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) April 24, 2000
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 April 24, 2000.
<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: April 24, 2000 By /s/ KATHERINE A. ASBECK
Katherine A. Asbeck
Vice President and Controller
<PAGE>
FOR RELEASE - April 24, 2000
Media Contact:
Robert W. DeMallie
(607) 974-8778
[email protected]
Corning Earnings Up More Than 75% in First Quarter
Before Special Items
Company beats Wall Street consensus and revises
full-year guidance to reflect bright outlook
CORNING, N.Y. Corning Incorporated (NYSE:GLW) reported today that its
first-quarter earnings before special items increased more than 75%,
exceeding Wall Street's revised consensus by 9 cents. While virtually
all of its high-technology businesses performed well above
expectations, demand was especially strong for the company's optical
fiber and optical-networking products used to support the growth of
Internet and e-commerce traffic.
The company reported first-quarter earnings of $0.64 per share before
special items, an increase of 78%, compared with $0.36 per share in
1999. Income for the first quarter of 2000 totaled $178.1 million
before special items, an increase of 93%, as compared with $92.5
million in 1999.
Commenting on the quarter, Corning Chairman and Chief Executive
Officer, Roger G. Ackerman, said, "The quarter was a home run for
Corning. We are reaping the benefits of our efforts to concentrate
every aspect of the company on the development of new products for
optical communications and other high-growth markets."
First-quarter sales were $1.35 billion, an increase of 36% as compared
with 1999 first-quarter sales of $997 million. Excluding the impact
of acquisitions, sales increased 28%. Sales of optical fiber remained
strong, with overall demand increasing more than 50%, and demand for
Corning -Registered Trademark- LEAF -Registered Trademark- optical
fiber tripling in the quarter. Sales in the Photonic Technologies
Division increased 90%, led by demand for the company's optical
amplifiers. Sales of flat-panel display glass used in computer
monitors grew at a rate of 45%.
(more)
<PAGE>
Corning Reports Q1 Earnings
Page 2
Equity earnings were up nearly 60% in the quarter, due primarily to
excellent performance at Samsung Corning Precision Glass Company,
Ltd., a Korean manufacturer of flat-panel display glass.
The company reported first-quarter 2000 pro forma net income per share
of $0.68, an increase of 79%, compared with $0.38 per share in first
quarter of 1999. Pro forma net income was $188.3 million in first
quarter 2000, an increase of 92% as compared with $97.9 million in the
same period of 1999. Pro forma earnings exclude amortization of
purchased intangibles and goodwill, purchased in-process R&D, one-time
acquisition costs, discontinued operations and other non-recurring
items. Going forward, Corning will report pro forma earnings as its
primary performance measure.
Commenting on the company's outlook for 2000, Ackerman said, "Given
the strength of the first-quarter results and the market's phenomenal
response to products that deliver on the demand for ever-increasing
bandwidth, we anticipate pro forma earnings growth this year of about
35%, including announced acquisitions. We are raising our full-year
pro forma earnings guidance to $2.70 to $2.75 per share to reflect
this strong outlook.
"The quarter fuels our long-held belief that the penetration of
optical technology in the world's communication network has only just
begun. Corning will capitalize on the expansion of the optical layer
by adding capacity around the world, successfully integrating our
recent acquisitions, and continuing to execute our growth strategy at
a rapid pace. I am confident we will accomplish all three."
Corning also recorded a first-quarter, pre-tax charge of $89.0 million
($69.1 million after-tax, or $0.25 per share) related to acquisitions.
In addition, Corning recorded a pre-tax gain of $6.8 million ($4.2
million after tax), or $0.02 per share, for a non-operating gain
related to the sale of Quanterra Incorporated. Finally, Corning
incurred an after-tax charge of $36.3 million, or $0.13 per share, to
impair its entire investment in Pittsburgh Corning Corporation.
Including these non-recurring items, Corning's net income for the
first quarter of 2000 totaled $76.9 million, or $0.28 per share. This
compares with first quarter 1999 net income of $92.5 million, or $0.36
per share.
