<PAGE>
Filed Pursuant to Rule 424(b)(5)
Registration No. 333-44328
Prospectus Supplement to Prospectus dated September 1, 2000.
$2,712,546,000
[LOGO]
CORNING INCORPORATED
Zero Coupon Convertible Debentures due November 8, 2015
-------------
The debentures are senior unsecured obligations of Corning. We will not pay
interest on the debentures prior to maturity. We are issuing the debentures at
an initial public offering price of $741.923 per $1,000 principal amount at
maturity. We refer to each $1,000 principal amount of debentures at maturity as
a debenture. The initial public offering price represents a yield to maturity of
2.00% per annum, compounded semi-annually. If you convert the debentures, we
will not make any cash payment for any accrued original issue discount.
You may convert the debentures into common stock of Corning Incorporated at
any time prior to their maturity or redemption by us. The conversion rate is
8.3304 shares for each $1,000 principal amount of debenture, subject to
adjustment in certain circumstances. This is equivalent to an initial conversion
price of approximately $89.0625 per share.
Our common stock is listed on the New York Stock Exchange under the symbol
"GLW". The last reported sale price for our common stock on November 2, 2000 was
$71.25 per share.
We may redeem the debentures in whole or in part at our option on or after
November 8, 2005. You have the right to require us to repurchase a debenture at
a price per debenture on November 8, 2005 of $819.544 and on November 8, 2010 of
$905.287. You may also require us to purchase any debentures held by you if
certain change in control events occur. We may choose to pay the repurchase
price in cash or, if we satisfy specified conditions, shares of our common stock
or a combination of cash and common stock.
Concurrently with this offering, we are also conducting a separate public
offering of 30,000,000 shares of our common stock. Neither the completion of the
common stock offering nor the completion of this debentures offering is
contingent upon the other.
SEE "RISK FACTORS" BEGINNING ON PAGE S-11 TO READ ABOUT CERTAIN FACTORS YOU
SHOULD CONSIDER BEFORE BUYING THE DEBENTURES.
------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY BODY
HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
------------------
<TABLE>
<CAPTION>
Per Debenture Total
-------------- -----
<S> <C> <C>
Initial Public Offering Price.............................. $741.923 $2,012,500,266
Underwriting discount...................................... $ 14.838 $ 40,250,005
Proceeds, before expenses, to Corning...................... $727.085 $1,972,250,261
</TABLE>
------------------
The underwriters expect to deliver the debentures in book-entry form only
through the facilities of The Depository Trust Company against payment in New
York, New York on November 8, 2000.
GOLDMAN, SACHS & CO.
CREDIT SUISSE FIRST BOSTON
SALOMON SMITH BARNEY
BANC OF AMERICA SECURITIES LLC
CHASE H&Q
<PAGE>
------------------
Prospectus Supplement dated November 2, 2000.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PROSPECTUS SUPPLEMENT
PAGE
--------
Forward-Looking Statements. S-2
Prospectus Supplement Summary. S-3
Risk Factors. S-11
Use of Proceeds. S-15
Price Range of Common Stock. S-16
Dividend Policy. S-16
Capitalization. S-17
Selected Consolidated Financial Data. S-18
Description of the Debentures. S-22
United States Federal Income Tax
Consequences. S-32
Underwriting. S-39
Validity of Securities. S-40
Experts. S-41
Where You Can Find More Information. S-42
PROSPECTUS
<S> <C>
PAGE
----
Corning Incorporated.................. 2
Corning Finance B.V. ................. 2
Use of Proceeds....................... 3
Securities We May Issue............... 3
Ratios of Earnings to Fixed Charges
and Ratios of Earnings to Combined
Fixed Charges Including Preferred
Stock Dividends..................... 4
Selected Consolidated Financial
Data................................ 5
Description of Debt Securities and
Guarantees.......................... 9
Description of Warrants............... 26
Description of Preferred Stock........ 31
Description of Depositary Shares...... 34
Description of Common Stock........... 37
Plan of Distribution.................. 40
Validity of Securities................ 40
Experts............................... 40
Where You Can Find More Information... 41
</TABLE>
FORWARD-LOOKING STATEMENTS
The statements in this prospectus supplement and the accompanying prospectus
that are not historical facts are forward-looking statements. The words
"believe," "may," "will," "estimate," "continue," "anticipate," "intend,"
"expect" and similar words are intended to identify forward-looking statements,
which include, but are not limited to, our projected earnings set forth in
"Prospectus Supplement Summary--Recent Developments." These forward-looking
statements involve risks and uncertainties that may cause the outcome to be
materially different. There are risks and uncertainties in addition to those
detailed in this prospectus supplement, the accompanying prospectus and the
documents that we incorporate by reference. These risks and uncertainties
include the following:
- global economic conditions;
- currency fluctuations;
- product demand and industry capacity,
- competitive products and pricing;
- manufacturing efficiencies;
- cost reductions;
- availability and costs of critical materials;
- new product development and commercialization;
- manufacturing capacity;
- facility expansions and new plant start-up costs;
- the effect of regulatory and legal developments;
- capital resource and cash flow activities;
- capital spending;
- equity company activities;
- interest costs;
- acquisition and divestiture activities;
- the rate of technology change; and
- the ability to enforce patents.
S-2
<PAGE>
PROSPECTUS SUPPLEMENT SUMMARY
THIS SUMMARY CONTAINS A GENERAL SUMMARY OF THE INFORMATION CONTAINED IN THIS
PROSPECTUS SUPPLEMENT. INVESTORS SHOULD CAREFULLY CONSIDER THE INFORMATION SET
FORTH UNDER "RISK FACTORS" IN THIS PROSPECTUS SUPPLEMENT.
CORNING INCORPORATED
OUR COMPANY
We trace our origins to a glass business established in 1851. Our present
corporation was incorporated in the State of New York in December 1936, and our
name was changed from Corning Glass Works to Corning Incorporated on April 28,
1989. Today, we are an international corporation competing in three broadly
defined operating segments: Telecommunications, Advanced Materials and
Information Display. Our business strategy is to focus on attractive global
markets in which our leadership in materials and process technology will allow
us to achieve and sustain competitive advantage and superior growth over time.
TELECOMMUNICATIONS. Our Telecommunications segment produces optical fiber
and cable, optical hardware and equipment and photonics components used in the
worldwide telecommunications industry. We offer a wide selection of fibers for
use in long-haul, utility, submarine, local exchange, cable TV and premises
applications. We provide a substantial portion of the world's optical fiber,
including LEAF-Registered Trademark- optical fiber, a technologically advanced
high-speed, high-data-rate fiber.
Corning Cable Systems manufactures fiber-optic cable and network hardware
that is deployed throughout the world.
Our Photonics Technologies business provides products that maximize the
capacity, flexibility, performance and reliability of communications networks
worldwide. Our photonics products boost, combine, separate and connect optical
signals transmitted over fiber-optic telecommunications networks. We are a
leading supplier of optical amplifiers and were among the first to offer an
innovative multiplexer module that allows optical signals to be added or dropped
as they travel through a communications network.
Our photonics products, primarily intended to enable the use of dense
wavelength division multiplexing technology, include cutting-edge PureGain-TM-
EDFA modules, PureGain-TM- DCM-Registered Trademark- modules and PurePass-TM-
optical routing modules.
We also offer MultiClad-Registered Trademark- couplers, variable optical
attenuators, micro-optic filters and PureMode-TM- engineered fibers. Our optical
networking products operate in terrestrial and submarine networks worldwide, and
are designed to withstand a wide array of mechanical and environmental
conditions. We are recognized as an industry leader, providing low-cost,
innovative fiber and photonic network solutions. Our test facilities assure the
performance and reliability of our photonics products at both the component and
system levels.
ADVANCED MATERIALS. Our Advanced Materials segment, which manufactures
environmental products, science products, semiconductor materials, optical and
lighting products and glass ceramic cooktops, has been a mainstay of our growth
for decades.
Our cellular ceramic products are component parts of catalytic converters on
cars, trucks and buses worldwide. Virtually every vehicle manufacturer around
the world demands new products that reduce emissions, as mandated by global
clean-air legislation. Recently introduced advanced cellular ceramic products
are expected to enable vehicle manufacturers to achieve substantially reduced
emissions over the next decade. Similar technologies are used to reduce
emissions from stationary power plants.
S-3
<PAGE>
New products from our Life Sciences business, which include polymer
microplates, and which stem from our expertise in complex polymers, surface
chemistry and molecular biology, are useful in pharmaceutical and genomic
research. Our advanced microplates allow for more efficient drug testing.
Our fused silica products enable semiconductor manufacturers to use
microlithography techniques to achieve the miniaturization that is required for
the manufacture and processing of chips for computer applications.
INFORMATION DISPLAY. Our Information Display segment manufactures glass
panels and funnels for televisions and cathode-ray tubes; projection video lens
assemblies; and liquid crystal display glass for flat panel displays. We are a
leading supplier of flat glass used in active matrix liquid crystal displays for
notebook computer screens, desktop monitors, digital cameras, personal digital
assistants and automotive displays. Ultra-thin, precision-surface glass enables
customers to create faster, larger and less expensive liquid crystal displays
with higher resolution.
Our lens assemblies, which are used widely in projection television systems,
are being adapted to meet emerging requirements in digital and high-definition
systems for entertainment, as well as commercial applications. Our traditional,
more mature television glass business concentrates on glass face plates, panels,
and funnels used to make color picture tubes.
SEGMENT FINANCIAL DATA
In the first quarter of 2000, we changed the performance measurement of our
operating segments to a new metric, pro forma earnings, which we define as net
income excluding amortization of purchased intangibles and goodwill, purchased
in-process research and developments costs, one-time acquisition costs,
discontinued operations and other non-recurring items. This measure is not in
accordance with United States generally accepted accounting principles and may
not be consistent with measures used by other companies. The segments' results
presented below have been restated to conform to the new measure.
We prepared the financial results for our three operating segments on a
basis that is consistent with the manner in which our management internally
disaggregates financial information to assist in making internal operating
decisions. We have allocated some common expenses among segments differently
from the way we would for stand-alone financial information prepared in
accordance with United States generally accepted accounting principles.
Note 1 to the consolidated financial statements contained in our quarterly
report on Form 10-Q for the period ended September 30, 2000, incorporated by
reference in this prospectus supplement, includes a reconciliation of segment
results to our net income.
S-4
<PAGE>
The following tables set forth financial data for our three operating
segments for the years ended December 31, 1999, 1998 and 1997 and the nine
months ended September 30, 2000 and 1999. These amounts do not include revenues,
expenses and equity earnings not specifically identifiable to the segments.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
NET SALES SEGMENT NET INCOME
------------------------------ ------------------------------
OPERATING SEGMENT FINANCIAL DATA 1999 1998 1997 1999 1998 1997
-------------------------------- -------- -------- -------- -------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Telecommunications.................. $2,958.2 $2,139.6 $2,109.7 $310.7 $250.0 $336.3
Advanced Materials.................. 1,053.9 1,020.1 1,030.4 112.6 93.8 103.6
Information Display................. 701.2 644.7 664.2 102.7 56.5 7.1
-------- -------- -------- ------ ------ ------
Total Segments.................... $4,713.3 $3,804.4 $3,804.3 $526.0 $400.3 $447.0
======== ======== ======== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
-----------------------------------------------------------
NET SALES SEGMENT NET INCOME
------------------------- -------------------------
OPERATING SEGMENT FINANCIAL DATA 2000 1999 2000 1999
-------------------------------- -------- -------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Telecommunications.......................... $3,577.7 $2,089.2 $476.4 $222.6
Advanced Materials.......................... 808.0 774.5 91.7 85.3
Information Display......................... 640.3 490.4 174.7 76.8
-------- -------- ------ ------
Total Segments............................ $5,026.0 $3,354.1 $742.8 $384.7
======== ======== ====== ======
</TABLE>
S-5
<PAGE>
RECENT DEVELOPMENTS
THIRD QUARTER 2000 EARNINGS RELEASE
Our third-quarter pro forma diluted earnings per share were $0.35, an
increase of 84% compared to $0.19 per share in the third quarter of 1999. Our
pro forma net income in the third quarter of 2000 totaled $317 million, compared
to $148 million in the third quarter of 1999. This increase was driven by strong
demand for our high-data-rate optical fiber and cable, optical amplifiers and
LCD flat-panel display glass.
Third-quarter sales were $1.9 billion, an increase of 54% over 1999
third-quarter sales of $1.25 billion. Excluding the impact of acquisitions,
sales increased by 37%. Sales in the optical fiber and cable business increased
by 67% compared to the third quarter of 1999, and by 45% if we exclude the
impact of acquisitions. Sales of photonic technologies grew 113%, led by demand
for our optical amplifiers.
Equity earnings increased by 63% in the third quarter of 2000 due primarily
to strong results by Samsung Corning Precision Glass Company, Ltd., our
subsidiary in Korea that manufactures flat-panel LCD display glass, and
Samsung-Corning Company Ltd., our subsidiary in Korea that manufactures glass
for conventional TV and computer monitors.
If we include amortization of purchased intangibles and goodwill, purchased
in-process research and development, one-time acquisition costs, discontinued
operations and other non-recurring items, our net income for the third quarter
of 2000 totaled $254 million, or $0.28 per share, compared to net income of
$142 million, or $0.18 per share in the third quarter of 1999.
We expect full-year 2000 pro forma diluted earnings per share in the range
of $1.15 to $1.17, an increase of approximately 70% compared to 1999. We expect
earnings to grow at a rate of approximately 25% in 2001. The Pirelli
acquisition, as described below, is expected to be less than 5% dilutive to our
2001 pro forma diluted earnings per share and accretive thereafter, resulting in
expected 2001 pro forma earnings per share in the range of $1.40 to $1.43.
You should read our current report on Form 8-K dated October 23, 2000 and
our quarterly report on Form 10-Q for the period ended September 30, 2000, for
more detailed information regarding our third quarter financial data. These
reports are incorporated by reference in this prospectus supplement.
THE PIRELLI ACQUISITION
On September 27, 2000, we announced the agreement to acquire Pirelli S.p.A's
90% interest in Optical Technologies USA, its optical components and devices
business, for a total consideration of approximately $3.6 billion in cash. We
will make an initial payment to Pirelli of approximately $3.4 billion, and may
make a contingent payment of $180 million upon the achievement of certain
business milestones. The Pirelli acquisition will be accounted for as a
purchase. We will likely record a charge for acquired in-process research and
development when the transaction is completed. The goodwill associated with this
transaction is expected to be amortized over a five to ten year period.
Cisco Systems, Inc. owns the remaining 10% interest in Optical Technologies
USA. Cisco has expressed its intent to exercise its tag-along rights to sell
its' 10% interest in Optical Technologies USA to us for a purchase price of
$370 million payable at the closing of the Pirelli acquisition and a contingent
payment of $20 million payable upon the achievement of certain business
milestones. In addition, we have entered into a non-binding letter of intent
with Cisco under which Cisco has agreed to receive shares of our common stock as
consideration for its 10% interest in Optical Technologies USA.
Pirelli's optical components and devices business, based in Milan, Italy, is
a leading manufacturer of lithium niobate modulators, pump lasers, certain
specialty fibers and fiber gratings used in optical networks. Lithium niobate
modulators are ideally suited for use in high-speed, long-haul optical
communications
S-6
<PAGE>
networks. The technology has been chosen by a majority of long-haul equipment
suppliers because it has the best combination of optical and electronic
performance and reliability. The addition of lithium niobate technology will
broaden our portfolio as we continue to position ourselves as a leading supplier
to telecommunications companies.
On October 23, 2000, the U.S. Federal Trade Commission granted early
termination of the normal 30-day antitrust waiting period with respect to the
Pirelli acquisition. The Pirelli acquisition is expected to close during the
fourth quarter of 2000. If the Pirelli acquisition is consummated, pro forma
financial statements showing the effect of this acquisition on our historical
financial statements will be included in our current report on Form 8-K to be
filed with the Securities and Exchange Commission, or SEC, within 75 days of the
closing date of the Pirelli acquisition.
STOCK SPLIT
We effected a three-for-one stock split on October 3, 2000 for our
shareholders of record on September 5, 2000.
S-7
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Securities Offered........................... $2,712,546,000 aggregate principal amount at maturity
of our Zero Coupon Convertible Debentures due
November 8, 2015. The debentures are senior unsecured
obligations of Corning.
Offering Price............................... We are offering the debentures at an initial public
offering price of $ 741.923 per $1,000 principal
amount at maturity.
Interest..................................... We will not pay interest on the debentures prior to
maturity, unless we elect to do so following a tax
event, as more fully described in "Description of the
Debentures--Tax Events."
Maturity Date................................ November 8, 2015.
Conversion Right............................. You may convert the debentures into shares of our
common stock initially at a conversion rate of 8.3304
shares for each debenture at any time before the
close of business on November 8, 2015, unless we have
previously redeemed or repurchased the debentures.
The initial conversion rate is equivalent to an
initial conversion price of approximately $89.0625
per share, which is based on the initial public
offering price of the debentures. The conversion rate
may be adjusted in certain circumstances. You may
convert your debenture called for redemption up to
and including the business day immediately preceding
the day fixed for redemption. You will not receive
any cash payment for the accrued original issue
discount through the conversion date. See
"Description of the Debentures--Conversion Rights."
Original Issue Discount...................... For U.S. federal income tax purposes we are offering
each debenture at an original issue discount equal to
the principal amount at maturity of each debenture
less the initial public offering price. You should be
aware that, although we will not pay interest on the
debentures until maturity, U.S. investors must
include original issue discount as the discount
accrues in their gross income for U.S. federal income
tax purposes prior to the conversion, redemption,
sale or maturity of the debentures (even if such
debentures are ultimately not converted, redeemed,
sold or paid at maturity).
Use of Proceeds.............................. We plan to use a portion of the net proceeds from
this offering and our concurrent common stock
offering to fund the Pirelli acquisition. If the
Pirelli acquisition is not completed, or if we
receive proceeds from these offerings in excess of
what we require to fund the Pirelli acquisition, we
will use these proceeds for general corporate
purposes.
</TABLE>
S-8
<PAGE>
<TABLE>
<S> <C>
Optional Redemption by Corning............... We may redeem some or all of the debentures at our
option at any time on or after November 8, 2005 at a
redemption price equal to the initial public offering
price plus accrued original issue discount through
the redemption date, as more fully described in
"Description of the Debentures--Optional Redemption
by Corning Incorporated."
Repurchase at Option of Holders.............. You may require us to repurchase some or all of your
debentures on November 8, 2005 and November 8, 2010
at repurchase prices specified in this prospectus
supplement. We may, at our option, elect to pay the
repurchase price in cash or, if we satisfy specified
conditions, common stock or a combination of cash and
common stock. If we pay with our common stock, it
will be valued at 100% of the average closing sales
price for the five trading days ending on the third
trading day prior to the repurchase date. See
"Description of the Debentures--Repurchase at Option
of Holders."
Repurchase at Option of Holders upon a Change
in Control................................... If we are the subject of a change in control, you may
require us to repurchase some or all of your
debentures at a price equal to the initial public
offering price plus accrued original issue discount
through the repurchase date. We may, at our option,
elect to pay the repurchase price in cash or, if we
satisfy specified conditions, common stock or a
combination of cash and common stock. If we pay with
our common stock, it will be valued at 95% of the
average closing sales price for the five trading days
ending on the third trading day prior to the
repurchase date. See "Description of the Debentures--
Repurchase at Option of Holders upon a Change in
Control."
Optional Conversion to Semiannual Coupon
Notes upon Tax Event......................... From and after the occurrence of a tax event, at our
option, cash interest in lieu of future original
issue discount shall accrue on each debenture from
the option exercise date at 2.00% per year on the
restated principal amount and will be payable
semiannually on each interest payment date to holders
of record at the close of business on each regular
record date immediately preceding such interest
payment date. Interest will be computed on the basis
of a 360-day year comprised of twelve 30-day months
and will accrue from the most recent date for which
interest has been paid or, if no interest has been
paid, the option exercise date. In such event, the
redemption price, repurchase price and change in
control purchase price will be adjusted as described
in "Description of the Debentures." However, there
will be no changes in your conversion rights.
</TABLE>
S-9
<PAGE>
<TABLE>
<S> <C>
Listing...................................... The debentures will not be listed on any securities
exchange or quoted on the Nasdaq National Market.
Common Stock................................. Our common stock is listed on the New York Stock
Exchange under the symbol "GLW."
Book-Entry System............................ We will issue the debentures only in fully registered
form and in minimum denominations of $1,000 principal
amount at maturity. The debentures will initially be
represented by one or more global securities, which
will be deposited with a custodian for, and
registered in the name of a nominee of, The
Depository Trust Company, or DTC, in New York City.
Ownership of beneficial interests in a global
security will be shown on, and the transfer of that
ownership will be effected only through, records
maintained by DTC and its participants. See
"Description of the Debentures--Book-Entry System."
Governing Law................................ The indenture and the debentures will be governed by
the laws of the State of New York.
Trustee...................................... The trustee under the indenture for the debentures
will be The Chase Manhattan Bank.
</TABLE>
RATIOS OF EARNINGS TO FIXED CHARGES
The table below sets forth our historical ratios of earnings to fixed
charges. For purposes of computing the ratio of earnings to fixed charges,
earnings consist of:
- income from continuing operations before taxes on income, before equity in
earnings and minority interest;
- our share of pre-tax earnings of 50%-owned companies;
- dividends received from less than 50%-owned companies and our share of
losses of these companies, if any, if any debt of these companies is
guaranteed by us;
- previously capitalized interest amortized during the period; and
- fixed charges net of capitalized interest.
Fixed charges consist of:
- interest expense on indebtedness;
- amortization of debt issuance costs;
- a portion of rental expenses that represents an appropriate interest rate
factor; and
- our share of the fixed charges of 50%-owned companies.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
----------------------- ----------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges............. 6.3x 4.7x 5.1x 4.3x 5.2x 5.7x 5.5x
</TABLE>
S-10
<PAGE>
RISK FACTORS
YOU SHOULD CONSIDER THE FOLLOWING RISK FACTORS AS WELL AS OTHER INFORMATION
CONTAINED IN THIS PROSPECTUS SUPPLEMENT BEFORE MAKING A DECISION TO INVEST IN
THE DEBENTURES BEING SOLD IN THIS OFFERING.
RISKS RELATED TO OUR BUSINESS
DIFFICULTIES WE MAY ENCOUNTER IN MANAGING OUR GROWTH COULD ADVERSELY AFFECT OUR
RESULTS OF OPERATIONS
We have historically achieved growth through a combination of internally
developed new products and acquisitions. Our growth strategy depends on our
ability to continue developing or acquiring new products for our customer base.
We expect to continue to pursue acquisitions of other companies as well as
equity ventures to develop new technologies and product lines, although we
cannot guarantee that we will be successful. The success of each acquisition,
including the Pirelli acquisition, will depend, in part, upon our ability:
- to efficiently integrate acquired businesses into our organization;
- to manufacture and sell the products of the businesses acquired;
- to retain key personnel of the acquired businesses; and
- to apply our financial and management controls and reporting systems and
procedures to the acquired businesses.
ACCOUNTING CONSEQUENCES OF PURCHASE ACQUISITIONS MAY MATERIALLY AFFECT OUR NET
INCOME CALCULATED IN ACCORDANCE WITH UNITED STATES GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES
Acquisitions recorded as purchases for accounting purposes have resulted and
in the future may result in the recognition of significant amounts of goodwill
and other purchased intangibles. The amortization of these assets will
significantly reduce our future net income calculated in accordance with United
States generally accepted accounting principles.
With respect to our pending acquisition of Pirelli S.p.A.'s 90% interest in
Optical Technologies USA, we may incur material charges to the portion of the
purchase price that is allocated to acquired in-process research and
development.
IF THE MARKETS FOR OUR PRODUCTS DO NOT DEVELOP AND EXPAND AS WE ANTICIPATE,
DEMAND FOR OUR PRODUCTS MAY DECLINE, WHICH WOULD NEGATIVELY IMPACT OUR RESULTS
OF OPERATIONS AND FINANCIAL PERFORMANCE
The markets for our products are characterized by rapidly changing
technologies, evolving industry standards and frequent new product
introductions. Our success is expected to depend, in substantial part, on the
timely and successful introduction of new products, upgrades of current products
to comply with emerging industry standards, our ability to acquire technologies
needed to remain competitive and our ability to address competing technologies
and products. In addition, the following factors related to our products and the
markets for them could have an adverse impact on our results of operations and
financial performance:
- if we are unable to introduce optical fiber and photonic component
products or any other leading products, such as our glass for flat panel
displays, that can command competitive prices in the marketplace;
- if we are unable to maintain a favorable mix of products;
- if the level of demand for our products by our customers does not
continue. While this demand has been increasing in recent quarters, there
is no assurance that this upward trend can be sustained. A leveling or
declining demand or an unanticipated change in market demand for products
based on a specific technology would adversely affect our ability to
sustain recent operating and financial performance;
- if we are unable to continue to develop new product lines to address our
customers' diverse needs and the several market segments in which we
participate. This requires a high level of innovation, as well as the
accurate anticipation of technological and market trends; or
S-11
<PAGE>
- if we are not successful in creating the infrastructure required to
support anticipated growth in product demand.
OUR SALES WOULD SUFFER IF ONE OR MORE OF OUR KEY CUSTOMERS SUBSTANTIALLY REDUCED
ORDERS FOR OUR PRODUCTS
Our customer base is concentrated, and relatively few customers account for
a high percentage of net sales in our telecommunications, environmental products
and advanced display product lines. If we are unable to establish or maintain
good relationships with key customers, it could materially adversely affect our
results of operations and financial performance. In particular, if our current
customers do not continue to place orders at the current levels, we may not be
able to replace these orders with orders from new customers.
IF WE DO NOT ACHIEVE ACCEPTABLE MANUFACTURING VOLUMES, YIELDS OR SUFFICIENT
PRODUCT RELIABILITY, OUR OPERATING RESULTS COULD SUFFER
As our customers' needs for our products increase, we must increase our
manufacturing volumes to meet these needs and satisfy customer demand. Failure
to do so may materially harm our operating results and financial performance.
The manufacture of our products involves highly complex and precise
processes, requiring production in highly controlled and clean environments.
Changes in our manufacturing processes or those of our suppliers could
significantly reduce our manufacturing yields and product reliability. In some
cases, existing manufacturing techniques, which involve substantial manual
labor, may be insufficient to achieve the volume or cost targets of our
customers. We will need to develop new manufacturing processes and techniques to
achieve targeted volume and cost levels. While we continue to devote substantial
efforts to the improvement of our manufacturing techniques and processes, we may
not achieve manufacturing volumes and cost levels in our manufacturing
activities that will fully satisfy customer demands.
INTERRUPTIONS OF SUPPLIES FROM OUR KEY SUPPLIERS MAY AFFECT OUR RESULTS OF
OPERATIONS AND FINANCIAL PERFORMANCE
Interruptions of supplies from our key suppliers could disrupt production or
impact our ability to increase production and sales. We obtain several critical
components from a limited number of suppliers, some of which are also our
competitors. We do not have long-term or volume purchase agreements with these
suppliers, and may have limited options for alternative supply if these
suppliers fail to continue the supply of components.
WE FACE INTENSE COMPETITION IN SEVERAL OF OUR BUSINESSES
We face intense competition in several of our businesses. We expect that we
will face additional competition from existing competitors and from a number of
companies that may enter our markets. Since some of the markets in which we
compete are characterized by rapid growth and rapid technology changes, smaller
niche and start-up companies may become our principal competitors in the future.
We must invest in research and development, expand our engineering manufacturing
and marketing capabilities, and continue to improve customer service and support
in order to remain competitive. While we expect to undertake the investment and
effort in each of these areas, we cannot assure you that we will be able to
maintain or improve our competitive position.
