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) December 31, 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)
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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.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
Exhibits:
The Registrant's press release of January 27, 1997.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CORNING INCORPORATED
Registrant
Date: January 27, 1997 By /s/ KATHERINE A. ASBECK
Katherine A. Asbeck
Chief Accounting Officer
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Media Relations Contact:
Kathryn C. Littleton
(607) 974-8206
IMMEDIATE RELEASE
January 27, 1997
Corning Incorporated Reports
Fourth Quarter and Full Year 1996 Results
Performance in Line with Expectations;
On Track for Growth in Core Operations and Developing Businesses
CORNING, N.Y., Jan. 27 - Corning Incorporated (NYSE:GLW) said today that
net income from continuing operations for its fourth quarter ended Dec. 31,
1996, totaled $91.3 million, an increase of 28 percent compared with adjusted
1995 fourth quarter net income from continuing operations of $71.5 million.
Fourth quarter earnings per share from continuing operations totaled $0.40,
an increase of 29 percent compared with 1995.
Adjustments to fourth quarter 1995 results relate to the change to
Corning's accounting calendar which became effective January 1, 1996.
For the full year 1996, Corning reported net income from continuing
operations of $342.9 million, or $1.50 per share, compared with a net loss of
$71.5 million, or $0.32 per share, in 1995. Excluding restructuring charges
and the impact of fully reserving our investment in Dow Corning Corporation
in 1995, Corning's 1996 net income and earnings per share from continuing
operations increased 16 percent over 1995.
Sales from Corning's continuing operations for the fourth quarter 1996
were $990.1 million, an increase of 16 percent over adjusted 1995 levels.
For 1996, sales from continuing operations were $3.7 billion, an increase of
12 percent compared with 1995 sales of $3.3 billion.
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Equity company results increased 80 percent in the fourth quarter
compared with adjusted 1995 results and for the full year rose 28 percent due
to excellent results in the international optical fiber equity companies;
EuroKera, a specialty glass equity venture with St. Gobain; and Samsung-
Corning Company Ltd. in South Korea.
Corning Board Chairman and Chief Executive Officer Roger G. Ackerman
indicated that sales and earnings increases in the fourth quarter and full
year were attributable to strong performance in most core businesses.
"We're especially pleased with the performance of the optical fiber and
optical cable businesses, where demand is strong due to fiber hungry global
markets, and with the emergence of opto-electronic components as a strong
contributor.
"We also enjoyed very strong performance in environmental products, both
in terms of market penetration and manufacturing productivity," continued Mr.
Ackerman. "Growth at Corning Costar resumed nicely for products for
pharmaceutical research and demand increased significantly for high-purity
fused silica glass for semiconductors. In addition, profitability improved
substantially for consumer products and glass laboratory products due to
ongoing cost reduction programs.
"Results from our television products businesses, however, were below
the previous year due to significant expansion related spending and a
temporary softness in market demand; and Quanterra, our environmental
services company, continues to struggle in a difficult industry."
"The year ahead will see a number of growth initiatives," said Mr.
Ackerman "We are further expanding our reach in telecommunications beyond
fiber and cable by developing new opportunities to be the supplier of choice
for high-reliability passive optical components. Our liquid crystal display
glass business, geared today for the lap-top computer market, is making
breakthrough advances in manufacturing technology which resulted in improved
results in the second half of 1996. We are also doubling our manufacturing
capacity to supply high-purity fused silica glass, a key component for the
next generation of semiconductor equipment."
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"Corning enters 1997 as a fundamentally changed organization now that
the spin off of the Health Care Services segment is complete; a newly aligned
management team is in place; and our strategy is clear.
"We are focused on attractive international markets where we can apply
our materials and process technology leadership to generate superior growth
in our communications, environmental and advanced materials businesses. We
continue to build on our leadership in glass, ceramics and photonics; we are
extending our capabilities in polymers and surfaces; and, as always, in
keeping with our history, we endeavor to create entirely new technologies,"
concluded Mr. Ackerman.