During the first quarter, Corning announced a definitive agreement for
a stock-for-stock merger with NetOptix Corporation. The transaction
has secured regulatory approval and is on track to close in mid-May.
(more)
<PAGE>
Corning Reports Q1 Earnings
Page 3
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 1999 were $4.7 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 filings with the
Securities and Exchange Commission.
Corning and NetOptix have filed a proxy statement/prospectus
describing the merger with the United States Securities and Exchange
Commission (SEC). In addition, Corning and NetOptix have each filed
other information and documents concerning the merger and their
business with the SEC. WE URGE INVESTORS IN THE COMMON STOCK OF
NETOPTIX AND CORNING TO REVIEW THE PROXY STATEMENT/PROSPECTUS AND
OTHER INFORMATION TO BE FILED WITH THE SEC BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION. These documents are available without charge
on the SEC's web site at www.sec.gov and may be obtained without
charge form the Corporate Secretary, Corning Incorporated, One
Riverfront Plaza, Corning, NY 14831 (tele: 607-974-9000) or the Chief
Financial Officer, NetOptix Corporation, c/o Leisegang Medical, Inc.,
6401 Congress Ave., Suite 160, Boca Raton, FL 33487 (tele: 561-994-
0202, ext. 227). INVESTORS SHOULD READ THE PROXY STATEMENT/PROSPECTUS
CAREFULLY BEFORE MAKING ANY VOTING OR INVESTMENT DECISIONS.
<PAGE>
Corning Incorporated and Subsidiary Companies
Consolidated Statements of Income
(Unaudited; in millions, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
2000 1999
--------- -------
<S> <C> <C>
Revenues
Net sales $1,351.4 $ 997.0
Royalty, interest, and dividend income 23.5 10.0
Non-operating gains 6.8
-------- -------
1,381.7 1,007.0
Deductions
Cost of sales 787.8 613.9
Selling, general and
administrative expenses 199.8 152.2
Research, development and
engineering expenses 110.1 83.4
Amortization of purchased intangibles
including goodwill 13.1 6.9
Interest expense 24.2 19.7
Non-recurring charges 89.0
Other, net 20.9 9.9
-------- -------
Income before taxes 136.8 121.0
Taxes on income 54.9 37.3
-------- -------
Income before minority interest and
equity earnings 81.9 83.7
Minority interest in earnings of
subsidiaries (2.6) (10.1)
Dividends on convertible preferred
securities of subsidiary (2.3)
Equity in earnings of associated companies 33.9 21.2
Impairment of equity investment (36.3)
-------- -------
Net Income $ 76.9 $ 92.5
======== =======
Basic Earnings Per Share $ 0.28 $ 0.37
======== =======
Diluted Earnings Per Share $ 0.28 $ 0.36
======== =======
Dividends Declared $ 0.18 $ 0.18
======== =======
Shares used in computing earnings per share
Basic earnings per share 270.4 248.4
======== =======
Diluted earnings per share 277.3 260.4
======== =======
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
Corning Incorporated and Subsidiary Companies
Pro Forma Consolidated Statements of Income
Excluding Amortization of Purchased Intangibles and Goodwill, Purchased In-
Process Research and Development, Acquisition-Related Costs and Non-Recurring
Items
(In millions, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
2000 1999
-------- -------
<S> <C> <C>
Revenues
Net sales $1,351.4 $ 997.0
Royalty, interest, and dividend income 23.5 10.0
-------- -------
1,374.9 1,007.0
Deductions
Cost of sales 787.8 613.9
Selling, general and administrative
expenses 199.8 152.2
Research, development and engineering
expenses 110.1 83.4
Interest expense 24.2 19.7
Other, net 20.9 9.9
-------- -------
Income before taxes 232.1 127.9
Taxes on income 75.1 38.8
-------- -------
Income before minority interest and
equity earnings 157.0 89.1
Minority interest in earnings of
subsidiaries (2.6) (10.1)
Dividends on convertible preferred
securities of subsidiary (2.3)
Equity in earnings of associated
companies 33.9 21.2
-------- -------
Pro Forma Net Income $ 188.3 $ 97.9
======== =======
Pro Forma Basic Earnings Per Share $ 0.70 $ 0.39
======== =======
Pro Forma Diluted Earnings Per Share $ 0.68 $ 0.38
======== =======
Dividends Declared $ 0.18 $ 0.18
======== =======
Shares used in computing pro forma
earnings per share
Basic earnings per share 270.4 248.4
======== =======
Diluted earnings per share 277.3 260.4
======== =======
</TABLE>
The above pro forma amounts for the quarter ended March 31, 2000 have been
adjusted to eliminate $13.1 million ($10.2 million after tax) or $0.04 per
share of amortization of purchased intangibles and goodwill, $42 million ($25.7
million after tax) or $0.09 per share of in-process research and development
charges, $47 million ($43.4 million after tax) or $0.16 per share of
transaction costs from the Oak acquisition, $36.3 million after tax or $0.13
per share for the impairment of the entire equity investment in Pittsburgh
Corning Corporation, and $6.8 million ($4.2 million after tax) or $0.02 per
share for a non-operating gain related to the sale of Quanterra Incorporated.
