest expense based on the ratio of net assets of
discontinued operations to Corning's consolidated net assets.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
The followings exhibit is attached:
Restated income statements, selected footnotes, and other analysis for the
fiscal years ended 1991 through 1995.
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CORNING INCORPORATED AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
(dollars in millions, except per-share amounts)
Fiscal Year Ended
----------------------------------------------
December January January January December 29
31, 1, 2, 3, 29,
1995 1995 1994 1993 1991
-------- ------ ------ ------ --------
REVENUES:
Net sales $ 3,257.1 $ 3,083.4 $2,685.3 $2,558.9$2,374.9
Royalty, interest, and
dividend income 30.6 26.5 28.2 34.1 25.8
------- ------- ------- ------- -------
3,287.7 3,109.9 2,713.5 2,593.0 2,400.7
DEDUCTIONS:
Cost of sales 2,032.6 1,950.0 1,784.8 1,676.8 1,555.1
Selling, general and
administrative expenses 556.2 535.8 480.3 483.3 462.5
Research and development
expenses 175.7 176.6 172.7 150.9 130.2
Provision for restructuring
and other special charges 26.5 112.0 63.3
Interest expense 69.3 65.6 57.5 46.8 46.9
Other, net 21.3 38.1 31.9 15.7 23.5
------- ------- ------- ------- -------
Income from continuing
operations before taxes
on income 406.1 343.8 74.3 156.2 182.5
Taxes on income from
continuing operations 118.2 112.6 (5.2) 20.8 52.2
------- ------- ------- ------- -------
Income from continuing
operations before
minority interest and
equity earnings 287.9 231.2 79.5 135.4 130.3
Minority interest in earnings
of subsidiaries (64.4) (48.6) (15.1) (21.0) (16.9)
Dividends on convertible
preferred securities
of subsidiary (13.7) (6.1)
Equity in earnings (losses)
of associated companies:
Other than Dow Corning
Corporation 66.7 48.6 25.0 40.4 36.6
Dow Corning Corporation (348.0) (2.8) (144.5) 11.9 74.4
------- ------- ------- ------- -------
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE
EXTRAORDINARY CREDIT AND
CUMULATIVE EFFECT OF CHANGES
IN ACCOUNTING METHODS (71.5) (a)222.3 (c)(55.1) (f)166.7 (h)224.4 (k)
Tax benefit of loss carryforwards 0.7 5.6
Cumulative effect of changes
in accounting methods (284.7) (i)
------- ------ ------ -------- ------
Income (loss) from
continuing operations (71.5) 222.3 (55.1) (117.3) 230.0
Income from discontinued
operations, net of
income taxes 20.7 (b) 59.0 (d) 39.9 (g)104.7 (j) 86.8 (l)
------- ---- ---- ----- ----
NET INCOME (LOSS) $ (50.8) $ 281.3 $ (15.2)(e)(12.6) $316.8
======= ======= ======= ===== ======
PER COMMON SHARE DATA:
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE EXTRAORDINARY
CREDIT AND CUMULATIVE EFFECT
OF CHANGES IN
ACCOUNTING METHODS $ (0.32) $ 1.04 $ (0.30) $ 0.87 $ 1.19
Tax benefit of
loss carryforwards 0.03
Cumulative effect of changes
in accounting
methods (1.51)
------- ------ ------ ------- ------
Income (loss) from
continuing operations (0.32) 1.04 (0.30) (0.64) 1.22
Income from discontinued
operations,
net of income taxes 0.09 0.28 0.21 0.56 0.47
------- ------- ------- ------- -------
NET INCOME (LOSS) $ (0.23) $ 1.32 $ (0.09) $ (0.08) $ 1.69
======= ======= ======= ======= =======
WEIGHTED AVERAGE
SHARES OUTSTANDING 226.6 211.8 192.0 188.6 186.5
======= ======= ======= ======= =======
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CORNING INCORPORATED AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED STATEMENTS OF INCOME
(a)In 1995, Corning recognized a restructuring charge from continuing
operations totaling $26.5 million ($16.1 million after tax), as a result of
severance for workforce reductions in corporate staff groups and the write-
off of production equipment caused by the decision to exit the manufacturing
facility for glass-ceramic memory-disks.
Corning also recorded an after-tax charge of $365.5 million to fully reserve
its investment in Dow Corning Corporation (a 50%-owned equity company) as a
result of Dow Corning Corporation filing for protection under Chapter 11 of
the United States Bankruptcy Code in May 1995.
(b)In 1995, discontinued operations included a restructuring charge totaling
$40.5 million ($24.4 million after tax, or $0.11 per share).
(c)In 1994, Corning recorded a $75.9 million reduction in equity earnings as a
result of a charge taken by Dow Corning Corporation related to breast-
implant litigation.
(d)In 1994, discontinued operations included a restructuring charge totaling
$82.3 million ($55.4 million after tax, or $0.26 per share).
(e)Effective January 4, 1993, Corning and its subsidiaries adopted Financial
Accounting Standard No. 109, "Accounting for Income Taxes" ("FAS 109") and
Financial Accounting Standard No. 112, "Employers' Accounting for
Postemployment Benefits" ("FAS 112"). The impact of adopting FAS 109 and
FAS 112 was not material to Corning's financial statements.
