SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: (Date of earliest event reported) October 15, 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
Attached for filing as an exhibit hereto is the item listed in "Item 7 --
Financial Statements, Pro Forma Financial Information and Exhibits" below.
Such item is being filed in connection with the offering by Corning
Incorporated of $500,000,000 aggregate principal amount of its Medium-Term
Notes due from 9 months to 30 years from Date of Issue.
<PAGE>3
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
Exhibits:
The Registrant's press release of October 15, 1996.
<PAGE>4 SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CORNING INCORPORATED
Registrant
Date: October 15, 1996 By /s/ KATHERINE A. ASBECK
Katherine A. Asbeck
Chief Accounting Officer
<PAGE>5
Kathryn C. Littleton
(607) 974-8206
Paul A. Rogoski
(607) 974-8832
IMMEDIATE RELEASE
October 15, 1996
Corning Incorporated Reports Third Quarter Results
Earnings from Continuing Operations Increase 11 Percent;
Performance Reflects Sustained Growth
In Communications and Specialty Materials Segments
CORNING, N.Y., October 15 - Corning Incorporated (NYSE:GLW) said today
that its 1996 third quarter net income from continuing operations totaled
$95.2 million, or $0.42 per share, an increase of 11 percent over adjusted
third quarter 1995 earnings of $0.38 per share.
Third quarter sales from continuing operations totaled $910.2 million,
an increase of 9 percent over adjusted 1995 levels.
Adjustments to the 1995 results relate to the previously announced
change to Corning's accounting calendar, effective January 1, 1996.
Corning Board Chairman and Chief Executive Officer Roger G. Ackerman
said, "Our results clearly demonstrate the strategy we have implemented for
our core businesses is on track. The Opto-Electronics businesses - optical
fiber, cable and associated components -- and the Specialty Materials
businesses -- ceramics, polymers and specialty glass products -- have been
strong all year."
"Consumer is showing improvement, although not up to plan," noted Mr.
Ackerman. "In the Information Display business, soft markets combined with
aggressive development and expansion plans have resulted in substantially
lower earnings than year earlier levels.
-more-
<PAGE>6
-2-
"As we move through the next quarter, we believe the company is poised
to meet our objectives," said Ackerman, "And, that our operating environment
is structured to support a continuous growth strategy."
Earnings from equity companies increased significantly from adjusted
1995 levels due to strong performance by the optical fiber equity companies
in Europe and Australia and by Samsung-Corning Company, Ltd., in South Korea.
On May 14, 1996, Corning announced a plan to spin-off its Health Care
Services Segment and, therefore, in the second quarter, Corning began to
account for its Health Care Services segment as a discontinued operation.
The company said it is on track to complete the spin-off transaction by the
end of this year.
As previously announced, the company recorded a third-quarter after-tax
charge from discontinued operations totaling $115.0 million. The charge
relates primarily to the establishment of additional reserves at Corning
Clinical Laboratories (CCL) for claims relating to billing practices of
certain clinical laboratories acquired by CCL in 1993 and 1994.
Commenting on the Health Care Segment, Mr. Ackerman said, "Excluding the
special charge, operating results of CCL have begun to stabilize and Corning
Pharmaceutical Services continues on its growth pace."
For the third quarter 1996, including the loss from discontinued
operations, Corning recorded a net loss of $19.8 million, or $0.09 per share.
<PAGE>7
-more-
Established in 1851, Corning Incorporated creates leading-edge
technologies for the fastest growing segments of the world's economy.
Corning manufactures optical fiber, cable and components, high-performance
glass and components for televisions, and other electronic displays for
communications and communications-related industries; advanced materials for
the scientific, life sciences and environmental markets; and consumer
products. Corning's total revenues from continuing operations in 1995 were
$3.3 billion.
-30-
Investor Relations Contact: Richard B. Klein (607) 974-8313
Katherine M. Dietz (607) 974-8217
Editors' Notes:
. Corning's continuing operations include its Communications, Specialty
Materials and Consumer Products segments.
. As previously announced on May 14, 1996, Corning is pursuing the simultaneous
spin-off of its Health Care Services segment (clinical laboratory and
pharmaceutical services businesses) in a transaction expected to be completed
by year-end. As a result of the planned spin-off, the Health Care Services
segment is reported as a discontinued operation.
. Corning discontinued recognition of equity earnings from Dow Corning
Corporation in the second quarter of 1995.
. Effective January 1, 1996, Corning made several changes to its accounting
calendar to make Corning's results more comparable with other companies and
to enable Corning to report results of certain subsidiaries on a more current
basis.
