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) February 4, 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>
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: February 4, 1999 By /s/ KATHERINE A. ASBECK
Katherine A. Asbeck
Vice President and Controller
<PAGE>
Item 5. Other Events.
The following exhibit includes Corning's segment disclosure for 1998, 1997 and
1996 in accordance with Financial Accounting Standard No. 131, "Disclosures
about Segments of an Enterprise and Related Information".
Exhibit 1
<PAGE>
Information by Operating Segment
Operating segments are defined as components of an enterprise about which
separate financial information is available that is evaluated regularly by the
chief operating decision maker, or decision making group, in deciding how to
allocate resources and in assessing performance. Corning's chief operating
decision making group is comprised of the Chief Executive Officer and the
officers who report to him directly.
Corning's reportable segments include Telecommunications, Advanced Materials
and Information Display. The Telecommunications Segment produces optical fiber
and cable, optical hardware and equipment and photonic components for the
worldwide telecommunications industry. The Advanced Materials Segment
manufactures specialized products with unique properties for customer
applications utilizing glass, glass ceramic and polymer technologies.
Businesses within this segment include environmental products, science
products, semiconductor materials and optical and lighting products. The
Information Display Segment manufactures glass panels and funnels for
televisions and CRTs, and projection video lens assemblies and liquid-crystal
display glass for flat panel displays.
Corning evaluates performance based on an after tax profit measure, which is
identified as segment net income. The accounting policies of the operating
segments are the same as those described in the summary of significant
accounting policies. The financial results for Corning's three operating
segments have been prepared on a basis which is consistent with the manner in
which Corning management internally disaggregates financial information for the
purposes of assisting in making internal operating decisions. In this regard,
certain common expenses have been allocated among segments less precisely than
would be required for stand alone financial information prepared in accordance
with generally accepted accounting principles. Revenue attributed to
geographic areas is based on the location of the customer.
<PAGE>
Information by Operating Segment (continued)
<TABLE>
<CAPTION>
Operating Segments Advanced Information Total
(in millions) Telecommunications Materials Display Segments
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1998
<S> <C> <C> <C> <C>
Net sales $1,791.7 $1,020.1 $644.7 $3,456.5
Depreciation and
amortization (1) 143.5 78.8 74.5 296.8
Research, development and
engineering expenses (2) 190.2 80.0 23.7 293.9
Interest income (3) 9.5 3.2 1.1 13.8
Interest expense (4) 29.7 16.7 10.0 56.4
Income tax expense 101.4 38.4 8.2 148.0
Segments earnings before
minority interest and
equity earnings (5) 221.9 75.9 39.2 337.0
Minority interest in
earnings of subsidiaries (37.3) 0.3 (27.6) (64.6)
Equity in earnings of
associated companies 20.7 17.6 44.9 83.2
Segment net income 205.3 93.8 56.5 355.6
Investment in associated
companies, at equity 25.8 42.0 190.4 258.2
Segment assets (6) 1,887.1 837.7 915.1 3,639.9
Capital expenditures 260.0 131.0 53.0 444.0
- -------------------------------------------------------------------------------
1997
Net sales $1,795.3 $1,030.4 $664.2 $3,489.9
Depreciation and
amortization (1) 130.7 82.0 71.8 284.5
Research, development and
engineering expenses (2) 117.1 63.6 69.6 250.3
Interest income (3) 3.6 2.5 1.0 7.1
Interest expense (4) 34.3 23.5 13.8 71.6
Income tax expense 163.9 50.8 (8.6) 206.1
Segments earnings before
minority interest and
equity earnings (5) 307.3 89.8 16.4 413.5
Minority interest in
earnings of subsidiaries (46.0) 0.7 (31.0) (76.3)
Equity in earnings of
associated companies 36.2 13.1 21.7 71.0
Segment net income 297.5 103.6 7.1 408.2
Investment in associated
companies, at equity 62.8 35.3 142.2 240.3
Segment assets (6) 1,599.2 762.6 841.4 3,203.2
Capital expenditures 336.0 117.0 119.0 572.0
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1996
Net sales $1,397.7 $1,031.4 $565.5 $2,994.6
Depreciation and
amortization (1) 104.7 65.0 81.0 250.7
Research, development and
engineering expenses (2) 83.2 52.3 53.7 189.2
Interest income (3) 2.6 2.5 1.8 6.9
Interest expense (4) 24.4 21.8 10.6 56.8
Income tax expense 130.6 33.0 (13.8) 149.8
Segments earnings before
minority interest and
equity earnings (5) 247.6 63.5 (10.0) 301.1
Minority interest in
earnings of subsidiaries (38.1) 3.0 (17.4) (52.5)
Equity in earnings of
associated companies 44.9 8.8 22.6 76.3
Segment net income 254.4 75.3 (4.8) 324.9
Investment in associated
companies, at equity 53.4 27.7 163.0 244.1
Segment assets (6) 1,227.9 631.5 789.4 2,648.8
Capital expenditures 209.0 85.6 170.0 464.6
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</TABLE>
(1) Includes an allocation of depreciation of corporate property, plant and
equipment not specifically identifiable to a segment. Related depreciable
assets are not allocated to segment assets.