The above pro forma amounts for the quarter ended March 31, 1999 have been
adjusted to eliminate $6.9 million ($5.4 million after tax) or $0.02 per share
of amortization of purchased intangibles and goodwill.
Pro Forma
<PAGE>
Corning Incorporated and Subsidiary Companies
Condensed Consolidated Balance Sheets
(Unaudited; in millions)
<TABLE>
<CAPTION>
March 31, 2000 Dec. 31, 1999
-------------- -------------
<S> <C> <C>
Assets
Current Assets
Cash and short-term investments $1,313.1 $ 280.4
Accounts receivable, net 1,146.6 872.4
Inventories 787.0 602.2
Deferred taxes on income and
other current assets 253.9 229.2
-------- --------
Total current assets 3,500.6 1,984.2
Investments 522.0 504.4
Plant and equipment, net 3,629.1 3,201.7
Goodwill and other intangible
assets, net 1,150.3 506.7
Other assets 212.3 329.0
-------- --------
Total Assets $9,014.3 $6,526.0
======== ========
Liabilities and Shareholders' Equity
Current Liabilities
Loans payable $ 150.1 $ 420.7
Accounts payable 416.7 418.0
Other accrued liabilities 698.2 715.3
-------- --------
Total current liabilities 1,265.0 1,554.0
Other liabilities 745.8 720.6
Loans payable beyond one year 1,987.8 1,490.4
Minority interest in subsidiary
companies 126.5 284.8
Convertible preferred stock 10.4 13.5
Common shareholders' equity 4,878.8 2,462.7
-------- --------
Total Liabilities and
Shareholders' Equity $9,014.3 $6,526.0
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
Corning Incorporated and Subsidiary Companies
Notes to Consolidated Financial Statements
Quarter 1, 2000
(1) Information about the performance of Corning's three operating segments for
the first quarter of 2000 and 1999 are below. These amounts do not include
revenues, expenses and equity earnings not specifically identifiable to
segments. Corning has changed the performance measurement of its operating
segments to a new metric - net income excluding amortization of purchased
intangibles and goodwill, purchased in-process research and development,
one-time acquisition costs, discontinued operations and other non-recurring
items. The segment results for 1999 have been restated to conform to the
new measure.