(f)In 1993, Corning recognized a restructuring charge from continuing
operations totaling $112.0 million ($63.2 million after tax and minority
interest) as a result of costs to integrate the Costar acquisition and a
planned company-wide restructuring program. Corning also recognized a non-
operating gain totaling $4.2 million ($2.6 million after tax).
Corning also recorded a $203.1 million reduction in equity earnings as a
result of a charge taken by Dow Corning related to breast-implant litigation
and a $9.5 million reduction in equity earnings as a result of a
restructuring charge taken by Vitro Corning, SA, a 50% equity investee.
(g)In 1993, discontinued operations included restructuring and other special
charges totaling $95 million ($57.3 million after tax, or $0.30 per share).
(h)In 1992, Corning recorded a provision of $63.3 million ($32.1 million after-
tax and minority interest) as a result of Corning Vitro Corporation's
("Corning Vitro") decision to restructure its Brazilian operations. Corning
also recognized net non-operating gains from consolidated operations
totaling $7.0 million ($21.7 million after tax), including a gain of $10.1
million (before and after tax) from the sale of an additional equity
interest in Corning Japan and a pre-tax loss of $7.3 million ($9.0 million
after-tax gain) from the formation of the consumer housewares venture with
Vitro.
Corning also recognized a $37.7 million reduction in equity earnings which
included $24.5 million of costs associated with Dow Corning's terminated
breast implant business and $13.2 million of restructuring charges
associated with Dow Corning's exit from its Brazilian operations and other
cost-reduction programs.
<PAGE>5
(i)Effective December 30, 1991, Corning and its subsidiaries adopted Financial
Accounting Standard No. 106, "Employers' Accounting for Postretirement
Benefits Other than Pensions" ("FAS 106"). The cumulative effect of
adopting FAS 106 resulted in a charge to continuing operations of $292.9
million (after tax and minority interest), or $1.55 per share, in 1992. In
addition, an $8.2 million gain, or $0.04 per share, from an equity company's
adoption of FAS 109 was recognized in 1992.
(j)In 1992, discontinued operations included a charge for the cumulative effect
of adopting FAS 106 totaling $1.9 million after tax, or $0.01 per share and
a tax benefit of loss carryforwards totaling $7.0 million, or $0.04 per
share.
(k)In 1991, the Company recognized net non-operating gains from consolidated
operations totaling $4.6 million ($12.5 million after tax) which included a
gain of $5.3 million (before and after tax) on the sale of a less than 10%
equity interest in Corning Japan. Corning also recognized an $8.2 million
reduction in equity earnings to reflect a charge recorded by Dow Corning for
costs associated with its breast implant business.
(l)In 1991, discontinued operations included non-operating gains of $3.5
million ($2.1 million after tax, or $0.01 per share).
The following analysis summarizes the impact of these items on Corning's net
income and earnings per share:
Fiscal Year Ended
----------------------------------------------
December 31,January 1,January 2,January 3,December 29,
1995 1995 1994 1993 1991
------- ------ ------ -------- -------
NET INCOME
Before Unusual Items and
Dow Corning Corporation $292.6 $225.1 $159.5 $165.2 $137.5
Unusual items and Dow
Corning Corporation:
Tax benefit of loss
carryforwards 0.7 5.6
Cumulative effect
of changes in
accounting methods (284.7)
Dow Corning
Corporation (348.0) (2.8) (144.5) 11.9 74.4
Restructuring and
other special charges,
net of non-operating
gains (16.1) (70.1) (10.4) 12.5
----- ---- ----- ----- -----
Continuing operations (71.5) 222.3 (55.1) (117.3) 230.0
Discontinued operations 20.7 59.0 39.9 104.7 86.8
----- ------ ----- ----- -----
NET INCOME (LOSS) $(50.8) $281.3 $(15.2) $(12.6) $316.8
====== ====== ====== ====== ======
EARNINGS PER SHARE
Before Unusual Items and
Dow Corning Corporation $ 1.29 $ 1.05 $ 0.82 $ 0.87 $ 0.72
Unusual items and Dow
Corning Corporation:
Tax benefit of loss
carryforwards 0.03
Cumulative effect of changes
in accounting methods (1.51)
Dow Corning Corporation (1.54) (0.01) (0.76) 0.06 0.40
Restructuring and other
special charges, net
of non-operating gains (0.07) (0.36) (0.06) 0.07
------ ---- ------ ------ ------
Continuing operations (0.32) 1.04 (0.30) (0.64) 1.22
Discontinued operations 0.09 0.28 0.21 0.56 0.47
------ ------ ------ ------ ------
NET INCOME (LOSS) $(0.23) $ 1.32 $(0.09) $(0.08) $ 1.69
====== ====== ====== ====== ======
WEIGHTED AVERAGE
SHARES OUTSTANDING 226.6 211.8 192.0 188.6 186.5
===== ====== ===== ===== =====
<PAGE>6
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: July 22, 1996 By /s/ KATHERINE A. ASBECK
Katherine A. Asbeck
Chief Accounting Officer
