- - 9 -
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) January 19, 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: January 19, 1999 By /s/ KATHERINE A. ASBECK
Katherine A. Asbeck
Vice President and Controller
<PAGE>
Item 5. Other Events.
Financial Accounting Standard No. 131, "Disclosures about Segments of an
Enterprise and Related Information" (FAS 131) became effective December 31,
1998. FAS 131 supercedes previous guidance and disclosure requirements
concerning the reporting of operating segment information.
Application of FAS 131 to Corning results in the determination of three
operating segments: Telecommunications, Information Display and Advanced
Materials. The Telecommunications Segment contains Corning's optical fiber and
cable, photonic and telecommunication hardware businesses, as well as its
optical fiber equity ventures. The businesses contained within the Information
Display Segment include conventional video components, projection video
components, and advanced display products, as well as Samsung Corning, Samsung
Corning Precision and other equity ventures. These two segments together
comprised the Communications segment reported historically. Advanced Materials
includes the businesses previously reported as the Specialty Materials segment.
FAS 131 requires companies to disclose the operating measure that is used by
management to evaluate the performance of each segment. For Corning, this is
an after tax profit measure identified as segment net income. Historical
disclosures were before consideration of income taxes and interest expense.
Segment net income also includes equity earnings and minority interest.
Finally, certain research, development and administrative expenses previously
shown in "Other" in segment presentations have been allocated to operating
segments.
The following exhibit includes Corning's segment disclosure for 1997 and 1996
in accordance with FAS 131.
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 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, 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 contained in Corning's annual report on Form 10-K. 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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<S> <C> <C> <C> <C>
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>
1997 1996
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<S> <C> <C>
Revenues
Total segment net sales $3,489.9 $2,994.6
Non-segment net sales (1) 26.9 29.4
Royalty, interest and dividend income 37.5 29.7
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Total revenues $3,554.3 $3,053.7
Net income
Total segment net income (2) $ 408.2 $ 324.9
Unallocated items:
Non-segment income (1) 10.0 5.3
Interest expense (0.4) (0.4)
Income tax (3.4) (1.6)
Equity in earnings of associated companies (1) 8.2 8.8
Dividends on convertible preferred securities
of subsidiary (13.7) (13.7)
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Net income from continuing operations $ 408.9 $ 323.3
Assets
Total segment assets $3,203.2 $2,648.8
Non-segment assets:
Net assets of discontinued operations 357.6 364.0
Property, plant and equipment (3) 523.2 442.4
Investments (4) 69.7 93.1
Other current assets (5) 262.6 380.6
Other assets (6) 275.6 254.5
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Total consolidated assets $4,691.9 $4,183.4
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</TABLE>
(1) Includes amounts derived from corporate investments.
(2) Includes royalty, interest and dividend income.
(3) Represents corporate property, plant and equipment not specifically
identifiable to a segment.
(4) Represents corporate investments in associated companies at equity.
(5) Includes current corporate assets, primarily cash, short-term investments
and deferred taxes.
(6) 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
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<S> <C> <C> <C>
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
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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 $82.4 and $19.0
in 1997 and 1996, respectively.
Information concerning principal geographic areas is as follows (in millions):
<TABLE>
<CAPTION>
1997 1996
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Net Non-current Net Non-current
Sales Assets (2) Sales Assets (2)
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<S> <C> <C> <C> <C>
North America
United States $2,206.8 $2,453.8 $2,020.8 $1,950.2
Canada 246.8 90.8 120.7 96.6
Other 37.9 25.9 46.1 15.9
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Total North America 2,491.5 2,570.5 2,187.6 2,062.7
Asia Pacific
Japan 360.4 103.4 271.6 118.7
China 119.6 1.0 53.4 0.5
Korea 29.5 135.9 31.7 159.3
Other 42.0 16.0 39.0 14.8
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Total Asia Pacific 551.5 256.3 395.7 293.3
Europe
Germany 101.8 45.9 88.7 53.4
France 85.0 58.8 76.5 50.4
United Kingdom 66.0 60.0 72.9 55.4
Other 100.3 26.8 106.0 22.2
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Total Europe 353.1 191.5 344.1 181.4
Latin America
Brazil 74.1 11.7 41.3 12.1
Other 18.4 0.4 11.7 0.4
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Total Latin America 92.5 12.1 53.0 12.5
All Other 28.2 8.5 43.6 8.5
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Total $3,516.8 $3,038.9 $3,024.0 $2,558.4
====================================================================
</TABLE>
(2) Excludes net assets of discontinued operations of $357.6 million and $364.0
million and deferred taxes of $96.3 million and $83.6 million in 1997 and
1996, respectively.