At year end, Corning completed the spin-off of its Health Care Services
segment creating two independent companies: Covance Inc. (NYSE:CVD) and
Quest Diagnostics Incorporated (NYSE:DGX). In connection with the spin-off,
Corning recognized a fourth-quarter loss from discontinued operations of $4.7
million, or $0.02 per share, due to the final accounting for estimates
recorded in the second quarter of 1996. Including the loss from discontinued
operations, Corning recorded net income of $86.6 million, or $0.38 per share,
in the fourth quarter; and net income of $175.6 million, or $0.76 per share,
in 1996.
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
scientific, and environmental markets; and consumer products.
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Investor Relations Contact: Richard B. Klein (607) 974-8313
Katherine M. Dietz (607) 974-8217
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Corning Incorporated and Subsidiary Companies
Consolidated Statements of Income
(In millions, except per-share amounts)
Three Twelve
Year Year Months Weeks
Ended Ended Ended Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1996 1995 1996 1995
(unaudited)
Revenues
Net sales $3,651.6 $3,257.1 $ 990.1 $ 814.5
Royalty, interest,
and dividend income 32.9 30.6 8.9 7.7
-------- --------- ------- --------
3,684.5 3,287.7 999.0 822.2
Deductions
Cost of sales 2,258.9 2,032.6 622.0 520.4
Selling, general and
administrative expenses 639.8 556.2 169.7 142.4
Research and development
expenses 191.3 175.7 53.8 45.3
Provision for restructuring
and other special charges 26.5
Interest expense 69.1 69.3 15.3 16.5
Other, net 38.1 21.3 18.4 3.6
-------- ------- -------- --------
Income from continuing
operations before
taxes on income 487.3 406.1 119.8 94.0
Taxes on income from
continuing operations 163.2 118.2 40.1 25.3
Income from continuing
operations before minority
interest and equity earnings 324.1 287.9 79.7 68.7
Minority interest in earnings of
subsidiaries (52.6) (64.4) (11.6) (13.0)
Dividends on convertible
preferred securities
of subsidiary (13.7) (13.7) (3.4) (3.2)
Equity in earnings (losses) of
associated companies:
Other than
Dow Corning Corporation 85.1 66.7 26.6 17.8
Dow Corning Corporation (348.0)
------- --------- -------- -------
Income (loss) from continuing
operations 342.9 (71.5) 91.3 70.3
Income (loss) from
discontinued operations,
net of income taxes (167.3) 20.7 (4.7) 13.2
------- --------- --------- -------
Net Income (Loss) $ 175.6 $ (50.8) $ 86.6 $ 83.5
Per Common Share:
Continuing operations $ 1.50 $ (0.32) $ 0.40 $ 0.31
Discontinued operations (0.74) 0.09 (0.02) 0.06
========== ========== ======= =======
Net Income (Loss) $ 0.76 $ (0.23) $ 0.38 $ 0.37
Dividends Declared $ 0.72 $ 0.72 $ 0.18 $ 0.18
Weighted Average
Shares Outstanding 227.1 226.6 225.9 226.7
The accompanying notes are an integral part of these statements.
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Corning Incorporated and Subsidiary Companies
Condensed Consolidated Balance Sheets
(In millions)
Dec. 31, 1996 Dec. 31, 1995
Assets
Current Assets
Cash and short-term investments $ 223.2 $ 187.6
Receivables, net 566.3 479.5
Inventories 498.5 426.5
Deferred taxes on income and
other current assets 130.7 102.8
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Total Current Assets 1,418.7 1,196.4
Investments 337.2 364.9
Plant and Equipment, Net 1,977.7 1,599.6
Goodwill and
Other Intangible Assets, Net 330.4 330.8
Other Assets 257.3 305.3
1,664.7
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$4,321.3 $5,461.7
Liabilities and Stockholders' Equity
Loans payable $ 53.9 $ 143.1
Accounts payable 268.9 202.6
Other accrued liabilities 484.7 396.3
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Total current liabilities 807.5 742.0
Other Liabilties 646.2 618.3
Loans Payable Beyond One Year 1,208.5 1,340.0
Minority Interest in
Subsidiary Companies 310.7 269.8
Convertible Preferred Securities
of Subsidiary 365.1 364.7
Convertible Preferred Stock 22.2 23.9
Common Stockholders' Equity 961.1 2,103.0
------- --------
$4,321.3 $5,461.7
======== =========
The accompanying notes are an integral part of these statements.
