SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: (Date of earliest event reported) October 23, 2000
CORNING INCORPORATED
(Exact name of registrant as specified in its charter)
New York 1-3247 16-0393470
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
One Riverfront Plaza, Corning, New York 14831
(Address of principal executive offices) (Zip Code)
(607) 974-9000
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events.
Item 7. Financial Statements.
Exhibits:
The Registrant's press release of October 23, 2000.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CORNING INCORPORATED
Registrant
Date: October 23, 2000 By /s/ KATHERINE A. ASBECK
Katherine A. Asbeck
Vice President and Controller
<PAGE>
FOR RELEASE - October 23, 2000
Corning Contacts:
Media Relations Investor Relations
Daniel F. Collins Katherine M. Dietz
(607) 974-4197 (607) 974-8217
[email protected] [email protected]
Corning Pro Forma Earnings Per Share Up 84% in Third Quarter
Optical Fiber, Cable and Amplifiers lead the way
CORNING, N.Y. Corning Incorporated (NYSE:GLW), a leading manufacturer
of optical-networking technologies, reported today that its third-
quarter pro forma earnings per share were $0.35, an increase of 84%
compared with $0.19 per share in the third quarter of 1999. Pro forma
net income in the third quarter of 2000 totaled $317 million, more
than double the $148 million in the third quarter of 1999. This
performance was driven by strong demand for the company's high-data-
rate optical fiber and cable, optical amplifiers, and LCD flat-panel
display glass.
"As the quarter's performance clearly shows, we continue to benefit
from delivering powerful optical technologies that provide the
capacity to double Internet traffic every six months," said Roger G.
Ackerman, Corning's chairman and chief executive officer. "We met
exceptionally robust demand for our optical-networking technologies by
sourcing products from our expanded network of five optical fiber
plants and nine photonic technology plants on four continents."
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 37%. Sales in the optical fiber and
cable business increased 67% versus the third quarter of last year,
and 45% excluding the impact of acquisitions. Sales of photonic
technologies grew 113%, led by demand for the company's optical
amplifiers.
Equity earnings were up 63% in the quarter due primarily to strong
results by Samsung Corning Precision Glass Company, Ltd., a Korean
manufacturer of flat-panel LCD display glass, and Samsung-Corning
Company Ltd., a Korean manufacturer of glass for conventional TV and
computer monitors.
(more)
<PAGE>
Corning Reports Q3 Earnings
Page 2
Pro forma net income excludes amortization of purchased intangibles
and goodwill, purchased in-process research and development, one-time
acquisition costs, discontinued operations and other non-recurring
items. Including these items, Corning's net income for the third
quarter of 2000 totaled $254 million, or $0.28 per share. This
compares with third-quarter 1999 net income of $142 million, or $0.18
per share.
Outlook
As announced on October 11, the company expects full-year pro forma
earnings per share in the range of $1.15 to $1.17, an increase of
approximately 70% versus last year's $0.67.
"Looking forward to 2001," Ackerman said, "we believe our key growth
businesses will lead the way for strong revenue and earnings growth
throughout 2001. Consistent with our long-term growth objectives, we
expect earnings to grow next year at a rate of about 25%. As
previously announced, the dilution from our pending acquisition of
Pirelli's optical-components business will impact this growth rate by
somewhat less than 5%, resulting in expected 2001 pro forma earnings
per share in the range of $1.40 - $1.43."
The company will host a conference call at 8:30 a.m. EDT on Monday,
October 23, 2000. To access the call, dial 888-625-1617 or 415-228-
4589 and use password: earnings. A replay of the call will begin
approximately 30 minutes after the call is completed and will run
through 5:00 p.m. EDT on Friday, October 27, 2000. To access the
replay, dial 800-677-5886 or 402-998-1184; a password is not required.
To listen to a live audio webcast of the call, go to
http://www.corning.com/investor and follow the instructions.
The webcast will be archived on the www.corning.com site for 30 days
following the call.
