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 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 fpr 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 July 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: July 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
July 15, 1996
Corning Incorporated Reports Second Quarter
Earnings from Continuing Operations Up 17%
Growth Fueled by Optical Fiber and Cable
And Ceramic Substrate Businesses
CORNING, N.Y., July 15 - Corning Incorporated (NYSE:GLW) said today that
its 1996 second quarter net income from continuing operations totaled $93.8
million, or $0.41 per share, an increase of 17 percent over adjusted second
quarter 1995 earnings of $0.35 per share. The adjusted 1995 second quarter
results exclude a special charge taken by Corning to fully reserve its
investment in Dow Corning Corporation and a restructuring provision.
Second quarter sales from continuing operations totaled $913.7 million,
an increase of 14 percent over adjusted 1995 levels.
"The improvement in overall operating performance demonstrates the
strength and market position of our core businesses and technologies," said
Roger G. Ackerman, chairman and chief executive officer. "Looking ahead, we
are optimistic about the second half of the year. We are moving aggressively
to capture the growth in key markets with expansions under way for optical
fiber, advanced materials, television glass and projection lenses."
-more-
<PAGE>6
The company said its sales and earnings growth was fueled by strong
demand for optical fiber, cable and components for telecommunications
markets, for ceramic substrates for environmental applications, and for life
science products. In consumer products, results improved compared with
1995's second quarter. However, results from information display businesses
were down from year earlier levels due to expansion-related manufacturing
issues.
Equity company earnings, excluding Dow Corning, increased approximately
10 percent from adjusted 1995 levels, due primarily to solid results from
optical fiber equity companies in Europe and Australia and from Samsung-
Corning Company Ltd. in South Korea.
Continuing operations include the company's Communications, Specialty
Materials and Consumer Products segments. As previously announced, on May
14, 1996, Corning is pursuing the spin-off of its clinical laboratory and
pharmaceutical services businesses in a transaction expected to be completed
by year-end. Therefore, Corning has begun to account for the Health Care
Services segment as discontinued operations.
The company recorded a loss from discontinued operations of $56.8
million, or $0.25 per share, in the second quarter of 1996. The loss
includes a charge for the estimated costs related to the spin-offs and a
charge to increase reserves for government claims at Corning Clinical Labs,
offset by the estimated results of the segment through the anticipated date
of the spin-off.
Corning's total net income, including the loss from discontinued
operations, was $37.0 million, or $0.16 per share, for the second quarter
1996, compared with a net loss of $297.2 million, or $1.32 per share, in the
same period of 1995.
<PAGE>7
-more-
Commenting on discontinued operations, Ackerman said, "Corning
Pharmaceutical Services is benefiting from the high growth in the contract
research field as part of the trend to bring new drugs to the marketplace at
a faster pace. At Corning Clinical Laboratories, operations continue to
stabilize, but the dynamics of that market continue to be difficult."
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.
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Investor Relations Contact: Richard B. Klein (607) 974-8313
Katherine M. Dietz (607) 974-8217
<PAGE>8
Corning Incorporated and Subsidiary Companies
Consolidated Statements of Income
(Unaudited; in millions, except per-share amounts)
Six Twenty-Four Three Twelve
Months Weeks Months Weeks
Ended Ended Ended Ended
June 30, June 18, June 30, June 18,
1996 1995 1996 1995
---- ---- --- ----
Revenues
Net sales $1,751.3 $1,397.0 $ 913.7 $ 764.8
Royalty, interest and
dividend income 15.0 14.6 7.0 8.2
------- ------- ------- -------
1,766.3 1,411.6 920.7 773.0
Deductions
Cost of sales 1,085.7 867.2 568.7 474.8
Selling, general and
administrative expenses 306.8 241.0 148.4 124.9
Research and development
expenses 90.2 77.4 44.9 39.9
Provision for restructuring
and other special charges 26.5 26.5
Interest expense 36.0 31.6 18.3 16.8
Other, net 11.2 9.7 4.1 1.8
------- ------- ------- -------
Income from continuing operations
before taxes on income 236.4 158.2 136.3 88.3
Taxes on income from
continuing operations 79.2 47.9 45.7 25.1
------- ------- ------- -------
Income from continuing operations
before minority interest and
equity earnings 157.2 110.3 90.6 63.2
Minority interest in earnings
of subsidiaries (28.0) (28.3) (15.8) (17.3)
Dividends on convertible
preferred securities
of subsidiary (6.9) (6.3) (3.5) (3.1)
Equity in earnings (losses)
of associated companies:
Other than Dow Corning
Corporation 34.1 29.4 22.5 21.0
Dow Corning Corporation (348.0) (365.5)
------ ------- ------ -------
Income (loss) from
continuing operations 156.4 (242.9) 93.8 (301.7)
Income (loss) from discontinued
operations, net of
income taxes (47.6) 25.1 (56.8) 4.5
------- ------- ------- -------
Net Income (Loss) $ 108.8 $(217.8) $ 37.0 $(297.2)
======= ======= ======= =======
Per Common Share:
Continuing operations $ 0.68 $ (1.08) $ 0.41 $ (1.34)
Discontinued operations (0.21) 0.11 (0.25) 0.02
------- ------- ------- --------
Net Income (Loss) $ 0.47 $ (0.97) $ 0.16 $ (1.32)
------- ------- ------- --------
Dividends Declared $ 0.36 $ 0.36 $ 0.18 $ 0.18
======= ======= ======= ========
Weighted Average Shares
Outstanding 227.3 225.9 227.3 226.3
======= ======= ======= =======
The accompanying notes are an integral part of these statements.