<TABLE>
<CAPTION>
Three months ended
March 31,
------------------
2000 1999
--------- -------
<S> <C> <C>
Telecommunications
Net sales $ 893.4 $ 593.3
Research, development and engineering
expenses $ 77.1 $ 56.1
Interest expense $ 15.2 $ 12.4
Segment earnings before minority interest
and equity earnings $ 107.8 $ 60.4
Minority interest in earnings of
subsidiaries 3.0 (4.3)
Equity in earnings of associated
companies (0.4) 4.0
--------- -------
Segment net income $ 110.4 $ 60.1
========= =======
Advanced Materials
Net sales $ 264.2 $ 252.1
Research, development and engineering
expenses $ 27.2 $ 21.9
Interest expense $ 5.5 $ 4.3
Segment earnings before minority interest
and equity earnings $ 21.9 $ 20.0
Minority interest in earnings of
subsidiaries 0.1
Equity in earnings of associated
companies 6.5 4.1
--------- -------
Segment net income $ 28.4 $ 24.2
========= =======
Information Display
Net sales $ 187.9 $ 145.7
Research, development and engineering
expenses $ 5.8 $ 5.4
Interest expense $ 3.4 $ 2.6
Segment earnings before minority interest
and equity earnings $ 19.3 $ 9.4
Minority interest in earnings of
subsidiaries (5.6) (5.9)
Equity in earnings of associated
companies 26.8 12.4
--------- -------
Segment net income $ 40.5 $ 15.9
========= =======
Total segments
Net sales $ 1,345.5 $ 991.1
Research, development and engineering
expenses $ 110.1 $ 83.4
Interest expense $ 24.1 $ 19.3
Segment earnings before minority interest
and equity earnings $ 149.0 $ 89.8
Minority interest in earnings of
subsidiaries (2.6) (10.1)
Equity in earnings of associated
companies 32.9 20.5
--------- -------
Segment net income $ 179.3 $ 100.2
========= =======
</TABLE>
<PAGE>
A reconciliation of the totals reported for the operating segments to the
applicable line items in the consolidated financial statements is as follows:
<TABLE>
<CAPTION>
Three months ended
March 31,
-------------------
2000 1999
-------- --------
<S> <C> <C>
Revenues
Total segment net sales $1,345.5 $ 991.1
Non-segment net sales (a) 5.9 5.9
Royalty, interest and dividend income 23.5 10.0
Non-operating gain 6.8
-------- --------
Total revenues $1,381.7 $1,007.0
======== ========
Net income
Total segment income (b) $ 179.3 $ 100.2
Unallocated items:
Non-segment loss and other (a) (2.2) (0.6)
Non-operating gain 6.8
Amortization of purchased
intangibles and goodwill (c) (13.1) (6.9)
Non-recurring charges (89.0)
Interest income 15.2
Interest expense (0.1) (0.4)
Income tax (d) 15.3 1.8
Equity in earnings of associated
companies (a) 1.0 0.7
Impairment of equity investment
after tax (36.3)
Dividends on convertible preferred
securities of subsidiary (2.3)
-------- --------
Net income $ 76.9 $ 92.5
======== ========
</TABLE>
(a) Includes amounts derived from corporate investments.
(b) Includes royalty, interest and dividend income.
(c) Amortization of goodwill and intangibles relates primarily to the
Telecommunications segment.
(d) Includes tax associated with special charges (unless otherwise noted),
interest income, amortization of purchased intangibles and goodwill
and non-operating gains.
(2) On January 28, 2000, Corning merged with Oak Industries, Inc. (Oak
Industries) in a pooling of interests transaction. Oak Industries
shareholders received 0.83 of a share of Corning common stock for each
share of Oak Industries stock owned. Corning issued 14.8 million shares of
Corning common stock and 2.7 million options to purchase Corning common
shares to complete the transaction. The consolidated financial statements
for the prior period of 1999 have been restated to include the financial
position and results of operations of Oak Industries. During the first
quarter of 2000, Corning recognized a charge of $47 million ($43.4 million
after tax), or $0.16 per share, for one-time acquisition costs related to
Oak Industries.
<PAGE>
(3) In February of 2000, Corning acquired the worldwide optical cable and
hardware business of Siemens AG and the remaining 50% of its investment in
Siecor Corporation and Siecor GmbH (the Siemens transaction). The purchase
price of $1.4 billion (subject to customary purchase price adjustments)
includes approximately $120 million in assumed debt and $145 million in
contingent performance payments to be paid, if earned, over a four-year
period. Portions of the transaction will close at dates into 2001. At
March 31, 2000, total cash paid to Siemens approximated $1.1 billion. This
acquisition has been accounted for under the purchase method of accounting.
The purchase price has been allocated based on estimated fair values at
date of acquisition, pending final determination of certain acquired
balances. This preliminary allocation has resulted in acquired intangibles
and goodwill of approximately $650 million, which is being amortized over
lives of 5 to 20 years.
