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 19, 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.
Item 7. Financial Statements.
Exhibits:
The Registrant's press release of October 19, 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: October 19, 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 Reports Third Quarter Earnings
CORNING, N.Y., October 19, 1998 Corning Incorporated (NYSE:GLW) reported
that its 1998 third quarter net income totaled $104.4 million, or $0.44 per
share, compared with net income from the same operations in the third quarter of
last year of $106.8 million, or $0.45 per share. This 2 percent decline in
earnings represents a significant improvement over the 25 percent decline
reported by the company in the first half of the year.
Sales for the third quarter were $906.5 million, up slightly compared with
1997 third-quarter sales of $891.9 million.
The improved comparisons for the quarter reflect exceptionally strong
volume growth in North America for the company's optical fiber, cable and
components businesses, including the shipment of significant quantities of
Corning's new LEAF brand optical fiber for high-data-rate applications.
However, the company said that the prices of optical fiber and cable continued
to decline.
Performance in other businesses was mixed, with improvements in information
display and environmental products offset by significant declines in advanced
materials, where severe cutbacks in semiconductor manufacturing equipment have
impacted demand for the company's stepper lenses.
Equity earnings declined 50 percent due to weaker volume and significant
price declines at Samsung Corning, a Korean manufacturer of glass panels and
funnels for television and display monitors, and at the company's international
optical fiber ventures.
(more)
<PAGE>
-2-
Corning Chairman and Chief Executive Officer Roger G. Ackerman said, "We
are encouraged that our third-quarter performance showed such substantial
improvement compared to our first half. The upswing in demand was largely due
to investments by new telecommunications network providers. The purchase of our
products for these networks is further evidence that our new product development
strategy is working."
Ackerman added: "Our fourth-quarter comparisons may not be as strong as the
third quarter due to potential variability in fiber demand for new networks as
well as possible impact from global economic events. However, we do expect to
see profit growth resume in 1999."
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
television, 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 the company's web site:
http://www.corning.com.
-30-
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>
Nine Months Ended Three Months Ended
Sept. 30, Sept. 30,
------------------- ------------------
1998 1997 1998 1997
-------- -------- ------- --------
<S> <C> <C> <C> <C>
Revenues
Net sales $2,557.2 $2,614.5 $ 906.5 $ 891.9
Royalty, interest
and dividend income 32.9 28.4 11.8 9.4
Non-operating gain 20.5
-------- -------- ------- -------
2,610.6 2,642.9 918.3 901.3
Deductions
Cost of sales 1,595.2 1,515.9 550.1 524.9
Selling, general and
administrative expenses 352.1 401.7 112.6 134.0
Provision for restructuring 84.6
Research and development
expenses 213.8 175.1 71.6 70.7
Interest expense 43.8 56.9 11.3 16.2
Other, net 40.4 10.4 10.7 5.4
-------- -------- ------- -------
Income from continuing
operations before taxes
on income 280.7 482.9 162.0 150.1
Taxes on income from
continuing operations 84.1 161.2 49.2 48.0
-------- -------- ------- -------
Income from continuing
operations before minority
interest and equity earnings 196.6 321.7 112.8 102.1
Minority interest in earnings
of subsidiaries (38.6) (56.2) (20.3) (22.9)
Dividends on convertible
preferred securities of
subsidiary (10.3) (10.3) (3.4) (3.4)
Equity in earnings of
associated companies 75.5 62.0 15.3 31.0
-------- -------- ------- -------
Income from continuing
operations 223.2 317.2 104.4 106.8
Income from discontinued
operations, net of income
taxes 66.5 14.1 5.5
-------- -------- ------- -------
Net Income $ 289.7 $ 331.3 $ 104.4 $ 112.3
======== ======== ======= =======
Basic Earnings Per Share
Continuing operations $ 0.97 $ 1.39 $ 0.45 $ 0.47
Discontinued operations 0.29 0.06 0.02
-------- -------- ------- -------
Net Income $ 1.26 $ 1.45 $ 0.45 $ 0.49
======== ======== ======= =======
Diluted Earnings Per Share
Continuing operations $ 0.95 $ 1.34 $ 0.44 $ 0.45
Discontinued operations 0.28 0.05 0.02
-------- -------- ------- -------
Net Income $ 1.23 $ 1.39 $ 0.44 $ 0.47
======== ======== ======= =======
Dividends Declared $ 0.54 $ 0.54 $ 0.18 $ 0.18
======== ======== ======= =======
</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>
Sept. 30, 1998 Dec. 31, 1997
-------------- -------------
<S> <C> <C>
Assets
Current Assets
Cash and short-term investments $ 93.0 $ 97.0
Receivables, net 593.5 559.7
Inventories 450.5 428.3
Deferred taxes on income and
other current assets 143.8 114.1
-------- --------
Total current assets 1,280.8 1,199.1
Investments 401.8 310.0
Plant and Equipment, Net 2,457.2 2,267.9
Goodwill and Other Intangible
Assets, Net 283.2 294.2
Other Assets 337.3 263.1
Net Assets of Discontinued Operations 357.6
-------- --------
$4,760.3 $4,691.9
======== ========
Liabilities and Stockholders' Equity
Current Liabilities
Loans payable $ 60.4 $ 213.0
Accounts payable 213.8 300.0
Other accrued liabilities 582.9 444.7
-------- --------
Total current liabilities 857.1 957.7
Other Liabilities 658.7 627.5
Loans Payable Beyond One Year 1,093.3 1,125.8
Minority Interest in Subsidiary
Companies 362.1 349.3
Convertible Preferred Securities
of Subsidiary 365.5 365.3
Convertible Preferred Stock 18.4 19.8
Common Stockholders' Equity 1,405.2 1,246.5
-------- --------
$4,760.3 $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 3, 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 229.5 million and 229.7 million for the third quarter and
third quarter year-to-date 1998, respectively, compared with 228.7 million
and 227.7 million for the same periods in 1997. Series B preferred
dividends amount to $0.4 million and $1.2 million in the third quarter and
third quarter year-to-date 1998 and 1997, respectively.
Diluted earnings per share is computed by dividing net income, increased
in 1998 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 third quarter and third quarter year-to-date 1998 were 242.2 million
and 243.9 million, respectively, compared with 246.8 million and 245.1
million for the same periods in 1997.
(2) Depreciation and amortization charged to continuing operations during the
third quarter year-to-date 1998 and 1997 totaled $233 million and $230.2
million, respectively.
(3) Corning's effective tax rate for continuing operations was 30.4% and 31.5%
for the third quarter and third quarter year-to-date 1998, respectively,
and 32% and 33.4% 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 $593 million and 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 of 1998. 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 future
operations.
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) Dow Corning Corporation, in which Corning has a 50% interest, has reported
to the Federal Bankruptcy Court that agreements in principle have been
reached with the Tort Claimants' Committee and that it expects to file a
plan or reorganization by the end of October 1998. Certain significant
points remain subject to negotiation, and the agreements are subject to
final documentation. The plan of reorganization will require a favorable
vote by many classes of creditors, as well as court approval, and may be
subject to appeals. The recent developments tend to increase the
probability that Dow Corning will successfully emerge from Chapter 11
proceedings, but the timing and eventual outcome of these proceedings are
inherently uncertain.
- 30 -