<PAGE>9
Corning Incorporated and Subsidiary Companies
Condensed Consolidated Balance Sheets
(In millions)
June 30, 1996 Dec. 31, 1995
------------ -------------
(Unaudited)
Assets
Current Assets
Cash and short-term investments $ 122.2 $ 187.6
Receivables, net 550.9 479.5
Inventories 501.0 426.5
Deferred taxes on income and
other current assets 136.5 102.8
--------- ---------
Total Current Assets 1,310.6 1,196.4
Investments 339.9 364.9
Plant and Equipment, Net 1,769.2 1,599.6
Assets, Net 347.1 330.8
Other Assets 273.8 305.3
Net Assets of Discontinued
Operations 1,736.7 1,664.7
----------- ---------
$5,777.3 $5,461.7
============ =========
Current Liabilities
Loans payable $ 415.0 $ 143.1
Accounts payable 166.2 202.6
Other accrued liabilities 431.6 396.3
--------- -------
Total current liabilities 1,012.8 742.0
Other Liabilities 634.7 618.3
Loans Payable Beyond One Year 1,303.8 1,340.0
Minority Interest in
Subsidiary Companies 302.5 269.8
Convertible Preferred Securities
of Subsidiary 364.9 364.7
Convertible Preferred Stock 23.3 23.9
Common Stockholder's Equity 2,135.3 2,103.0
-------- ---------
$5,777.3 $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 2, 1996
(1) 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.
Corning's investment in equity and intercompany debt of the companies to be
distributed totaled $1.7 billion at June 30, 1996. Corning currently
estimates that, prior to the Distributions, the companies to be distributed
will borrow approximately $600 million to $800 million from third-party
lenders and repay intercompany debt to Corning, reducing Corning's
investment to approximately $900 million to $1.1 billion. Corning's
stockholders' equity will be reduced by Corning's investment in these
companies at the date of the Distribution. Corning intends to use the
proceeds from the repayment of intercompany debt to repay third-party debt,
repurchase shares or invest for future strategic uses.
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.
The loss from discontinued operations in the second quarter of 1996
includes a charge for 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 second quarter
of 1995 includes an after-tax restructuring charge of $24.4 million.
<PAGE>11
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, the U.S. Department of
Justice notified Corning Clinical Labs that it has taken issue with certain
payments received by Damon Corporation from federally funded healthcare
programs prior to its acquisition by Corning. Corning Clinical Labs
management has met with the U.S. Department of Justice several times to
evaluate the substance of the government's allegations. Discussions with
the U.S. Department of Justice are in a preliminary state and consequently,
it is not possible to predict the outcome of this matter with any
certainty.
Corning Clinical Labs has established reserves equal to management's
estimate of the low end of the range of potential amounts which could be
required to satisfy the government's claims. However, it is possible that
the aggregate claim (which might include restitution, multiple damages,
other civil penalties or criminal fines) 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 such claim is settled.
Corning does not believe that this claim will have a material adverse
impact on Corning's overall financial condition.
(2) 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 for the second quarter and first
half of 1996 was 227.3 million and 226.3 million and 225.9 million,
respectively, for the same periods in 1995. Series B preferred
dividends amounted to $0.5 million and $1.0 million in the second
quarter and first half, respectively, in both 1996 and 1995.
(3) Depreciation and amortization charged to continuing operations during
the first half of 1996 and 1995 totaled $141.8 million and $120.2
million, respectively.
(4) Corning's effective tax rate for continuing operations was 33.5% for the
second quarter and first half of 1996. Excluding the impact of the
restructuring charge, the effective tax rate was 31% and 31.5% for the
second quarter and first half of 1995. The lower 1995 rate was due to a
higher percentage of Corning's earnings from consolidated entities with
lower effective tax rates.
<PAGE>13
(5) 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.
First, Corning adopted an annual reporting calendar. Previous
years operated on a fiscal year ending on the Sunday nearest
December 31. As a result, Corning's 1996 quarters will include
results for three calendar months while Corning's quarters
previously included results for 12 weeks (16 weeks in the third
quarter).
Second, Corning's 1996 quarters will include three months of
operations for all significant subsidiaries and affiliates.
Previously, certain subsidiaries reported two months of results in
the first quarter and four months of results in the third quarter.
Third, Corning Life Sciences, Inc. and certain other consolidated
subsidiaries that previously reported on a fiscal year ending
November 30 adopted a calendar year end. The December 1995 results
of these subsidiaries were recorded in retained earnings during the
first quarter of 1996.
Second quarter and first half 1995 financial statements were not
restated for the calendar change. The following table presents
unaudited pro forma results for the second quarter and first half 1995
as if this change had occurred at the beginning of 1995 (in millions
except per-share amounts):
Three Six
Months EndedMonths Ended
June 30, 1995June 30, 1995
(pro forma)(pro forma)
----------- ----------
Sales $801.3 $1,568.8
====== ========
Net income (loss)
Before Dow Corning Corporation
and restructuring $ 80.3 $ 136.8
Equity in losses of Dow Corning
Corporation (365.5) (348.0)
Provision for restructuring (16.1) (16.1)
------ ------
Continuing operations (301.3) (227.3)
Discontinued operations 3.1 29.5
------ ------
Net loss $(298.2) $(197.8)
======= =======
Net income (loss) per common share
Before Dow Corning Corporation
and restructuring $ 0.35 $ 0.60
Equity in losses of Dow Corning
Corporation (1.62) (1.54)
Provision for restructuring (0.07) (0.07)
------ -------
Continuing operations (1.34) (1.01)
Discontinued operations 0.02 0.13
------ -------
Net loss per common share $(1.32) $ (0.88)
====== =======
<PAGE>14
(6) 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.
(7) 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.
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