Our competitors may have greater financial, engineering, manufacturing,
marketing or other support resources. Market consolidation may create additional
or stronger competitors and may intensify competition.
WE FACE PRICE PRESSURES IN EACH OF OUR LEADING BUSINESSES THAT COULD ADVERSELY
AFFECT OUR RESULTS OF OPERATIONS AND FINANCIAL PERFORMANCE
We face pricing pressures in each of our leading businesses as a result of
intense competition, emerging new technologies, and manufacturing efficiencies
in both the domestic and the international marketplaces. While we will work
toward reducing our costs to respond to pricing pressures, we may not be able to
achieve proportionate reductions in costs.
S-12
<PAGE>
WE MAY EXPERIENCE DIFFICULTIES IN OBTAINING OR PROTECTING INTELLECTUAL PROPERTY
RIGHTS
We may encounter difficulties, costs or risks in protecting our intellectual
property rights or obtaining rights to additional intellectual property to
permit us to continue or expand our businesses. Other companies, including some
of our large competitors, hold patents in our industries and the intellectual
property rights of others could inhibit our ability to introduce new products in
our field of operations unless we secure licenses on commercially reasonable
terms.
WE FACE RISKS RELATED TO OUR INTERNATIONAL OPERATIONS AND SALES
We have customers located outside the United States, as well as significant
foreign operations, including manufacturing and sales. As a result of these
international operations, we face a number of risks, including:
- the difficulty of effectively managing our diverse global operations;
- change in regulatory requirements;
- tariffs and other trade barriers;
- political and economic instability in foreign markets; and
- fluctuations in foreign currencies which may make our products less
competitive in countries in which local currencies decline in value
relative to the dollar.
IF WE FAIL TO ATTRACT AND RETAIN KEY PERSONNEL, RESULTS OF OPERATIONS AND
FINANCIAL PERFORMANCE MAY SUFFER
Our future success will be determined in part by our ability to attract and
retain, in a highly competitive marketplace, key scientific and technical
personnel for our research, development and engineering efforts. Our business
also depends on the continued contributions of our executive officers and other
key management and technical personnel. While we believe that we have been
successful in attracting and retaining key personnel, we cannot assure you that
we will continue to be successful in the future.
IF WE PROVIDE CUSTOMER FINANCING IN THE FUTURE, IT COULD EXPOSE US TO THE TERM
CREDIT QUALITY OF OUR CUSTOMERS
We currently do not provide customer financing. However, the competitive
environment in which we operate may require us to provide medium-term and
long-term customer financing in the future. If we do so, we will be exposed to
the term credit quality of our customers. In the event of economic uncertainty
or reduced demand for customer financings in the capital and bank markets, we
may be required to continue to hold some customer financing obligations for
longer periods prior to placement with third-party lenders.
RISKS RELATED TO THE PIRELLI ACQUISITION
WE CANNOT ASSURE YOU THAT THE PIRELLI ACQUISITION WILL BE COMPLETED
On October 23, 2000, the U.S. Federal Trade Commission granted early
termination of the normal 30-day antitrust waiting period with respect to the
Pirelli acquisition. While we do not anticipate any governmental proceedings
will be initiated in Europe with respect to the Pirelli acquisition, we cannot
assure you that this will be the case, and, therefore, we cannot assure you that
the transaction will be completed. If the Pirelli acquisition is not completed,
we will have broad discretion to allocate the net proceeds from the proposed
offerings of convertible debentures and common stock without any action or
approval of our shareholders. If the Pirelli acquisition is not completed, we
cannot guarantee that we will be able to access technologies similar to those
developed by Optical Technologies USA internally, from third-party suppliers or
by acquisitions.
S-13
<PAGE>
WE MAY HAVE TO DRAW DOWN A SIGNIFICANT PORTION OF OUR BRIDGE FACILITY TO CLOSE
THE PIRELLI ACQUISITION AND THIS MAY ADVERSELY AFFECT OUR CREDIT RATINGS
If, for any reason, either or both of our common stock and convertible
debentures offerings do not close, we may have to draw down all or a portion of
our committed bridge facility to fund the Pirelli acquisition. This would result
in significant incremental indebtness on our balance sheet, which may adversely
affect our credit ratings.
RISKS RELATED TO OUR COMMON STOCK
OUR QUARTERLY RESULTS MAY FLUCTUATE
We expect to continue to experience fluctuations in our quarterly results.
All of the concerns we have discussed under "Risk Factors" could affect our
operating results. In addition, our operating results may be affected by:
- seasonality,
- the timing of the receipt of product orders from a limited number of major
customers;
- the announcement and introduction of new products by us;
- expenses associated with litigation; and
- the costs associated with the acquisition or disposition of a business.
OUR COMMON STOCK PRICE HAS EXPERIENCED AND MAY CONTINUE TO EXPERIENCE
SUBSTANTIAL VOLATILITY
The market price of our common stock has been, and is likely to continue to
be, highly volatile because of the following factors:
- fluctuations in our quarterly results;
- announcements by our competitors and customers of technological
innovations or new products;
- developments with respect to patents or proprietary rights; and
- general market conditions.
In addition, changes in the market's valuation of telecommunications
equipment stocks, and in particular those that participate in supplying optical
fiber and photonic products, could cause our common stock to be volatile or
decline from current levels, possibly significantly. The stock market has from
time to time experienced significant price and volume fluctuations that are
unrelated to the operating performance of particular companies, which
fluctuation may also cause the price of our common stock to decline.
Our results of operations and financial performance in future quarters may
not meet the expectations of public market securities analysts and investors and
that could cause significant volatility in the price of our common stock.
RISK RELATED TO THE DEBENTURES
A PUBLIC MARKET MAY NOT DEVELOP FOR THE DEBENTURES
Prior to the offering there has been no trading market for the debentures.
If such a market were to develop, the debentures could trade at prices that may
be higher or lower than the initial public offering price plus accrued original
issue discount. The underwriters have advised us that they currently intend to
make a market in the debentures. However, the underwriters are not obligated to
make a market and may discontinue this market-making activity at any time
without notice. In addition, market-making activity by the underwriters will be
subject to the limits imposed by the Securities Act of 1933 and the Securities
Exchange Act of 1934. As a result, we cannot assure you that any market for the
debentures will develop or, if one does develop, that it will be maintained. If
an active market for the debentures fails to develop or be sustained, the
trading price of the debentures could decline significantly.
S-14
<PAGE>
USE OF PROCEEDS
We estimate that the net proceeds from the sale of the debentures offered by
this prospectus will be approximately $1,971.4 million, after deducting the
underwriting discounts and commissions and estimated offering expenses we will
pay. Concurrently with this offering, we are offering shares of our common
stock. We estimate that the net proceeds from the common stock offering will be
approximately $2,078.0 million, or $2,389.8 million, if the underwriters
exercise in full their option to purchase additional shares, after deducting the
underwriting discounts and commissions and estimated offering expenses we will
pay. Neither the completion of the debentures offering nor the completion of the
common stock offering is contingent upon the other.
We intend to use a portion of the net proceeds of this offering and our
offering of common stock, to fund the total purchase price of up to
$3.6 billion for the Pirelli acquisition, which is expected to close during the
fourth quarter of 2000. If, for any reason, either or both of our common stock
and convertible debentures offerings do not close, we will fund the remaining
purchase price of the Pirelli acquisition with proceeds from a committed
$3.6 billion bridge facility provided by Goldman, Sachs & Co.
If the Pirelli acquisition is not completed, or if we receive proceeds from
these offerings in excess of what we require to fund the Pirelli acquisition, we
will use them for general corporate purposes, including:
- the funding of other acquisitions;
- working capital requirements; and
- the funding of a portion of our normal, ongoing capital spending program.
We will invest the net proceeds in short-term, interest-bearing,
investment-grade obligations until they are applied as described above. If the
Pirelli acquisition is not completed, we will have broad discretion in
allocating the net proceeds from the proposed offerings of debentures and common
stock without any action or approval of our shareholders.
S-15
<PAGE>
PRICE RANGE OF COMMON STOCK
Our common stock is listed on the New York Stock Exchange under the symbol
"GLW". The table below sets forth for the periods indicated the intra-day high
and low sales prices for our common stock as reported on the NYSE Composite
Tape, as adjusted for a three-for-one stock split effected on October 3, 2000 to
our shareholders of record on September 5, 2000.
<TABLE>
<CAPTION>
CASH
PRICE RANGE DIVIDENDS
------------------- DECLARED PER
HIGH LOW SHARE
-------- -------- -------------
<S> <C> <C> <C>
1997
First Quarter.............................................. $15.46 $11.25 $.06
Second Quarter............................................. 18.83 14.33 .06
Third Quarter.............................................. 21.71 13.25 .06
Fourth Quarter............................................. 16.52 11.79 .06
1998
First Quarter.............................................. 14.65 10.67 .06
Second Quarter............................................. 14.79 11.31 .06
Third Quarter.............................................. 12.00 7.63 .06
()
Fourth Quarter............................................. 15.23 8.98 .06
1999
First Quarter.............................................. 20.58 14.92 .06
Second Quarter............................................. 23.58 15.90 .06
Third Quarter.............................................. 25.00 20.10 .06
Fourth Quarter............................................. 43.02 21.35 .06
2000
First Quarter.............................................. 75.42 34.36 .06
Second Quarter............................................. 90.33 42.83 .06
Third Quarter.............................................. 113.29 74.36 .06
Fourth Quarter (through November 2, 2000).................. 106.94 60.00 --
</TABLE>
The last reported sale price of our common stock on the New York Stock
Exchange for November 2, 2000 was $71.25. At September 30, 2000, there were
884,186,991 shares of our common stock outstanding, as adjusted for our
three-for-one stock split effected on October 3, 2000 to our shareholders of
record on September 5, 2000, held by 18,439 shareholders of record and
approximately 275,000 beneficial owners.
DIVIDEND POLICY
We have regularly paid cash dividends since 1881 and expect to continue to
pay cash dividends. Our current quarterly cash dividend is $.06 per share of
common stock. Holders of common stock are entitled to share equally in the
dividends that may be declared by our board of directors, but only after payment
of dividends required to be paid on outstanding shares of preferred stock. The
continued declaration of dividends by our board of directors is subject to our
current and prospective earnings, financial condition, capital requirements and
any other factors that our board of directors deems relevant. See "Description
of Common Stock" in the accompanying prospectus.
S-16
<PAGE>
CAPITALIZATION
The following table sets forth both our actual consolidated capitalization
at September 30, 2000 and our capitalization as adjusted to give effect to this
offering and the concurrent offering of common stock. The table also reflects
our three-for-one stock split effected on October 3, 2000 to our shareholders of
record on September 5, 2000.
<TABLE>
<CAPTION>
SEPTEMBER 30, 2000
-----------------------
ACTUAL AS ADJUSTED
-------- ------------
(IN MILLIONS)
<S> <C> <C>
Cash and short-term investments............................. $1,237.5 $ 5,286.9
======== =========
Current maturities of long-term debt and short-term notes
payable................................................... $ 111.4 $ 111.4
======== =========
Loans payable beyond one year............................... $1,946.3 $ 1,946.3
Zero coupon convertible debentures.......................... -- 2,012.5
Minority interest in subsidiary companies................... 138.7 138.7
Convertible preferred stock................................. 8.9 8.9
Common shareholders' equity
Common stock, including excess over par value and other
capital--par value $0.50 per share; shares authorized:
1.2 billion; shares issued: 958.7 million actual and
988.7 million as adjusted............................... 6,600.0 8,678.0
Retained earnings......................................... 2,113.7 2,113.7
Less cost of 75.9 million shares of common stock in
treasury................................................ (746.9) (746.9)
Accumulated other comprehensive loss...................... (114.6) (114.6)
-------- ---------
Total common shareholders' equity..................... 7,852.2 9,930.2
-------- ---------
Total capitalization........................................ $9,946.1 $14,036.6
======== =========
</TABLE>
S-17
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following tables contain our consolidated financial data as of and for
the periods presented. The financial data at and for each of the five years
ended December 31, 1999 have been derived from our audited financial statements.
The financial data at and for the nine months ended September 30, 2000 and 1999
have been derived from our unaudited financial statements. The unaudited
consolidated financial statements include all adjustments, consisting of normal
recurring accruals, which we consider necessary for a fair presentation of the
financial position and results of operations for these periods. The results of
operations for the nine months ended September 30, 2000 are not necessarily
indicative of the results to be expected for the full fiscal year. Share and per
share data presented below give effect to the three-for-one stock split of our
common stock effected on October 3, 2000 to our shareholders of record on
September 5, 2000. You should read the following financial data in conjunction
with the financial statements, including the related notes, which are
incorporated by reference in this prospectus.
S-18
<PAGE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-----------------------------
2000 1999
---------- ---------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C>
OPERATIONS:
Net sales....................... $ 5,042.8 $3,372.0
Nonoperating gains.............. 6.8(a) 30.0(g)
Gross margin.................... 2,112.4 1,297.8
Research, development and
engineering expenses.......... 371.3 272.1
Amortization of purchased
intangibles, including
goodwill...................... 144.2 21.2
Nonrecurring charges............ 139.7(b)(c)(d)(e) 15.5(h)
Income from continuing
operations before taxes on
income........................ 711.4 475.0
Minority interest in earnings of
subsidiaries.................. 17.4 46.1
Equity in earnings (losses) of
associated companies:
Other than Dow Corning
Corporation................. 125.5 84.1
Dow Corning Corporation.......
Impairment of equity
investment.................... (36.3)(f)
Income (loss) from continuing
operations.................... 479.7(a)(b)(c)(d)(e)(f) 365.4(g)(h)
Income (loss) from discontinued
operations, net of income
taxes.........................
Extraordinary charge, net of
income taxes and minority
interest......................
--------- --------
NET INCOME (LOSS)............... $ 479.7 $ 365.4
========= ========
BASIC EARNINGS PER SHARE
Continuing operations......... $ 0.57 $ 0.48
Discontinued operations.......
--------- --------
Net Income (loss)......... $ 0.57 $ 0.48
========= ========
DILUTED EARNINGS PER SHARE
Continuing operations......... $ 0.55 $ 0.47
Discontinued operations.......
--------- --------
Net income (loss)......... $ 0.55 $ 0.47
========= ========
Book value per share.......... $ 8.89 $ 2.97
Dividends declared per
share....................... $ 0.18 $ 0.18
FINANCIAL POSITION:
Cash and cash equivalents....... $ 1,237.5 $ 109.7
Working capital................. 2,246.6 525.7
Total assets.................... 12,188.1 6,148.6
Loans payable beyond one
year(t)....................... 1,946.3 1,495.8
Minority interest in subsidiary
companies..................... 138.7 361.4
Convertible preferred securities
of subsidiary.................
Convertible preferred stock..... 8.9 15.2
Common shareholders'
equity(u)(v).................. 7,852.2 2,305.3
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------
1999 1998 1997 1996 1995
--------- --------- --------- --------- ---------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net sales....................... $4,741.1 $3,831.9 $3,831.2 $3,327.5 $2,900.1
Nonoperating gains.............. 30.0(g) 39.7(k)(l) 21.5(n)
Gross margin.................... 1,810.8 1,471.4 1,606.9 1,321.5 1,137.1
Research, development and
engineering expenses.......... 378.2 307.4 262.9 200.1 177.3
Amortization of purchased
intangibles, including
goodwill...................... 27.8 22.2 21.8 16.3 15.0
Nonrecurring charges............ 1.4(h)(i) 84.6(i) 5.9(o) 26.5(r)
Income from continuing
operations before taxes on
income........................ 674.9 482.3 665.8 519.1 356.9
Minority interest in earnings of
subsidiaries.................. 66.8 61.6 77.4 59.8 75.2
Equity in earnings (losses) of
associated companies:
Other than Dow Corning
Corporation................. 112.3 97.3 79.2 83.8 68.2
Dow Corning Corporation....... (348.0)(s)
Impairment of equity
investment....................
Income (loss) from continuing
operations.................... 511.0(g)(h)(i) 354.8(i)(k)(l) 430.6 355.2(n)(o) (130.3)(r)(s)
Income (loss) from discontinued
operations, net of income
taxes......................... 4.8(j) 66.5(m) 30.9 (136.9)(p) 29.0
Extraordinary charge, net of
income taxes and minority
interest...................... (0.9)(q) (1.6)(q)
-------- -------- -------- -------- --------
NET INCOME (LOSS)............... $ 515.8 $ 421.3 $ 461.5 $ 217.4 $ (102.9)
======== ======== ======== ======== ========
BASIC EARNINGS PER SHARE
Continuing operations......... $ 0.67 $ 0.48 $ 0.59 $ 0.49 $ (0.18)
Discontinued operations....... 0.09 0.04 (0.19) 0.04
-------- -------- -------- -------- --------
Net Income (loss)......... $ 0.67 $ 0.57 $ 0.63 $ 0.30 $ (0.14)
======== ======== ======== ======== ========
DILUTED EARNINGS PER SHARE
Continuing operations......... $ 0.65 $ 0.47 $ 0.57 $ 0.48 $ (0.18)
Discontinued operations....... 0.01 0.09 0.04 (0.18) 0.04
-------- -------- -------- -------- --------
Net income (loss)......... $ 0.66 $ 0.56 $ 0.61 $ 0.30 $ (0.14)
======== ======== ======== ======== ========
Book value per share.......... $ 3.15 $ 2.31 $ 1.93 $ 1.55 $ 3.03
Dividends declared per
share....................... $ 0.24 $ 0.24 $ 0.24 $ 0.24 $ 0.24
FINANCIAL POSITION:
Cash and cash equivalents....... $ 280.4 $ 59.2 $ 105.6 $ 221.2 $ 193.5
Working capital................. 430.2 347.7 326.2 524.2 349.7
Total assets.................... 6,526.0 5,464.3 5,079.7 4,557.7 5,647.0
Loans payable beyond one
year(t)....................... 1,490.4 1,217.8 1,277.3 1,333.3 1,417.6
Minority interest in subsidiary
companies..................... 284.8 346.1 354.3 320.8 305.8
Convertible preferred securities
of subsidiary................. 365.2 365.3 365.1 364.7
Convertible preferred stock..... 13.5 17.9 19.8 22.2 23.9
Common shareholders'
equity(u)(v).................. 2,462.7 1,706.6 1,428.7 1,132.8 2,222.2
</TABLE>
S-19
<PAGE>
NOTES TO SELECTED FINANCIAL INFORMATION
(a) In January 2000, we sold Quanterra Incorporated to Severn Trent Laboratories
for $35 million. In the first quarter of 2000, we recorded a nonoperating
gain of $6.8 million ($4.2 million after tax).
(b) During the first quarter of 2000, we recognized a charge of $47 million
($43.4 million after tax) for one-time acquisition costs related to the
acquisition of Oak Industries, accounted for as a pooling of interests.
(c) In February 2000, we acquired British Telecommunication's Photonics Research
Center for approximately $66 million in cash. We recorded a first quarter
charge of $42 million ($25.7 million after tax) for in-process research and
development.
(d) In June 2000, we acquired the remaining 67% interest in IntelliSense
Corporation, a manufacturer of micro-electro-mechanical devices, in exchange
for 6,050,259 shares of our common stock and the assumption of stock options
convertible into 1,968,312 shares of our common stock. This consideration
was valued at approximately $410 million. As part of the transaction, we
recorded a second quarter charge of $6.7 million for in-process research and
development.
(e) In May 2000, we acquired the remaining 84% interest in NZ Applied
Technologies (NZAT), a developer and manufacturer of photonic components for
optical telecommunications applications, including the optical data networks
industry, in exchange for our common stock. We issued 1,321,749 shares of
common stock at closing with a value of approximately $75 million, and
placed an additional 1,321,749 shares in escrow to be issued over the next
three years contingent upon NZAT achieving certain product development and
sales milestones. We recorded a charge of $44.0 million for in-process
research and development.
(f) Pittsburgh Corning Corp. (PCC) is a 50%-owned equity investment of our
company. PPG Industries, Inc. is the other 50% owner. 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
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, we recorded an after-tax charge of $36.3 million to impair our
entire investment in PCC in the first quarter of 2000.
(g) During the third quarter of 1999, we 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. We recorded a
non-operating gain of $30 million ($9.5 million after tax and minority
interest) as a result of this transaction.
(h) In the third quarter of 1999, we recognized an impairment loss of
$15.5 million pretax ($10.0 million after tax) in connection with
management's decision to sell Quanterra Incorporated. The impairment loss
reduces our investment in these assets to an amount equal to management's
current estimate of fair value. Disposition of the business occurred in
January 2000.
(i) In the second quarter of 1998, we recorded a restructuring charge of
$84.6 million ($49.2 million after tax and minority interests). During the
fourth quarter of 1999, we determined that the actual costs of certain
benefits included in the retirement incentive program were less than
originally estimated in the second quarter of 1998 and released
restructuring reserves totaling $14.1 million ($8.6 million after tax).
(j) During the fourth quarter of 1999, certain indemnification agreements
related to the April 1998 sale of our consumer housewares business expired.
As a result, we recognized income from discontinued operations of
$7.8 million ($4.8 million after tax) in the fourth quarter from the release
of reserves provided at the date of the transaction.
(k) In the second quarter of 1998, Molecular Simulations, Inc. (MSI) merged with
Pharmacopeia, Inc., a publicly traded company (NASDAQ: PCOP). We previously
owned 35% of MSI and owned approximately 15% of the combined entity at the
time of the merger. We realized a gain of $20.5 million ($13.2 million after
tax) from this transaction.
S-20
<PAGE>
(l) In the fourth quarter of 1998, we recorded a nonoperating gain of
$19.2 million ($9.7 million after tax) related to the divestiture of several
small businesses within the science products division.
(m) On April 1, 1998, we completed the recapitalization and sale of a
controlling interest in our consumer housewares business to an affiliate of
Borden, Inc. We received cash proceeds of $593 million and continue to
retain a 3% interest in World Kitchen Inc., formerly the Corning Consumer
Products Company. We recorded an after-tax gain of $67.1 million in the
second quarter of 1998. The $66.5 million net income from discontinued
operations includes a $0.6 million loss from operations of the discontinued
business through March 31, 1998.
(n) During 1996, Oak Industries recorded a pretax gain of $21.5 million on the
sale of equity investments.
(o) During 1996, Oak Industries recorded a pretax charge of $5.9 million
primarily related to asset write-downs.
(p) On December 31, 1996, we distributed all of the shares of Quest Diagnostics
Incorporated and Covance Inc., which collectively comprised Corning's Health
Care Services segment, to our shareholders on a pro rata basis. We recorded
a provision for loss on the distributions of $176.5 million, offset by
income from discontinued operations of $9.2 million, recognized in the first
quarter of 1996. We recorded an additional $30.4 million of income from
discontinued operations related to other businesses, including
$10.8 million related to discontinued operations at Oak Industries.
(q) Oak Industries' previously existing $30 million and $200 million credit
agreements were terminated on August 30, 1995 and November 1, 1996,
respectively. As a result, Oak Industries recorded noncash, after-tax
charges of $1.6 million and $0.9 million in 1995 and 1996, respectively,
related to the early extinguishment of the former credit facilities.
(r) In 1995, we recognized a restructuring charge from continuing operations
totaling $26.5 million ($16.1 million after tax) as a result of severance
for workforce reductions in corporate staff groups and the write-off of
production equipment caused by the decision to exit the manufacturing
facility for glass-ceramic memory disks.
(s) We also recorded an after-tax charge of $365.5 million to fully reserve our
investment in Dow Corning Corporation (a 50%-owned equity company) as a
result of Dow Corning Corporation filing for protection under Chapter 11 of
the United States Bankruptcy Code in May 1995. We recognized equity earnings
totaling $17.5 million from Dow Corning Corporation in the first quarter of
1995. We discontinued recognition of equity earnings from Dow Corning
Corporation beginning in the second quarter of 1995.
(t) In February 2000, we completed an offering of euro-denominated debt
securities which generated net proceeds of $485 million. We used the
proceeds as long-term financing of a portion of the cash purchase price for
our acquisition of Siemens AG's worldwide optical cable and hardware
business and the remaining 50% interest in Siecor Corporation and Siecor
GmbH.
(u) We closed an equity offering of 44,850,000 shares of our common stock on
January 28, 2000. The transaction generated net proceeds of approximately
$2.2 billion of which approximately $645 million was used to fund a portion
of the purchase price for the Siemens acquisition. The purchase price of
$1.4 billion included approximately $120 million of assumed debt and
contingent consideration of $145 million.
(v) On May 12, 2000, we completed the acquisition of NetOptix Corporation for
33,719,067 shares of Corning common stock and the assumption of stock
options convertible into 2,487,240 shares of Corning common stock. Based on
the average closing price of Corning common stock for a range of days
surrounding the announcement, and a Black Scholes valuation of options
issued, the recorded purchase price was approximately $2.1 billion. NetOptix
manufactures thin film filters for use in dense wavelength division
multiplexing components. The excess of the purchase price over the estimated
fair value of tangible assets acquired was allocated to goodwill. Goodwill
of approximately $2.065 billion will be amortized on a straight-line basis
over a ten-year life.
S-21
<PAGE>
DESCRIPTION OF THE DEBENTURES
We will issue the debentures under a senior indenture to be dated as of
November 8, 2000 between us and The Chase Manhattan Bank, as the senior trustee,
the form of which is filed as an exhibit to the registration statement of which
this prospectus is a part, and a supplemental indenture to be dated as of
November 8, 2000 between us and the senior trustee. We refer to the original
indenture and the supplemental indenture collectively in this prospectus
supplement as the senior indenture. The senior indenture and the debentures are
governed by New York law. This summary supplements and modifies the description
of the general terms in the accompanying prospectus in "Description of Debt
Securities and Guarantees". Because this section is a summary, it does not
describe every aspect of the senior indenture or the debentures. You should read
the senior indenture itself for a full description of the terms of the
debentures. This summary is subject to and qualified in its entirety by
reference to all of the provisions of the senior indenture.
GENERAL
The debentures are senior unsecured obligations of Corning Incorporated.
They will be issued as a series of zero coupon convertible debentures under the
senior indenture. The debentures are limited to $2,712,546,000 aggregate
principal amount at maturity. We are required to repay the full principal amount
of the debentures on November 8, 2015, in cash, unless they are redeemed or
repurchased on an earlier date. The debentures will rank pari passu with our
other senior unsecured obligations.
We are offering and selling the debentures at a discount from their value at
maturity. We will initially issue the debentures at a price to the public of
$741.923 per debenture. Over time, the amount payable on each debenture will
increase in value until it reaches its maturity value of $1,000 on November 8,
2015. We will issue debentures only in denominations of $1,000 principal amount
at maturity and integral multiples of $1,000 principal amount at maturity. When
we refer to a debenture in this prospectus supplement, we mean $1,000 principal
amount of the debentures at maturity.
You have the option to convert your debentures into our common stock at any
time prior to maturity, unless we have previously redeemed or repurchased the
debentures. The conversion rate is 8.3304 shares of common stock per debenture.
This is equivalent to an initial conversion price of $89.0625 per share of
common stock based on the initial public offering price of the debentures. The
conversion rate is subject to adjustment if certain events occur. Upon
conversion, you will receive only common stock in payment for accrued original
issue discount through the conversion date. You will not receive any cash
payment for the accrued original issue discount through the conversion date.
BOOK-ENTRY SYSTEM
The debentures will be represented by one or more global securities. Each
global security will be deposited with, or on behalf of, The Depository Trust
Company, or DTC, and be registered in the name of a nominee of DTC. Except under
circumstances described below, the debentures will not be issued in definitive
form.
Upon the issuance of a global security, DTC will credit on its book-entry
registration and transfer system the accounts of persons designated by the
underwriters with the respective principal amounts of the debentures represented
by the global security. Ownership of beneficial interests in a global security
will be limited to persons that have accounts with DTC or its nominee, referred
to as participants, or persons that may hold interests through participants.