<PAGE>8
Corning Incorporated and Subsidiary Companies
Consolidated Statements of Income
(Unaudited; in millions, except per-share amounts)
Nine Months Forty Three Months Sixteen
Ended Weeks Ended Ended Weeks Ended
Sept.30, Oct. 8, Sept. 30, Oct. 8,
1996 1995 1996 1995
--------- -------- --------- --------
Revenues
Net sales $2,661.5 $2,442.6 $ 910.2 $1,045.6
Royalty, interest, and
dividend income 24.0 22.9 9.0 8.3
------- ------- ------- -------
2,685.5 2,465.5 919.2 1,053.9
Deductions
Cost of sales 1,636.9 1,512.2 551.2 645.0
Selling, general and
administrative expenses 470.1 413.8 163.3 172.8
Research and development
expenses 137.5 130.4 47.3 53.0
Provision for restructuring and
other special charges 26.5
Interest expense 53.8 52.8 17.8 21.2
Other, net 19.7 17.7 8.5 8.0
------- ------- ------- -------
Income from continuing
operations before taxes
on income 367.5 312.1 131.1 153.9
Taxes on income from continuing
operations 123.1 92.9 43.9 45.0
------ ------- ------- -------
Income from continuing
operations before minority
interest and equity earnings 244.4 219.2 87.2 108.9
Minority interest in earnings
of subsidiaries (41.0) (51.4) (13.0) (23.1)
Dividends on convertible
preferred securities of
subsidiary (10.3) (10.5) (3.4) (4.2)
Equity in earnings (losses) of
associated companies:
Other than
Dow Corning Corporation 58.5 48.9 24.4 19.5
Dow Corning Corporation (348.0)
------ ------- ------ -------
Income (loss) from continuing
operations 251.6 (141.8) 95.2 101.1
Income (loss) from discontinued
operations, net of
income taxes (162.6) 7.5 (115.0) (17.6)
------- ------- ------- -------
Net Income (Loss) $ 89.0 $(134.3) $ (19.8) $ 83.5
======= ======= ======= =======
Per Common Share:
Continuing operations $ 1.10 $ (0.63) $ 0.42 $ 0.45
Discontinued operations (0.72) 0.03 (0.51) (0.08)
------- ------- ------- --------
Net Income (Loss) $ 0.38 $ (0.60) $ (0.09) $ 0.37
======= ======= ======= ========
Dividends Declared $ 0.54 $ 0.54 $ 0.18 $ 0.18
======= ======= ======= ========
Weighted Average
Shares Outstanding 227.4 226.5 227.4 227.2
====== ======= ======= =======
The accompanying notes are an integral part of these statements.
<PAGE>9
Corning Incorporated and Subsidiary Companies
Condensed Consolidated Balance Sheets
(In millions)
September 30, 1996 Dec. 31, 1995
------------------ -------------
(Unaudited)
Assets
Current Assets
Cash and short-term investments $ 127.5 $ 187.6
Receivables, net 545.8 479.5
Inventories 504.0 426.5
Deferred taxes on income and
other current assets 122.9 102.8
-------- --------
1,300.2 1,196.4
Investments 349.4 364.9
Plant and Equipment, net 1,848.7 1,599.6
Intangible Assets, Net 342.2 330.8
Goodwill and Other Intangibles
Assets, net 271.9 305.3
Other Assets
1,616.3 1,664.7
-------- --------
$5,728.7 $5,461.7
Liabilities and Stockholders' Equity
Current Liabilities
Loans payable $ 427.8 $ 143.1
Accounts payable 159.2 202.6
Other accrued liabilities 452.7 396.3
-------- --------
Total current liabilities 1,039.7 742.0
Other Liabilities 637.2 618.3
Loans Payable Beyond One Year 1,278.3 1,340.0
Minority Interest in
Subsidiary Companies 311.5 269.8
Convertible Preferred
Securities of Subsidiary 365.0 364.7
Convertible Preferred Stock 22.7 23.9
Common Stockholders' Equity 2,074.3 2,103.0
--------- -------
$5,728.7 $5,461.7
======== ========
The accompanying notes are an integral part of these statements.
<PAGE>10
Corning Incorporated and Subsidiary Companies
Notes to Consolidated Financial Statements
Quarter 3, 1996
(1) Earnings per common share are computed by dividing net income less
dividends on Series B convertible preferred stock by the weighted
average number of common shares outstanding during the period. The
weighted average shares outstanding was 227.4 million for the third
quarter and third quarter year-to-date 1996 and 227.2 million and 226.5
million, respectively, for the same periods in 1995. Series B preferred
dividends amounted to $0.5 million and $1.5 million in the third quarter
and third quarter year-to-date, respectively, in both 1996 and 1995.
(2) Depreciation and amortization charged to continuing operations during
the third quarter year-to-date of 1996 and 1995 totaled $212.1 million
and $185.2 million, respectively.
(3) Corning's effective tax rate for continuing operations was 33.5% for the
third quarter and third quarter year-to-date 1996, respectively.
