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 20, 1998
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>
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.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
Exhibits:
The Registrant's press release of July 20, 1998.
<PAGE>
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 20, 1998 By /s/ KATHERINE A. ASBECK
Katherine A. Asbeck
Vice President and Controller
<PAGE>
FOR IMMEDIATE RELEASE Media Contact:
Robert W. DeMallie
(607) 974-8778
[email protected]
Investor Relations Contact:
Katherine M. Dietz
(607) 974-8217
[email protected]
Corning Incorporated Reports Second Quarter Earnings
Down 25 Percent Before Special Items
CORNING, N.Y., July 20, 1998 - Corning Incorporated (NYSE:GLW) reported
today that its 1998 second quarter net income from continuing operations
before special items totaled $92.7 million, or $0.39 per share, compared with
1997 net income from the same operations of $125.0 million, or $0.52 per
share. This decline of 25 percent is in line with expectations.
Second quarter sales were $855.9 million, compared with 1997 second
quarter sales of $905.5 million. According to the company, the quarter's
performance reflects the continuing impact of Asia on many of its businesses.
While the company's optical fiber and cable business posted solid gains in
volume compared with a very strong second quarter in the prior year, the
gains were more than offset by lower prices.
Equity earnings increased 35 percent to $32.7 million, led by Samsung-
Corning Company Ltd., a Korean manufacturer of glass panels and funnels for
television and display monitors.
Commenting on the company's performance, Corning's Chairman and Chief
Executive Officer Roger G. Ackerman said, "With the lack of any improvement
in the Asian markets, results were in line with our expectations. As
previously announced, we have implemented early retirement and involuntary
separation programs to reduce fixed costs and improve long-term
competitiveness and financial performance. At the same time, we are seeing
our investment strategy in research and development paying off, as we won
several important orders for our new LEAF brand optical fiber."
(more)
<PAGE>
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Corning also recorded net income from special items in the second
quarter of $31.1 million after tax, or $0.14 per share. These items include
an after-tax charge of $49.2 million related to the early retirement and
involuntary separation programs, and an after-tax gain of $13.2 million
resulting from the merger of Molecular Simulations Inc. with Pharmacopeia,
Inc. (NASDAQ: PCOP). These special items are included in income from
continuing operations. In addition, Corning recorded an after-tax gain of
$67.1 million from the recapitalization and sale of a controlling interest in
its consumer housewares business to an affiliate of Borden, Inc., which is
included in income from discontinued operations.
Including these items, Corning's net income for the second quarter of
1998 totaled $123.8 million, or $0.53 per share, compared with net income of
$127.0 million, or $0.53 per share, for the second quarter of 1997.
Commenting on future performance, Ackerman said, "We continue to believe
that our second half performance comparisons will show improvement versus the
first half. The extent to which this occurs will depend in part on both
currency valuations and demand for our products in Asian markets. In the
meantime, we will continue to trim expenses, while improving our ability to
rapidly introduce new products."
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. Corning also
manufactures advanced materials for scientific and environmental markets.
Corning's total revenues in 1997 were $3.5 billion. More information on the
company is available at Corning's Web site: www.corning.com.
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Forward-Looking and Cautionary Statements
Except for historical information and discussions contained herein,
statements included in this release constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
These statements involve a number of risks, uncertainties and other factors
that could cause results to differ materially, as discussed in the company's
filing with the Securities and Exchange Commission.
<PAGE>
Corning Incorporated and Subsidiary Companies
Consolidated Statements of Income
(Unaudited; in millions, except per share amounts)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30 June 30
-------------------- -------------------
1998 1997 1998 1997
--------- --------- --------- --------
<S> <C> <C> <C> <C>
Revenues
Net sales $1,650.7 $1,722.6 $ 855.9 $ 905.5
Royalty, interest,
and dividend income 21.1 19.0 12.0 9.1
Non-operating gain 20.5 20.5
-------- -------- ------- -------
1,692.3 1,741.6 888.4 914.6
Deductions
Cost of sales 1,045.1 991.0 530.4 515.3
Selling, general and
administrative expenses 239.5 267.7 126.6 138.9
Provision for restructuring 84.6 84.6
Research and development
expenses 142.2 104.4 75.1 53.4
Interest expense 32.5 40.7 14.9 19.5
Other, net 29.7 5.0 2.6 (1.8)
-------- ------- ------- -------
Income from continuing
operations before taxes
on income 118.7 332.8 54.2 189.3
Taxes on income from
continuing operations 34.9 113.2 13.9 64.2
-------- ------- ------- -------
Income from continuing
operations before minority
interest and equity earnings 83.8 219.6 40.3 125.1
Minority interest in earnings
of subsidiaries (18.3) (33.3) (12.8) (20.8)
Dividends on convertible
preferred securities of
subsidiary (6.9) (6.9) (3.5) (3.5)
Equity in earnings of
associated companies 60.2 31.0 32.7 24.2
-------- ------- ------- -------
Income from continuing
operations 118.8 210.4 56.7 125.0
Income from discontinued
operations, net of taxes 66.5 8.6 67.1 2.0
-------- ------- ------- ------
Net Income $ 185.3 $ 219.0 $ 123.8 $ 127.0
======== ======== ======= =======
Basic Earnings Per Share
Continuing operations $ 0.51 $ 0.92 $ 0.24 $ 0.55