Ownership of beneficial interests in a global security will be shown on, and the
transfer of that ownership will be effected only through, records maintained by
DTC or its nominee. The laws of some states require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability
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to transfer beneficial interests in a global security.
So long as DTC or its nominee is the registered owner of a global security,
DTC or its nominee, as the case may be, will be considered the sole owner or
holder of the debentures represented by that global security for all purposes
under the senior indenture. Except as provided below, owners of beneficial
interests in a global security will not be entitled to have debentures
represented by that global security registered in their names, will not receive
or be entitled to receive physical delivery of debentures in definitive form and
will not be considered the owners or holders thereof under the senior indenture.
Principal and interest payments, if any, on debentures registered in the
name of DTC or its nominee will be made to DTC or its nominee, as the registered
owner of the relevant global security. None of Corning Incorporated, the
trustee, any paying agent or the registrar for the debentures will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial interests in a global security or for
maintaining, supervising or reviewing any records relating to such beneficial
interests.
We expect that DTC or its nominee, upon receipt of any payment of principal
or interest, if any, will immediately credit participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
the principal amount of the relevant global security, as shown on the records of
DTC or its nominee. We also expect that payments by participants to owners of
beneficial interests in a global security held through such participants will be
governed by standing instructions and customary practices, as is the case with
securities held for the accounts of customers in bearer form or registered in
"street name," and will be the responsibility of such participants.
If DTC is at any time unwilling or unable to continue as a depositary, and a
successor depositary is not appointed by us within 90 days, we will issue
debentures in definitive form in exchange for the entire global security for the
debentures. In addition, we may at any time and in our sole discretion determine
not to have debentures represented by a global security and, in such event, will
issue debentures in definitive form in exchange for the entire global security
relating to such debentures. In any such instance, an owner of a beneficial
interest in a global security will be entitled to physical delivery in
definitive form of debentures represented by such global security equal in
principal amount to such beneficial interest and to have such debentures
registered in its name. Debentures so issued in definitive form will be issued
as registered debentures in denominations of $1,000 principal amount at maturity
and integral multiples thereof, unless otherwise specified by us.
For a more detailed description of the book-entry system, see "Description
of Debt Securities and Guarantees--What Is a Global Security" in the
accompanying prospectus.
OPTIONAL REDEMPTION BY CORNING INCORPORATED
On and after November 8, 2005, we can redeem all or part of the debentures
at any time, upon not less than 15 nor more than 60 days' notice by mail to
holders of debentures, for a price equal to the initial public offering price
per debenture plus accrued original issue discount at a rate of 2.00% per annum
compounded semiannually to the date of redemption, on the basis of a 360-day
year consisting of twelve 30-day months.
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The table below shows redemption prices per debenture at November 8, 2005,
on every November 8 prior to maturity and at maturity on November 8, 2015. The
prices reflect the accrued original issue discount calculated through each date.
The redemption price of a debenture redeemed between these dates would include
an additional amount reflecting the additional original issue discount accrued
since the immediately preceding date in the table to the actual redemption date.
<TABLE>
<CAPTION>
(1)
DEBENTURE (2) (3)
INITIAL PUBLIC ACCRUED ORIGINAL REDEMPTION PRICE
REDEMPTION DATE OFFERING PRICE ISSUE DISCOUNT AT 2.00% (1) + (2)
--------------- -------------- ----------------------- ----------------
<S> <C> <C> <C>
November 8, 2005.......................... $741.923 $77.622 $819.544
November 8, 2006.......................... 741.923 94.094 836.017
November 8, 2007.......................... 741.923 110.898 852.821
November 8, 2008.......................... 741.923 128.040 869.963
November 8, 2009.......................... 741.923 145.526 887.449
November 8, 2010.......................... 741.923 163.364 905.287
November 8, 2011.......................... 741.923 181.560 923.483
November 8, 2012.......................... 741.923 200.122 942.045
November 8, 2013.......................... 741.923 219.057 960.980
November 8, 2014.......................... 741.923 238.373 980.296
At stated maturity........................ 741.923 258.077 1,000.000
</TABLE>
From and after the date a tax event occurs and we exercise our option to pay
interest at 2.00% per year on the debentures instead of accruing original issue
discount, the principal amount for redemption will be restated, and will be
calculated by adding the initial public offering price and the original issue
discount which had accrued up until the date on which we exercise the option.
If we decide to redeem less than all of the outstanding debentures, the
senior trustee will select the debentures to be redeemed by the following
methods:
- by lot;
- pro rata; or
- by another method the trustee considers fair and appropriate.
If the senior trustee selects a portion of your debentures for partial
redemption and you convert a portion of the same debentures, the converted
portion will be deemed to be from the portion selected for redemption. Each
debenture will be redeemed in whole.
INTEREST
We will not pay cash interest on the debentures unless we elect to do so
following a tax event. You should be aware that accrued original issue discount
must be included in your gross income for federal income tax purposes. Original
issue discount per debenture is the difference between the initial public
offering price of $741.923 and the $1,000 redemption price of the debenture at
maturity.
CONVERSION RIGHTS
You have the right to convert the debentures into our common stock. You may
convert a debenture into common stock at any time until the close of business on
the last business day prior to November 8, 2015. If a debenture has been called
for redemption, you will be entitled to convert the debenture until the close of
business on the business day immediately preceding the date of redemption. You
may convert debentures in part so long as the part is an integral multiple of
$1,000 principal amount at maturity.
The initial conversion rate is 8.3304 shares of common stock for each
debenture. This is equivalent to an initial conversion price of
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$89.0625 per share of common stock based on the initial public offering price of
the debentures. You will not receive any cash payment representing accrued
original issue discount upon conversion of a debenture. Instead, upon conversion
we will deliver to you a fixed number of shares of common stock and any cash
payment to account for fractional shares. The cash payment for fractional shares
will be based on the closing price of the common stock on the trading day
immediately prior to the conversion date. Delivery of common stock will be
deemed to satisfy our obligation to pay the principal amount of the debenture
and accrued original issue discount. Accrued original issue discount will be
deemed paid in full rather than canceled, extinguished or forfeited. We will not
adjust the conversion ratio to account for the accrued original issue discount.
The conversion rate will be subject to adjustment upon the following events:
- issuance of common stock as a dividend or distribution on any class of
capital stock;
- issuance to all holders of common stock of rights or warrants that allow
the holders to purchase common stock at less than the market price at such
time;
- subdivision or combination of the outstanding common stock;
- distribution to all holders of common stock of debt or other assets, but
excluding distributions of common stock, rights and warrants described
above and all-cash distributions out of our retained earnings;
- the distribution to all holders of common stock of all-cash distributions,
other than distributions out of our retained earnings, in an aggregate
amount that, together with (1) any cash and the fair market value of any
other consideration payable in respect of any tender offer by us or any of
our subsidiaries for common stock concluded within the preceding
12 months not triggering a conversion price adjustment and (2) all other
such all-cash distributions to all or substantially all holders of common
stock made within the preceding 12 months not triggering a conversion
price adjustment, exceeds an amount equal to 10% of the market
capitalization of our common stock at such time; and
- the purchase of common stock pursuant to a tender offer made by us or any
of our subsidiaries to the extent that the same involves aggregate
consideration that, together with (1) any cash and the fair market value
of any other consideration payable in respect of any tender offer by us or
any of our subsidiaries for common stock consummated within the preceding
12 months not triggering a conversion price adjustment and (2) all-cash
distributions, other than distributions out of retained earnings, to all
holders of common stock made within the preceding 12 months not triggering
a conversion price adjustment, exceeds an amount equal to 10% of the
market capitalization of our common stock at such time.
We are not required to adjust the conversion rate until adjustments greater
than 1% have occurred. We may increase the conversion rate, in addition to those
adjustments required by the provisions described above, as we consider advisable
in order to avoid or diminish any income tax to any holders of common stock
resulting from any dividend or distribution of stock or stock rights. We may
also increase the conversion rate for any period of at least 20 days, upon at
least 15 days notice, if our board of directors determines that the increase
would be in our best interest. The board of directors' determination in this
regard will be conclusive. We will compute all adjustments to the conversion
rate and will give notice by mail to holders of the debentures of any
adjustments.
In any case in which we consolidate or merge with or into another entity or
in which another entity is merged into us, or in case of any sale or transfer of
all or substantially all of our assets, each debenture then outstanding will
become convertible only into the kind and
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amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer by a holder of the number of shares of
common stock into which the debentures were convertible immediately prior to the
consolidation or merger or sale or transfer. The preceding sentence will not
apply to a merger which does not result in any reclassification, conversion,
exchange or cancellation of our common stock. You will have the right in the
event of certain mergers or other transactions to require us to repurchase your
debentures. See "--Repurchase at Option of Holders upon a Change in Control."
Except as provided in the next sentence, if you submit your debentures for
conversion after we have elected to exercise our option to pay interest instead
of accruing original issue discount between a record date and the opening of
business on the next interest payment date, you must also pay funds equal to the
interest payable on the converted principal amount through the next interest
payment date. You will not be required to pay such funds for debentures or
portions of debentures called for redemption on a redemption date occurring
during the period from the close of business on a record date and ending on the
opening of business on the first business day after the next interest payment
date, or if the interest payment date is not a business day.
REPURCHASE AT OPTION OF HOLDERS
You have the right to require us to repurchase the debentures on
November 8, 2005 and November 8, 2010. We will be required to repurchase any
outstanding debenture for which you deliver a written repurchase notice to the
paying agent. This notice must be delivered during the period beginning at any
time from the opening of business on the date that is 20 business days prior to
the repurchase date until the close of business on the last business day prior
to the repurchase date. If the repurchase notice is given and withdrawn during
the period, we will not be obligated to repurchase the related debentures. Our
repurchase obligation will be subject to certain additional conditions described
in the senior indenture.
The repurchase price payable will be equal to the initial public offering
price plus accrued original issue discount through the repurchase date. The
table below shows the repurchase prices of a debenture as of each of the
repurchase dates.
<TABLE>
<CAPTION>
REPURCHASE PRICE
----------------
<S> <C>
November 8, 2005............. $ 819.544
November 8, 2010............. 905.287
</TABLE>
We may, at our option, elect to pay the repurchase price in cash or, subject
to the satisfaction of specified conditions, common stock or a combination of
cash and common stock. If we pay with our common stock, it will be valued at
100% of the average closing sales price for the five trading days ending on the
third trading day prior to the repurchase date. For a discussion of the tax
treatment of a holder receiving cash, common stock or a combination of cash and
common stock, see "United States Federal Income Tax Consequences."
If we have previously exercised our option to pay interest instead of
accruing original issue discount on the debentures following a tax event, we
will repurchase the debentures at a repurchase price equal to the restated
principal amount plus the accrued and unpaid interest from the date we exercised
our option. See "--Tax Events."
We will be required to give notice on a date not less than 20 business days
prior to each repurchase date to all holders at their addresses shown in the
register of the registrar, and to beneficial owners as required by applicable
law, stating among other things:
- whether we will pay the repurchase price of the debentures in cash or
common stock or any combination thereof, specifying the percentages of
each;
- if we elect to pay in common stock, the method of calculating the market
price of the common stock; and
- the procedures that holders must follow to require us to repurchase their
debentures.
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Your notice electing to require us to repurchase your debentures must state:
- the debenture certificate numbers;
- the portion of the principal amount at maturity of debentures to be
repurchased, in multiples of $1,000;
- that the debentures are to be repurchased by us pursuant to the applicable
provisions of the senior indenture; and
- in the event we elect, pursuant to the notice that we are required to
give, to pay the repurchase price in common stock, in whole or in part,
but the repurchase price is ultimately to be paid to the holder entirely
in cash because any of the conditions to payment of the repurchase price
or portion of the repurchase price in common stock is not satisfied prior
to the close of business on the business day prior to the repurchase date,
as described below, whether the holder elects:
- to withdraw the repurchase notice as to some or all of the debentures to
which it relates, or
- to receive cash in respect of the entire repurchase price for all
debentures or portions of debentures subject to such repurchase notice.
If the holder fails to indicate the holder's choice with respect to the
election described in the final bullet point above, the holder will be deemed to
have elected to receive cash in respect of the entire repurchase price for all
debentures subject to the repurchase notice in these circumstances. For a
discussion of the tax treatment of a holder receiving cash instead of common
stock, see "United States Federal Income Tax Consequences."
You may withdraw any repurchase notice by a written notice of withdrawal
delivered to the paying agent prior to the close of business on the business day
prior to the repurchase date. The notice of withdrawal must state:
- the principal amount at maturity;
- the certificate numbers of the withdrawn debentures; and
- the principal amount at maturity, if any, which remains subject to the
repurchase notice.
If we elect to pay the repurchase price, in whole or in part, in common
stock, the number of shares of common stock to be delivered by us will be equal
to the portion of the repurchase price to be paid in common stock divided by the
market price of one share of our common stock.
We will pay cash based on the market price for all fractional shares in the
event we elect to deliver common stock in payment, in whole or in part, of the
repurchase price.
The "market price" means the average of the sale prices of our common stock
for the five trading day period ending on the third trading day prior to the
applicable repurchase date, appropriately adjusted to take into account the
occurrence, during the period commencing on the first of such trading days
during such five trading day period and ending on such repurchase date, of
certain events that would result in an adjustment of the conversion rate with
respect to our common stock.
The "sale price" of our common stock on any date means the closing per share
sale price (or if no closing sale price is reported, the average of the bid and
asked prices or, if more than one in either case, the average of the average bid
and the average asked prices) on such date as reported in composite transactions
for the principal U.S. securities exchange on which our common stock is traded
or, if our common stock is not listed on a U.S. national or regional securities
exchange, as reported by the Nasdaq System.
Because the market price of our common stock is determined prior to the
applicable repurchase date, holders of debentures bear the market risk with
respect to the value of the common stock to be received from the date such
market price is determined until such repurchase date. We may pay the repurchase
price or any portion of the repurchase price in common stock only if the
information necessary
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to calculate the market price is published in a daily newspaper of national
circulation.
Upon determination of the actual number of shares of common stock in
accordance with the foregoing provisions, we will publish such information on
our website or through such other public medium as we may use at that time.
Our right to repurchase debentures, in whole or in part, with common stock
is subject to our satisfying various conditions, including:
- the registration of the common stock under the Securities Act of 1933 and
the Securities Exchange Act of 1934, if required; and
- any necessary qualification or registration under applicable state
securities laws or the availability of an exemption from such
qualification and registration.
If such conditions are not satisfied with respect to a holder prior to the
close of business on the repurchase date, we will pay the repurchase price of
the debentures of the holder entirely in cash. See "United States Federal Income
Tax Consequences." We may not change the form or components or percentages of
components of consideration to be paid for the debentures once we have given the
notice that we are required to give to holders of debentures, except as
described in the first sentence of this paragraph.
Our ability to repurchase debentures with cash may be limited by the terms
of our then existing borrowing arrangements.
A holder must either effect book-entry transfer or deliver the debenture,
together with necessary endorsements, to the office of the paying agent after
delivery of the repurchase notice to receive payment of the repurchase price.
You will receive payment in cash on the repurchase date or at the time of
book-entry transfer or the delivery of the debenture. If the paying agent holds
money or securities sufficient to pay the repurchase price of the debenture on
the business day following the repurchase date, then:
- the debenture will cease to be outstanding;
- original issue discount will cease to accrue; and
- all other rights of the holder will terminate.
This will be the case whether or not book-entry transfer of the debenture is
made or whether or not the debenture is delivered to the paying agent.
We will comply with the provisions of Rule 13e-4 and any other tender offer
rules under the Securities Exchange Act of 1934 which may be applicable at the
time to the repurchase of debentures. We will file a Schedule TO or any other
schedule required in connection with any such repurchase of debentures by us.
REPURCHASE AT OPTION OF HOLDERS UPON A CHANGE IN CONTROL
If we undergo a change in control, you will have the option to require us to
purchase some or all of your debentures 35 business days after the change in
control. We will pay a repurchase price equal to the initial public offering
price plus accrued original issue discount through the repurchase date. You may
require us to repurchase all or any part of the debentures so long as the
principal amount at maturity of the debentures being repurchased is an integral
multiple of $1,000.
At our option, instead of paying the repurchase price in cash, we may pay
the repurchase price in our common stock or a combination of cash and common
stock. If we pay with our common stock, it will be valued at 95% of the average
closing sales price for the five trading days immediately preceding and
including the third trading day prior to the repurchase date. We may only pay
the repurchase price or any portion of the repurchase price in common stock if
we satisfy conditions provided in the senior indenture.
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A change in control occurs in the following situations:
- any person, including any syndicate or group deemed to be a "person" under
Section 13(d)(3) of the Securities Exchange Act of 1934, acquires
beneficial ownership, directly or indirectly, through a purchase, merger
or other acquisition transaction or series of transactions, of shares of
our capital stock entitling the person to exercise 50% or more of the
total voting power of all shares of our capital stock that are entitled to
vote generally in elections of directors, other than an acquisition by us,
any of our subsidiaries or any of our employee benefit plans; or
- we merge or consolidate with or into any other person, any other person
merges into us, or we convey, sell, transfer or lease all or substantially
all of our assets to another person, other than any such transaction:
- that does not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of our capital stock,
- pursuant to which the holders of 50% or more of the total voting power
of all shares of our capital stock entitled to vote generally in
elections of directors immediately prior to such transaction have the
entitlement to exercise, directly or indirectly, 50% or more of the
total voting power of all shares of capital stock entitled to vote
generally in the election of directors of the continuing or surviving
corporation immediately after such transaction, or
- which is effected solely to change our jurisdiction of incorporation
and results in a reclassification, conversion or exchange of
outstanding shares of our common stock solely into shares of common
stock.
However, a change in control will not be deemed to have occurred if either:
- the closing price per share of our common stock for any five trading days
within the period of 10 consecutive trading days ending immediately after
the later of the change in control or the public announcement of the
change in control, in the case of a change in control relating to an
acquisition of capital stock, or the period of 10 consecutive trading days
ending immediately before the change in control, in the case of change in
control relating to a merger, consolidation or asset sale, equals or
exceeds 105% of (A) the sum of (1) the initial public offering price of a
debenture plus (2) accrued original issue discount on such debenture
divided by (B) the conversion rate then applicable to such debenture, as
calculated on each of those trading days, or
- all of the consideration, excluding cash payments for fractional shares
and cash payments made pursuant to dissenters' appraisal rights, in a
merger or consolidation otherwise constituting a change in control,
consists of shares of common stock traded on a national securities
exchange or quoted on the Nasdaq National Market, or which will be so
traded or quoted immediately following such merger or consolidation, and
as a result of such merger or consolidation the debentures become
convertible solely into such common stock.
Any increase in the conversion rate as a result of a determination of our
board of directors described in the fourth paragraph under "--Conversion Rights"
will not be taken into account in determining whether a change in control has
occurred under the first bullet point of this paragraph.
You must deliver a written notice to the paying agent prior to the close of
business on the business day prior to the date on which the debentures are to be
repurchased to exercise the repurchase right upon a change in control. This
notice must specify the debentures
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submitted for repurchase. You may withdraw the notice by delivering a written
notice of withdrawal to the paying agent before the same date.
Within 15 business days after a change in control, we will publish and mail
to the senior trustee and to each holder of the debentures a written notice of
the change in control which specifies the terms and conditions and the
procedures required for exercise of a holder's right to require us to repurchase
your debentures.
If we have previously exercised our option to pay interest instead of
accruing original issue discount on the debentures following a tax event, we
will repurchase the debentures at a repurchase price equal to the restated
principal amount plus accrued and unpaid interest from the date we exercised our
option. See "--Tax Events."
Our ability to repurchase debentures upon the occurrence of a change in
control is subject to important limitations. Some of the events constituting a
change in control could cause an event of default under, or be prohibited or
limited by, the terms of our then existing borrowing arrangements. Further, we
cannot assure you that we would have the financial resources, or would be able
to arrange financing, to pay the repurchase price for all the debentures that
might be delivered by holders of debentures seeking to exercise the repurchase
right. If we were to fail to repurchase the debentures when required following a
change in control, an event of default under the senior indenture would occur,
whether or not such repurchase is permitted by the terms of our then existing
borrowing arrangements. Any such default may, in turn, cause a default under our
other debt.
TAX EVENTS
We have the option to convert the debentures to interest-bearing debentures
upon a tax event. From and after the date a tax event occurs, we may elect to
pay interest at 2.00% per year on the debentures instead of accruing original
issue discount. The principal amount, which will be restated, will be calculated
by adding the initial public offering price and the original issue discount
which had accrued up until the date on which we exercise the option. This
restated principal amount will be the amount due at maturity. If we elect this
option, interest will be based on a 360-day year comprised of twelve 30-day
months. Interest will accrue from the option exercise date and will be payable
semi-annually on November 15 to holders of record on the immediately preceding
November 1 and on May 15 to holders of record on the immediately preceding
May 1.
A tax event occurs when we receive an opinion from an experienced
independent tax counsel stating that, as a result of:
- any amendment, change or announced prospective change in the laws or
regulations of the U.S. or any of its political subdivisions or taxing
authorities of the U.S., or
- any amendment, change, interpretation or application of the laws or
regulations by any legislative body, court, government agency or
regulatory authority,
there is more than an insubstantial risk that interest, including original issue
discount, payable on the debentures either:
- would not be deductible on a current accrual basis, or
- would not be deductible under any other method,
in either case, in whole or in part, by us (by reason of deferral, disallowance
or otherwise) for U.S. federal income tax purposes.
The Clinton Administration has previously proposed to change the tax law to
defer the deduction of original issue discount on convertible debt instruments
until the issuer pays the interest in cash. Congress has not yet enacted these
proposed changes in the law.
If a similar proposal were ever enacted and made applicable to the
debentures in a manner that would limit our ability to either
- deduct the interest, including original issue discount, payable on the
debentures on a current accrual basis, or
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- deduct the interest, including original issue discount, payable on the
debentures under any other method for United States federal income tax
purposes,
such enactment would result in a tax event and the terms of the debentures would
be subject to modification at our option as described above.
The modification of the terms of the debentures by us upon a tax event as
described above could alter the timing of income recognition by certain holders
of the debentures. See "United States Federal Income Tax Consequences."
COVENANTS NOT APPLICABLE TO THE DEBENTURES
The debentures will not be entitled to the benefit of covenants included in
the senior indenture regarding limitations on liens and limitations on sale and
leaseback transactions described in the accompanying prospectus under
"Description of Debt Securities and Guarantees--Restrictive Covenants and
Defeasance."
EVENTS OF DEFAULT
If there is an event of default under the senior indenture, the trustee or
the holders of at least 25% in principal amount of the debentures then
outstanding may declare the initial public offering price plus accrued original
issue discount on the outstanding debentures immediately due and payable. If we
exercise our option to pay interest instead of accruing original issue discount
on the debentures following a tax event, the declaration of acceleration
referred to above will make the restated principal amount plus accrued and
unpaid interest immediately due and payable. For a description of the events of
default under the senior indenture, see "Description of Debt Securities and
Guarantees--Defaults, Remedies and Waiver of Default--Events of Default" in the
accompanying prospectus.
GOVERNING LAW
The senior indenture and the debentures will be governed by and construed in
accordance with the laws of the State of New York.
INFORMATION ABOUT THE TRUSTEE,
PAYING AGENT AND CONVERSION AGENT
We have appointed The Chase Manhattan Bank, the senior trustee under the
senior indenture, as our paying agent, registrar and custodian for the
debentures. We have appointed Computershare Investor Services LLC located at Two
North LaSalle Street, Chicago, IL 60602, telephone number (312) 588-4991, as our
conversion agent.
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UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
This is a general discussion of United States federal income tax
consequences of the purchase, ownership and disposition of debentures to U.S.
holders and non-U.S. holders. For purposes of the discussion below, you are a
"U.S. holder" if you are a beneficial owner of a debenture that, for United
States federal income tax purposes, is (i) a citizen or resident of the United
States, (ii) a corporation, partnership or other entity created or organized in
or under the laws of the United States or any state, (iii) an estate, the income
of which is subject to United States federal income taxation regardless of its
source or (iv) a trust, if a U.S. court is able to exercise primary jurisdiction
over the administration of the trust and one or more U.S. persons have the
authority to control all substantial decisions relating to such trust. You are a
"non-U.S. holder" if you are a beneficial owner of a debenture other than a U.S.
holder. This discussion is based upon the Internal Revenue Code of 1986, as
amended (the "Code"), Treasury regulations, Internal Revenue Service rulings and
judicial decisions now in effect, all of which are subject to change (possibly
with retroactive effect) or different interpretations. There can be no assurance
that the Internal Revenue Service will not challenge one or more of the
conclusions described herein, and we have not obtained, nor do we intend to
obtain, a ruling from the Internal Revenue Service with respect to the United
States federal income tax consequences of acquiring or holding debentures.
This discussion does not address all aspects of United States federal income
taxation that may be relevant to you (for example, if you are subject to the
alternative minimum tax provisions). Also, it is not intended to be wholly
applicable to all categories of investors, some of which may be subject to
special rules, such as non-U.S. holders engaged in a trade or business in the
United States, dealers, banks and tax-exempt holders, traders using a mark-to-
market method of accounting for their securities holdings, life insurance
companies, persons that own debentures that are part of a hedging, straddle or
conversion transaction for tax purposes, individuals who change their status
between a U.S. holder and a non-U.S. holder and persons whose functional
currency for tax purposes is not the U.S. dollar.
This discussion also does not describe the tax consequences arising under
the laws of any state, local or foreign jurisdiction. In addition, this
discussion applies to you only if you are an original investor who purchases
debentures in this offering at their issue price (as described below) and who
will hold the debentures and common stock into which the debentures may be
converted as capital assets (generally property held for investment).
PERSONS CONSIDERING THE PURCHASE, OWNERSHIP, CONVERSION OR OTHER DISPOSITION
OF DEBENTURES ARE URGED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE UNITED
STATES FEDERAL INCOME TAX CONSEQUENCES AND THE CONSEQUENCES ARISING UNDER THE
LAWS OF ANY STATE, LOCAL OR FOREIGN TAXING JURISDICTION.
We have been advised by our counsel, Shearman & Sterling, that in such
counsel's opinion the debentures will be treated as indebtedness for United
States federal income tax purposes. Shearman & Sterling has further advised us
that, while the following does not discuss all tax matters relating to the
debentures, based upon the debentures being treated as indebtedness, the
following are the material federal income tax consequences to holders of the
purchase, ownership and disposition of debentures, subject to the qualifications
set forth herein.
U.S. HOLDERS
Subject to the limitations set forth above, the following is a general
discussion of the U.S. federal income tax consequences of ownership of the
debentures (and our common stock received upon conversion) that are relevant to
you if you are a U.S. holder.
ORIGINAL ISSUE DISCOUNT
The debentures are being issued at a substantial discount from their stated
principal amount at maturity. For United States federal income tax purposes,
original issue discount is the excess of such principal amount of a
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debenture over its issue price (the initial price at which a substantial number
of the debentures are sold for money to investors). You will be required to
include original issue discount in income periodically over the term of the
debentures before receipt of the cash or other payment attributable to such
income and irrespective of your general method of tax accounting.
In particular, as a holder of a debenture, you must include in gross income,
as interest for United States federal income tax purposes, the sum of the daily
portions of original issue discount with respect to the debenture for each day
during the taxable year or portion of a taxable year in which you hold the
debenture ("accrued original issue discount"). The daily portion is determined
by allocating to each day of an accrual period (generally a six-month period) a
pro rata portion of an amount equal to the adjusted issue price of the debenture
at the beginning of the accrual period multiplied by the yield to maturity
(determined on the basis of compounding at the close of each accrual period) of
the debenture. The adjusted issue price of the debenture at the start of any
accrual period is the issue price of the debenture increased by the accrued
original issue discount for each prior accrual period.
Under these original issue discount rules, you will have to include in gross
income increasingly greater amounts of original issue discount in each
successive accrual period with a corresponding increase in your tax basis in the
debenture.