Established in 1851, Corning Incorporated (www.corning.com) creates
leading-edge technologies for the fastest-growing markets of the
world's economy. Corning manufactures optical fiber, cable and
photonic products for the telecommunications industry; and high-
performance displays and components for television and other
communications-related industries. The company also uses advanced
materials to manufacture products for scientific, semiconductor and
environmental markets. Corning's revenues in 1999 were $4.7 billion.
###
Forward-Looking and Cautionary Statements
Except for historical information and discussions contained herein,
statements included in this release may constitute "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. These statements involve a number of risks,
uncertainties and other factors that could cause results to differ
materially, as discussed in the company's filings with the Securities
and Exchange Commission.
<PAGE>
Corning Incorporated and Subsidiary Companies
Pro Forma Consolidated Statements of Income
Excluding Amortization of Purchased Intangibles and Goodwill, Purchased
In-Process Research and Development, Acquisition-Related Costs and
Non-Recurring Items
(In millions, except per share amounts)
<TABLE>
<CAPTION>
Nine Months Three Months
Ended Sept. 30, Ended Sept. 30,
------------------ ------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues
Net sales $5,042.8 $3,372.0 $1,915.8 $1,245.3
Royalty, interest, and dividend
income 78.6 30.0 28.2 8.7
-------- -------- -------- --------
5,121.4 3,402.0 1,944.0 1,254.0
Deductions
Cost of sales 2,930.4 2,074.2 1,112.7 767.0
Selling, general and
administrative expenses 713.6 475.4 255.8 172.0
Research, development and
engineering expenses 371.3 272.1 141.1 100.2
Interest expense 77.9 66.1 25.2 26.0
Other, net 39.7 32.5 7.0 11.9
-------- -------- -------- --------
Income before taxes 988.5 481.7 402.2 176.9
Taxes on income 320.2 144.4 130.2 51.8
-------- -------- -------- --------
Income before minority interest
and equity earnings 668.3 337.3 272.0 125.1
Minority interest in earnings
of subsidiaries (17.4) (36.6) (7.3) (9.1)
Dividends on convertible
preferred securities of subsidiary (2.3)
Equity in earnings of associated
companies 125.5 84.1 52.3 32.1
-------- -------- -------- --------
Pro Forma Net Income $ 776.4 $ 382.5 $ 317.0 $ 148.1
======== ======== ======== ========
Pro Forma Basic Earnings
Per Share $ 0.92 $ 0.50 $ 0.36 $ 0.19
======== ======== ======== ========
Pro Forma Diluted Earnings
Per Share $ 0.89 $ 0.49 $ 0.35 $ 0.19
======== ======== ======== ========
Dividends Declared $ 0.18 $ 0.18 $ 0.06 $ 0.06
======== ======== ======== ========
Shares used in computing
pro forma earnings per share
Pro forma basic earnings
per share 844.2 763.2 876.6 772.8
======== ======== ======== ========
Pro forma diluted earnings
per share 873.0 793.8 906.6 796.8
======== ======== ======== ========
</TABLE>
The above pro forma amounts for the nine months ended September 30, 2000 have
been adjusted to eliminate $144.2 million ($144.8 million after tax) of
amortization of purchased intangibles and goodwill, $92.7 million ($76.4
million after tax) of in-process research and development charges, $47 million
($43.4 million after tax) of transaction costs from the Oak acquisition, $36.3
million after tax for the impairment of the entire equity investment in
Pittsburgh Corning Corporation, and $6.8 million ($4.2 million after tax) for a
nonoperating gain related to the sale of Quanterra Incorporated.
The above pro forma amounts for the quarter ended September 30, 2000 have been
adjusted to eliminate $81.9 million ($63.4 million after tax) of amortization
of purchased intangibles and goodwill.