Discontinued operations 0.30 0.04 0.30 0.01
-------- --------- -------- -------
Net Income $ 0.81 $ 0.96 $ 0.54 $ 0.56
======== ========= ======== =======
Diluted Earnings Per Share
Continuing operations $ 0.51 $ 0.89 $ 0.24 $ 0.52
Discontinued operations 0.28 0.03 0.29 0.01
------- -------- -------- -------
Net Income $ 0.79 $ 0.92 $ 0.53 $ 0.53
======= ======== ======== =======
Dividends Declared $ 0.36 $ 0.36 $ 0.18 $ 0.18
======= ======== ======== =======
Shares used in computing
earnings per share
Basic earnings per share 229.8 227.2 229.9 227.8
======= ======== ======== =======
Diluted earnings per share 233.3 244.6 233.9 245.8
======= ======== ======== =======
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
Corning Incorporated and Subsidiary Companies
Condensed Consolidated Balance Sheets
(Unaudited; in millions)
<TABLE>
<CAPTION>
June 30, 1998 Dec. 31, 1997
------------- -------------
<S> <C> <C>
Assets
Current Assets
Cash and short-term investments $ 191.3 $ 97.0
Receivables, net 543.3 559.7
Inventories 464.7 428.3
Deferred taxes on income and
other current assets 135.2 114.1
-------- --------
Total current assets 1,334.5 1,199.1
Investments 429.0 310.0
Plant and Equipment, Net 2,358.5 2,267.9
Goodwill and Other Intangible
Assets, Net 281.1 294.2
Other Assets 338.9 263.1
Net Assets of Discontinued Operations 357.6
-------- --------
$4,742.0 $4,691.9
======== ========
Liabilities and Stockholders' Equity
Current Liabilities
Loans payable $ 38.8 $ 213.0
Accounts payable 207.4 300.0
Other accrued liabilities 628.8 444.7
-------- --------
Total current liabilities 875.0 957.7
Other Liabilities 655.9 627.5
Loans Payable Beyond One Year 1,095.9 1,125.8
Minority Interest in Subsidiary
Companies 343.7 349.3
Convertible Preferred Securities
of Subsidiary 365.5 365.3
Convertible Preferred Stock 18.7 19.8
Common Stockholders' Equity 1,387.3 1,246.5
-------- --------
$4,742.0 $4,691.9
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
Corning Incorporated and Subsidiary Companies
Notes to Consolidated Financial Statements
Quarter 2, 1998
(1) Basic earnings per share is computed by dividing net income less dividends
on Series B convertible preferred stock by the weighted average number of
common shares outstanding during each period. The weighted average shares
outstanding were 229.9 million and 229.8 million for the second quarter and
first half of 1998, respectively, compared with 227.8 million and 227.2
million for the same periods in 1997. Series B preferred dividends amount
to $0.4 million and $0.8 million in the second quarter and first half of
1998 and 1997, respectively.
Diluted earnings per share is computed by dividing net income, increased in
1997 by dividends on convertible preferred stock, by the weighted average
number of common shares outstanding during the period after giving effect
to dilutive stock options and, in 1997, adjusted for dilutive common shares
assumed to be issued on conversion of Corning's convertible securities.
The shares used in computing diluted earnings per share for the second
quarter and first half of 1998 were 233.9 million and 233.3 million,
respectively, compared with 245.8 million and 244.6 million for the same
periods in 1997.
(2) Depreciation and amortization charged to continuing operations during the
first half of 1998 and 1997 totaled $157.2 million and $150.5 million,
respectively.
(3) Corning's effective tax rate for continuing operations, excluding the
impact of special items, was 32.5% for the second quarter and year-to-date
1998, and 34% for the same periods in 1997. The lower 1998 rate is due to
a higher percentage of Corning's earnings resulting from consolidated
entities with lower effective tax rates.
(4) On April 1, 1998, Corning completed the recapitalization and sale of a
controlling interest in its consumer housewares business to an affiliate of
Borden, Inc. Corning received cash proceeds of $583 million in the second
quarter and an additional $10.1 million in July due to normal closing
balance sheet adjustments. Corning will continue to retain an 8 percent
interest in the Corning Consumer Products Company. In addition, Corning
could receive an additional payment of up to $15 million if certain
financial targets are met by Corning Consumer Products Company for the
three year period 1998 - 2000.
Corning recorded an after-tax gain of $67.1 million, or $0.29 per share, in
the second quarter. Corning used approximately $350 million of the
proceeds to repay current borrowings and will use the remaining proceeds to
fund restructuring activities and to invest in its communications,
environmental and advanced materials businesses.
Corning's consolidated financial statements and notes thereto report the
consumer housewares business as a discontinued operation. Prior period
consolidated financial statements and notes have been restated accordingly.
(5) In the second quarter of 1998, Corning recorded a restructuring charge of
$84.6 million ($49.2 million after tax and minority interest), or $0.21 per
share. The charge is comprised of early retirement incentives and
severance costs.
<PAGE>
(6) In June, 1998, Molecular Simulations, Inc. (MSI) merged with Pharmacopeia,
Inc., a publicly traded company (NASDAQ: PCOP). Corning previously owned
35% of MSI. Corning realized a gain of $20.5 million ($13.2 million after
tax), or $0.06 per share from this transaction.
(7) On July 8, 1998, Dow Corning Corporation, 50% owned by each Corning and The
Dow Chemical Corporation, announced that the Federal Bankruptcy Court
accepted an agreement in principle between the debtor and the Tort
Claimants Committee in which Dow Corning will settle outstanding breast
implant claims. The agreement is subject to final documentation, approval
and/or appeal by all parties involved with the bankruptcy. Corning
continues to believe that it is impossible to predict if and when Dow
Corning will successfully emerge from Chapter 11 proceedings.
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