We intend to treat the possibility of an optional redemption or repurchase
or modification by us, or at the direction of holders under the various optional
redemption, repurchase and modification provisions in the debentures, as
significantly unlikely to occur or as remote under applicable Treasury
regulations. Thus, we do not intend to treat these possibilities as affecting
the determination of the yield to maturity of the debentures or giving rise to
any additional accrual of original issue discount or recognition of ordinary
income upon the redemption, sale or exchange of a debenture.
We will be required to furnish annually to the Internal Revenue Service and
to certain noncorporate holders information regarding the amount of the original
issue discount attributable to that year. For this purpose, we will use a
six-month accrual period which ends on the day in each calendar year
corresponding to the maturity day of the debenture or the date six months before
such maturity date.
DISPOSITION OR CONVERSION
Except as described below, gain or loss upon a sale or other disposition of
a debenture will generally be capital gain or loss (which will be long term if
the debenture is held by you for more than one year).
Your conversion of a debenture into common stock is generally not a taxable
event (except with respect to cash received in lieu of a fractional share). Your
obligation to include in gross income the daily portions of original issue
discount with respect to a debenture will terminate prospectively on the date of
conversion. Your basis in our common stock received on conversion of a debenture
will be the same as your basis in our debenture at the time of conversion
(exclusive of any tax basis allocable to a fractional share). The holding period
for the common stock received on conversion will include the holding period of
the converted debenture, except that the holding period for common stock
attributable to accrued original issue discount may commence on the day
following the date of conversion.
If you elect to exercise your option to tender a debenture to us on a
purchase date or on a change in control date, and we issue our common stock in
satisfaction of all or part of the repurchase price, the exchange of the
debenture for our common stock should qualify as a reorganization or an
otherwise nontaxable transaction for United States federal income tax purposes.
If the repurchase price is paid solely in common stock, neither gain nor
loss would generally be recognized by you, except as described below with
respect to a fractional share.
If the repurchase price is paid in a combination of shares of common stock
and
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cash (other than cash received in lieu of a fractional share), gain (but not
loss) realized by you would be recognized, but only to the extent such gain does
not exceed such cash.
Your tax basis in the common stock received in the exchange will be the same
as your tax basis in the debenture tendered to us in exchange for the common
stock (exclusive of any tax basis allocable to a fractional share interest as
described below). However, this tax basis will be decreased by the amount of
cash (other than cash received in lieu of a fractional share), if any, received
in exchange and increased by the amount of any gain recognized by you on the
exchange (other than gain with respect to a fractional share).
Your holding period for common stock received in the exchange will include
the holding period for the debenture tendered to us in exchange for the common
stock, except that the holding period for common stock attributable to accrued
original issue discount may commence on the day following the purchase date.
Cash received in lieu of a fractional share of common stock upon conversion
of a debenture or upon a tender of a debenture to us on a purchase date or on a
change in control date should be treated as a payment in exchange for the
fractional share. Accordingly, the receipt of cash in lieu of a fractional share
of common stock should generally result in capital gain or loss, if any,
measured by the difference between the cash received for the fractional share
and your basis in the fractional share.
If you elect to exercise your option to tender a debenture to us on a
purchase date or on a change in control purchase date, and we deliver cash in
satisfaction of the purchase price, you would recognize gain or loss, measured
by the difference between the amount of cash transferred by us to you and your
basis in the tendered debenture. Gain or loss recognized by you would generally
be capital gain or loss.
If you sell a debenture in the market, this will be a taxable sale with the
same results to you as a tender of a debenture to us for a payment in cash.
You, as a holder of our common stock received upon conversion of a debenture
or in satisfaction of the repurchase price of a debenture tendered to us,
generally must report as ordinary income any dividends made on our common stock,
subject to applicable limitations, such as the dividends received deduction for
U.S. corporate holders and, if we have no earnings and profits (current or
accumulated) when dividends are distributed, those dividends will be treated as
a tax-free return of capital to the extent of your tax basis in our common stock
and then as capital gain. Gain or loss on the sale or other disposition of our
common stock will be capital gain or loss (which gain or loss will be long-term
if the holding period for such common stock is more than one year).
In the case of individuals, long-term capital gains with respect to property
held for more than one year are taxed at a maximum 20% federal tax rate. Net
capital gain of corporations is taxed the same as ordinary income, with a
maximum federal tax rate of 35%. The deductibility of capital losses is subject
to limitations.
CONSTRUCTIVE DIVIDEND
If at any time we make a distribution of property to our stockholders that
would be taxable to them as a dividend for United States federal income tax
purposes and, in accordance with the anti-dilution provisions of the debentures,
the conversion rate of the debentures is increased, such increase may be deemed
to be the payment of a taxable dividend to you as a holder of the debentures.
For example, an increase in the conversion rate in the event of
distributions of evidences of indebtedness or our assets or an increase in the
event of extraordinary cash dividends will generally result in deemed dividend
treatment to holders of the debentures, but generally an increase in the event
of stock dividends or the distribution of rights to subscribe for common stock
will not so result. See "Description of the Debentures--Conversion Rights."
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BACKUP WITHHOLDING AND INFORMATION REPORTING
Information reporting will apply to payments of interest or dividends, if
any, made by us on, or the proceeds of the sale or other disposition of, the
debentures or shares of common stock with respect to certain noncorporate
holders, and backup withholding at a rate of 31% may apply unless the recipient
of such payment supplies a taxpayer identification number, certified under
penalties of perjury, as well as certain other information, or otherwise
establishes an exemption from backup withholding. Any amount withheld under the
backup withholding rules will be allowable as a credit against your United
States federal income tax, provided that the required information is properly
submitted to the Internal Revenue Service.
TAX EVENT
The modification of the terms of the debentures by us upon a tax event as
described in "Description of the Debentures--Tax Events" could possibly alter
the timing of income recognition by you with respect to the semiannual payments
of interest due after the change to semiannual coupon notes. In particular,
under applicable Treasury regulations, following such a modification you may be
permitted to report such payments as interest income as they are paid or accrue
in accordance with your regular method of tax accounting.
NON-U.S. HOLDERS
Subject to the limitations set forth above, the following is a general
discussion of the United States federal income and estate tax consequences
resulting from the ownership of debentures (and our common stock received upon
conversion) that is relevant to you if you are a non-U.S. holder.
WITHHOLDING TAX ON PAYMENTS OF PRINCIPAL AND ORIGINAL ISSUE DISCOUNT
Subject to the discussion of backup withholding set forth below, no
withholding of United States federal income tax will be required with respect to
accruals of original issue discount and payments by us of interest and principal
(including amounts in respect of original issue discount) in cash to you as a
non-U.S. holder, provided that in the case of payment of interest or original
issue discount either (i) you as the beneficial owner of the debenture certify
to us or our agent, under penalties of perjury, that you are not a U.S. holder
and you provide your name and address on Internal Revenue Service Form W-8BEN
(or a suitable substitute form) or (ii) a securities clearing organization, bank
or other financial institution that holds customers' securities in the ordinary
course of its trade or business (a "financial institution") and that holds the
debenture certifies under penalties of perjury that such a Form W-8BEN (or
suitable substitute form) has been received from you as beneficial owner by it
or by another financial institution between it and the beneficial owner and
furnishes the payor with a copy thereof. However, this exception to U.S.
withholding tax will not apply to you if you actually or constructively own 10%
or more of the total combined voting power of all classes of our stock entitled
to vote, are a controlled foreign corporation that is related to us through
stock ownership or are a foreign tax-exempt organization or foreign private
foundation for United States federal income tax purposes.
Recently finalized Treasury regulations, which generally will be effective
with respect to payments of interest (including original issue discount) and
disposition proceeds after December 31, 2000 (subject to certain transition
rules), will modify the foregoing certification requirements in some respects.
For example, for interest and disposition proceeds paid with respect to a
debenture after December 31, 2000, a foreign partnership will be required to
provide an appropriate certification by each of its partners, unless the foreign
partnership has entered into a withholding agreement with the Internal Revenue
Service. Prospective investors, including foreign partnerships and their
partners, should consult their tax advisers regarding possible additional
reporting requirements under the new regulations.
In the event the non-U.S. holder certification requirements described above
are not satisfied, U.S. income tax will be imposed on you at a 30% rate on the
amount of original issue
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discount accrued while you were the beneficial owner of the debenture at the
time such debenture is redeemed or otherwise paid by us, or earlier if sold by
you or converted. This 30% U.S. tax may be reduced or eliminated if you are
eligible for the benefits of a tax treaty to which the United States is a party
and comply with applicable Internal Revenue Service procedures necessary to
demonstrate such eligibility.
In the event of an adjustment to the conversion ratio that results in
constructive dividends to you as the beneficial owner of a debenture as
described above in "Constructive Dividend", you may be subject to U.S.
witholding tax on such dividends as provided below at the time of the
constructive distribution or later upon retirement or conversion of the
debenture into our common stock.
DISPOSITION OR CONVERSION
Assuming you comply with the non-U.S. holder certification requirements
described above, you will not be subject to United States federal income tax on
gain or income realized on the sale, exchange or redemption of a debenture,
including the exchange of a debenture for our common stock pursuant to a
conversion, unless you are an individual and you are present in the United
States for 183 days or more in the year of such sale and certain other
conditions are satisfied. However, this exception to United States federal
income tax will not apply in the event we are a "United States real property
holding corporation" ("USRPHC") for United States federal income tax purposes at
any time during the shorter of the five-year period ending on the date of the
disposition or the period during which you held the debenture and our common
stock received upon conversion. We believe that we are not a USRPHC for United
States federal income tax purposes. Although we consider it unlikely based on
our current business plans and operations, we may become a USRPHC in the future.
Even if we were to become a USRPHC, any gain recognized by you on a sale of our
common stock still would not be subject to United States tax if the shares of
our common stock were considered to be "regularly traded on an established
securities market" under applicable U.S. Treasury regulations and you did not
own, actually or constructively, at any time during the shorter of the periods
described above, more than five percent of our common stock.
DISTRIBUTIONS ON OUR COMMON STOCK
If distributions are paid on the shares of our common stock, these
distributions generally will constitute dividends for U.S. federal income tax
purposes to the extent paid from our current or accumulated earnings and
profits, as determined under U.S. federal income tax principles, then will
constitute a return of capital that is applied against your basis in our common
stock to the extent distributions exceed those earnings and profits, and then as
capital gain. Dividends paid to you on our common stock will be subject to
United States withholding tax at a 30% rate or, if a tax treaty applies, a lower
rate specified by the treaty. To receive a reduced treaty rate, you must furnish
to us or our paying agent a duly completed Internal Revenue Service Form 1001 or
Form W-8BEN or substitute form certifying to your qualification for the reduced
rate.
Currently, withholding is generally imposed on the gross amount of a
distribution, regardless of whether we have sufficient earnings and profits to
cause the distribution to be a dividend for U.S. federal income tax purposes.
However, withholding on distributions made after December 31, 2000 may be on
less than the gross amount of the distribution if the distribution exceeds a
reasonable estimate made by us of our accumulated and current earnings and
profits.
Under current Treasury regulations, dividends paid before January 1, 2001 to
an address outside the United States are presumed to be paid to a resident of
the country of address for purposes of the withholding discussed above and for
purposes of determining the applicability of a tax treaty rate. However,
Treasury regulations applicable to dividends paid after December 31, 2000
eliminate this presumption, subject to transition rules and if you wish to claim
the benefit of an applicable treaty rate and avoid backup withholding, as
discussed below, you would be required to satisfy applicable certification and
other requirements.
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For dividends paid after December 31, 2000, you generally will be subject to
U.S. backup withholding tax at a 31% rate under the backup withholding rules
described below, rather than at a 30% rate or a reduced rate under an income tax
treaty, as described above, unless you comply with Internal Revenue Service
certification procedures or, in the case of payments made outside the United
States with respect to an offshore account, documentary evidence procedures.
Further, to claim the benefit of a reduced rate of withholding under a tax
treaty for dividends paid after December 31, 2000, you must comply with modified
Internal Revenue Service certification requirements. Special rules also apply to
dividend payments made after December 31, 2000 to foreign intermediaries, U.S.
or foreign wholly owned entities that are disregarded for U.S. federal income
tax purposes and entities that are treated as fiscally transparent in the United
States, the applicable income tax treaty jurisdiction, or both. You should
consult your own tax advisor concerning the effect, if any, of the rules
affecting post-December 31, 2000 dividends on your possible investment in our
common stock.
If you are eligible for a reduced rate of U.S. withholding tax under an
income tax treaty, you may obtain a refund of any excess amounts withheld by
filing an appropriate claim for refund along with the required information with
the Internal Revenue Service.
FEDERAL ESTATE TAX
A debenture owned by an individual who at the time of death is not a citizen
or resident of the United States, as defined for U.S. estate tax purposes, will
not be subject to United States federal estate tax if the individual does not
actually or constructively own 10 percent or more of the total combined voting
power of all classes of our stock entitled to vote at the time of the
individual's death. However, common stock owned by an individual who is not a
citizen or resident of the United States, as defined for U.S. estate tax
purposes, at the time of death will be included in that individual's gross
estate for U.S. federal estate tax purposes, unless an applicable estate tax
treaty provides otherwise.
INFORMATION REPORTING AND BACKUP WITHHOLDING TAX
Under Treasury regulations, we must report annually to the Internal Revenue
Service and to you the amount of dividends or interest, including original issue
discount, as the case may be, paid to you and the tax withheld with respect to
those dividends or interest. Pursuant to an applicable tax treaty, that
information may also be made available to the tax authorities in the country in
which you reside.
United States federal backup withholding generally is a withholding tax
imposed at the rate of 31% on specified payments to persons that fail to furnish
required information under the U.S. information reporting requirements. U.S.
federal backup withholding tax will not apply to payments of interest, including
original issue discount, if you comply with the non-U.S. holder certification
requirements described above under "Withholding Tax on Payments of Principal and
Original Issue Discount." See the discussion under "Distributions on Our Common
Stock" above for rules regarding backup withholding on dividends paid to
non-U.S. holders after December 31, 2000.
As a general matter, information reporting and backup withholding will not
apply to a payment by or through a foreign office of a foreign broker of the
proceeds of a sale of the debentures or our common stock effected outside the
United States. However, information reporting requirements, but not backup
withholding, will apply to a payment by or through a foreign office of a broker
of the proceeds of a sale of the debentures or our common stock effected outside
the United States if that broker:
- is a U.S. person;
- is a foreign person that derives 50% or more of its gross income for
specified periods from the conduct of a trade or business in the U.S.;
- is a "controlled foreign corporation" as defined in the Internal Revenue
Code; or
- is a foreign partnership with specified U.S. connections for payments made
after December 31, 2000.
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Information reporting requirements will not apply in the above cases if the
broker has documentary evidence in its records that you, as the beneficial owner
of the debentures or our common stock, are a non-U.S. holder and specified
conditions are met or you otherwise establish an exemption.
Payment by or through a U.S. office of a broker of the proceeds of a sale of
the debentures or our common stock is subject to both backup withholding and
information reporting unless you certify to the payor in the manner required as
to your non-U.S. holder status under penalties of perjury or you otherwise
establish an exemption.
Amounts withheld under the backup withholding rules do not constitute a
separate U.S. federal income tax. Rather, any amounts withheld under the backup
withholding rules may be refunded or allowed as a credit against your U.S.
federal income tax liability, if any, provided the required information or
appropriate claim for refund is filed with the Internal Revenue Service.
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UNDERWRITING
We and the underwriters named below have entered into an underwriting
agreement with respect to the debentures being offered. Subject to certain
conditions, each underwriter has severally agreed to purchase the aggregate
principal amount at maturity of debentures indicated in the following table.
<TABLE>
<CAPTION>
Aggregate Principal
Amount at Maturity
Underwriters of Debentures
------------ -------------------
<S> <C>
Goldman, Sachs & Co. ....................................... $1,886,990,000
Credit Suisse First Boston Corporation...................... 318,429,000
Salomon Smith Barney Inc. .................................. 318,429,000
Banc of America Securities LLC.............................. 94,349,000
Chase Securities Inc. ...................................... 94,349,000
--------------
Total..................................................... $2,712,546,000
==============
</TABLE>
Debentures sold by the underwriters to the public will initially be offered
at the initial public offering price set forth on the cover of this prospectus.
Any debentures sold by the underwriters to securities dealers may be sold at a
discount from the initial public offering price of up to $8.90 per debenture.
Any such securities dealers may resell any debentures purchased from the
underwriters to certain other brokers or dealers at a discount from the initial
public offering price of up to $0.12 per debenture. If all the debentures are
not sold at the initial public offering price, the underwriters may change the
offering price and the other selling terms.
We have agreed with the underwriters not to dispose of or hedge any of our
common stock or securities convertible into or exchangeable for shares of common
stock during the period from the date of this prospectus supplement continuing
through the date 90 days after the date of this prospectus supplement, except
with the prior written consent of Goldman, Sachs & Co. This agreement does not
apply to any securities issued: (i) under employee benefit plans or dividend
reinvestment plans, (ii) upon exercise of currently outstanding stock options,
(iii) upon conversion or exchange of currently outstanding convertible or
exchangeable securities or (iv) in connection with mergers, acquisitions or
similar transactions. This agreement does not restrict us from filing a shelf
registration statement which includes equity securities.
The debentures are a new issue of securities with no established trading
market. We have been advised by the underwriters that the underwriters intend to
make a market in the debentures but are not obligated to do so and may
discontinue market making at any time without notice. No assurance can be given
as to the liquidity of the trading market for the debentures.
In connection with the offering, the underwriters may purchase and sell
debentures in the open market. These transactions may include short sales,
stabilizing transactions and purchases to cover positions created by short
sales. Short sales involve the sale by the underwriters of a greater number of
debentures than they are required to purchase in the offering. The underwriters
must close out any short position by purchasing debentures in the open market. A
short position is likely to be created if the underwriters are concerned that
there may be downward pressure on the price of the debentures in the open market
after pricing that could adversely affect investors who purchase in the
offering. Stabilizing transactions consist of various bids for or purchases of
debentures made by the underwriters in the open market prior to the completion
of the offering.
The underwriters may also impose a penalty bid. This occurs when a
particular underwriter repays to the underwriters a portion of the
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underwriting discount received by it because the other underwriters have
repurchased debentures sold by or for the account of such underwriter in
stabilizing or short covering transactions.
Purchases to cover a short position and stabilizing transactions may have
the effect of preventing or retarding a decline in the market price of the
debentures, and together with the potential imposition of the penalty bid, may
stabilize, maintain or otherwise affect the market price of the debentures. As a
result, the price of the debentures may be higher than the price that otherwise
might exist in the open market. If these activities are commenced, they may be
discontinued at any time. These transactions may be effected in the
over-the-counter market or otherwise.
We estimate that our share of the total expenses of the offering, excluding
underwriting discounts and commissions, will be approximately $900,000.
We have agreed to indemnify the several underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
In the ordinary course of the underwriters' respective businesses, the
underwriters and their affiliates have engaged and may engage in commmercial and
investment banking transactions with us and our affiliates for which they have
received and may receive customary fees and expenses.
A prospectus in electronic format will be made available on the web sites
maintained by one or more of the underwriters of this offering and may also be
made available on web sites maintained by other underwriters. The underwriters
may agree to allocate a number of shares to underwriters for sale to their
online brokerage account holders. Internet distributions will be allocated by
the underwriters to underwriters that may make Internet distributions on the
same basis as other allocations.
VALIDITY OF SECURITIES
The validity of the securities is being passed upon for us by William D.
Eggers, Esq., Senior Vice President and General Counsel of Corning Incorporated.
The validity of the debentures we are offering is being passed upon for the
underwriters by Sullivan & Cromwell, New York, New York. Mr. Eggers owns
substantially less than 1% of the outstanding shares of our common stock.
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EXPERTS
The consolidated financial statements of our company are incorporated herein
by reference to our Annual Report on Form 10-K, as amended by Form 10-K/A, for
the year ended December 31, 1999, in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
that firm as experts in auditing and accounting.
The consolidated financial statements of NetOptix Corporation appearing in
NetOptix's Annual Report on Form 10-K, for the year ended September 30, 1999
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given on the authority of such firm as experts in
accounting and auditing.
The combined financial statements of the Lichtenwellenleiter Group of
Siemens, A.G. for the year ended September 30, 1999, incorporated herein by
reference to our Current Report on Form 8-K, as amended by Form 8-K/ A filed
with the Securities and Exchange Commission on April 17, 2000, have been so
incorporated in reliance on the report of KPMG Deutsche Treuhand-Gesellschaft
Aktiengesellschaft Wirtschaftsprufungsgesellschaft, independent accountants,
given on the authority of that firm as experts in auditing and accounting.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy this information at the SEC's
public reference rooms in Washington, D.C., New York, New York and Chicago,
Illinois. You can also request copies of the documents, upon payment of a
duplicating fee, by writing the Public Reference Section of the SEC. Please call
the SEC at 1-800-SEC-0330 for further information on the public reference rooms.
These SEC filings are also available to the public from the SEC's web site at
http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we or other
companies file with the SEC. This means that we can disclose important
information to you by referring you to another document filed separately with
the SEC. The information incorporated by reference is considered to be part of
this prospectus. Information that we file later with the SEC will automatically
update information in this prospectus. In all cases, you should rely on the
later information over different information included in this prospectus or the
prospectus supplement.
This prospectus incorporates by reference the documents listed below that we
previously filed with the SEC and that are not included in or delivered with the
documents. They contain important information about our company and its
financial condition.
- Amendment No. 2 to Annual Report on Form 10-K/A for the year ended
December 31, 1999, dated April 7, 2000;
- Quarterly reports on Form 10-Q for the quarters March 31, 2000, June 30,
2000 and September 30, 2000;
- Current Report on Form 8-K, dated January 11, 2000;
- Current Report on Form 8-K, dated January 24, 2000;
- Current Report on Form 8-K, dated January 26, 2000;
- Current Report on Form 8-K, dated February 15, 2000;
- Current Report on Form 8-K, dated February 17, 2000;
- Current Report on Form 8-K, dated February 22, 2000;
- Current Report on Form 8-K, dated March 29, 2000;
- Current Report on Form 8-K/A, dated April 17, 2000;
- Current Report on Form 8-K, dated April 20, 2000;
- Current Report on Form 8-K, dated April 25, 2000;
- Current Report on Form 8-K, dated May 3, 2000;
- Current Report on Form 8-K, dated July 17, 2000;
- Current Report on Form 8-K, dated October 4, 2000;
- Current Report on Form 8-K, dated October 13, 2000;
- Current Report on Form 8-K, dated October 23, 2000;
- Definitive Proxy Statement on Schedule 14A, dated September 19, 2000; and
- Registration Statement on Form 8-A containing a description of our
preferred share rights plan filed on July 11, 1996.
We incorporate by reference additional documents that we may file with the
SEC under Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of
1934, as amended, after the date of this prospectus and before the completion of
this offering. The documents include periodic reports, like Annual Reports on
Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as
well as proxy statements.
In addition, we incorporate by reference Item 14(a) of the Annual Report on
Form 10-K of
S-42
<PAGE>
NetOptix Corporation for the year ended September 30, 1999.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Corning Incorporated
One Riverfront Plaza
Corning, New York 14831
Attention: Secretary
(607) 974-9000
Information in this prospectus may add to, update or change information in a
previously filed document incorporated by reference in this prospectus. In that
case, you should rely on the information in this prospectus. Information in a
document filed after the date of this prospectus may add to, update or change
information in this prospectus or in a previously filed document incorporated by
reference in this prospectus. In that case, you should rely on the information
in the later filed document.
S-43
<PAGE>
PROSPECTUS
[LOGO]
CORNING INCORPORATED
AND
CORNING FINANCE B.V.
By this prospectus, we may offer from time to time up to $4,000,000,000 of:
- DEBT SECURITIES OF CORNING INCORPORATED;
- GUARANTEED DEBT SECURITIES OF CORNING FINANCE B.V.;
- DEBT WARRANTS AND EQUITY WARRANTS OF CORNING INCORPORATED;
- PREFERRED STOCK OF CORNING INCORPORATED;
- DEPOSITARY SHARES OF CORNING INCORPORATED; AND
- COMMON STOCK OF CORNING INCORPORATED.
------------------------
When we offer securities, we will provide you with a prospectus supplement
describing the terms of the specific issue of securities including the offering
price of the securities. You should read this prospectus and the accompanying
prospectus supplement carefully before you invest.
The common stock of Corning Incorporated is quoted on the New York Stock
Exchange under the symbol GLW. On August 31, 2000, the closing price for the
common stock was $327.93.
------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This prospectus is dated September 1, 2000.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Corning Incorporated.................. 2
Corning Finance B.V................... 2
Use of Proceeds....................... 3
Securities We May Issue............... 3
Ratio of Earnings to Fixed Charges and
Ratio of Earnings to Combined
Fixed Charges Including Preferred
Stock Dividends..................... 4
Selected Consolidated Financial
Data................................ 5
</TABLE>
<TABLE>
Description of Debt Securities and
Guarantees.......................... 9
<CAPTION>
PAGE
--------
<S> <C>
Description of Warrants............... 26
Description of Preferred Stock........ 31
Description of Depositary Shares...... 34
Description of Common Stock........... 37
Plan of Distribution.................. 40
Validity of Securities................ 40
Experts............................... 40
Where You Can Find More Information... 41
</TABLE>
CORNING INCORPORATED
We trace our origins to a glass business established in 1851. The present
corporation was incorporated in the State of New York in December 1936, and our
name was changed from Corning Glass Works to Corning Incorporated on April 28,
1989.
We are a global, technology-based corporation that operates in three broadly
based operating business segments:
- Telecommunications;
- Advanced Materials;
- 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 computer displays, projection video
lens assemblies and liquid-crystal display glass for flat panel displays.
Our principal office is located at One Riverfront Plaza, Corning, New York
14831. Our telephone number is (607) 974-9000.
CORNING FINANCE B.V.
Corning Finance B.V. is an indirect wholly owned subsidiary of Corning
Incorporated, incorporated under the laws of The Netherlands solely for the
purpose of raising capital to meet the financing needs of Corning Incorporated
and its subsidiaries. Corning Finance B.V. has no independent operations. Its
principal executive offices are located at Strawinskylaan 3105, 1007 Amsterdam;
telephone: 31.20.406.4444.
2
<PAGE>
USE OF PROCEEDS
Except as may be set forth in the prospectus supplement, we will use the net
proceeds from the sale of the securities offered under this prospectus and the
prospectus supplement for general corporate purposes. Our general corporate
purposes may include:
- the repayment or reduction of indebtedness;
- working capital requirements; and
- the funding of a portion of our normal, ongoing capital spending program.
Corning Finance B.V. will lend the net proceeds from the sale of any debt
securities offered by it to Corning Incorporated or its subsidiaries to be used
for similar purposes. We will determine any specific allocation of the net
proceeds of an offering of securities to a specific purpose at the time of the
offering and will describe the allocation in the related prospectus supplement.
SECURITIES WE MAY ISSUE
We may use this prospectus to offer up to $4,000,000,000 of:
- debt securities issued by Corning Incorporated;
- debt securities issued by Corning Finance B.V. and fully and
unconditionally guaranteed by Corning Incorporated;
- debt warrants and equity warrants issued by Corning Incorporated;
- preferred stock issued by Corning Incorporated;
- depositary shares relating to preferred stock; and
- common stock issued by Corning Incorporated.
A prospectus supplement will describe the specific types, amounts, prices,
and detailed terms of any of these securities.
3
<PAGE>
RATIOS OF EARNINGS TO FIXED CHARGES AND
RATIOS OF EARNINGS TO COMBINED FIXED CHARGES
INCLUDING PREFERRED STOCK DIVIDENDS
The table below sets forth:
- our historical ratios of earnings to fixed charges; and
- our consolidated ratios of earnings to combined fixed charges including
preferred stock dividends for the periods indicated.