The above pro forma amounts for the nine months ended September 30, 1999 have
been adjusted to eliminate $21.2 million ($16.6 million after tax) of
amortization of purchased intangibles and goodwill, $30.0 million ($9.5 million
after tax and minority interest) of nonoperating gain related to the sale of
Republic Wire and Cable, and $15.5 million ($10.0 million after tax) for the
impairment of assets related to management's decision to sell Quanterra
Incorporated.
The above pro forma amounts for the quarter ended September 30, 1999 have been
adjusted to eliminate $7.3 million ($5.7 million after tax) of amortization of
purchased intangibles and goodwill, $30.0 million ($9.5 million after tax and
minority interest) of nonoperating gain related to the sale of Republic Wire
and Cable, and $15.5 million ($10.0 million after tax) for the impairment of
assets related to management's decision to sell Quanterra Incorporated.
PRO FORMA
<PAGE>
Corning Incorporated and Subsidiary Companies
Condensed Consolidated Statements of Income
(Unaudited; in millions, except per share amounts)
<TABLE>
<CAPTION>
Nine Months Three Months
Ended Sept. 30, Ended Sept. 30,
------------------- -------------------
2000 1999 2000 1999
------ ------ ------ ------
<S> <C> <C> <C> <C>
Revenues
Net sales $5,042.8 $3,372.0 $1,915.8 $1,245.3
Royalty, interest, and
dividend income 78.6 30.0 28.2 8.7
Nonoperating gains 6.8 30.0 30.0
-------- -------- -------- --------
5,128.2 3,432.0 1,944.0 1,284.0
Deductions
Cost of sales 2,930.4 2,074.2 1,112.7 767.0
Selling, general and
administrative expenses 713.6 475.4 255.8 172.0
Research, development and
engineering expenses 371.3 272.1 141.1 100.2
Amortization of purchased
intangibles including
goodwill 144.2 21.2 81.9 7.3
Interest expense 77.9 66.1 25.2 26.0
Acquisition-related charges 139.7
Provision for impairment and
restructuring 15.5 15.5
Other, net 39.7 32.5 7.0 11.9
-------- -------- -------- --------
Income before taxes 711.4 475.0 320.3 184.1
Taxes on income 303.5 145.3 111.7 55.7
-------- -------- -------- --------
Income before minority
interest and equity earnings 407.9 329.7 208.6 128.4
Minority interest in earnings
of subsidiaries (17.4) (46.1) (7.3) (18.6)
Dividends on convertible
preferred securities
of subsidiary (2.3)
Equity in earnings of
associated companies 125.5 84.1 52.3 32.1
Impairment of equity
investment (36.3)
-------- -------- -------- --------
Net Income $ 479.7 $ 365.4 $ 253.6 $ 141.9
======== ======== ======== ========
Basic Earnings Per Share $ 0.57 $ 0.48 $ 0.29 $ 0.18
======== ======== ======== ========
Diluted Earnings Per Share $ 0.55 $ 0.47 $ 0.28 $ 0.18
======== ======== ======== ========
Dividends Declared $ 0.18 $ 0.18 $ 0.06 $ 0.06
======== ======== ======== ========
Shares used in computing
earnings per share
Basic earnings per share 844.2 763.2 876.6 772.8
======== ======== ======== ========
Diluted earnings per share 873.0 793.8 906.6 796.8
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
Corning Incorporated and Subsidiary Companies
Condensed Consolidated Balance Sheets
(Unaudited; in millions)
<TABLE>
<CAPTION>
Sept. 30, Dec. 31,
2000 1999
--------- --------
<S> <C> <C>
Assets
Current Assets
Cash and short-term investments $ 1,237.5 $ 280.4
Accounts receivable, net 1,295.4 872.4
Inventories 943.2 602.2
Deferred taxes on income and
other current assets 239.6 229.2
--------- --------
Total current assets 3,715.7 1,984.2
Investments 549.1 504.4
Plant and equipment, net 4,092.3 3,201.7
Goodwill and other intangible assets, net 3,582.1 506.7
Other assets 248.9 329.0
--------- --------
Total Assets $12,188.1 $6,526.0
========= ========
Liabilities and Shareholders' Equity
Current Liabilities
Loans payable $ 111.4 $ 420.7
Accounts payable 506.8 418.0
Other accrued liabilities 850.9 715.3
--------- --------
Total current liabilities 1,469.1 1,554.0
Other liabilities 772.9 720.6
Loans payable beyond one year 1,946.3 1,490.4
Minority interest in subsidiary companies 138.7 284.8
Convertible preferred stock 8.9 13.5
Common shareholders' equity 7,852.2 2,462.7
--------- --------
Total Liabilities and Shareholders' Equity $12,188.1 $6,526.0
========= ========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
Corning Incorporated and Subsidiary Companies
Notes to Consolidated Financial Statements
Quarter 3, 2000
(1) Information by Operating Segment
Information about the performance of Corning's three operating segments for
the third quarter and nine months of 2000 and 1999 is presented below.