(2) Non-direct research, development and engineering expenses are allocated
based upon direct project spending for each segment.
(3) Interest income is allocated to segments based on a percentage of segment
net operating assets.
(4) Interest expense is allocated to segments based on a percentage of segment
net operating assets. Consolidated subsidiaries with independent capital
structures do not receive additional allocations of interest expense.
(5) Many of Corning's administrative and staff functions are performed on a
centralized basis. Where practicable, Corning charges these expenses to
segments based upon the extent to which each business uses a centralized
function. Other staff functions, such as corporate finance, human resources
and legal, are allocated to segments, primarily as a percentage of sales.
(6) Includes inventory, accounts receivable, plant, property and equipment,
investments in associated equity companies and goodwill specifically
identifiable to segments.
<PAGE>
Information by Operating Segment (continued)
A reconciliation of the totals reported for the operating segments to the
applicable line items in the consolidated financial statements is as follows
(in millions):
<TABLE>
<CAPTION>
1998 1997 1996
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues
Total segment net sales $3,456.5 $3,489.9 $2,994.6
Non-segment net sales (1) 27.5 26.9 29.4
Royalty, interest and dividend income 48.4 37.5 29.7
Non-operating gains 39.7
- --------------------------------------------------------------------------
Total revenues $3,572.1 $3,554.3 $3,053.7
Net income
Total segment net income (2) $ 355.6 $ 408.2 $ 324.9
Unallocated items:
Non-segment income (1) 39.5 10.0 5.3
Provision for restructuring (3) (84.6)
Minority interest 3.7
Interest expense (0.3) (0.4) (0.4)
Income tax 15.2 (3.4) (1.6)
Equity in earnings of associated
companies (1) 12.1 8.2 8.8
Dividends on convertible preferred
securities of subsidiary (13.7) (13.7) (13.7)
- --------------------------------------------------------------------------
Net income from continuing operations $ 327.5 $ 408.9 $ 323.3
Assets
Total segment assets $3,639.9 $3,203.2 $2,648.8
Non-segment assets:
Net assets for discontinued operations 357.6 364.0
Property, plant and equipment (4) 624.7 523.2 442.4
Investments (5) 108.1 69.7 93.1
Other current assets (6) 310.7 263.1 380.6
Remaining corporate assets (7) 298.5 275.1 254.5
- --------------------------------------------------------------------------
Total consolidated assets $4,981.9 $4,691.9 $4,183.4
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</TABLE>
(1) Includes amounts derived from corporate investments. Non-segment net income
includes non-operating gains in 1998.
(2) Includes royalty, interest and dividend income.
(3) The portion of this charge related to Telecommunications, Advanced Materials
and Information Display Segments was $8.3 million, $26.9 million, and $16.3
million, respectively. The remainder pertains to corporate functions.
(4) Represents corporate property, plant and equipment not specifically
identifiable to a segment.
(5) Represents corporate investments in associated companies, at equity.