For purposes of computing the ratio of earnings to fixed charges, earnings
consist of:
- income from continuing operations before taxes on income, before equity in
earnings and minority interest;
- Corning's share of pre-tax earnings of fifty-percent owned companies;
- Corning's share of pre-tax earnings of greater than fifty-percent owned
unconsolidated subsidiaries;
- dividends received from less than fifty-percent owned companies and
Corning's share of losses of these companies, if any, if any debt of these
companies is guaranteed by Corning;
- previously capitalized interest amortized during the period; and
- fixed charges net of capitalized interest.
Fixed charges consist of:
- interest on indebtedness;
- amortization of debt issuance costs;
- a portion of rental expenses which represents an appropriate interest rate
factor;
- Corning's share of the fixed charges of fifty-percent owned companies; and
- fixed charges of greater than fifty-percent owned and unconsolidated
subsidiaries.
Preferred dividends consist of preferred dividends paid on:
- Corning's 6% Convertible Monthly Income Preferred Securities, all of which
were redeemed as of March 23, 1999 and none of which are currently
outstanding; and
- Corning's 8% Series B Convertible Preferred Stock.
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
------------------- ----------------------------------------------------
JUNE 30, JUNE 30, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31,
2000 1999 1999 1998 1997 1996 1995
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges..... 5.7x 4.4x 5.1x 4.3x 5.2x 5.7x 5.5x
Ratio of earnings to combined fixed
charges and preferred dividends...... 5.7x 4.3x 5.0x 3.9x 4.6x 4.9x 4.4x
</TABLE>
4
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following tables contain Corning's consolidated financial data for the
periods presented. The historical financial data for each of the five years
ended December 31, 1999 have been derived from our audited financial statements.
The historical financial data for the six months ended June 30, 2000 and 1999
have been derived from our unaudited financial statements. Share and per share
data are presented below on a pro forma basis after giving effect to the
three-for-one stock split of Corning common stock effective to Corning
stockholders of record on September 5, 2000. You should read the following
financial data in conjunction with the financial statements, including the
related notes, which are incorporated by reference in the accompanying
prospectus.
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
JUNE 30, FOR THE YEAR ENDED DECEMBER 31,
------------------------------------- -------------------------------------
2000 1999 1999 1998
-------- -------- -------- --------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
OPERATIONS:
Net sales............... $3,127.0 $2,126.7 $4,741.1 $3,831.9
Nonoperating gains...... 6.8 (a) 30.0 (g) 39.7 (k)(l)
Gross margin............ 1,309.3 819.5 1,810.8 1,471.4
Research, development
and engineering
expenses.............. 230.2 171.9 378.2 307.4
Amortization of
purchased intangibles
including goodwill.... 62.3 13.9 27.8 22.2
Nonrecurring charges.... 139.7 (b)(c)(d)(e) 1.4 (h)(i) 84.6 (i)
Income from continuing
operations before tax
on income............. 391.1 290.9 674.9 482.3
Minority interest in
earnings of
subsidiaries.......... 10.1 27.5 66.8 61.6
Equity in earnings
(losses) of associated
companies:
Other than Dow Corning
Corporation......... 73.2 52.0 112.3 97.3
Dow Corning
Corporation.........
Impairment of equity
investment............ (36.3)(f)
Income (loss) from
continuing
operations............ 226.1 (a)(b)(c)(d)(e)(f) 223.5 511.0 (g)(h)(i) 354.8 (k)(i)(l)
Income (loss) from
discontinued
operations, net of
income taxes.......... 4.8 (j) 66.5 (m)
Extraordinary charge,
net of income taxes
and minority
interest..............
-------- -------- -------- --------
NET INCOME (LOSS)....... $ 226.1 $ 223.5 $ 515.8 $ 421.3
======== ======== ======== ========
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-----------------------------------
1997 1996 1995
-------- -------- --------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
OPERATIONS:
Net sales............... $3,831.2 $3,327.5 $2,900.1
Nonoperating gains...... 21.5 (n)
Gross margin............ 1,606.9 1,321.5 1,137.1
Research, development
and engineering
expenses.............. 262.9 200.1 177.3
Amortization of
purchased intangibles
including goodwill.... 21.8 16.3 15.0
Nonrecurring charges.... 5.9 (o) 26.5 (r)
Income from continuing
operations before tax
on income............. 665.8 519.1 356.9
Minority interest in
earnings of
subsidiaries.......... 77.4 59.8 75.2
Equity in earnings
(losses) of associated
companies:
Other than Dow Corning
Corporation......... 79.2 83.8 68.2
Dow Corning
Corporation......... (348.0)(r)
Impairment of equity
investment............
Income (loss) from
continuing
operations............ 430.6 355.2 (130.3)(r)
Income (loss) from
discontinued
operations, net of
income taxes.......... 30.9 (136.9)(p) 29.0
Extraordinary charge,
net of income taxes
and minority
interest.............. (0.9)(q) (1.6)(q)
-------- -------- --------
NET INCOME (LOSS)....... $ 461.5 $ 217.4 $ (102.9)
======== ======== ========
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
JUNE 30, FOR THE YEAR ENDED DECEMBER 31,
------------------------------------- -------------------------------------
2000 1999 1999 1998
-------- -------- -------- --------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
PRO FORMA BASIC EARNINGS
PER SHARE
Continuing
operations.......... $ 0.27 $ 0.29 $ 0.67 $ 0.48
Discontinued
operations.......... 0.09
-------- -------- -------- --------
Net income (loss)..... $ 0.27 $ 0.29 $ 0.67 $ 0.57
======== ======== ======== ========
PRO FORMA DILUTED
EARNINGS PER SHARE
Continuing
operations.......... $ 0.27 $ 0.29 $ 0.65 $ 0.47
Discontinued
operations.......... 0.01 0.09
-------- -------- -------- --------
Net income (loss)..... $ 0.27 $ 0.29 $ 0.66 $ 0.56
======== ======== ======== ========
Book value per share.... 8.64 2.83 3.15 2.31
Dividends declared per
share................. $ 0.12 $ 0.12 $ 0.24 $ 0.24
FINANCIAL POSITION:
Cash and cash
equivalents......... $1,379.5 $ 83.8 $ 280.4 $ 59.2
Working capital....... 2,239.8 561.6 430.2 347.7
Total assets.......... 11,933.9 5,960.5 6,526.0 5,464.3
Loans payable beyond
one year(s)......... 1,977.3 1,473.2 1,490.4 1,217.8
Minority interest in
subsidiary
companies........... 132.6 363.5 284.8 346.1
Convertible preferred
securities of
subsidiary.......... 365.2
Convertible preferred
stock............... 9.6 15.1 13.5 17.9
Common shareholders'
equity(t)........... 7,605.3 2,200.3 2,462.7 1,706.6
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-----------------------------------
1997 1996 1995
-------- -------- --------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
PRO FORMA BASIC EARNINGS
PER SHARE
Continuing
operations.......... $ 0.59 $ 0.49 $ (0.18)
Discontinued
operations.......... 0.04 (0.19) 0.04
-------- -------- --------
Net income (loss)..... $ 0.63 $ 0.30 $ (0.14)
======== ======== ========
PRO FORMA DILUTED
EARNINGS PER SHARE
Continuing
operations.......... $ 0.57 $ 0.48 $ (0.18)
Discontinued
operations.......... 0.04 0.18 0.04
-------- -------- --------
Net income (loss)..... $ 0.61 $ 0.30 $ (0.14)
======== ======== ========
Book value per share.... 1.93 1.55 3.03
Dividends declared per
share................. $ 0.24 $ 0.24 $ 0.24
FINANCIAL POSITION:
Cash and cash
equivalents......... $ 105.6 $ 221.2 $ 193.5
Working capital....... 326.2 524.2 349.7
Total assets.......... 5,079.7 4,557.7 5,647.0
Loans payable beyond
one year(s)......... 1,277.3 1,333.3 1,417.6
Minority interest in
subsidiary
companies........... 354.3 320.8 305.8
Convertible preferred
securities of
subsidiary.......... 365.3 365.1 364.7
Convertible preferred
stock............... 19.8 22.2 23.9
Common shareholders'
equity(t)........... 1,428.7 1,132.8 2,222.2
</TABLE>
NOTES TO SELECTED FINANCIAL INFORMATION
All per share data are presented on a pro forma basis to reflect the
three-for-one stock split of Corning common stock effective to Corning
stockholders of record on September 5, 2000.
(a) In January 2000, Corning sold Quanterra Incorporated to Severn Trent
Laboratories for $35 million. In the first quarter of 2000, Corning recorded
a nonoperating gain of $6.8 million ($4.2 million after tax).
(b) During the first quarter of 2000, Corning recognized a charge of $47 million
($43.4 million after tax), or $0.05 per share, for one time acquisition
costs related to the pooling of interests for Oak Industries.
(c) In February 2000, Corning acquired British Telecommunication's Photonics
Research Center for approximately $66 million in cash. Corning recorded a
first quarter charge of $42 million ($25.7 million after tax), or $0.03 per
share, for in-process research and development.
(d) In June 2000, Corning acquired the remaining 67% interest in IntelliSense
Corporation, a manufacturer of micro-electro-mechanical devices in exchange
for 2,016,753 shares of Corning common stock and the assumption of stock
options convertible into 656,104 shares of Corning common stock. This
consideration was valued at approximately $410 million. As part of the
6
<PAGE>
transaction Corning recorded a second quarter charge of $6.7 million, or
$0.01 per share for in-process research and development.
(e) In May 2000, Corning acquired the remaining 84% interest in NZ Applied
Technologies (NZAT), a developer and manufacturer of photonic components for
optical telecommunications applications including the optical data networks
industry, in exchange for Corning common stock. Corning issued 440,583
shares of common stock at closing with a value of approximately $75 million,
and placed an additional 440,583 shares in escrow to be issued over the next
three years contingent upon NZAT achieving certain product development and
sales milestones. Corning recorded a charge of $44.0 million, or $0.05 per
share for in-process research and development.
(f) Pittsburg 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
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 $0.04
per share to impair its entire investment in PCC in the first quarter of
2000.
(g) 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 $0.01 per share as a result of this transaction.
(h) In the third quarter of 1999, Corning recognized an impairment loss of
$15.5 million pretax ($10.0 million after tax), or $0.01 per share, in
connection with management's decision to sell Quanterra Incorporated. The
impairment loss reduces Corning's investment in these assets to an amount
equal to management's current estimate of fair value. Disposition of the
business occurred in February 2000.
(i) In the second quarter of 1998, Corning recorded a restructuring charge of
$84.6 million ($49.2 million after tax and minority interests), or $0.06 per
share. During the fourth quarter of 1999, Corning determined that the actual
costs of certain benefits included in the retirement incentive program were
less than estimated in the second quarter of 1998 and released restructuring
reserves totaling $14.1 million ($8.6 million after tax) or $0.01 per share.
(j) During the fourth quarter of 1999, certain indemnification agreements
related to the April 1998 sale of Corning's consumer housewares business
expired. As a result, Corning recognized income from discontinued operations
of $7.8 million ($4.8 million after tax) or $0.01 per share in the fourth
quarter from the release of reserves provided at the date of the
transaction.
(k) In the second quarter of 1998, Molecular Simulations, Inc. (MSI) merged with
Pharmacopeia, Inc., a publicly traded company (NASDAQ: PCOP). Corning
previously owned 35% of MSI and owned approximately 15% of the combined
entity at the time of the merger. Corning realized a gain of $20.5 million
($13.2 million after tax), or $0.02 per share, from this transaction.
(l) In the fourth quarter of 1998, Corning recorded a non-operating gain of
$19.2 million ($9.7 million after tax), or $0.01 per share, related to the
divestiture of several small businesses within the science products
division.
(m) On April 1, 1998, Corning completed the recapitalization and sale of a
controlling interest in its consumer housewares business to an affiliate of
Borden, Inc. Corning received cash proceeds of $593 million and continues to
retain a 3% interest in World Kitchen Inc., formerly the Corning Consumer
Products Company. Corning recorded an after-tax gain of $67.1 million, or
$0.09 per share, in the second quarter of 1998. The $66.5 million net income
from discontinued operations includes a $0.6 million loss from operations of
the discontinued business through March 31, 1998.
7
<PAGE>
(n) During 1996, Oak Industries recorded a pre-tax gain of $21.5 million on the
sale of equity investments.
(o) During 1996, Oak Industries recorded a pre-tax charge of $5.9 million
primarily related to asset write-downs.
(p) On December 31, 1996, Corning distributed all of the shares of Quest
Diagnostics Incorporated and Covance Inc., which collectively comprised
Corning's Health Care Services segment, to its shareholders on a pro rata
basis. Corning recorded a provision for loss on the distributions of
$176.5 million, or $0.23 per share, offset by income from discontinued
operations of $9.2 million, or $0.01 per share, recognized in the first
quarter of 1996. Corning recorded an additional $30.4 million, or $0.04 per
share of income from discontinued operations related to other businesses
including $10.8 million related to discontinued operations at Oak
Industries.
(q) Oak Industries previously existing $30 million and $200 million credit
agreements were terminated on August 30, 1995 and November 1, 1996,
respectively. As a result, Oak Industries recorded non-cash, after tax
charges of $1.6 million and $0.9 million in 1995 and 1996, respectively,
related to the early extinguishment of the former credit facilities.
(r) In 1995, Corning recognized a restructuring charge from continuing
operations totaling $26.5 million ($16.1 million after tax), or $0.02 per
share, as a result of severance for workforce reductions in corporate staff
groups and the write-off of production equipment caused by the decision to
exit the manufacturing facility for glass-ceramic memory disks.
Corning also recorded an after-tax charge of $365.5 million, or $0.51 per
share, to fully reserve its investment in Dow Corning Corporation (a
50%-owned equity company) as a result of Dow Corning Corporation filing for
protection under Chapter 11 of the United States Bankruptcy Code in
May 1995. Corning recognized equity earnings totaling $17.5 million from Dow
Corning Corporation in the first quarter of 1995. Corning discontinued
recognition of equity earnings from Dow Corning Corporation beginning in the
second quarter of 1995.
(s) In February of 2000, Corning completed an offering of Euro-denominated
securities which generated net proceeds of $485 million. Corning used the
proceeds as long-term financing of a portion of the cash purchase price for
the Siemens acquisition.
(t) Corning closed an equity offering of 14,950,000 shares of its common stock
on January 31, 2000. The transaction generated net proceeds of $2.2 billion
of which approximately $645 million was used to fund a portion of the
purchase price for its acquisition of Siemens AG's worldwide optical cable
and hardware business and the remaining 50% of its investment in Siecor
Corporation and Siecor GmbH. The purchase price of $1.4 billion included
approximately $120 million of assumed debt and contingent consideration of
$145 million.
8
<PAGE>
DESCRIPTION OF DEBT SECURITIES AND GUARANTEES
GENERAL
THE DEBT SECURITIES WILL BE ISSUED UNDER AN INDENTURE
As required by U.S. federal law for all bonds and notes of companies that
are publicly offered, the debt securities are governed by a document called the
indenture. In the case of debt securities issued by Corning Incorporated, the
applicable indenture is a contract between Corning Incorporated and The Chase
Manhattan Bank, which acts as trustee. In the case of debt securities issued by
Corning Finance B.V., the applicable indenture is a contract among Corning
Finance B.V., Corning Incorporated, which acts as guarantor, and The Chase
Manhattan Bank, which acts as trustee. The trustee has two main roles:
- First, the trustee can enforce your rights against us if we default. There
are limitations on the extent to which the trustee acts on your behalf,
which we describe later under "--Default, Remedies and Waiver of Default";
and
- Second, the trustee performs administrative duties for us, which include
sending you interest payments and notices.
We may issue as many distinct series of debt securities under each indenture
as we wish. This section summarizes terms of the debt securities that are common
to all series. Most of the financial terms and other specific terms of your
series are described in the prospectus supplement attached to the front of this
prospectus. Those terms may vary from the terms described here. The prospectus
supplement may also describe special Federal income tax consequences of the debt
securities.
THIS SECTION IS ONLY A SUMMARY
This section and your prospectus supplement summarize all the material terms
of each indenture and your debt security. They do not, however, describe every
aspect of each indenture and your debt security.
Each indenture and its associated documents, including your debt security,
contain the full text of the matters described in this section and your
prospectus supplement. Each indenture and the debt securities are governed by
New York law. A copy of each indenture has been filed with the SEC as part of
our registration statement. See "Where You Can Find More Information" below for
information on how to obtain a copy.
LEGAL OWNERSHIP OF DEBT SECURITIES
We refer to those who have debt securities registered in their own names, on
the books that we or the trustee maintain for this purpose, as the "holders" of
those debt securities. These persons are the legal holders of the debt
securities. We refer to those who, indirectly through others, own beneficial
interests in debt securities that are not registered in their own names as
indirect holders of those debt securities. As we discuss below, indirect holders
are not legal holders, and investors in debt securities issued in book-entry
form or in street name will be indirect holders.
BOOK-ENTRY HOLDERS
We will issue debt securities in book-entry form only, unless we specify
otherwise in the applicable prospectus supplement. This means debt securities
will be represented by one or more global securities registered in the name of a
financial institution that holds them as depositary on behalf of other financial
institutions that participate in the depositary's book-entry system. These
participating institutions, in turn, hold beneficial interests in the debt
securities on behalf of themselves or their customers.
Under each indenture, only the person in whose name a debt security is
registered is recognized as the holder of that debt security. Consequently, for
debt securities issued in global form, we will recognize only the depositary as
the holder of the debt securities and we will make all payments on the debt
securities to the depositary. The depositary passes along the payments it
receives to its
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participants, which in turn pass the payments along to their customers who are
the beneficial owners. The depositary and its participants do so under
agreements they have made with one another or with their customers; they are not
obligated to do so under the terms of the debt securities.
As a result, investors will not own debt securities directly. Instead, they
will own beneficial interests in a global security, through a bank, broker or
other financial institution that participates in the depositary's book-entry
system or holds an interest through a participant. As long as the debt
securities are issued in global form, investors will be indirect holders, and
not holders, of the debt securities.
STREET NAME HOLDERS
In the future we may terminate a global security or issue debt securities
initially in non-global form. In these cases, investors may choose to hold their
debt securities in their own names or in "street name". Debt securities held by
an investor in street name would be registered in the name of a bank, broker or
other financial institution that the investor chooses, and the investor would
hold only a beneficial interest in those debt securities through an account he
or she maintains at that institution.
For debt securities held in street name, we will recognize only the
intermediary banks, brokers and other financial institutions in whose names the
debt securities are registered as the holders of those debt securities and we
will make all payments on those debt securities to them. These institutions pass
along the payments they receive to their customers who are the beneficial
owners, but only because they agree to do so in their customer agreements or
because they are legally required to do so. Investors who hold debt securities
in street name will be indirect holders, not holders, of those debt securities.
LEGAL HOLDERS
Our obligations, as well as the obligations of the trustee and those of any
third parties employed by us or the trustee, run only to the legal holders of
the debt securities. We do not have obligations to investors who hold beneficial
interests in global securities, in street name or by any other indirect means.
This will be the case whether an investor chooses to be an indirect holder of a
debt security or has no choice because we are issuing the debt securities only
in global form.
For example, once we make a payment or give a notice to the holder, we have
no further responsibility for the payment or notice even if that holder is
required, under agreements with depositary participants or customers or by law,
to pass it along to the indirect holders but does not do so. Similarly, if we
want to obtain the approval of the holders for any purpose--E.G., to amend the
applicable indenture or to relieve us of the consequences of a default or of our
obligation to comply with a particular provision of the applicable indenture--we
would seek the approval only from the holders, and not the indirect holders, of
the debt securities. Whether and how the holders contact the indirect holders is
up to the holders.
When we refer to you, we mean those who invest in the debt securities being
offered by this prospectus, whether they are the holders or only indirect
holders of those debt securities. When we refer to your debt securities, we mean
the debt securities in which you hold a direct or indirect interest.
SPECIAL CONSIDERATIONS FOR INDIRECT HOLDERS
If you hold debt securities through a bank, broker or other financial
institution, either in book-entry form or in street name, you should check with
your own institution to find out:
- how it handles securities payments and notices;
- whether it imposes fees or charges;
- how it would handle a request for the holders' consent, if ever required;
- whether and how you can instruct it to send you debt securities registered
in your own name so you can be a holder, if that is permitted in the
future;
- how it would exercise rights under the debt securities if there were a
default or
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other event triggering the need for holders to act to protect their
interests; and
- if the debt securities are in book-entry form, how the depositary's rules
and procedures will affect these matters.
WHAT IS A GLOBAL SECURITY?
We will issue each debt security in book-entry form only, unless we specify
otherwise in the applicable prospectus supplement. A global security represents
one or any other number of individual debt securities. Generally, all debt
securities represented by the same global securities will have the same terms.
We may, however, issue a global security that represents multiple debt
securities that have different terms and are issued at different times. We call
this kind of global security a master global security.
Each debt security issued in book-entry form will be represented by a global
security that we deposit with and register in the name of a financial
institution or its nominee that we select. The financial institution that we
select for this purpose is called the depositary. Unless we specify otherwise in
the applicable prospectus supplement, The Depository Trust Company, New York,
New York, known as DTC, will be the depositary for all debt securities issued in
book-entry form.
A global security may not be transferred to or registered in the name of
anyone other than the depositary or its nominee, unless special termination
situations arise. We describe those situations below under "--Special Situations
When a Global Security Will Be Terminated". As a result of these arrangements,
the depositary, or its nominee, will be the sole registered owner and holder of
all debt securities represented by a global security, and investors will be
permitted to own only beneficial interests in a global security. Beneficial
interests must be held by means of an account with a broker, bank or other
financial institution that in turn has an account with the depositary or with
another institution that does. Thus, an investor whose security is represented
by a global security will not be a holder of the debt security, but only an
indirect holder of a beneficial interest in the global security.
If the prospectus supplement for a particular debt security indicates that
the debt security will be issued in global form only, then the debt security
will be represented by a global security at all times unless and until the
global security is terminated. We describe the situations in which this can
occur below under "--Special Situations When a Global Security Will Be
Terminated". The global security may be a master global security, although your
prospectus supplement will not indicate whether it is a master global security.
If termination occurs, we may issue the debt securities through another
book-entry clearing system or decide that the debt securities may no longer be
held through any book-entry clearing system.
SPECIAL CONSIDERATIONS FOR GLOBAL SECURITIES
As an indirect holder, an investor's rights relating to a global security
will be governed by the account rules of the investor's financial institution
and of the depositary, as well as general laws relating to securities transfers.
We do not recognize this type of investor as a holder of debt securities and
instead deal only with the depositary that holds the global security.
If debt securities are issued only in the form of a global security, an
investor should be aware of the following:
- An investor cannot cause the debt securities to be registered in his or
her name, and cannot obtain non-global certificates for his or her
interest in the debt securities, except in the special situations we
describe below;
- An investor will be an indirect holder and must look to his or her own
bank or broker for payments on the debt securities and protection of his
or her legal rights relating to the debt securities, as we describe under
"--Legal Ownership of Debt Securities" above;
- An investor may not be able to sell interests in the debt securities to
some insurance companies and to other institutions that are required by
law to
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own their securities in non-book-entry form;
- An investor may not be able to pledge his or her interest in a global
security in circumstances where certificates representing the debt
securities must be delivered to the lender or other beneficiary of the
pledge in order for the pledge to be effective;
- The depositary's policies, which may change from time to time, will govern
payments, transfers, exchanges and other matters relating to an investor's
interest in a global security. We and the trustee have no responsibility
for any aspect of the depositary's actions or for its records of ownership
interests in a global security. We and the trustee also do not supervise
the depositary in any way;
- The depositary may (and we understand that DTC will) require that those
who purchase and sell interests in a global security within its book-entry
system use immediately available funds and your broker or bank may require
you to do so as well; and
- Financial institutions that participate in the depositary's book-entry
system, and through which an investor holds its interest in a global
security, may also have their own policies affecting payments, notices and
other matters relating to the debt securities. There may be more than one
financial intermediary in the chain of ownership for an investor. We do
not monitor and are not responsible for the actions of any of those
intermediaries.
SPECIAL SITUATIONS WHEN A GLOBAL SECURITY WILL BE TERMINATED
In a few special situations described below, a global security will be
terminated and interests in it will be exchanged for certificates in non-global
form representing the debt securities it represented. After that exchange, the
choice of whether to hold the debt securities directly or in street name will be
up to the investor. Investors must consult their own banks or brokers to find
out how to have their interests in a global security transferred on termination
to their own names, so that they will be holders. We have described the rights
of holders and street name investors above under "--Legal Owner of Debt
Securities".
The special situations for termination of a global security are as follows:
- if the depositary notifies us that it is unwilling, unable or no longer
qualified to continue as depositary for that global security and we do not
appoint another institution to act as depositary within 60 days;
- if we notify the trustee that we wish to terminate that global security;
or
- if an event of default has occurred with regard to debt securities
represented by that global security and has not been cured or waived; we
discuss defaults later under "--Default, Remedies and Waiver of Default".
If a global security is terminated, only the depositary, and not we or the
trustee, is responsible for deciding the names of the institutions in whose
names the debt securities represented by the global security will be registered
and, therefore, who will be the holders of those debt securities.
RANKING
Each series of debt securities will not be secured by any property or assets
of Corning Incorporated or Corning Finance B.V., and will not be subordinated to
any other obligations of either Corning Incorporated or Corning Finance B.V., as
applicable.
FULL AND UNCONDITIONAL GUARANTEE OF DEBT SECURITIES OF CORNING FINANCE B.V.
All debt securities issued by Corning Finance B.V. will be fully and
unconditionally guaranteed under a guarantee of Corning Incorporated of the
payment of principal of, and any premium, interest and "additional amounts" on,
these debt securities when due, whether at maturity or otherwise. For a
discussion of the payment of "additional amounts", please see
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"--Payment of Additional Amounts with Respect to the Guaranteed Debt
Securities". Under the terms of the full and unconditional guarantee, holders of
the guaranteed debt securities will not be required to exercise their remedies
against Corning Finance B.V. before they proceed directly against Corning
Incorporated.
PAYMENT OF ADDITIONAL AMOUNTS WITH RESPECT TO THE GUARANTEED DEBT SECURITIES
Unless otherwise indicated in your prospectus supplement, all amounts of
principal of, and any premium and interest on, any guaranteed debt securities
will be paid by Corning Finance B.V. without deduction or withholding for any
taxes, assessments or other charges imposed by the government of The
Netherlands, or the government of a jurisdiction in which a successor to Corning
Finance B.V. is organized. If deduction or withholding of any of these charges
is required by The Netherlands, or by a jurisdiction in which a successor to
Corning Finance B.V. is organized, Corning Finance B.V. will pay as additional
interest any additional amounts necessary to make the net amount paid to the
affected holders equal the amount the holders would have received in the absence
of the deduction or withholding. However, these "additional amounts" do not
include:
- the amount of any tax, assessment or other governmental charge imposed by
any unit of the United States;
- the amount of any tax, assessment or other governmental charge which is
only payable because either:
-- a type of connection exists between the holder and The Netherlands;
or
-- the holder presented the debt security for payment more than 30 days
after the date on which the relevant payment became due or was
provided for, whichever is later;
- the amount of any tax, assessment or other governmental charge which is
payable other than by deduction or withholding from a payment on the debt
securities;
- the amount of any tax, assessment or other governmental charge that is
imposed or withheld due to the beneficial owner of the debt security
failing to comply with a request from us to either provide information
concerning the beneficial owner's nationality, residence or identity or
make any claim to satisfy any information or reporting requirement, if the
completion of either would have provided an exemption from the applicable
governmental charge; or
- any combination of the taxes, assessments or other governmental charges
described above.
The prospectus supplement will describe any additional circumstances under
which additional amounts will not be paid with respect to debt securities.
