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 13, 1999
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 13, 1999.
<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 13, 1999 By /s/ KATHERINE A. ASBECK
Katherine A. Asbeck
Vice President and Controller
<PAGE>
IMMEDIATE RELEASE Media Contact:
Robert W. DeMallie
(607) 974-8778
[email protected]
Corning Third-Quarter Earnings Up Across the Board
CORNING, N.Y., Oct. 13, 1999 Corning Incorporated (NYSE:GLW), the world's
leading supplier of optical fiber, reported strong third-quarter results in all
three of its business segments. Net earnings totaled $0.54 per share, an
increase of 23% compared with earnings of $0.44 per share in 1998. Net income
for the third quarter of 1999 totaled $133.3 million, an increase of 28%
compared with $104.4 million in 1998.
Commenting on the quarter, Corning Chairman and Chief Executive Officer,
Roger G. Ackerman, said, "We continue to achieve across-the-board growth and are
particularly pleased to see both our established businesses and new businesses
showing strength."
Third-quarter sales were just over $1.1 billion, an increase of 25%
compared with 1998 third-quarter sales of $906.5 million. Excluding the impact
of acquisitions, sales increased 17%. Sales of optical fiber remained strong,
with demand for the company's LEAFr optical fiber tripling in the quarter over
the same period last year. Sales of optical amplifiers used in communication
networks drove sales up nearly 50% in the company's photonic technologies
business. Demand for liquid crystal display glass used in computer monitors,
semiconductor materials used in the manufacture of integrated circuits, and
substrates used in catalytic converters also contributed to the quarter's
growth.
Equity earnings more than doubled in the quarter due primarily to excellent
performance at both Samsung Corning Company, Ltd. and Samsung Corning Precision
Glass Company, Ltd.
Ackerman said, "Performance in the first three quarters of 1999 has been
very strong. The positive momentum we have seen gives us confidence that we
will achieve earnings growth of 20% for the full year."
(more)
<PAGE>
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Established in 1851, Corning Incorporated creates leading-edge technologies
for the fastest-growing markets of the world's economy. Corning manufactures
optical fiber, cable and photonic products for the telecommunications industry;
and high-performance displays and components for television and other
communications-related industries. The company also uses advanced materials to
manufacture products for scientific, semiconductor and environmental markets.
Corning's revenues in 1998 were $3.5 billion. More information on the company
is available at www.corning.com.
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Investor Relations Contact:
Katherine M. Dietz
(607) 974-8217
[email protected]
Forward-Looking and Cautionary Statements
Except for historical information and discussions contained herein,
statements included in this release may 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,
-------------------- --------------------
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues
Net sales $3,048.8 $2,557.2 $1,136.6 $ 906.5
Royalty, interest, and
dividend income 29.6 32.9 8.5 11.8
Non-operating gain 30.0 20.5 30.0
-------- -------- -------- -------
3,108.4 2,610.6 1,175.1 918.3
Deductions
Cost of sales 1,861.6 1,583.4 696.7 546.2
Selling, general and
administrative expenses 428.4 352.1 155.5 112.6
Research, development and
engineering expenses 260.9 213.8 96.5 71.6
Provision for impairment
and restructuring 15.5 84.6 15.5
Amortization of purchased
intangibles 15.9 11.8 5.6 3.9
Interest expense 56.1 43.8 22.6 11.3
Other, net 32.5 40.4 11.9 10.7
-------- -------- -------- -------
Income from continuing
operations before taxes
on income 437.5 280.7 170.8 162.0
Taxes on income from
continuing operations 132.4 84.1 51.1 49.2
-------- -------- -------- -------
Income from continuing
operations before minority
interest and equity earnings 305.1 196.6 119.7 112.8
Minority interest in earnings
of subsidiaries (46.1) (38.6) (18.6) (20.3)
Dividends on convertible
preferred securities of
subsidiary (2.3) (10.3) (3.4)
Equity in earnings of
associated companies 84.9 75.5 32.2 15.3
-------- -------- -------- -------
Income from continuing
operations 341.6 223.2 133.3 104.4
Income from discontinued
operations, net of taxes 66.5
-------- -------- -------- -------
Net Income $ 341.6 $ 289.7 $ 133.3 $ 104.4