Excluding the impact of the second quarter 1995 restructuring charge,
the effective tax rate was 29% and 30.5% for the third quarter and third
quarter year-to-date 1995. The lower 1995 rate was due to a higher
percentage of Corning's earnings being from consolidated entities with
lower effective tax rates.
(4) Effective January 1, 1996, Corning made several changes to its
accounting calendar to make Corning's results more comparable with other
companies and to enable Corning to report results of certain
subsidiaries on a more current basis.
Third quarter and third quarter year-to-date 1995 financial statements
were not restated for the calendar change. The following table presents
unaudited pro forma results for the third quarter and third quarter
year-to-date 1995 as if this change had occurred at the beginning of
1995 (in millions, except per-share amounts):
Three Nine
Months Ended Months Ended
September 30, 1995 September 30, 1995
------------------ ------------------
Sales $834.5 $2,403.3
====== ========
Net income (loss)
Before Dow Corning
Corporation and restructuring $ 84.3 $ 221.1
Equity in losses of
Dow Corning Corporation (348.0)
Provision for restructuring (16.1)
----- ------
Continuing operations 84.3 (143.0)
Discontinued operations (21.3) 8.2
------ ------
Net income (loss) $ 63.0 $(134.8)
====== =======
Net income (loss) per common share
Before Dow Corning
Corporation and restructuring $ 0.38 $ 0.98
Equity in losses of
Dow Corning Corporation (1.54)
Provision for restructuring (0.07)
----- ------
Continuing operations 0.38 (0.63)
Discontinued operations (0.10) 0.03
------ ------
Net income (loss) per common share $ 0.28 $ (0.60)
====== ======
<PAGE>11
(5) On May 15, 1995, Dow Corning Corporation (a 50%-owned equity company)
voluntarily filed for protection under Chapter 11 of the United States
Bankruptcy Code. As a result of this action, Corning recorded an after-
tax charge of $365.5 million, or $1.62 per share, in the second quarter
of 1995 to fully reserve its investment in Dow Corning Corporation.
Corning also discontinued recognition of equity earnings from Dow
Corning Corporation beginning in the second quarter of 1995. Corning
recognized equity earnings from Dow Corning Corporation of $17.5 million
in the first quarter of 1995.
(6) In the second quarter of 1995, Corning recorded a restructuring charge
in continuing operations totaling $26.5 million ($16.1 million after
tax) or $0.07 per share.
(7) 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 and notes report these businesses, which comprised Corning's
Health Care Services segment, as discontinued operations. Prior period
financial statements have been restated accordingly.
During the third quarter, Corning recorded a loss in discontinued
operations totaling $115 million after-tax. The loss related primarily to
a charge taken by Corning Clinical Labs (CCL) to increase reserves related
to certain government investigations of billing practices of certain
clinical laboratories acquired by CCL in 1993 and 1994.
As disclosed in Corning's 1995 Annual Report on Form 10-K, government
investigations of certain practices by clinical laboratories acquired in
recent years are ongoing. In the second quarter 1996, the U.S. Department
of Justice (DOJ) notified Corning Clinical Labs (CCL) that it has taken
issue with certain payments received by Damon Corporation from federally-
funded healthcare programs prior to its acquisition by Corning. As a
result, in the second quarter 1996, CCL increased its reserves by $37
million after tax.
During the third quarter, CCL management met with the government several
times to evaluate the substance of the government's allegations. As a
result of these discussions, CCL, on behalf of its Damon subsidiary, has
reached a settlement agreement with the DOJ which will cause CCL to pay
$119 million to the government. As a result of this settlement agreement,
CCL management has reassessed the level of reserves recorded for other
asserted and unasserted claims related to the Damon and other similar
government investigations, the most significant of which is the
investigation of billing practices by Nichols Institute prior to its
acquisition by Corning in 1994.
<PAGE>12
Corning will agree to indemnify CCL for the settlement of certain
governmental claims pending at the Distribution date. Although management
believes that established reserves should be sufficient to pay other
asserted and unasserted claims, it is possible that the final resolution of
these matters could be in excess of established reserves by an amount which
could be material to Corning's results of operations and cash flows in the
quarter in which any such claim is settled. Corning does not believe that
these issues will have a material adverse impact on Corning's overall
financial condition.
The loss from discontinued operations in the third quarter year-to-date
1996 totaled to $162.6 million. It includes the $115 million third quarter
after-tax charge discussed above and a $56.8 million after-tax charge
recorded in the second quarter offset by $9.2 million of income recognized
in the first quarter. The second quarter charge includes the estimated
costs related to the Distributions and a charge to increase reserves for
government claims, offset by the estimated results of operations of the
businesses to be distributed from April 1, 1996, through December 31, 1996,
the anticipated date of the Distributions. Income from discontinued
operations for the third quarter year-to-date 1995 includes an after-tax
restructuring charge of $24.4 million recorded in the second quarter 1995.