REDEMPTION AND REPAYMENT
Unless otherwise indicated in your prospectus supplement, your debt security
will not be entitled to the benefit of any sinking fund--that is, we will not
deposit money on a regular basis into any separate custodial account to repay
your debt securities. In addition, we will not be entitled to redeem your debt
security before its stated maturity unless your prospectus supplement specifies
a redemption commencement date. You will not be entitled to require us to buy
your debt security from you, before its stated maturity, unless your prospectus
supplement specifies one or more repayment dates.
If your prospectus supplement specifies a redemption commencement date or a
repayment date, it will also specify one or more redemption prices or repayment
prices, which will be expressed as a percentage of the principal amount of your
debt security. It may also specify one or more redemption periods during which
the redemption prices relating to a redemption of debt securities during those
periods will apply.
If your prospectus supplement specifies a redemption commencement date, your
debt security will be redeemable at our option at any time on or after that
date. If we redeem your
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debt security, we will do so at the specified redemption price, together with
interest accrued to the redemption date. If different prices are specified for
different redemption periods, the price we pay will be the price that applies to
the redemption period during which your debt security is redeemed.
If your prospectus supplement specifies a repayment date, your debt security
will be repayable at your option on the specified repayment date at the
specified repayment price, together with interest accrued to the repayment date.
In the event that we exercise an option to redeem any debt security, we will
give to the trustee and the holder written notice of the principal amount of the
debt security to be redeemed, not less than 30 days nor more than 60 days before
the applicable redemption date. We will give the notice in the manner described
below in "--Notices".
If a debt security represented by a global security is subject to repayment
at the holder's option, the depositary or its nominee, as the holder, will be
the only person that can exercise the right to repayment. Any indirect holders
who own beneficial interests in the global security and wish to exercise a
repayment right must give proper and timely instructions to their banks or
brokers through which they hold their interests, requesting that they notify the
depositary to exercise the repayment right on their behalf. Different firms have
different deadlines for accepting instructions from their customers, and you
should take care to act promptly enough to ensure that your request is given
effect by the depositary before the applicable deadline for exercise.
STREET NAME AND OTHER INDIRECT HOLDERS SHOULD CONTACT THEIR BANKS OR BROKERS
FOR INFORMATION ABOUT HOW TO EXERCISE A REPAYMENT RIGHT IN A TIMELY MANNER.
In the event that the option of the holder to elect repayment as described
above is deemed to be a "tender offer" within the meaning of Rule 14e-1 under
the Securities Exchange Act of 1934, we will comply with Rule 14e-1 as then in
effect to the extent it is applicable to us and the transaction.
We or our affiliates may purchase debt securities from investors who are
willing to sell from time to time, either in the open market at prevailing
prices or in private transactions at negotiated prices. Debt securities that we
or they purchase may, at our discretion, be held, resold or canceled.
OPTIONAL TAX REDEMPTION
Unless otherwise indicated in your prospectus supplement, except in the case
of debt securities that have a variable rate of interest, which may be redeemed
on any interest payment date, Corning Finance B.V. may redeem each series of
debt securities at its option in whole but not in part at any time. Except in
the case of outstanding original issue discount debt securities which may be
redeemed at the redemption price specified by the terms of that series of debt
securities, the redemption price will be equal to the principal amount plus
accrued interest to the date of redemption, if:
- Corning Finance B.V. would be required to pay additional amounts, as a
result of any change in the tax laws of The Netherlands which becomes
effective on or after the date of issuance of that series, as explained
above under "--Payment of Additional Amounts With Respect to the
Guaranteed Debt Securities", or
- as a result of any change in any treaty affecting taxation to which The
Netherlands, or a jurisdiction in which a successor to Corning Finance
B.V. is organized, is a party which becomes effective on or after a date
on which Corning Incorporated borrows money from Corning Finance B.V.,
Corning Incorporated would be required to deduct or withhold tax on any
payment to Corning Finance B.V. to enable it to make any payment of
principal, premium, if any, or interest.
In both of these cases, however, we will not be permitted to redeem a series
of debt securities if we can avoid either the payment of additional amounts, or
deductions or withholding, as the case may be, by using reasonable measures
available to us.
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CONVERSION
Your debt securities may be convertible into or exchangeable for common
stock or other securities of Corning Incorporated if your prospectus supplement
so provides. If your debt securities are convertible or exchangeable, your
prospectus supplement will include provisions as to whether conversion or
exchange is mandatory, at your option or at our option. Your prospectus
supplement would also include provisions regarding the adjustment of the number
of shares of common stock or other securities of Corning Incorporated to be
received by you upon conversion or exchange.
MERGERS AND SIMILAR TRANSACTIONS
We are generally permitted to merge or consolidate with another firm. We are
also permitted to sell substantially all our assets to another firm. We may not
take any of these actions, however, unless all the following conditions are met:
- Where we merge out of existence or sell our assets, the successor firm
must agree to be legally responsible for the debt securities and must be
organized as a corporation, partnership, trust, limited liability company
or similar entity. In the case of a merger or consolidation of Corning
Incorporated, the successor firm may not be organized under a foreign
country's laws, that is, it must be organized under the laws of a State or
the District of Columbia or under federal law. In the case of a merger or
consolidation of Corning Finance B.V., the successor firm may be organized
under the laws of any jurisdiction.
- The merger, sale of assets or other transaction must not cause a default
on the debt securities, and we must not already be in default, unless the
merger or other transaction would cure the default. For purposes of this
no-default test, a default would include an event of default that has
occurred and not been cured, as described below under "Event of Default".
A default for this purpose would also include any event that would be an
event of default if the requirements for giving us default notice or our
default having to exist for a specific period of time were disregarded.
- It is possible that the merger, sale of assets or other transaction would
cause some of our property to become subject to a mortgage or other legal
mechanism giving lenders preferential rights in that property over other
lenders or over our general creditors if we fail to pay them back. We have
promised to limit these preferential rights on our property, called
"liens." This limitation is discussed below under "Restrictive Covenant
and Defeasance Restrictions on Liens". If a merger or other transaction
would create any liens on our property, we must comply with that
restrictive covenant. We would do this either by deciding that the liens
were permitted, or by following the requirements of the restrictive
covenant to grant an equivalent or higher-ranking lien on the same
property to you and the other direct holders of the debt securities.
- In the case of the guaranteed debt securities, the successor to Corning
Finance B.V., if not organized in the United States, must agree to pay the
holder of each guaranteed debt security any "additional amounts" or other
expenses imposed on the holder as a result of the merger, consolidation or
sale, as explained above under "--Payment of Additional Amounts with
Respect to the Guaranteed Debt Securities".
RESTRICTIVE COVENANTS AND DEFEASANCE
RESTRICTIONS ON LIENS
In each indenture, Corning Incorporated promises that it will not become
obligated on any new debt that is secured by a lien on any of its principal
domestic manufacturing properties, or on any shares of stock or debt of any of
its domestic subsidiaries, unless it grants an equivalent or higher-ranking lien
on the same property to you and the other direct holders of
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the debt securities and, if applicable, the guarantees.
Corning Incorporated does not need to comply with this restriction if the
amount of all debt that is secured by liens on its principal domestic
manufacturing properties is less than 10% of its consolidated net tangible
assets. In performing this calculation, debt secured would include the new debt
and the securities which it would secure as described in the previous paragraph.
This restriction on liens does not apply to debt secured by the following
types of liens, and Corning Incorporated can disregard this debt when we
calculate the limits imposed by this restriction:
- liens on the property of any domestic subsidiaries of Corning
Incorporated, or on their shares of stock or debt, if those liens existed
at the time the corporation became a domestic subsidiary of Corning
Incorporated or as of the date that debt securities are first issued under
the applicable indenture;
- liens in favor of Corning Incorporated or its domestic subsidiaries;
- some mechanics' liens, tax liens, liens in favor of, and to secure
payments or the acquisition of property from any governmental body by law
or because of a contract Corning Incorporated has entered into, and other
liens incidental to construction, conduct of business or ownership of its
property or of any domestic subsidiary;
- liens on property that existed at the time Corning Incorporated acquired
the property, including property it may acquire through a merger or
similar transaction, or that it granted in order to purchase, alter or
construct the property, sometimes called "purchase money mortgages"; and
- liens arising from any judgment, decree or order of a court so long as
proceedings to review these judgments have not been terminated or the
period in which to initiate proceedings has not expired.
Corning Incorporated can also disregard debt secured by liens that extend,
renew or replace any of these types of liens.
Corning Incorporated and its subsidiaries are permitted to have as much
unsecured debt as they may choose, and neither indenture restricts liens on any
of the shares of stock of Corning Incorporated or of less than 80%-owned
subsidiaries.
RESTRICTIONS ON SALES AND LEASEBACKS
In each indenture, Corning Incorporated promises that neither it nor any of
its domestic subsidiaries will enter into any sale and leaseback transaction
involving a principal domestic manufacturing property, unless it complies with
this restrictive covenant. A "sale and leaseback transaction" generally is an
arrangement between Corning Incorporated or a domestic subsidiary and a bank,
insurance company or other lender or investor where Corning Incorporated or the
domestic subsidiary lease a principal domestic manufacturing property which was
or will be sold by Corning Incorporated or the domestic subsidiary to that
lender or investor more than 180 days after the completion of construction of
the property and the beginning of its full operation.
Corning Incorporated does not need to comply with this restriction if the
amount of attributable debt is less than 10% of its consolidated net tangible
assets. Corning Incorporated can comply with this restrictive covenant if it
retires an amount of funded debt, within 180 days of the transaction, equal to
at least the net proceeds of the sale of the principal domestic manufacturing
property that it leases in the transaction or the fair value of that property,
subject to credits for voluntary retirements of debt securities and funded debt
we may make, whichever is greater.
This restriction on sales and leasebacks does not apply to any sale and
leaseback transaction that is between Corning Incorporated and one of its
domestic subsidiaries or between domestic subsidiaries,
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or that involves a lease for a period of three years or less.
DEFINITIONS RELATING TO OUR RESTRICTIVE COVENANTS
Following are the meanings of the terms that are important in understanding
the restrictive covenants previously described.
- "attributable debt" means the total net amount of rent, discounted at a
rate of 15% per annum compounded semi-annually, that is required to be
paid during the remaining term of any lease.
- "consolidated net tangible assets" is the total amount of assets, less
reserves and other permitted deductible items, after subtracting all
current liabilities and all goodwill, trade names, trademarks, patents,
unamortized debt discounts and expenses and similar intangible assets, as
these amounts appear on the most recent consolidated balance sheet of
Corning Incorporated and computed in accordance with generally accepted
accounting principles.
- A "domestic subsidiary" means any subsidiary of Corning Incorporated
except one which does not transact a substantial portion of its business
in the United States or does not regularly keep a substantial portion of
its assets, other than intangible assets, in the United States, or one
that is used primarily to finance the operations of Corning Incorporated
outside of the United States. A "subsidiary" is a corporation in which
Corning Incorporated and/or one or more of its other subsidiaries owns at
least 80% of the voting stock, which is a kind of stock that ordinarily
permits its owners to vote for the election of directors.
- "funded debt" means all debt for borrowed money that either has a maturity
of 12 months or more from the date on which the calculation of funded debt
is made or has a maturity of less than 12 months from that date but is by
its terms renewable or extendible beyond 12 months from that date at the
option of the borrower.
- A "principal domestic manufacturing property" is any building or other
structure or facility, and the land on which it sits and its associated
fixtures, that Corning Incorporated uses primarily for manufacturing or
processing, that has a gross book value in excess of 3% of consolidated
net tangible assets and that is located in the United States, other than a
building, structure or other facility that is financed by industrial
revenue bonds or that the board of directors of Corning Incorporated has
determined is not of material importance to the total business that
Corning Incorporated and its subsidiaries conduct.
DEFEASANCE AND COVENANT DEFEASANCE
Unless we say otherwise in the applicable prospectus supplement, the
provisions for full defeasance and covenant defeasance described below apply to
each series of debt securities. In general, we expect these provisions to apply
to each U.S. dollar-denominated debt security that is not a floating rate or
indexed debt security.
FULL DEFEASANCE. If there is a change in U.S. federal tax law, as described
below, we can legally release ourselves from all payment and other obligations
on your debt securities. This is called full defeasance. To do so, each of the
following must occur:
- We must deposit in trust for the benefit of all holders a combination of
money and U.S. government or U.S. government agency notes or bonds that
will generate enough cash to make interest, principal and any other
payments on your debt securities on their various due dates;
- There must be a change in current U.S. federal tax law or an Internal
Revenue Service ruling that lets us make the above deposit without causing
you to be taxed on your debt security any differently than if we did not
make the deposit and just repaid the debt security ourselves. Under
current federal tax law, the deposit and
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our legal release from the debt security would be treated as though we
took back your debt security and gave you your share of the cash and debt
security or bonds deposited in trust. In that event, you could recognize
gain or loss on your debt security; and
- We must deliver to the trustee a legal opinion of our counsel confirming
the tax law change described above.
If we ever fully defease your debt security, you will have to rely solely on
the trust deposit for payments on your debt security. You could not look to us
for payment in the event of any shortfall.
COVENANT DEFEASANCE. Under current U.S. federal tax law, we can make the
same type of deposit described above and be released from some of the
restrictive covenants relating to your debt security. This is called covenant
defeasance. In that event, you would lose the protection of those restrictive
covenants. In order to achieve covenant defeasance, we must do both of the
following:
- We must deposit in trust for the benefit of the holders a combination of
money and government or U.S. government notes or bonds that will generate
enough cash to make interest, principal and other payments on your debt
security on their various due dates.
- We must deliver to the trustee a legal opinion of our counsel confirming
that under current U.S. federal income tax law we may make the above
deposit without causing you to be taxed on your debt security any
differently than if we did not make the deposit and just repaid the debt
security ourselves.
If we accomplish covenant defeasance with regard to your debt security, the
following provisions of the indenture and the debt securities would no longer
apply:
- The condition regarding the treatment of liens when we merge or engage in
similar transactions, as described above under "--Restriction on Liens"
and any other covenants that your prospectus supplement may state are
applicable to your debt security.
- The events of default resulting from a breach of covenants, described
below in the fourth item under "--Default, Remedies and Waiver of
Default--Events of Default".
If we accomplish covenant defeasance, you can still look to us for repayment
of your debt security in the event of any shortfall in the trust deposit. You
should note, however, that if one of the remaining events of default occurred,
like our bankruptcy, and your debt security became immediately due and payable,
there may be a shortfall. Depending on the event causing the default, you may
not be able to obtain payment of the shortfall.
DEFAULT, REMEDIES AND WAIVER OF DEFAULT
You will have special rights if an event of default with respect to your
debt security occurs and is not cured, as described in this subsection.
EVENTS OF DEFAULT
With respect to your debt security, when we refer to an event of default, we
mean any of the following:
- We do not pay interest on a debt security within 30 days of its due date.
- We do not pay the principal or any premium on a debt security on its due
date.
- We do not deposit any sinking fund payment on its due date.
- We remain in breach of our covenant described under "--Restrictive
Covenants and Defeasance--Restrictions on Liens" above, or any other
covenant we make in the indenture for 60 days after we receive a notice of
default stating we are in breach. The notice must be sent by either the
trustee or holders of 25% of the principal amount of debt security of the
affected series.
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- We file for bankruptcy or other events in bankruptcy, insolvency or
reorganization occur.
- Any other event of default described in the prospectus supplement occurs.
REMEDIES IF AN EVENT OF DEFAULT OCCURS
If an event of default has occurred and has not been cured or waived, the
trustee or the holders of 25% or more in principal amount of all debt securities
of the affected series may declare the entire principal amount of all the debt
securities to be due immediately. If an event of default occurs because of
events in bankruptcy, insolvency or reorganization relating to Corning
Incorporated, the entire principal amount of all the debt securities will be
automatically accelerated, without any action by the trustee or any holder.
Each of the situations described above is called an acceleration of the
maturity of the affected debt securities. If the maturity of any debt securities
is accelerated and a judgment for payment has not yet been obtained, the holders
of a majority in principal amount of the debt securities affected by the
acceleration may cancel the acceleration for all the affected debt securities.
If an event of default occurs, the trustee will have special duties. In that
situation, the trustee will be obligated to use those of its rights and powers
under the applicable indenture, and to use the same degree of care and skill in
doing so, that a prudent person would use in that situation in conducting his or
her own affairs.
Except as described in the prior paragraph, the trustee is not required to
take any action under the applicable indenture at the request of any holders
unless the holders offer the trustee reasonable protection from expenses and
liability. This is called an indemnity. If the trustee is provided with an
indemnity reasonably satisfactory to it, the holders of a majority in principal
amount of the relevant series of debt securities may direct the time, method and
place of conducting any lawsuit or other formal legal action seeking any remedy
available to the trustee. These majority holders may also direct the trustee in
performing any other action under the applicable indenture with respect to the
relevant series of debt securities.
Before you bypass the trustee and bring your own lawsuit or other formal
legal action or take other steps to enforce your rights or protect your
interests relating to the debt securities, the following must occur:
- The holder of your debt security must give the trustee written notice that
an event of default has occurred, and the event of default must not have
been cured or waived.
- The holders of 25% or more in principal amount of all of the relevant debt
securities must make a written request that the trustee take action
because of the default, and they or other holders must offer to the
trustee indemnity reasonably satisfactory to the trustee against the cost
and other liabilities of taking that action.
- The trustee must not have taken action for 60 days after the above steps
have been taken. During those 60 days, the holders of a majority in
principal amount of the related series of debt securities must not have
given the trustee directions that are inconsistent with the written
request of the holders of not less than 25% in principal amount of all the
relevant series of debt securities.
You are, however, entitled at any time to bring a lawsuit for the payment of
money due on your debt securities on or after their due date.
WAIVER OF DEFAULT
The holders of a majority in principal amount of the relevant series of debt
securities may waive a default for all of the relevant series of debt
securities. If this happens, the default will be treated as if it has not
occurred. No one can waive a payment default on a particular debt security,
however, without the approval of the holder of that debt security.
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WE WILL GIVE THE TRUSTEE INFORMATION ABOUT DEFAULTS ANNUALLY
We will furnish to the trustee every year a written statement of two of our
officers certifying that to their knowledge we are in compliance with the
indenture and the debt securities, or else specifying any default.
BOOK-ENTRY AND OTHER INDIRECT HOLDERS SHOULD CONSULT THEIR BANKS OR BROKERS FOR
INFORMATION ON HOW TO GIVE NOTICE OR DIRECTION TO OR MAKE A REQUEST OF THE
TRUSTEE AND HOW TO DECLARE OR CANCEL AN ACCELERATION.
MODIFICATION AND WAIVER OF COVENANTS
There are three types of changes we can make to the indenture and the debt
securities.
CHANGES REQUIRING EACH HOLDER'S APPROVAL
First, there are changes that we or the trustee cannot make without the
approval of each holder of debt security affected by the change. We cannot:
- change the stated maturity for any principal or interest payment on a debt
security;
- reduce the principal amount, the amount payable on acceleration of the
maturity after a default, the interest rate or the redemption price for a
debt security;
- in the case of the guaranteed debt securities, change any obligation to
pay additional amounts, as explained above under "--Payment of Additional
Amounts With Respect to the Guaranteed Debt Securities";
- permit redemption of a debt security if not previously permitted;
- impair any right a holder may have to require repayment of its debt
security;
- change the currency of any payment on a debt security other than as
permitted by the debt security;
- change the place of payment on a debt security, if it is in non-global
form;
- impair a holder's right to sue for payment of any amount due on its debt
security;
- in the case of the guaranteed debt securities, change any obligation to
pay additional amounts, as explained above;
- reduce the percentage in principal amount of the debt securities and any
other affected series of debt securities, taken together, the approval of
whose holders is needed to change the indenture or the debt securities;
- reduce the percentage in principal amount of the debt securities and any
other affected series of debt securities, taken separately or together, as
the case may be, the consent of whose holders is needed to waive our
compliance with the applicable indenture or to waive defaults; and
- change the provisions of the applicable indenture dealing with
modification and waiver in any other respect, except to increase any
required percentage referred to above or to add to the provisions that
cannot be changed or waived without approval.
CHANGES NOT REQUIRING APPROVAL
The second type of change does not require any approval by holders of the
debt securities. This type is limited to clarifications and changes that would
not adversely affect the debt securities in any material respect. Nor do we need
any approval to make any change that affects only debt securities to be issued
under each indenture after the changes take effect.
We may also make changes or obtain waivers that do not adversely affect a
particular debt security, even if they affect other debt securities. In those
cases, we do not need to obtain the approval of the holder of that debt
security; we need only obtain any required approvals from the holders of the
affected debt securities or other debt securities.
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CHANGES REQUIRING MAJORITY APPROVAL
Any other change to each indenture and the debt securities would require the
following approval:
- If the change affects only one series of debt securities, it must be
approved by the holders of a majority in principal amount of the relevant
series of debt securities.
- If the change affects more than one series of debt securities issued under
each indenture, it must be approved by the holders of a majority in
principal amount of the series affected by the change, with all affected
series voting together as one class for this purpose.
In each case, the required approval must be given by written consent.
The same majority approval would be required for us to obtain a waiver of
any of our covenants in each indenture. Our covenants include the promises we
make about merging and putting liens on our interests, which we describe above
under "--Mergers and Similar Transactions" and "--Restrictive Covenants and
Defeasance". If the holders agree to waive a covenant, we will not have to
comply with it.
BOOK-ENTRY AND OTHER INDIRECT HOLDERS SHOULD CONSULT THEIR BANKS OR BROKERS FOR
INFORMATION ON HOW APPROVAL MAY BE GRANTED OR DENIED IF WE SEEK TO CHANGE THE
APPLICABLE INDENTURE OR THE DEBT SECURITIES OR REQUEST A WAIVER.
FORM, EXCHANGE AND TRANSFER
If the debt securities cease to be issued in global form, they will be
issued:
- only in fully registered form;
- without interest coupons; and
- unless we indicate otherwise in your prospectus supplement, in
denominations of $1,000 and amounts that are multiples of $1,000;
Holders may exchange their debt securities that are not in global form for
debt securities of smaller denominations or combined into fewer debt securities
of larger denominations, as long as the total principal amount is not changed.
Holders may exchange or transfer their debt securities at the office of the
trustee. We have appointed the trustee to act as our agent for registering debt
securities in the names of holders transferring debt securities. We may appoint
another entity to perform these functions or perform them ourselves.
Holders will not be required to pay a service charge to transfer or exchange
their debt securities, but they may be required to pay for any tax or other
governmental charge associated with the transfer or exchange. The transfer or
exchange will be made only if our transfer agent is satisfied with the holder's
proof of legal ownership.
If we have designated additional transfer agents for your debt security,
they will be named in your prospectus supplement. We may appoint additional
transfer agents or cancel the appointment of any particular transfer agent. We
may also approve a change in the office through which any transfer agent acts.
If any debt securities are redeemable and we redeem less than all those debt
securities, we may block the transfer or exchange of those debt securities
during the period beginning 15 days before the day we mail the notice of
redemption and ending on the day of that mailing, in order to freeze the list of
holders to prepare the mailing. We may also refuse to register transfers or
exchanges of any debt securities selected for redemption, except that we will
continue to permit transfers and exchanges of the unredeemed portion of any debt
security being partially redeemed.
If a debt security is issued as a global security, only the depositary will
be entitled to transfer and exchange the debt security as described in this
subsection, since it will be the sole holder of the debt security.
PAYMENT MECHANICS
WHO RECEIVES PAYMENT
If interest is due on a debt security on an interest payment date, we will
pay the interest to
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the person or entity in whose name the debt security is registered at the close
of business on the regular record date (see below) relating to the interest
payment date. If interest is due at maturity but on a day that is not an
interest payment date, we will pay the interest to the person or entity entitled
to receive the principal of the debt security. If principal or another amount
besides interest is due on a debt security at maturity, we will pay the amount
to the holder of the debt security against surrender of the debt security at a
proper place of payment, or, in the case of a global security, in accordance
with the applicable policies of the depositary.
HOW WE WILL MAKE PAYMENTS DUE IN U.S. DOLLARS
We will follow the practice described in this subsection when paying amounts
due in U.S. dollars. Payments of amounts due in other currencies will be made as
described in the next subsection.
PAYMENTS ON GLOBAL SECURITIES. We will make payments on a global security
in accordance with the applicable policies of the depositary as in effect from
time to time. Under those policies, we will pay directly to the depositary, or
its nominee, and not to any indirect holders who own beneficial interests in the
global security. An indirect holder's right to those payments will be governed
by the rules and practices of the depositary and its participants, as described
under "--What Is a Global Security?".
PAYMENTS ON NON-GLOBAL SECURITIES. We will make payments on a debt security
in non-global form as follows. We will pay interest that is due on an interest
payment date by check mailed on the interest payment date to the holder at his
or her address shown on the trustee's records as of the close of business on the
record date. We will make all other payments by check at the paying agent
described below, against surrender of the debt security. All payments by check
will be made in next-day funds--I.E.,funds that become available on the day
after the check is cashed.
Alternatively, if a non-global security has a face amount of at least
$1,000,000 and the holder asks us to do so, we will pay any amount that becomes
due on the debt security by wire transfer of immediately available funds to an
account at a bank in New York City, on the due date. To request wire payment,
the holder must give the paying agent appropriate transfer instructions at least
five business days before the requested wire payment is due. In the case of any
interest payment due on an interest payment date, the instructions must be given
by the person who is the holder on the relevant regular record date. In the case
of any other payment, payment will be made only after the debt security is
surrendered to the paying agent. Any wire instructions, once properly given,
will remain in effect unless and until new instructions are given in the manner
described above.
BOOK-ENTRY AND OTHER INDIRECT HOLDERS SHOULD CONSULT THEIR BANKS OR BROKERS FOR
INFORMATION ON HOW THEY WILL RECEIVE PAYMENTS ON THEIR DEBT SECURITIES.
HOW WE WILL MAKE PAYMENTS DUE IN OTHER CURRENCIES
We will follow the practice described in this subsection when paying amounts
that are due in a specified currency other than U.S. dollars.
PAYMENTS ON GLOBAL SECURITIES. We will make payments on a global security
in accordance with the applicable policies of the depositary as in effect from
time to time. We understand that these policies, as currently in effect at DTC,
are as follows.
Unless otherwise indicated in your prospectus supplement, if you are an
indirect holder of global notes denominated in a specified currency other than
U.S. dollars and if you elect to receive payments in that other currency, you
must notify the participant through which your interest in the global security
is held of your election:
- on or before the applicable regular record date, in the case of a payment
of interest, or
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- on or before the 16th day prior to stated maturity, or any redemption or
repayment date, in the case of payment of principal or any premium.
You may elect to receive all or only a portion of any interest, principal or
premium payment in a specified currency other than U.S. dollars.
Your participant must, in turn, notify DTC of your election on or before the
third DTC business day after that regular record date, in the case of a payment
of interest, and on or before the 12th DTC business day prior to stated
maturity, or on the redemption or repayment date if your debt security is
redeemed or repaid earlier, in the case of a payment of principal or any
premium.
DTC, in turn, will notify the paying agent of your election in accordance
with DTC's procedures.
If complete instructions are received by the participant and forwarded by
the participant to DTC, and by DTC to the paying agent, on or before the dates
noted above, the paying agent, in accordance with DTC's instructions, will make
the payments to you or your participant by wire transfer of immediately
available funds to an account maintained by the payee with a bank located in the
country issuing the specified currency or in another jurisdiction acceptable to
us and the paying agent.
If the foregoing steps are not properly completed, we expect DTC to inform
the paying agent that payment is to be made in U.S. dollars. In that case, we or
our agent will convert the payment to U.S. dollars in the manner described below
under "--Conversion to U.S. Dollars". We expect that we or our agent will then
make the payment in U.S. dollars to DTC, and that DTC in turn will pass it along
to its participants.