======== ======== ======== =======
Basic Earnings Per Share
Continuing operations $ 1.42 $ 0.97 $ 0.55 $ 0.45
Discontinued operations 0.29
-------- -------- -------- -------
Net Income $ 1.42 $ 1.26 $ 0.55 $ 0.45
======== ======== ======== =======
Diluted Earnings Per Share
Continuing operations $ 1.39 $ 0.95 $ 0.54 $ 0.44
Discontinued operations 0.28
-------- --------- --------- -------
Net Income $ 1.39 $ 1.23 $ 0.54 $ 0.44
======== ========= ========= =======
Dividends Declared $ 0.54 $ 0.54 $ 0.18 $ 0.18
======== ========= ========= =======
Shares used in computing
earnings per share
Basic earnings per share 239.7 229.7 243.0 229.5
======== ========= ========= =======
Diluted earnings per share 247.2 243.9 248.3 242.2
======== ========= ========= =======
</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, 1999 Dec. 31, 1998
-------------- -------------
<S> <C> <C>
Assets
Current Assets
Cash and short-term investments $ 101.5 $ 45.4
Accounts receivable, net 768.4 636.0
Inventories 550.6 458.7
Deferred taxes on income and
other current assets 211.5 170.2
--------- ---------
Total current assets 1,632.0 1,310.3
Investments 451.8 366.2
Plant and equipment, net 2,909.9 2,684.9
Goodwill and other intangible
assets, net 344.5 309.7
Other assets 335.6 310.8
--------- ---------
Total Assets $ 5,673.8 $ 4,981.9
========= =========
Liabilities and Shareholders' Equity
Current Liabilities
Loans payable $ 297.8 $ 204.6
Accounts payable 283.8 291.7
Other accrued liabilities 637.1 578.4
--------- ---------
Total current liabilities 1,218.7 1,074.7
Other liabilities 690.1 674.1
Loans payable beyond one year 1,287.6 998.3
Minority interest in subsidiary
companies 361.4 346.1
Convertible preferred securities
of subsidiary 365.2
Convertible preferred stock 15.2 17.9
Common shareholders' equity 2,100.8 1,505.6
--------- ---------
Total Liabilities and
Shareholders' Equity $ 5,673.8 $ 4,981.9
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
Corning Incorporated and Subsidiary Companies
Notes to Consolidated Financial Statements
Quarter 3, 1999
(1) Information about the performance of Corning's three operating segments for
the third quarter and first nine months of 1999 and 1998 are below. These
amounts do not include revenues, expenses and equity earnings not
specifically identifiable to segments.
<TABLE>
<CAPTION>
Nine months ended Three months ended
Sept. 30, Sept. 30,
------------------- ----------------
1999 1998 1999 1998
--------- --------- -------- -------
<S> <C> <C> <C> <C>
Telecommunications
Net sales $1,766.0 $1,312.4 $ 694.7 $483.8
Research, development and
engineering expenses $ 175.8 $ 136.5 $ 67.6 $ 46.7
Income from continuing
operations before minority
interest and equity earnings $ 190.3 $ 166.6 $ 75.5 $ 78.9
Minority interest in
earnings of subsidiaries (20.4) (30.4) (7.5) (12.5)
Equity in earnings of
associated companies 12.3 14.4 4.9 1.5
-------- -------- -------- ------
Segment net income (1) $ 182.2 $ 150.6 $ 72.9 $ 67.9
======== ======== ======== ======
Advanced Materials
Net sales $ 774.5 $ 767.7 $ 257.7 $247.7
Research, development and
engineering expenses $ 68.8 $ 60.3 $ 23.7 $ 19.8
Income from continuing
operations before minority
interest and equity earnings $ 71.6 $ 55.7 $ 23.5 $ 17.0
Minority interest in
earnings of subsidiaries 0.3
Equity in earnings of
associated companies 13.7 11.2 6.1 3.7
-------- -------- -------- ------
Segment net income (2) $ 85.3 $ 67.2 $ 29.6 $ 20.7
======== ======== ======== ======
Information Display
Net sales $ 490.4 $ 459.3 $ 178.7 $169.8
Research, development and
engineering expenses $ 16.4 $ 16.9 $ 5.3 $ 5.0
Income from continuing
operations before minority
interest and equity earnings $ 40.1 $ 15.3 $ 13.0 $ 17.5
Minority interest in
earnings of subsidiaries (16.2) (12.2) (1.6) (7.8)
Equity in earnings of
associated companies 52.9 40.5 18.3 6.6
-------- -------- -------- ------
Segment net income $ 76.8 $ 43.6 $ 29.7 $ 16.3
======== ======== ======== ======
Total segments
Net sales $3,030.9 $2,539.4 $1,131.1 $901.3
Research, development and
engineering expenses $ 261.0 $ 213.7 $ 96.6 $ 71.5
Income from continuing
operations before minority
interest and equity earnings $ 302.0 $ 237.6 $ 112.0 $113.4
Minority interest in
earnings of subsidiaries (36.6) (42.3) (9.1) (20.3)
Equity in earnings of
associated companies 78.9 66.1 29.3 11.8
-------- -------- -------- ------
Segment net income (1) (2) $ 344.3 $ 261.4 $ 132.2 $104.9
======== ======== ======== ======
</TABLE>
(1) Does not include a non-operating gain described in Footnote 4.
