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, 1997
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 28, 1998.
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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 28, 1998 By /s/ KATHERINE A. ASBECK
Katherine A. Asbeck
Vice President and
Controller
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IMMEDIATE RELEASE Robert W. DeMallie
January 28, 1998 (607) 974-8778
CORNING REPORTS EARNINGS UP 18 PERCENT
IN FOURTH QUARTER AND 28 PERCENT FOR THE YEAR
CORNING, N.Y., Jan. 28 - Corning Incorporated (NYSE:GLW) said today that
net income for its fourth quarter ending December 31, 1997 totaled $108.5
million, an increase of 19 percent over 1996 net income from the same
operations of $91.3 million. Basic earnings per share for the fourth quarter
totaled $0.47, an increase of 18 percent over 1996.
Corning reported net income of $439.8 million for the full year 1997, an
increase of 28 percent over 1996 net income from the same operations of
$342.9 million. Basic earnings per share for 1997 totaled $1.92, an increase
of 28 percent over 1996.
Fourth quarter sales were $1.1 billion, an increase of 9 percent over
1996, while 1997 full-year sales were $4.1 billion, an increase of 12 percent
over 1996.
Commenting on the company's performance, Corning's Chairman and Chief
Executive Officer Roger G. Ackerman said, "Our focus on growth markets and
high-demand technologies produced one of the strongest years in Corning's
history. At the same time, we made significant capital investments in our
communications businesses, increased our research and development spending,
and expanded our laboratories around the world.
"Our fourth-quarter performance was also very strong, although at a
lower growth rate than the year as a whole. The principal differences were
in consumer products, where profits were below last year as a result of soft
sales at mass merchants, and at equity companies, where a 35 percent decline
in earnings largely reflected the impact of turmoil in Asian markets on a
number of our international equity companies.
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"The problems in Asia also had an impact on consolidated operations in
the fourth quarter," Ackerman added, "though the impact was still relatively
minor. However, we are anticipating that the influence of Asia will become
more pronounced in the first quarter. A major portion of the 15 percent
growth we planned for 1998 as a whole will be eroded by lower exchange rates,
volume, and prices in a number of businesses. Optical fiber and cable, in
particular, will be impacted.
"While it is difficult to be precise in a situation as fluid as Asia, we
currently anticipate that earnings in the first quarter will be down in the
range of 30 percent from 1997's very strong first quarter. This reflects not
only the current Asian crisis, but the unusually high international shipments
of optical fiber in the first quarter of last year, and a current shutdown in
our U.S. television-glass plant for the repair and expansion of a glass-
melting furnace.
"Despite the challenges of the first quarter, we anticipate that we will
rebound in the later quarters and finish the year on a positive note,"
Ackerman said.
"We are also optimistic that we will complete the divestiture of our
consumer housewares business in the first half of 1998. Doing so will enable
Corning to complete its transition to a sharply focused high-technology
growth company."
On December 31, 1997, Corning adopted Financial Accounting Standard No.
128, "Earnings per Share," which requires the presentation of both basic and
diluted earnings-per-share amounts. Corning's diluted earnings per share
totaled $0.46 for the fourth quarter and $1.85 for the full year, an increase
of 15 percent and 25 percent respectively over the same operations in 1996.
In future releases, Corning will use diluted earnings per share as its
principle measure.
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On December 31, 1996, Corning distributed all of the shares of Quest
Diagnostics Incorporated (NYSE:DGX) and Covance Inc. (NYSE:CVD) to its
shareholders on a pro-rata basis. Corning's results for 1996 report Quest
Diagnostics and Covance as discontinued operations. In connection with the
spin-off, Corning recognized a fourth-quarter loss from discontinued
operations of $4.7 million, or $0.02 per share. The loss from discontinued
operations totaled $167.3 million, or $0.74 per share for the year ended
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.
FORWARD-LOOKING AND CAUTIONARY STATEMENTS
Except for historical information and discussions contained herein,
statements included in this release may constitute "forward-looking
statement" 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.