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Corning Incorporated and Subsidiary Companies
Notes to Consolidated Financial Statements
Quarter 4, 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 were 225.9 million and 227.1 million
for the fourth quarter and year ended December 31, 1996 and 226.7
million and 226.6 million, respectively, for the same periods in 1995.
Series B preferred dividends amounted to $0.4 million and $1.9 million
for the fourth quarter and year ended December 31, 1996 and $0.5 million
and $2.0 million, respectively, for the same periods in 1995.
(2) Depreciation and amortization charged to continuing operations during
the years ended December 31, 1996 and 1995 totaled $288.1 million and
$251.6 million, respectively.
(3) Corning's effective tax rate for continuing operations was 33.5% for the
fourth quarter and year ended December 31, 1996 and 27% and 29%,
respectively, for the same periods in 1995. The lower 1995 rate was due
to a higher percentage of Corning's earnings being from consolidated
entities with lower effective tax rates and the second quarter 1995
restructuring charge.
(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.
Fourth quarter 1995 financial statements were not restated for the
calendar change. The following table presents unaudited pro forma
results for the fourth quarter 1995 as if this change had occurred at
the beginning of 1995 (in millions, except per-share amounts):
Three
Months Ended
December 31, 1995
-----------------
Sales $ 853.8
=======
Net income
Continuing operations $ 71.5
Discontinued operations 12.5
-------
Net income $ 84.0
=======
Net income per common share
Continuing operations $ 0.31
Discontinued operations 0.06
--------
Net income per common share $ 0.37
========
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(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 Quest Diagnostics
Incorporated (formerly Corning Clinical Laboratories Inc.) and Covance Inc.
(formerly Corning Pharmaceutical Services, Inc.) (the Distributions). On
December 31, 1996, Corning completed the Distributions. Prior to the
Distributions, Corning received a ruling from the Internal Revenue Service
that the Distributions are tax-free to Corning and its shareholders. As a
result of the Distributions, Quest Diagnostics and Covance became
independent publicly traded companies. Corning's consolidated financial
statements report these companies, which formerly comprised Corning's
Health Care Services segment, as discontinued operations.
During the fourth quarter, Corning recorded a loss in discontinued
operations totaling $4.7 million after-tax related to the final accounting
for estimates recorded in the second quarter of 1996.
The loss from discontinued operations for the year ended 1996 totaled
$167.3 million. It includes the $4.7 million fourth quarter after-tax
charge discussed above, a $115 million after-tax charge recorded in the
third quarter, 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 third quarter charge primarily related to a charge taken by Quest
Diagnostics to increase reserves related to government investigations of
billing practices of certain clinical laboratories acquired by Quest
Diagnostics in 1993 and 1994. 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.
Corning has agreed to indemnify Quest Diagnostics on an after-tax basis for
the settlement of claims relating to billing practices of Quest Diagnostics
that were pending at December 31, 1996. Coincident with the Distributions,
Corning recorded a payable to Quest Diagnostics of approximately $25
million which is equal to management's best estimate of amounts which are
probable of being paid by Corning to Quest Diagnostics to satisfy the
remaining indemnified claims on an after-tax basis.
Although management believes that established reserves for indemnified
claims are sufficient, it is possible that additional information may
become available which may cause the final resolution of these matters to
exceed established reserves by an amount which could be material to
Corning's results of operations and cash flow in the period in which such
claims are settled. Corning does not believe that these issues will have a
material adverse impact on Corning's overall financial condition.