(6) Includes current corporate assets, primarily cash, short-term investments
and deferred taxes.
(7) Includes non-current corporate assets, primarily pension assets and deferred
taxes.
<PAGE>
Information by Operating Segment (continued)
<TABLE>
<CAPTION>
Other Significant Items Segment Reconciling Consolidated
Total Adjustments Total
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
1998
Depreciation and amortization $296.8 $ 1.2 $298.0
Interest expense 56.4 0.3 56.7
Income taxes 148.0 (15.2) 132.8
Equity in earnings of associated
companies 83.2 12.1 95.3
Minority interest (64.6) 3.7 (60.9)
Investment in associated companies,
at equity 258.2 54.9 313.1
Capital expenditures 444.0 269.6 (1) 713.6
- ------------------------------------------------------------------------------
1997
Depreciation and amortization $284.5 $ 1.4 $285.9
Interest expense 71.6 0.4 72.0
Income taxes 206.1 3.4 209.5
Equity in earnings of associated
companies 71.0 8.2 79.2
Investment in associated companies,
at equity 240.3 52.6 292.9
Capital expenditures 572.0 173.6 (1) 745.6
- ------------------------------------------------------------------------------
1996
Depreciation and amortization $250.7 $ 1.6 $252.3
Interest expense 56.8 0.4 57.2
Income taxes 149.8 1.6 151.4
Equity in earnings of associated
companies 76.3 8.8 85.1
Investment in associated companies,
at equity 244.1 69.7 313.8
Capital expenditures 464.6 95.6 (1) 560.2
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</TABLE>
(1) Includes capital spending on shared research facilities of $166.0 million,
$82.4 million and $19.0 million in 1998, 1997 and 1996, respectively.
<PAGE>
Information by Operating Segment (continued)
Information concerning principal geographic areas is as follows (in millions):
<TABLE>
<CAPTION>
1998 1997 1996
- -------------------------------------------------------------------------------
Net Non-current Net Non-current Net Non-current
Sales Assets (1) Sales Assets (1) Sales Assets (1)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
North America
United States $2,257.4 $2,877.5 $2,206.8 $2,436.8 $2,020.8 $1,950.2
Canada 301.7 89.9 246.8 90.8 120.7 96.6
Other 37.0 43.3 37.9 25.9 46.1 15.9
- -------------------------------------------------------------------------------
Total North America 2,596.1 3,010.7 2,491.5 2,553.5 2,187.6 2,062.7
Asia Pacific
Japan 308.8 109.6 360.4 103.4 271.6 118.7
China 74.6 0.9 119.6 1.0 53.4 0.5
Korea 24.0 195.2 29.5 135.9 31.7 159.3
Other 35.5 15.1 42.0 16.0 39.0 14.8
- -------------------------------------------------------------------------------
Total Asia Pacific 442.9 320.8 551.5 256.3 395.7 293.3
Europe
Germany 117.6 49.0 101.8 45.9 88.7 53.4
France 72.6 75.8 85.0 58.8 76.5 50.4
United Kingdom 73.8 76.0 66.0 60.0 72.9 55.4
Other 109.3 22.5 100.3 26.8 106.0 22.2
- -------------------------------------------------------------------------------
Total Europe 373.3 223.3 353.1 191.5 344.1 181.4
Latin America
Brazil 29.9 10.4 74.1 11.7 41.3 12.1
Other 10.9 18.4 0.4 11.7 0.4
- -------------------------------------------------------------------------------
Total Latin America 40.8 10.4 92.5 12.1 53.0 12.5
All Other 30.9 22.0 28.2 8.5 43.6 8.5
- -------------------------------------------------------------------------------
Total $3,484.0 $3,587.2 $3,516.8 $3,021.9 $3,024.0 $2,558.4
===============================================================================
</TABLE>
(1) Excludes net assets of discontinued operations of $357.6 million and
$364.0 million in 1997 and 1996, respectively, and deferred taxes of
$84.4 million, $113.3 million and $83.6 million in 1998, 1997 and 1996,
respectively.