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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)
Year Ended Dec. 31, 3 Months Ended Dec. 31,
------------------- -----------------------
1997 1996 1997 1996
----- ----- ----- -----
(unaudited)
REVENUES
Net sales $4,089.7 $3,651.6 $1,075.4 $ 990.1
Royalty, interest,
and dividend income 39.4 32.9 9.6 8.9
------- ------- -------- -------
4,129.1 3,684.5 1,085.0 999.0
DEDUCTIONS
Cost of sales 2,406.2 2,258.9 641.2 622.0
Selling, general and
administrative expenses 671.4 639.8 171.9 169.7
Research and development
expenses 250.7 191.3 75.3 53.8
Interest expense 85.0 69.1 17.8 15.3
Other, net 37.6 38.1 9.1 18.4
------- ------- ------ -----
Income from continuing
operations before
taxes on income 678.2 487.3 169.7 119.8
Taxes on income from
continuing operations 227.2 163.2 54.8 40.1
------ ----- ----- -----
Income from continuing
operations before
minority interest and
equity earnings 451.0 324.1 114.9 79.7
Minority interest in earnings
of subsidiaries (76.7) (52.6) (20.2) (11.6)
Dividends on convertible
preferred securities
of subsidiary (13.7) (13.7) (3.4) (3.4)
Equity in earnings of
associated companies 79.2 85.1 17.2 26.6
------ ------ ------ ------
Income from continuing
operations 439.8 342.9 108.5 91.3
Loss from discontinued
operations,
net of income taxes (167.3) (4.7)
------- ------- ------- ------
NET INCOME $ 439.8 $ 175.6 $ 108.5 $ 86.6
======== ======= ======= ========
BASIC EARNINGS PER SHARE
Continuing operations $ 1.92 $ 1.50 $ 0.47 $ 0.40
Discontinued operations (0.74) (0.02)
------- ---------- ------- --------
NET INCOME $ 1.92 $ 0.76 $ 0.47 $ 0.38
======= ======== ======== ========
DILUTED EARNINGS PER SHARE
Continuing operations $ 1.85 $ 1.48 $ 0.46 $ 0.40
Discontinued operations (0.70) (0.03)
------ -------- -------- --------
NET INCOME $ 1.85 $ 0.78 $ 0.46 $ 0.37
======= ======== ======== ========
DIVIDENDS DECLARED $ 0.72 $ 0.72 $ 0.18 $ 0.18
======= ========= ======== =======
SHARES USED IN COMPUTING EARNINGS PER SHARE
Basic earnings per share 228.1 227.1 229.1 225.9
Diluted earnings per share 245.4 239.5 245.5 239.4
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)
December 31, 1997 December 31, 1996
----------------- ------------------
ASSETS
CURRENT ASSETS
Cash and short-term investments $ 101.3 $ 223.2
Receivables, net 628.0 566.3
Inventories 564.7 498.5
Deferred taxes on income and
other current assets 130.2 130.7
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Total current assets 1,424.2 1,418.7
INVESTMENTS 310.0 337.2
PLANT AND EQUIPMENT, NET 2,427.6 1,977.7
GOODWILL AND OTHER INTANGIBLE
ASSETS, NET 363.3 330.4
OTHER ASSETS 286.3 257.3
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$4,811.4 $4,321.3
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Loans payable $ 215.0 $ 53.9
Accounts payable 316.7 268.9
Other accrued liabilities 485.6 484.7
------- -------
Total current liabilities 1,017.3 807.5
OTHER LIABILITIES 678.1 646.2
LOANS PAYABLE BEYOND ONE YEAR 1,134.1 1,208.5
MINORITY INTEREST IN
SUBSIDIARY COMPANIES 350.3 310.7
CONVERTIBLE PREFERRED SECURITIES
OF SUBSIDIARY 365.3 365.1
CONVERTIBLE PREFERRED STOCK 19.8 22.2
COMMON STOCKHOLDERS' EQUITY 1,246.5 961.1
------- -------
$4,811.4 $4,321.3
========= ========
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, 1997
(1) On December 31, 1997, Corning adopted Financial Accounting Standard No.
128, "Earnings per Share."
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 229.1 million and 228.1 million
for the fourth quarter and year ended December 31, 1997 and 225.9
million and 227.1 million, respectively, for the same periods in 1996.
Series B preferred dividends amounted to $0.4 million and $1.6 million
for the fourth quarter and year ended December 31, 1997 and $0.4 million
and $1.9 million, respectively, for the same periods in 1996.
Diluted earnings per share is computed by dividing net income plus
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 adjusted for dilutive common shares assumed
to be issued on conversion of Corning's convertible securities. The
shares used in computing earnings per share assuming dilution for the
fourth quarter and year ended December 31, 1997 were 245.5 million and
245.4 million, respectively, and 239.4 million and 239.5 million,
respectively, for the same periods in 1996.
(2) Depreciation and amortization charged to continuing operations during
the years ended December 31, 1997 and 1996 totaled $321.6 million and
$288.1 million, respectively.
(3) Corning's effective tax rate for continuing operations was 32.3% and
33.5%, respectively, for the fourth quarter and year ended December 31,
1997 and 33.5% for the same periods in 1996.
(4) On May 5, 1997, Corning announced that it is exploring the divestiture
of its worldwide consumer housewares business. On December 10, 1997,
Corning announced that a planned recapitalization and sale of a
controlling interest in the consumer business had been terminated.
Corning continues to explore the divestiture of this business. The
results of the consumer housewares business are included in continuing
operations.
(5) On December 31, 1996, Corning distributed all of the shares of Quest
Diagnostics Incorporated and Covance Inc. to its shareholders on a pro
rata basis. Corning's results for 1996 report Quest Diagnostics and
Covance as discontinued operations. The loss from discontinued
operations in the third quarter of 1996 primarily related to a charge
taken by Quest Diagnostics to increase reserves related to certain
government investigations of billing practices of certain clinical
laboratories acquired by Quest Diagnostics in 1993 and 1994.
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