INDIRECT HOLDERS OF A GLOBAL SECURITY DENOMINATED IN A CURRENCY OTHER THAN U.S.
DOLLARS SHOULD CONSULT THEIR BANKS OR BROKERS FOR INFORMATION ON HOW TO REQUEST
PAYMENT IN THE SPECIFIED CURRENCY.
PAYMENTS ON NON-GLOBAL SECURITIES. Except as described in the last paragraph
under this heading, we will make payments on debt securities in non-global form
in the applicable specified currency. We will make these payments by wire
transfer of immediately available funds to any account that is maintained in the
applicable specified currency at a bank designated by the holder and acceptable
to us and the trustee. To designate an account for wire payment, the holder must
give the paying agent appropriate wire instructions at least five business days
before the requested wire payment is due. In the case of any interest payment
due on an interest payment date, the instructions must be given by the person or
entity who is the holder on the regular record date. In the case of any other
payment, the payment will be made only after the debt security is surrendered to
the paying agent. Any instructions, once properly given, will remain in effect
unless and until new instructions are properly given in the manner described
above.
If a holder fails to give instructions as described above, we will notify
the holder at the address in the trustee's records and will make the payment
within five business days after the holder provides appropriate instructions.
Any late payment made in these circumstances will be treated under the indenture
as if made on the due date, and no interest will accrue on the late payment from
the due date to the date paid.
Although a payment on a debt security in non-global form may be due in a
specified currency other than U.S. dollars, we will make the payment in U.S.
dollars if the holder asks us to do so. To request U.S. dollar payment, the
holder must provide appropriate written notice to the trustee at least five
business days before the next due date for which payment in U.S. dollars is
requested. In the case of any interest payment due on an interest payment date,
the request must be made by the person or entity who is the holder on the
regular record date. Any request, once properly made, will remain in effect
unless and until revoked by notice properly given in the manner described above.
BOOK-ENTRY AND OTHER INDIRECT HOLDERS OF A DEBT SECURITY WITH A SPECIFIED
CURRENCY OTHER THAN U.S.
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DOLLARS SHOULD CONTACT THEIR BANKS OR BROKERS FOR INFORMATION ABOUT HOW TO
RECEIVE PAYMENTS IN THE SPECIFIED CURRENCY OR IN U.S. DOLLARS.
CONVERSION TO U.S. DOLLARS. When we are asked by a holder to make payments
in U.S. dollars of an amount due in another currency, either on a global
security or a non-global security as described above, we will determine the U.S.
dollar amount the holder receives as follows. The exchange rate agent described
below will request currency bid quotations expressed in U.S. dollars from three
or, if three are not available, then two, recognized foreign exchange dealers in
New York City, any of which may be the exchange rate agent, as of 11:00 A.M.,
New York City time, on the second business day before the payment date. Currency
bid quotations will be requested on an aggregate basis, for all holders of debt
securities, if any, requesting U.S. dollar payments of amounts due on the same
date in the same specified currency. The U.S. dollar amount the holder receives
will be based on the highest acceptable currency bid quotation received by the
exchange rate agent. If the exchange rate agent determines that at least two
acceptable currency bid quotations are not available on that second business
day, the payment will be made in the specified currency.
To be acceptable, a quotation must be given as of 11:00 A.M., New York City
time, on the second business day before the due date and the quoting dealer must
commit to execute a contract at the quotation.
A holder that requests payment in U.S. dollars will bear all associated
currency exchange costs, which will be deducted from the payment.
WHEN THE SPECIFIED CURRENCY IS NOT AVAILABLE. If we are obligated to make
any payment in a specified currency other than U.S. dollars, and the specified
currency is not available to us due to circumstances beyond our control--which
may include the imposition of exchange controls or a disruption in the currency
markets--we will be entitled to satisfy our obligation to make the payment in
that specified currency by making the payment in U.S. dollars, on the basis of
the most recently available exchange rate.
For a specified currency other than U.S. dollars, the exchange rate will be
the noon buying rate for cable transfers of the specified currency in New York
City as quoted by the Federal Reserve Bank of New York on the then-most recent
day to which that Bank has quoted that rate.
The foregoing will apply to any debt security, whether in global or
non-global form, and to any payment, including a payment at maturity. Any
payment made under the circumstances and in a manner described above will not
result in a default under any of the indenture.
THE EURO. The euro may be a specified currency for some debt securities. On
January 1, 1999, the euro became the legal currency for the 11 member states
participating in the European Economic and Monetary Union. During a transition
period from January 1, 1999 to December 31, 2001 and for a maximum of six months
thereafter, the former national currencies of these 11 member states will
continue to be legal tender in their country of issue, at rates irrevocably
fixed on December 31, 1998.
EXCHANGE RATE AGENT. If we issue a debt security in a specified currency
other than U.S. dollars, we will appoint a financial institution to act as the
exchange rate agent and will name the institution initially appointed when the
debt security is originally issued in the applicable prospectus supplement. We
may change the exchange rate agent from time to time after the original issue
date of the debt security without your consent and without notifying you of the
change.
All determinations made by the exchange rate agent will be at its sole
discretion unless we state in the applicable prospectus supplement that any
determination is subject to our approval. In the absence of manifest error,
those determinations will be conclusive for all purposes and binding on you and
us, without any liability on the part of the exchange rate agent.
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PAYMENT WHEN OFFICES ARE CLOSED
If any payment is due on a debt security on a day that is not a business
day, we will make the payment on the next day that is a business day. Payments
postponed to the next business day in this situation will be treated under the
indenture as if they were made on the original due date. A postponement of this
kind will not result in a default under any debt security or the indenture, and
no interest will accrue on the postponed amount from the original due date to
the next day that is a business day.
PAYING AGENT
We may appoint one or more financial institutions to act as our paying
agents, at whose designated offices debt securities in non-global form may be
surrendered for payment at their maturity. We call each of those offices a
paying agent. We may add, replace or terminate paying agents from time to time.
We may also choose to act as our own paying agent. Initially, we have appointed
the trustee, at its corporate trust office in New York City, as the paying
agent. We must notify you of changes in the paying agents.
UNCLAIMED PAYMENTS
Regardless of who acts as paying agent, all money paid by us to a paying
agent that remains unclaimed at the end of two years after the amount is due to
a holder will be repaid to us. After that two-year period, the holder may look
only to us for payment and not to the trustee, any other paying agent or anyone
else.
NOTICES
Notices to be given to holders of a global debt security will be given only
to the depositary, in accordance with its applicable policies as in effect from
time to time. Notices to be given to holders of debt securities not in global
form will be sent by mail to the respective addresses of the holders as they
appear in the trustee's records, and will be deemed given when mailed. Neither
the failure to give any notice to a particular holder, nor any defect in a
notice given to a particular holder, will affect the sufficiency of any notice
given to another holder.
BOOK-ENTRY AND OTHER INDIRECT HOLDERS SHOULD CONSULT THEIR BANKS OR BROKERS
FOR INFORMATION ON HOW THEY WILL RECEIVE NOTICES.
OUR RELATIONSHIP WITH THE TRUSTEE
The Chase Manhattan Bank is initially serving as the trustee for the debt
securities and all other series of debt securities to be issued under the
indenture. The Chase Manhattan Bank acts as the trustee of our investment plans
and has provided commercial banking and other services for us and our related
companies in the past and may do so in the future.
SERVICE OF PROCESS
Corning Finance B.V. has appointed CT Corporation System acting through its
office at 1633 Broadway, New York, New York as its authorized agent for service
of process in any legal action or proceeding to which it is a party relating to
the indenture, the guaranteed debt securities or the full and unconditional
guarantee brought in any federal or state court in New York City and has
submitted to the non-exclusive jurisdiction of those courts.
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DESCRIPTION OF WARRANTS
Corning Incorporated may issue warrants to purchase its debt securities, as
well as warrants to purchase its preferred or common stock. Warrants may be
issued independently or together with any securities and may be attached to or
separate from those securities. The warrants will be issued under warrant
agreements to be entered into between Corning Incorporated and a bank or trust
company, as warrant agent, all as will be set forth in the related prospectus
supplement.
DEBT WARRANTS
The following briefly summarizes the material terms of the debt warrant
agreement, other than pricing and related terms disclosed in the accompanying
prospectus supplement. You should read the particular terms of any debt warrants
that are offered by us and the applicable debt warrant agreement which will be
described in more detail in a prospectus supplement. The prospectus supplement
will also state whether any of the generalized provisions summarized below do
not apply to the debt warrants being offered.
GENERAL
Corning Incorporated may issue warrants for the purchase of its debt
securities. As explained below, each debt warrant will entitle its holder to
purchase debt securities at an exercise price set forth in, or to be
determinable as set forth in, the related prospectus supplement. Debt warrants
may be issued separately or together with debt securities.
The debt warrants are to be issued under debt warrant agreements to be
entered into between Corning Incorporated and one or more banks or trust
companies, as debt warrant agent, all as will be set forth in the prospectus
supplement relating to the debt warrants being offered by the prospectus
supplement. A form of debt warrant agreement, including a form of debt warrant
certificate representing the debt warrants, reflecting the alternative
provisions that may be included in the debt warrant agreements to be entered
into with respect to particular offerings of debt warrants, is included as an
exhibit to the registration statement of which this prospectus forms a part. See
"Where You Can Find More Information" below for information on how to obtain a
copy of the form of debt warrant agreement.
TERMS OF THE DEBT WARRANTS TO BE DESCRIBED IN THE PROSPECTUS SUPPLEMENT
The particular terms of each issue of debt warrants, the debt warrant
agreement relating to the debt warrants and the debt warrant certificates
representing debt warrants will be described in the applicable prospectus
supplement. This description will include:
- the initial offering price;
- the currency or currency unit in which the price for the debt warrants is
payable;
- the title, aggregate principal amount and terms of the debt securities
purchasable upon exercise of the debt warrants;
- the title and terms of any related debt securities with which the debt
warrants are issued and the number of the debt warrants issued with each
debt security;
- the date, if any, on and after which the debt warrants and the related
debt securities will be separately transferable;
- the principal amount of debt securities purchasable upon exercise of each
debt warrant and the price at which that principal amount of debt
securities may be purchased upon exercise of each debt warrant;
- the date on which the right to exercise the debt warrants will commence
and the date on which this right will expire;
- if applicable, a discussion of United States federal income tax,
accounting or other considerations applicable to the debt warrants;
- whether the debt warrants represented by the debt warrant certificates
will be
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issued in registered or bearer form, and, if registered, where they may be
transferred and registered; and
- any other terms of the debt warrants.
Debt warrant certificates will be exchangeable for new debt warrant
certificates of different denominations and, if in registered form, may be
presented for registration of transfer and debt warrants may be exercised at the
corporate trust office of the debt warrant agent or any other office indicated
in the related prospectus supplement. Before the exercise of debt warrants,
holders of debt warrants will not be entitled to payments of principal, premium,
if any, or interest, if any, on the debt securities purchasable upon exercise of
the debt warrants, or to enforce any of the covenants in the indenture.
EXERCISE OF DEBT WARRANTS
Unless otherwise provided in the related prospectus supplement, each debt
warrant will entitle the holder of debt warrants to purchase for cash the
principal amount of debt securities at the exercise price that will in each case
be set forth in, or be determinable as set forth in, the related prospectus
supplement. Debt warrants may be exercised at any time up to the close of
business on the expiration date specified in the prospectus supplement relating
to the debt warrants. After the close of business on the expiration date or any
later date to which the expiration date may be extended by us, unexercised debt
warrants will become void.
Debt warrants may be exercised as set forth in the prospectus supplement
relating to the debt warrants. Upon receipt of payment and the debt warrant
certificate properly completed and duly executed at the corporate trust office
of the debt warrant agent or any other office indicated in the prospectus
supplement, we will, as soon as practicable, forward the debt securities
purchasable upon exercise of the debt warrants to the person entitled to them.
If fewer than all of the debt warrants represented by the debt warrant
certificate are exercised, a new debt warrant certificate will be issued for the
remaining amount of debt warrants.
If you hold your interest in a debt warrant indirectly, you should check
with the institution through which you hold your interest in the debt warrant to
determine how these provisions will apply to you.
MODIFICATIONS
The debt warrant agreement may be amended by Corning Incorporated and the
debt warrant agent, without the consent of the holder of any debt warrant
certificate, for the purpose of curing any ambiguity, or of curing, correcting
or supplementing any defective provision contained in the debt warrant
agreement, or making any provisions in regard to matters or questions arising
under the debt warrant agreement that Corning Incorporated may deem necessary or
desirable; PROVIDED that the amendment may not adversely affect the interest of
the holders of debt warrant certificates in any material respect. Corning
Incorporated and the debt warrant agent also may modify or amend the debt
warrant agreement and the terms of the debt warrants, with the consent of the
owners of not less than a majority in number of the then outstanding unexercised
debt warrants affected. However, modifications or amendments that result in any
of the following changes may be made only with the consent of the owners
affected by the modification or amendment:
- An increase in the exercise price of the debt warrants;
- A shortening of the period of time during which the debt warrants may be
exercised;
- Any material and adverse change that affects the exercise rights of the
owners of the debt warrants; or
- A reduction in the number of debt warrants whose owners must consent to
the modification or amendment of the debt warrant agreement or the terms
of the equity warrants.
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MERGER, CONSOLIDATION, SALE OR OTHER DISPOSITIONS
Under the debt warrant agreement, Corning Incorporated may, to the extent
permitted in the indenture, consolidate with, or sell or convey all or
substantially all of its assets to, or merge with or into, any other
corporation. If at any time there is a merger, consolidation, sale, transfer,
conveyance or other disposition of substantially all of the assets of Corning
Incorporated, the successor or assuming corporation will succeed to and be
substituted for Corning Incorporated, with the same effect as if it had been
named in the debt warrant agreement and in the debt warrants as Corning
Incorporated. Corning Incorporated will then be relieved of any further
obligation under the debt warrant agreement or under the debt warrants.
ENFORCEABILITY OF RIGHTS, GOVERNING LAW
The debt warrant agent will act solely as the agent of Corning Incorporated
in connection with the issuance and exercise of debt warrants and will not
assume any obligation or relationship of agency or trust for or with any holder
of a debt warrant certificate or any owner of a beneficial interest in debt
warrants. The holders of debt warrant certificates, without the consent of the
debt warrant agent, the trustee, the holder of any debt securities issued upon
exercise of debt warrants or the holder of any other debt warrant certificates,
may, on their own behalf and for their own benefit, enforce, and may institute
and maintain any suit, action or proceeding against Corning Incorporated
suitable to enforce, or otherwise in respect of, their rights to exercise debt
warrants evidenced by their debt warrant certificates. Except as may otherwise
be provided in the related prospectus supplement, each issue of debt warrants
and the applicable debt warrant agreement will be governed by the laws of the
State of New York.
EQUITY WARRANTS
The following briefly summarizes the material terms and provisions of the
equity warrants, other than pricing and related terms disclosed in the
accompanying prospectus supplement. You should read the particular terms of the
equity warrants that are offered by Corning Incorporated, which will be
described in more detail in a prospectus supplement. The prospectus supplement
will also state whether any of the general provisions summarized below do not
apply to the equity warrants being offered.
GENERAL
Corning Incorporated may issue warrants for the purchase of its equity
securities such as its preferred stock or common stock. As explained below, each
equity warrant will entitle its holder to purchase equity securities at an
exercise price set forth in, or to be determinable as set forth in, the related
prospectus supplement. Equity warrants may be issued separately or together with
equity securities.
The equity warrants are to be issued under equity warrant agreements to be
entered into between Corning Incorporated and one or more banks or trust
companies, as equity warrant agent, all as will be set forth in the prospectus
supplement relating to the equity warrants being offered by the prospectus
supplement. A form of equity warrant agreement, including a form of equity
warrant certificate representing the equity warrants, reflecting the alternative
provisions that may be included in the equity warrant agreements to be entered
into with respect to particular offerings of equity warrants, is included as an
exhibit to the registration statement of which this prospectus forms a part. See
"Where You Can Find More Information" below for information on how to obtain a
copy of the form of equity warrant agreement.
TERMS OF THE EQUITY WARRANTS TO BE DESCRIBED IN THE PROSPECTUS SUPPLEMENT
The particular terms of each issue of equity warrants, the equity warrant
agreement relating to the equity warrants and the equity warrant certificates
representing equity warrants will be described in the applicable
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prospectus supplement. This description will include:
- the title of the equity warrants;
- the securities for which the equity warrants are exercisable;
- the price or prices at which the equity warrants will be issued;
- if applicable, the designation and terms of the preferred stock or common
stock with which the equity warrants are issued, and the number of equity
warrants issued with each share of preferred stock or common stock;
- if applicable, the date on and after which the equity warrants and the
related preferred stock or common stock will be separately transferable;
- if applicable, a discussion of any material federal income tax
considerations; and
- any other terms of the equity warrants, including terms, procedures and
limitations relating to the exchange and exercise of the equity warrants.
Holders of equity warrants will not be entitled, solely by virtue of being
holders, to vote, to consent, to receive dividends, to receive notice as
shareholders with respect to any meeting of shareholders for the election of our
directors or any other matter, or to exercise any rights whatsoever as
shareholders of Corning Incorporated.
The exercise price payable and the number of shares of common stock or
preferred stock purchasable upon the exercise of each equity warrant will be
subject to adjustment if Corning Incorporated issues a stock dividend to holders
of common stock or preferred stock, or if Corning Incorporated declares a stock
split, reverse stock split, combination, subdivision or reclassification of
common stock or preferred stock. Instead of adjusting the number of shares of
common stock or preferred stock purchasable upon exercise of each equity
warrant, Corning Incorporated may elect to adjust the number of equity warrants.
No adjustments in the number of shares purchasable upon exercise of the equity
warrants will be required until cumulative adjustments require an adjustment of
at least 1% of those shares. Corning Incorporated may, at its option, reduce the
exercise price at any time. Corning Incorporated will not issue fractional
shares upon exercise of equity warrants, but Corning Incorporated will pay the
cash value of any fractional shares otherwise issuable.
Notwithstanding the previous paragraph, if there is a consolidation, merger,
or sale or conveyance of substantially all of the property of Corning
Incorporated, the holder of each outstanding equity warrant will have the right
to the kind and amount of shares of stock and other securities and property,
including cash, receivable by a holder of the number of shares of common stock
or preferred stock into which that equity warrant was exercisable immediately
prior to the consolidation, merger, sale or conveyance.
EXERCISE OF EQUITY WARRANTS
Unless otherwise provided in the related prospectus supplement, each equity
warrant will entitle the holder of equity warrants to purchase for cash the
principal amount of equity securities at the exercise price that will in each
case be set forth in, or be determinable as set forth in, the related prospectus
supplement. Equity warrants may be exercised at any time up to the close of
business on the expiration date specified in the prospectus supplement relating
to the equity warrants. After the close of business on the expiration date or
any later date to which the expiration date may be extended by Corning
Incorporated, unexercised equity warrants will become void.
Equity warrants may be exercised as set forth in the prospectus supplement
relating to the equity warrants. Upon receipt of payment and the equity warrant
certificate properly completed and duly executed at the corporate trust office
of the equity warrant agent or any other office indicated in the prospectus
supplement, Corning Incorporated will, as soon as practicable, forward the
equity securities purchasable upon exercise of the equity
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warrants to the person entitled to them. If fewer than all of the equity
warrants represented by the equity warrant certificate are exercised, a new
equity warrant certificate will be issued for the remaining amount of equity
warrants.
If you hold your interest in an equity warrant indirectly, you should check
with the institution through which you hold your interest in the equity warrant
to determine how these provisions will apply to you.
MODIFICATIONS
The equity warrant agreement may be amended by Corning Incorporated and the
equity warrant agent, without the consent of the holder of any equity warrant
certificate, for the purpose of curing any ambiguity, or of curing, correcting
or supplementing any defective provision contained in the equity warrant
agreement, or making any provisions in regard to matters or questions arising
under the equity warrant agreement that Corning Incorporated may deem necessary
or desirable; PROVIDED that the amendment may not adversely affect the interest
of the holders of equity warrant certificates in any material respect. Corning
Incorporated and the equity warrant agent also may modify or amend the equity
warrant agreement and the terms of the equity warrants, with the consent of the
owners of not less than a majority in number of the then outstanding unexercised
equity warrants affected. However, modifications or amendments that result in
any of the following changes may be made only with the consent of the owners
affected by the modification or amendment:
- An increase in the exercise price of the equity warrants;
- A shortening of the period of time during which the equity warrants may be
exercised;
- Any material and adverse change that affects the exercise rights of the
owners of the equity warrants; or
- A reduction in the number of equity warrants whose owners must consent to
the modification or amendment of the equity warrant agreement or the terms
of the equity warrants.
MERGER, CONSOLIDATION, SALE OR OTHER DISPOSITIONS
Under the equity warrant agreement, Corning Incorporated may, to the extent
permitted in the indenture, consolidate with, or sell or convey all or
substantially all of its assets to, or merge with or into, any other
corporation. If at any time there is a merger, consolidation, sale, transfer,
conveyance or other disposition of substantially all of the assets of Corning
Incorporated, the successor or assuming corporation will succeed to and be
substituted for Corning Incorporated, with the same effect as if it had been
named in the equity warrant agreement and in the equity warrants as Corning
Incorporated. Corning Incorporated will then be relieved of any further
obligation under the equity warrant agreement or under the equity warrants.
ENFORCEABILITY OF RIGHTS, GOVERNING LAW
The equity warrant agent will act solely as the agent of Corning
Incorporated in connection with the issuance and exercise of equity warrants and
will not assume any obligation or relationship of agency or trust for or with
any holder of an equity warrant certificate or any owner of a beneficial
interest in equity warrants. The holders of equity warrant certificates, without
the consent of the equity warrant agent, the holder of any equity securities
issued upon exercise of equity warrants or the holder of any other equity
warrant certificates, may, on their own behalf and for their own benefit,
enforce, and may institute and maintain any suit, action or proceeding against
Corning Incorporated suitable to enforce, or otherwise in respect of, their
rights to exercise equity warrants evidenced by their equity warrant
certificates. Except as may otherwise be provided in the related prospectus
supplement, each issue of equity warrants and the applicable equity warrant
agreement will be governed by the laws of the State of New York.
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DESCRIPTION OF PREFERRED STOCK
The following briefly summarizes the material terms of the preferred stock
of Corning Incorporated, other than pricing and related terms disclosed in the
accompanying prospectus supplement. You should read the particular terms of any
series of preferred stock offered by Corning Incorporated which will be
described in more detail in any prospectus supplement relating to such series.
The prospectus supplement will also state whether any of the terms summarized
below do not apply to the series of preferred stock being offered.
GENERAL
Corning Incorporated is authorized to issue up to 10,000,000 shares of
preferred stock, par value $100 per share. Under the certificate of
incorporation of Corning Incorporated, the board of directors is authorized to
issue shares of preferred stock in one or more series, and to establish from
time to time a series of preferred stock with the following terms specified:
- the number of shares to be included in the series;
- the designation, powers, preferences and rights of the shares of the
series; and
- the qualifications, limitations or restrictions of the series, except as
otherwise stated in the certificate of incorporation.
Prior to the issuance of any series of preferred stock, the board of
directors will adopt resolutions creating and designating the series as a series
of preferred stock and will file an amendment to the certificate of
incorporation setting forth the terms of the series. Shareholders will not need
to approve this amendment.
At July 31, 2000, Corning Incorporated had authorized the issuance of:
- 2,400,000 shares of Series A junior participating preferred stock, par
value $100 per share, upon exercise of preferred share purchase rights
associated with each share of common stock outstanding. See "Description
of Common Stock--Rights Agreement"; and
- 316,822 shares of Series B cumulative convertible preferred stock, par
value $100 per share.
In addition, as described under "Description of Depositary Shares", Corning
Incorporated, at its option, instead of offering full shares of any series of
preferred stock, may offer depositary shares evidenced by depositary receipts,
each representing a fraction of a share of the particular series of preferred
stock issued and deposited with a depositary. The fraction of a share of
preferred stock which each depositary share represents will be set forth in the
prospectus supplement relating to the depositary shares.
The rights of holders of the preferred stock offered may be adversely
affected by the rights of holders of any shares of preferred stock that may be
issued in the future. The board of directors may cause shares of preferred stock
to be issued in public or private transactions for any proper corporate purpose.
Examples of proper corporate purposes include issuances to obtain additional
financing in connection with acquisitions, and issuances to officers, directors
and employees pursuant to benefit plans. Shares of preferred stock issued by
Corning Incorporated may have the effect of rendering more difficult or
discouraging an acquisition of Corning Incorporated deemed undesirable by the
board of directors.
The preferred stock will be, when issued, fully paid and nonassessable.
Holders of preferred stock will not have any preemptive or subscription rights
to acquire more stock of Corning Incorporated.
The transfer agent, registrar, dividend disbursing agent and redemption
agent for shares of each series of preferred stock will be named in the
prospectus supplement relating to these series.
RANK
Unless otherwise specified in the prospectus supplement relating to the
shares of any series of preferred stock, shares of one series will rank on an
equal basis with each
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other series of preferred stock and prior to the common stock as to dividends
and distributions of assets.
DIVIDENDS
Holders of each series of preferred stock will be entitled to receive cash
dividends when, as and if declared by the board of directors out of funds
legally available for dividends. The rates and dates of payment of dividends
will be set forth in the prospectus supplement relating to each series of
preferred stock. Dividends will be payable to holders of record of preferred
stock as they appear on the books of Corning Incorporated on the record dates
fixed by the board of directors. Dividends on any series of preferred stock may
be cumulative or noncumulative.
Corning Incorporated may not declare, pay or set apart for payment dividends
on the preferred stock unless full dividends on any other series of preferred
stock that ranks on an equal or senior basis have been paid or sufficient funds
have been set apart for payment for either of the following:
- all prior dividend periods of the other series of preferred stock that pay
dividends on a cumulative basis; or
- the immediately preceding dividend period of the other series of preferred
stock that pay dividends on a noncumulative basis.
Partial dividends declared on shares of preferred stock and any other series
of preferred stock ranking on an equal basis as to dividends will be declared
pro rata. A pro rata declaration means that the ratio of dividends declared per
share to accrued dividends per share will be the same for both series of
preferred stock.
Similarly, Corning Incorporated may not declare, pay or set apart for
payment non-stock dividends or make other payments on the common stock or any of
its other stock ranking junior to the preferred stock until full dividends on
the preferred stock have been paid or set apart for payments for:
- all prior dividend periods if the other series of preferred stock pays
dividends on a cumulative basis; or
- the immediately preceding dividend period if the preferred stock pays
dividends on a noncumulative basis.
CONVERSION AND EXCHANGE
The prospectus supplement for any series of preferred stock will state the
terms, if any, on which shares of that series are convertible into or
exchangeable for shares of common stock of Corning Incorporated.
REDEMPTION
If so specified in the applicable prospectus supplement, a series of
preferred stock may be redeemable at any time, in whole or in part, at our
option or the holder's, and may be mandatorily redeemed.
Any restriction on the repurchase or redemption by Corning Incorporated of
its preferred stock while there is any arrearage in the payment of dividends
will be described in the relevant prospectus supplement.
Any partial redemptions of preferred stock will be made in a way that the
board of directors of Corning Incorporated decides is equitable.
Unless Corning Incorporated defaults in the payment of the redemption price,
dividends will cease to accrue after the redemption date on shares of preferred
stock called for redemption and all rights of holders of these shares will
terminate except for the right to receive the redemption price.
ANTI-TAKEOVER PROVISIONS
See "Description of Common Stock--Fair Price Amendment" and "Description of
Common Stock--Other Anti-takeover Provisions of the Certificate of Incorporation
and By-Laws" for a discussion of provisions of the certificate of incorporation
and by-laws of Corning Incorporated that would have an effect of delaying,
deferring or preventing a change in control of Corning Incorporated.