These amounts exclude revenues, expenses and equity earnings not
specifically identifiable to segments. In the first quarter of 2000,
Corning changed the performance measurement of its operating segments to a
new metric - net income excluding amortization of purchased intangibles and
goodwill, purchased in-process research and development costs, one-time
acquisition costs and other non-recurring items. This measure is not in
accordance with generally accepted accounting principles (GAAP) and may not
be consistent with measures used by other companies. The segment results
for 1999 have been restated to conform to the new measure.
Corning prepared the financial results for its three operating segments on
a basis that is consistent with the manner in which Corning management
internally disaggregates financial information to assist in making internal
operating decisions. Corning has allocated some common expenses among
segments differently than it would for stand alone financial information
prepared in accordance with GAAP.
<TABLE>
<CAPTION>
Nine months ended Three months ended
September 30, September 30,
------------------ ------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Telecommunications
Net sales $3,577.7 $2,089.2 $1,402.1 $ 803.4
Research, development and
engineering expenses $ 264.3 $ 186.9 $ 103.0 $ 71.2
Interest expense $ 50.0 $ 42.5 $ 16.3 $ 17.3
Segment earnings before minority
interest and equity earnings $ 476.5 $ 231.6 $ 194.3 $ 89.8
Minority interest in (earnings)
losses of subsidiaries 3.0 (20.4) (7.4)
Equity in earnings (losses)
of associated companies (3.1) 11.4 0.1 4.8
-------- -------- -------- --------
Segment net income $ 476.4 $ 222.6 $ 194.4 $ 87.2
======== ======== ======== ========
Advanced Materials
Net sales $ 808.0 $ 774.5 $ 271.7 $ 257.7
Research, development and
engineering expenses $ 88.9 $ 68.8 $ 31.6 $ 23.7
Interest expense $ 15.0 $ 15.2 $ 3.8 $ 6.0
Segment earnings before minority
interest and equity earnings $ 74.5 $ 71.6 $ 28.7 $ 23.6
Minority interest in earnings
of subsidiaries (0.1)
Equity in earnings of
associated companies 17.2 13.7 5.4 6.1
-------- -------- -------- --------
Segment net income $ 91.7 $ 85.3 $ 34.1 $ 29.6
======== ======== ======== ========
Information Display
Net sales $ 640.3 $ 490.4 $ 236.8 $ 178.7
Research, development and
engineering expenses $ 18.1 $ 16.4 $ 6.5 $ 5.3
Interest expense $ 12.6 $ 8.0 $ 5.1 $ 2.7
Segment earnings before minority
interest and equity earnings $ 88.0 $ 40.1 $ 35.6 $ 12.9
Minority interest in earnings
of subsidiaries (20.4) (16.2) (7.3) (1.5)
Equity in earnings of
associated companies 107.1 52.9 45.0 18.3
-------- -------- -------- --------
Segment net income $ 174.7 $ 76.8 $ 73.3 $ 29.7
======== ======== ======== ========
Total segments
Net sales $5,026.0 $3,354.1 $1,910.6 $1,239.8
Research, development and
engineering expenses $ 371.3 $ 272.1 $ 141.1 $ 100.2
Interest expense $ 77.6 $ 65.7 $ 25.2 $ 26.0
Segment earnings before minority
interest and equity earnings $ 639.0 $ 343.3 $ 258.6 $ 126.3
Minority interest in earnings
of subsidiaries (17.4) (36.6) (7.3) (9.0)
Equity in earnings of
associated companies 121.2 78.0 50.5 29.2
-------- -------- -------- --------
Segment net income $ 742.8 $ 384.7 $ 301.8 $ 146.5
======== ======== ======== ========
</TABLE>
<PAGE>