(2) Does not include an impairment charge described in Footnote 5.
<PAGE>
(2) Depreciation and amortization charged to continuing operations during
the third quarter year-to-date 1999 and 1998 totaled $281 million and
$233 million, respectively.
(3) Corning's effective tax rate for continuing operations, excluding the
impact of special items, was 29.2% and 30.0% for the third quarter and
year-to-date 1999, respectively, and 30.4% and 31.5% for the same periods
in 1998. The lower 1999 rates are due to a higher percentage of Corning's
earnings resulting from consolidated entities with lower effective tax
rates.
(4) During the third quarter of 1999, Corning sold Republic Wire and Cable, a
manufacturer of elevator cables and a subsidiary of Siecor Corporation, for
approximately $52 million in cash and short-term notes. Corning recorded a
non-operating gain of $30 million ($9.5 million after tax and minority
interest) or $0.04 per share as a result of this transaction.
(5) In the third quarter of 1999, Corning recognized an impairment loss of
$15.5 million pretax ($10.0 million after tax), or $0.04 per share, in
connection with management's decision to sell or dispose of certain assets
within the Advanced Materials segment. The impairment loss reduces
Corning's investment in these assets to an amount equal to management's
current estimate of fair value.
(6) During the third quarter of 1999, Corning acquired the 21% interest in
Corning Japan KK it did not own for cash consideration of approximately $32
million. The excess purchase price over the fair value of the net assets
acquired, accounted for as goodwill, was approximately $18 million and is
being amortized over 20 years. Corning Japan KK produces flat panel
display glass within the Information Display Segment, and will continue to
be consolidated within Corning's operating results.
(7) On April 30, 1999, Corning acquired BICC's telecommunications cable
business and the 50 percent equity interest in Optical Waveguides
Australia, Pty. Ltd. it did not already own for cash consideration of
approximately $135 million. The excess purchase price over the fair
value of the net assets acquired, accounted for as goodwill and other
intangible assets, was approximately $30 million and is being amortized
over periods ranging from 5 to 25 years.
(8) During the first quarter of 1999, Corning issued $300 million of debt
securities under a shelf registration agreement previously filed with
the Securities and Exchange Commission. This issuance consisted of $150
million of notes with a 6.30% coupon due in 2009, and $150 million of
debentures with a 6.85% coupon due in 2029. The proceeds from these
borrowings will be used for the repayment of short and long-term debt,
working capital, capital spending and acquisitions.
(9) During the first quarter of 1999, Corning Delaware L.P., a special
purpose limited partnership in which Corning is the sole general
partner, called for the redemption of all Convertible Monthly Income
Preferred Securities (MIPS). The MIPS were guaranteed by Corning and
convertible into Corning common stock at a rate of 1.534 shares of
Corning common stock for each MIPS. As of March 31, 1999, all of the
MIPS were converted into 11.5 million shares of Corning common stock.
The conversion will cause Corning's reported income to increase in
comparison to 1998, but will have no impact on Corning's diluted
earnings per share.
<PAGE>
(10) Dow Corning and the Committee of Tort Claimants, one of Dow Corning's
Chapter 11 creditor committees, filed with the United States Bankruptcy
Court a joint plan of reorganization on November 9, 1998 (the Joint Plan).
In the first half of 1999, the Joint Plan received a favorable vote from
nearly all of the creditor classes, although four creditor classes did not
support the Plan and certain groups of creditors have opposed the Plan.
Beginning on June 28, 1999, the Bankruptcy Court conducted ten days of
hearings on the application by Dow Corning and the Committee of Tort
Claimants to confirm the Joint Plan. The hearings concluded with oral
arguments on July 30, 1999. Post-hearing briefing was completed by mid-
September 1999. The parties are awaiting the decision of the Bankruptcy
Court. The determinations to be made by the Bankruptcy Court are likely to
be subject to further review in the District Court for the Eastern District
of Michigan and further appeals are possible. 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 remain uncertain.
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