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding up of
Corning, holders of each series of preferred stock will be entitled to receive
distributions upon liquidation in the amount described in the prospectus
supplement relating to each
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series of preferred stock, plus an amount equal to any accrued and unpaid
dividends. These distributions will be made before any distribution is made on
any securities ranking junior relating to liquidation, including common stock.
If the liquidation amounts payable relating to the preferred stock of any
series and any other securities ranking on a parity regarding liquidation rights
are not paid in full, the holders of the preferred stock of these series and the
other securities will share in any distribution of available assets of Corning
Incorporated on a ratable basis in proportion to the full liquidation
preferences. Holders of these series of preferred stock will not be entitled to
any other amounts from us after they have received their full liquidation
preference.
VOTING RIGHTS
The holders of shares of preferred stock will have no voting rights, except:
- as otherwise stated in the prospectus supplement;
- as otherwise stated in the certificate of designation establishing the
series; or
- as required by applicable law.
OUTSTANDING PREFERRED STOCK
At July 31, 2000, there were 93,413 shares of Series B preferred stock
outstanding.
SERIES B PREFERRED STOCK
Cumulative cash dividends at the rate of 8% per annum are payable on shares
of the Series B preferred stock that have been issued. Corning Incorporated has
regularly paid dividends on the Series B preferred stock. No dividends may be
paid or declared on the Series A preferred stock or the common stock unless all
dividends for all prior dividend periods have been paid or declared on the
Series B preferred stock.
Holders of Series B preferred stock are entitled to vote, voting together
with the common stock and not as a separate class, on all matters submitted to
holders of the common stock, each share of Series B preferred stock having four
votes, subject to adjustment.
Holders of Series B preferred stock have no preemptive rights. In the event
of a liquidation, dissolution or winding-up of Corning Incorporated, holders of
Series B preferred stock would be entitled to receive a distribution in the
amount of $100 per share, plus accrued and unpaid dividends, before any
distribution on the common stock or Series A preferred stock.
The Series B preferred stock is redeemable, in whole or in part, at the
election of Corning Incorporated, at any time, at $100 per share.
The Series B preferred stock is subject to redemption, at the option of the
holder, at any time upon five business day's notice, at a redemption price equal
to $100 plus accrued and unpaid dividends, if the proceeds are necessary:
- to make a distribution pursuant to an investment election made under one
of the investment plans of Corning Incorporated; or
- to satisfy any indebtedness to which the investment plans of Corning
Incorporated are subject, provided that this payment is necessary to
remedy or prevent a default under the applicable indebtedness.
Corning Incorporated, at its option, may make payment of the redemption
price required upon redemption of shares of Series B preferred stock in cash or
in shares of common stock, or in any combination of shares of common stock and
cash.
The Series B preferred stock is convertible at the option of the holder, at
any time, into common stock at a conversion price of $20.89 per share of common
stock, each share of Series B preferred stock being valued at $100 for the
purpose of this conversion, producing a conversion ratio equal to 4.79 shares of
common stock for each share of Series B preferred stock so converted, subject to
adjustments to prevent dilution.
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DESCRIPTION OF DEPOSITARY SHARES
The following briefly summarizes the material provisions of the deposit
agreement and of the depositary shares and depositary receipts, other than
pricing and related terms disclosed in the accompanying prospectus supplement.
You should read the particular terms of any depositary shares and any depositary
receipts that are offered by us and any deposit agreement relating to a
particular series of preferred stock which will be described in more detail in a
prospectus supplement. The prospectus supplement will also state whether any of
the generalized provisions summarized below do not apply to the depositary
shares or depositary receipts being offered. A form of deposit agreement,
including the form of depositary receipt, is included as an exhibit to the
registration statement of which this prospectus forms a part. See "Where You Can
Find More Information" below for information on how to obtain a copy of the form
of deposit agreement.
GENERAL
Corning Incorporated may, at its option, elect to offer fractional shares of
preferred stock, rather than full shares of preferred stock. If it decides to do
so, Corning Incorporated will issue receipts for depositary shares, each of
which will represent a fraction of a share of a particular series of preferred
stock.
The shares of any series of preferred stock represented by depositary shares
will be deposited under a deposit agreement between Corning Incorporated and a
bank or trust company selected by Corning Incorporated having its principal
office in the United States and having a combined capital and surplus of at
least $50,000,000, as preferred stock depositary. Each owner of a depositary
share will be entitled to all the rights and preferences of the underlying
preferred stock, including dividend, voting, redemption, conversion and
liquidation rights, in proportion to the applicable fraction of a share of
preferred stock represented by the depositary share.
The depositary shares will be evidenced by depositary receipts issued
pursuant to the deposit agreement. Depositary receipts will be distributed to
those persons purchasing the fractional shares of preferred stock in accordance
with the terms of the applicable prospectus supplement.
DIVIDENDS AND OTHER DISTRIBUTIONS
The preferred stock depositary will distribute all cash dividends or other
cash distributions received in respect of the deposited preferred stock to the
record holders of depositary shares relating to the underlying preferred stock
in proportion to the number of the depositary shares owned by the holders.
The preferred stock depositary will distribute any property received by it
other than cash to the record holders of depositary shares entitled to these
distributions. If the preferred stock depositary determines that it is not
feasible to make a distribution, it may, with the approval of Corning
Incorporated, sell the property and distribute the net proceeds from the sale to
the holders of the depositary shares.
REDEMPTION OF PREFERRED STOCK
If Corning Incorporated is to redeem a series of preferred stock represented
by depositary shares, the depositary shares will be redeemed from the proceeds
received by the preferred stock depositary resulting from the redemption, in
whole or in part, of the applicable series of preferred stock. The depositary
shares will be redeemed by the preferred stock depositary at a price per
depositary share equal to the applicable fraction of the redemption price per
share payable in respect of the shares of preferred stock so redeemed.
Whenever Corning Incorporated redeems shares of preferred stock held by the
preferred stock depositary, the preferred stock depositary will redeem as of the
same date the number of depositary shares representing shares of preferred stock
so redeemed. If fewer than all the depositary shares are to be redeemed, the
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depositary shares to be redeemed will be selected by the preferred stock
depositary by lot or ratably or by any other equitable method as the preferred
stock depositary decides.
WITHDRAWAL OF PREFERRED STOCK
Unless the related depositary shares have previously been called for
redemption, any holder of depositary shares may receive the number of whole
shares of the related series of preferred stock and any money or other property
represented by those depositary receipts after surrendering the depositary
receipts at the corporate trust office of the preferred stock depositary.
Holders of depositary shares making these withdrawals will be entitled to
receive whole shares of preferred stock on the basis set forth in the related
prospectus supplement for that series of preferred stock.
However, holders of whole shares of preferred stock will not be entitled to
deposit that preferred stock under the deposit agreement or to receive
depositary receipts for that preferred stock after withdrawal. If the depositary
shares surrendered by the holder in connection with withdrawal exceed the number
of depositary shares that represent the number of whole shares of preferred
stock to be withdrawn, the preferred stock depositary will deliver to that
holder at the same time a new depositary receipt evidencing the excess number of
depositary shares.
VOTING DEPOSITED PREFERRED STOCK
When the preferred stock depository receives notice of any meeting at which
the holders of any series of deposited preferred stock are entitled to vote, the
preferred stock depositary will mail the information contained in the notice to
the record holders of the depositary shares relating to the applicable series of
preferred stock. Each record holder of the depositary shares on the record date
will be entitled to instruct the preferred stock depositary to vote the amount
of the preferred stock represented by the holder's depositary shares. To the
extent possible, the preferred stock depositary will vote the amount of the
series of preferred stock represented by depositary shares in accordance with
the instructions it receives.
Corning Incorporated will agree to take all reasonable actions that the
preferred stock depositary determines are necessary to enable the preferred
stock depositary to vote as instructed. The preferred stock depositary will vote
all shares of any series of preferred stock held by it proportionately with
instructions received if it does not receive specific instructions from the
holders of depositary shares representing that series of preferred stock.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of depositary receipt evidencing the depositary shares and any
provision of the deposit agreement may at any time be amended by agreement
between Corning Incorporated and the preferred stock depositary. However, any
amendment that imposes additional charges or materially and adversely alters any
substantial existing right of the holders of depositary shares will not be
effective unless the amendment has been approved by the holders of at least a
majority of the affected depositary shares then outstanding. Holders who retain
their depositary receipts after the amendment becomes effective will be deemed
to agree to the amendment and will be bound by the amended deposit agreement.
The deposit agreement automatically terminates if:
- all outstanding depositary shares have been redeemed;
- each share of preferred stock has been converted into or exchanged for
common stock; or
- a final distribution in respect of the preferred stock has been made to
the holders of depositary shares in connection with any liquidation,
dissolution or winding up of Corning Incorporated.
Corning Incorporated may terminate the deposit agreement at any time and the
preferred stock depositary will give notice of that termination to the record
holders of all
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outstanding depositary receipts not less than 30 days prior to the termination
date. In that event, the preferred stock depositary will deliver or make
available for delivery to holders of depositary shares, upon surrender of the
depositary shares, the number of whole or fractional shares of the related
series of preferred stock as are represented by those depositary shares.
CHARGES OF PREFERRED STOCK DEPOSITARY; TAXES AND OTHER GOVERNMENTAL CHARGES
No fees, charges and expenses of the preferred stock depositary or any agent
of the preferred stock depositary or of any registrar will be payable by any
person other than Corning Incorporated, except for any taxes and other
governmental charges and except as provided in the deposit agreement. If the
preferred stock depositary incurs fees, charges or expenses for which it is not
otherwise liable at the election of a holder of a depositary receipt or other
person, that holder or other person will be liable for those fees, charges and
expenses.
RESIGNATION AND REMOVAL OF DEPOSITARY
The preferred stock depositary may resign at any time by delivering to
Corning Incorporated notice of its intent to do so, and Corning Incorporated may
at any time remove the preferred stock depositary. Any resignation or removal
will take effect upon the appointment of a successor preferred stock depositary
and its acceptance of the appointment. A successor preferred stock depositary
must be appointed within 60 days after delivery of the notice of resignation or
removal and must be a bank or trust company having its principal office in the
United States and having a combined capital and surplus of at least $50,000,000.
MISCELLANEOUS
The preferred stock depositary will forward all reports and communications
from Corning Incorporated which are delivered to the preferred stock depositary
and which Corning Incorporated is required to furnish to the holders of the
deposited preferred stock.
Neither the preferred stock depositary nor Corning Incorporated will be
liable if it is prevented or delayed by law or any circumstances beyond its
control in performing its obligations under the deposit agreement. The
obligations of Corning Incorporated and the preferred stock depositary under the
deposit agreement will be limited to performance with honest intentions of their
duties under the agreement and they will not be obligated to prosecute or defend
any legal proceeding in respect of any depositary shares, depositary receipts or
shares of preferred stock unless satisfactory indemnity is furnished. Corning
Incorporated and the preferred stock depositary may rely upon written advice of
counsel or accountants, or upon information provided by holders of depositary
receipts or other persons believed to be competent and on documents believed to
be genuine.
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DESCRIPTION OF COMMON STOCK
Corning Incorporated has authorized the issuance of 1,200,000,000 shares of
common stock, par value $.50 per share. As of July 31, 2000, Corning
Incorporated had 293,986,745 shares outstanding. Each holder of common stock is
entitled to one vote per share for all matters to be voted on by shareholders of
Corning Incorporated. Holders of common stock may not cumulate their votes in
the election of directors, and are entitled to share equally in the dividends
that may be declared by the board of directors, but only after payment of
dividends required to be paid on outstanding shares of preferred stock. The
current quarterly cash dividend of Corning Incorporated is $.18 per share of
common stock. The continued declaration of dividends by the board of directors
is subject to the current and prospective earnings, financial condition and
capital requirements of Corning Incorporated and any other factors that the
board of directors deems relevant.
Upon voluntary or involuntary liquidation, dissolution or winding up of
Corning Incorporated, the holders of the common stock share ratably in the
assets remaining after payments to creditors and provision for the preference of
any preferred stock. There are no preemptive or other subscription rights,
conversion rights or redemption or scheduled installment payment provisions
relating to shares of common stock. All of the outstanding shares of common
stock are fully paid and nonassessable. The transfer agent and registrar for the
common stock is Computershare Investor Services, LLC. The common stock is listed
on The New York Stock Exchange, Inc.
RIGHTS AGREEMENT
Attached to each share of common stock is one preferred share purchase
right. Each right entitles the registered holder to purchase from Corning
Incorporated one one-hundredth of a share of Series A preferred stock at a price
of $125.00 per one one-hundredth of a share of Series A preferred stock, subject
to adjustment. The rights expire on July 15, 2006, unless the final expiration
date is extended or unless the rights are earlier redeemed by Corning
Incorporated.
The rights represented by the certificates for common stock are not
exercisable, and are not transferable apart from the common stock, until the
earlier of:
- ten days after a person or group, called an "acquiring person", acquires
beneficial ownership of 20% or more of the common stock of Corning
Incorporated; or
- ten business days, or a later date determined by the board of directors,
after the commencement or first public announcement of a tender or
exchange offer that would result in a person or group beneficially owning
20% or more of the outstanding common stock of Corning Incorporated.
The earlier of these two dates is called the "distribution date". Separate
certificates for the rights will be mailed to holders of record of the common
stock as of the distribution date. The rights could then begin trading
separately from the common stock.
Generally, in the event that a person or group becomes an acquiring person,
each right, other than the rights owned by the acquiring person, will entitle
the holder to receive, upon exercise of the right, common stock having a value
equal to two times the exercise price of the right. In the event that Corning
Incorporated is acquired in a merger, consolidation, or other business
combination transaction or more than 50% of its assets, cash flow or earning
power is sold or transferred, each right, other than the rights owned by an
acquiring person, will entitle the holder to receive, upon the exercise of the
right, common stock of the surviving corporation having a value equal to two
times the exercise price of the right.
At any time after the acquisition by the acquiring person of beneficial
ownership of 20% or more of the outstanding shares of the common stock of
Corning Incorporated and before the acquisition by the acquiring person of 50%
or more of the voting power of the outstanding shares of the common stock of
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Corning Incorporated, the board of directors may exchange the rights, other than
rights owned by the acquiring person, which would have become void, in whole or
in part, at an exchange ratio of one share of our common stock per right,
subject to adjustment.
The rights are redeemable in whole, but not in part, at $.01 per right until
any person or group becomes an acquiring person. The ability to exercise the
rights terminates at the time that the board of directors elects to redeem the
rights. Notice of redemption will be given by mail to the registered holders of
the rights. At no time will the rights have any voting rights. The rights agent
is Computershare Investor Services, LLC.
The exercise price payable, and the number of shares of Series A preferred
stock or other securities or property issuable, upon exercise of the rights are
subject to adjustment from time to time to prevent dilution:
- in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the shares of Series A preferred stock;
- upon the grant to holders of the shares of Series A preferred stock of
rights or warrants to subscribe for or purchase shares of Series A
preferred stock at a price, or securities convertible into shares of
Series A preferred stock with a conversion price, less than the then
current market price of the shares of Series A preferred stock; or
- upon the distribution to holders of the shares of Series A preferred stock
of evidences of indebtedness or assets, excluding regular periodic cash
dividends paid out of earnings or retained earnings or dividends payable
in shares of Series A preferred stock, or of subscription rights or
warrants, other than those referred to above.
The number of outstanding rights and the number of one one-hundredths of a
share of Series A preferred stock issuable upon exercise of each right are also
subject to adjustment in the event of a stock split of, or stock dividend on, or
subdivision, consolidation or combination of, the common stock prior to the
distribution date. With some exceptions, no adjustment in the exercise price
will be required until cumulative adjustments require an adjustment of at least
1% in the exercise price.
Upon the exercise of the rights, no fractional shares of Series A preferred
stock will be issued and instead an adjustment in cash will be made. However,
fractional shares of Series A preferred stock may be issued where these
fractions are integral multiples of one-hundredth of a share which may, at the
election of Corning Incorporated, be evidenced by depositary receipts.
The rights have certain anti-takeover effects. The rights may cause
substantial dilution to a person or group that attempts to acquire us on terms
not approved by the board of directors of Corning Incorporated, except in the
case of an offer conditioned on a substantial number of rights being acquired.
The rights should not interfere with any merger or other business combination
approved by the board of directors since, subject to exceptions, the rights may
be redeemed by us at $.01 per right at any time prior to the acquisition by a
person or group of beneficial ownership of 20% or more of the common stock. The
redemption of the rights may be made effective at any time, on any basis, and
with any conditions that the board of directors in its sole discretion may
establish.
The shares of Series A preferred stock purchasable upon exercise of the
right will rank junior to all other series of preferred stock of Corning
Incorporated, including the Series B preferred stock, or any similar stock that
specifically provides that it ranks prior to the shares of Series A preferred
stock. The shares of Series A preferred stock will be nonredeemable. Each share
of Series A preferred stock will be entitled to a minimum preferential quarterly
dividend of $1.00 per share, but will be entitled to an aggregate dividend of
100 times the dividend declared per share of common stock. In the event of
liquidation, the holders of the shares of Series A preferred stock will be
entitled to a minimum preferential liquidation payment of $100 per share, but
will be entitled to an aggregate payment of 100 times the payment made per share
of common stock. Each share of Series A
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preferred stock will have 100 votes, voting together with the common stock. In
the event of any merger, consolidation or other transaction in which common
stock is exchanged, each share of Series A preferred stock will be entitled to
receive 100 times the amount and type of consideration received per share of
common stock. These rights are protected by customary antidilution provisions.
Because of the nature of the Series A preferred stock's dividend, liquidation
and voting rights, the value of the interest in a share of Series A preferred
stock purchasable upon the exercise of each right should approximate the value
of one share of common stock.
The description of the rights contained in this section does not describe
every aspect of the rights. The rights agreement dated as of June 5, 1996,
between Corning Incorporated and the rights agent, contains the full legal text
of the matters described in this section. A copy of the rights agreement has
been incorporated by reference in the Registration Statement of which this
prospectus forms a part. See "Where You Can Find More Information" below for
information on how to obtain a copy.
FAIR PRICE AMENDMENT
In 1985, shareholders of Corning Incorporated adopted a "fair price
amendment" to the certificate of incorporation of Corning Incorporated that, in
general, requires the approval by the holders of at least 80% of the voting
power of the outstanding capital stock of Corning Incorporated entitled to vote
generally in the election of directors as a condition for mergers and other
forms of business combinations with any beneficial owner of more than 10% of
this voting power unless:
- the transaction is approved by at least a majority of the "continuing
directors", as defined in the certificate of incorporation; or
- minimum price, form of consideration and procedural requirements are met.
Amendment or repeal of this provision or the adoption of any inconsistent
provision requires the affirmative vote of at least 80% of the voting stock
unless the proposed amendment or repeal or the adoption of the inconsistent
provisions were approved by two-thirds of the entire board of directors and a
majority of the continuing directors.
OTHER ANTI-TAKEOVER PROVISIONS OF THE CERTIFICATE OF INCORPORATION AND BY-LAWS
In addition to the preferred share purchase rights and the fair price
amendment, the certificate of incorporation and by-laws of Corning Incorporated
contain other provisions that may discourage a third party from seeking to
acquire Corning Incorporated or to commence a proxy contest or other takeover-
related action. Corning Incorporated has classified its board of directors so
that one-third of the board is elected each year to three-year terms of office.
In addition, holders of common stock may remove a director from office at any
time prior to the expiration of his or her term only with cause and by vote of a
majority of holders of common stock outstanding. These provisions, together with
provisions concerning the size of the board and requiring that premature
vacancies on the board be filled only by a majority of the entire board, may not
be amended, altered or repealed, nor may we adopt any inconsistent provisions
without the affirmative vote of at least 80% of the voting stock of Corning
Incorporated or the approval of two-thirds of the entire board of directors.
The by-laws of Corning Incorporated contain procedural requirements with
respect to the nomination of directors by shareholders that require, among other
things, delivery of notice by nominating shareholders to its Secretary not later
than 90 days nor more than 120 days prior to the date of the shareholders
meeting at which the nomination is to be considered. The by-laws do not provide
that a meeting of the board of directors may be called by shareholders.
The certificate of incorporation of Corning Incorporated provides that no
director will be liable to Corning Incorporated or its shareholders for a breach
of duty as a director except as provided by the New York Business Corporation
Law.
The effect of these provisions may be to deter attempts either to obtain
control of Corning Incorporated or to acquire a substantial amount of its stock,
even if a proposed acquisition transaction were at a significant premium over
the then-prevailing market value
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of the common stock, or to deter attempts to remove the board of directors and
management of Corning Incorporated, even though some or a majority of the
holders of common stock may believe these actions to be beneficial.
PLAN OF DISTRIBUTION
We may sell securities to or through underwriters, and also may sell
securities directly to other purchasers or through agents. Unless otherwise set
forth in the prospectus supplement, the obligations of any underwriters to
purchase the securities will be subject to conditions precedent and these
underwriters will be obligated to purchase all the securities if any are
purchased.
The distribution of the securities may be effected from time to time in one
or more transactions at a fixed price or prices which may be changed, at market
prices prevailing at the time of sale, at prices related to these prevailing
market prices or at negotiated prices. The applicable prospectus supplement will
describe the method of distribution of the securities.
In connection with the sale of securities, underwriters may receive
compensation from us or from purchasers of securities for whom they may act as
agents, in the form of discounts, concessions or commissions. Underwriters,
dealers and agents that participate in the distribution of securities may be
deemed to be underwriters, and any discounts or commissions received by them and
any profit on the resale of securities by them may be deemed to be underwriting
discounts and commissions, under the Securities Act of 1933. Any underwriter,
dealer or agent that will participate in the distribution of the securities will
be identified, and any compensation it will receive will be described, in the
prospectus supplement.
Under agreements which may be entered into by us, underwriters, dealers and
agents who participate in the distribution of securities may be entitled to
indemnification by us against some liabilities, including liabilities under the
Act, or to contribution with respect to payments which the underwriters, dealers
or agents may be required to make relating to these liabilities. Any agreement
in which we agree to indemnify underwriters, dealers and agents against civil
liabilities will be described in the relevant prospectus supplement.
If so indicated in the prospectus supplement, we will authorize dealers or
other persons acting as our agent to solicit offers by some institutions to
purchase securities from us pursuant to contracts providing for payment and
delivery on a future date. Institutions with which these contracts may be made
include commercial and savings banks, insurance companies, pension funds,
investment companies, educational and charitable institutions and others.
VALIDITY OF SECURITIES
The validity of the securities is being passed on for us by William D.
Eggers, Esq., Senior Vice President and General Counsel of Corning Incorporated,
and for any underwriters, dealers or agents by Sullivan & Cromwell, 125 Broad
Street, New York, New York. Mr. Eggers owns substantially less than 1% of the
outstanding shares of Corning Incorporated common stock.
EXPERTS
The consolidated financial statements of Corning Incorporated incorporated
in this prospectus by reference to Corning Incorporated's 1999 Annual Report on
Form 10-K for the year ended December 31, 1999, as amended, have been so
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of that firm as experts in
auditing and accounting.
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WHERE YOU CAN FIND MORE INFORMATION
As required by the Securities Act of 1933, we filed a registration statement
(No. 333-44328) relating to the securities offered by this prospectus with the
Securities and Exchange Commission. This prospectus is a part of that
registration statement, which includes additional information.
Corning Incorporated files annual, quarterly and current reports, proxy
statements and other information with the SEC. You may read and copy this
information at the SEC's public reference rooms in Washington, D.C., New York,
New York and Chicago, Illinois. You can also request copies of the documents,
upon payment of a duplicating fee, by writing the Public Reference Section of
the SEC. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms. These SEC filings are also available to the public from
the SEC's web site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file with
the SEC. This means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The information
incorporated by reference is considered to be part of this prospectus.
Information that we file later with the SEC will automatically update
information in this prospectus. In all cases, you should rely on the later
information over different information included in this prospectus or the
prospectus supplement.
This prospectus includes by reference the documents listed below that
Corning Incorporated has previously filed with the SEC and that are not included
in or delivered with the documents. They contain important information about our
company and its financial condition.
- Annual Report on Form 10-K for the year ended December 31, 1999;
- Amendment No. 1 to Annual Report on Form 10-K/A for the year ended
December 31, 1999, dated March 8, 2000;
- Amendment No. 2 to Annual Report on Form 10-K/A for the year ended
December 31, 1999, dated April 7, 2000;
- Quarterly reports on Form 10-Q for the quarters ended March 31, 2000 and
June 30, 2000;
- Current Report on Form 8-K, dated January 11, 2000;
- Current Report on Form 8-K, dated January 24, 2000;
- Current Report on Form 8-K, dated January 26, 2000;
- Current Report on Form 8-K, dated February 15, 2000;
- Current Report on Form 8-K, dated February 17, 2000;
- Current Report on Form 8-K, dated February 22, 2000;
- Current Report on Form 8-K, dated March 29, 2000;
- Current Report on Form 8-K/A, dated April 17, 2000;
- Current Report on Form 8-K, dated April 20, 2000;
- Current Report on Form 8-K, dated April 25, 2000;
- Current Report on Form 8-K, dated May 3, 2000;
- Current Report on Form 8-K, dated July 17, 2000; and
- Registration Statement on Form 8-A containing a description of our
preferred share rights plan filed on July 11, 1996.
We incorporate by reference additional documents that we may file with the
SEC after the date of this prospectus and before the completion of this
offering. The documents include periodic reports, like Annual Reports on
Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as
well as proxy statements.
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You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Corning Incorporated
One Riverfront Plaza
Corning, New York 14831
Attention: Secretary
(607) 974-9000
Information in this prospectus may add to, update or change information in a
previously filed document incorporated by reference in this prospectus. In that
case, you should rely on the information in this prospectus. Information in a
document filed after the date of this prospectus may add to, update or change
information in this prospectus or in a previously filed document incorporated by
reference in this prospectus. In that case, you should rely on the information
in the later filed document.
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No dealer, salesperson or other person is authorized to give any information
or to represent anything not contained in this prospectus. You must not rely on
any unauthorized information or representations. This prospectus is an offer to
sell only the shares offered hereby, but only under circumstances and in
jurisdictions where it is lawful to do so. The information contained in this
prospectus is current only as of its date.
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TABLE OF CONTENTS
Prospectus Supplement
<TABLE>
<CAPTION>
Page
--------
<S> <C>
Forward-Looking Statements........... S-2
Prospectus Supplement Summary........ S-3
Risk Factors......................... S-11
Use of Proceeds...................... S-15
Price Range of Common Stock.......... S-16
Dividend Policy...................... S-16
Capitalization....................... S-17
Selected Consolidated Financial
Data............................... S-18
Description of the Debentures........ S-22
United States Federal Income Tax
Consequences....................... S-32
Underwriting......................... S-39
Validity of Securities............... S-40
Experts.............................. S-41
Where You Can Find More
Information........................ S-42
Prospectus
Corning Incorporated................. 2
Corning Finance B.V. ................ 2
Use of Proceeds...................... 3
Securities We May Issue.............. 3
Ratios of Earnings to Fixed Charges
and Ratios Earnings to Combined
Fixed Charges Including Preferred
Stock Dividends.................... 4
Selected Consolidated Financial
Data............................... 5
Description of Debt Securities and
Guarantees......................... 9
Description of Warrants.............. 26
Description of Preferred Stock....... 31
Description of Depositary Shares..... 34
Description of Common Stock.......... 37
Plan of Distribution................. 40
Validity of Securities............... 40
Experts.............................. 40
Where You Can Find More
Information........................ 41
</TABLE>
$2,712,546,000
CORNING INCORPORATED
Zero Coupon Convertible
Debentures due November 8, 2015
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[LOGO]
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GOLDMAN, SACHS & CO.
CREDIT SUISSE FIRST BOSTON
SALOMON SMITH BARNEY
BANC OF AMERICA SECURITIES LLC
CHASE H&Q
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