(4) On February 14, 2000, Corning acquired British Telecommunication's
Photonics Research Center for approximately $66 million in cash. Corning
recorded a charge of $42 million ($25.7 million after tax), or $0.09 per
share, for in-process research and development costs. Remaining purchase
price has been recorded as property, plant and equipment and purchased
intangibles and goodwill being amortized over lives up to 9 years.
(5) Pittsburgh Corning (PCC) is a 50% owned equity investment of Corning
Incorporated and PPG Industries, Inc. On April 16, 2000, PCC filed for
Chapter 11 reorganization in the United States Bankruptcy Court for the
Western District of Pennsylvania. It indicated that the high costs of
defending or settling asbestos claims, coupled with sharply increasing
settlement demands, had threatened its financial health and left it with no
alternative means of resolving the asbestos claims brought against it. As
a result of this event, Corning recorded an after tax charge of $36.3
million, or $0.13 per share to impair its entire investment in PCC.
(6) In January 2000, Corning sold Quanterra Incorporated to Severn Trent
Laboratories for $35 million. In the first quarter of 2000, Corning
recorded a non-operating gain of $6.8 million ($4.2 million after tax), or
$0.02 per share, as a result of this transaction.
(7) Depreciation and amortization charged to operations during the first
quarters of 2000 and 1999 totaled $125.6 million and $101.6 million,
respectively.
(8) Excluding the impact of special items, Corning's effective tax rate was 33%
for the first quarter of 2000, and 30.8% for the first quarter of 1999.
(9) On January 31, 2000, Corning completed an equity offering of 14.95 million
shares of common stock generating net proceeds of $2.2 billion. The
proceeds were used to repay $98 million of bank debt assumed in the Oak
Industries merger and $372 million of commercial paper and to fund a
portion of the Siemens transaction. The remaining proceeds of
approximately $1.1 billion will be used for general corporate purposes,
including funding Corning's capital spending program.
(10) In February 2000, Corning completed an offering of Euro-denominated debt
securities, which generated net proceeds of $485 million. The proceeds
were used to finance a portion of the Siemens transaction.
<PAGE>
(11) On February 14, 2000, Corning announced that it had signed a definitive
agreement to acquire NetOptix Corporation for approximately 12 million
shares of Corning common stock. NetOptix manufactures thin film filters
for use in dense wavelength division multiplexing components. Under the
terms of the agreement, Corning will exchange 0.90 shares of Corning common
stock for each share of NetOptix common stock. Corning will account for
the transaction under the purchase method of accounting. Based on the
average closing price for Corning for a range of days surrounding the
announcement, the transaction is valued at approximately $2.1 billion, most
of which will be allocated to goodwill and intangibles. Corning currently
expects goodwill and intangibles to be amortized over 10 years and to be
non-tax deductible. Corning expects the transaction to close in mid-May.
(12) In the fourth quarter of 1999, the United States Bankruptcy Court for the
Northern District of Michigan entered an order confirming the plan of
reorganization filed jointly by Dow Corning Corporation and the Committee
of Tort Claimants ("Joint Plan"). Corning and The Dow Chemical Company
each own 50% of the shares of Dow Corning. On December 21, 1999, however,
the Court limited shareholder releases provided in the Joint Plan to apply
to all claimants who voted in favor of the Joint Plan and not to those who
voted against the Plan or abstained. Appeals from these December 21, 1999
rulings were taken on a variety of grounds to the United States District
Court for the Eastern District of Michigan by the proponents, the two
shareholders, and parties objecting to elements of the Joint Plan. Certain
parties moved to dismiss the appeals by the proponents and shareholders as
untimely. The proponents and shareholders also filed motions to vacate
parts of the December 21, 1999 ruling. These motions and appeals were
joined by the Court for coordinated briefing and argument. On April 12 and
13, 2000, the District Court held a hearing and permitted extensive oral
argument. The Court indicated that it would rule on the appeals and
motions within 30 days. It is probable that the District Court's ruling
will be subject to further appellate review. The timing and eventual
outcome of these proceedings, including any subsequent appeals, remain
uncertain. Further details concerning these proceedings appear in
Corning's Form 10-K/A for 1999.
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