A reconciliation of the totals reported for the operating segments to the
applicable line items in the consolidated financial statements is as follows:
<TABLE>
<CAPTION>
Nine months ended Three months ended
September 30, September 30,
------------------ ------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues
Total segment net sales $5,026.0 $3,354.1 $1,910.6 $1,239.8
Non-segment net sales (a) 16.8 17.9 5.2 5.5
Royalty, interest and dividend
income 78.6 30.0 28.2 8.7
Nonoperating gain 6.8 30.0 30.0
-------- -------- -------- --------
Total revenues $5,128.2 $3,432.0 $1,944.0 $1,284.0
======== ======== ======== ========
Net income
Total segment income (b) $ 742.8 $ 384.7 $ 301.8 $ 146.5
Unallocated items:
Non-segment loss and other (a) (4.7) (7.7) (1.1) (1.3)
Nonoperating gain 6.8 30.0 30.0
Amortization of purchased
intangibles and goodwill (c) (144.2) (21.2) (81.9) (7.3)
Acquisition-related charges (139.7)
Provision for impairment and
restructuring (15.5) (15.5)
Interest income (d) 53.5 19.3
Interest expense (0.3) (0.4)
Income tax (e) (2.5) 1.2 13.7 (3.9)
Equity in earnings of associated
companies (a) 4.3 6.1 1.8 2.9
Impairment of equity investment (36.3)
Minority interest in
nonoperating gain (9.5) (9.5)
Dividends on convertible preferred
securities of subsidiary (2.3)
-------- -------- -------- --------
Net income $ 479.7 $ 365.4 $ 253.6 $ 141.9
======== ======== ======== ========
</TABLE>
(a) Includes amounts derived from corporate investments.
(b) Includes royalty, interest and dividend income.
(c) Amortization of purchased intangibles and goodwill relates primarily
to the Telecommunications segment.
(d) Corporate interest income is not allocated to reportable segments.
(e) Includes tax associated with unallocated items.
(2) Recent Acquisitions
Optical Technologies USA
------------------------
On September 26, 2000, Corning signed a definitive agreement with Pirelli
S.p.A., to acquire its 90% interest in Optical Technologies USA, a
manufacturer of lithium niobate modulators, pump lasers, certain specialty
fibers and fiber gratings used in optical networks for approximately $3.4
billion in cash. In addition, a contingent payment of $180 million may
also be paid upon the achievement of certain product milestones. The
remaining 10% is owned by Cisco Systems Inc. Cisco Systems has tag-along
rights to sell its stake to Corning for a period of thirty business days
beginning on September 26, 2000. If Cisco Systems exercises their right to
sell, the purchase price will increase to approximately $4 billion in
total. The transaction is expected to close in the fourth quarter subject
to the receipt of certain government approvals. Due to the minimal amount
of net tangible assets acquired, the amount allocated to goodwill, patents,
in-process research and development and other intangible assets will
approximate the purchase price. Any in-process research and development
will be charged to income in the period the transaction closes and patents,
goodwill and other acquired intangibles will be amortized over lives
ranging from five to seventeen years.
<PAGE>
To finance this transaction, on October 18, 2000, Corning announced a dual
tranche offering of convertible debt and common stock under its existing
$4.8 billion universal shelf registration statement. Corning will offer 30
million shares of newly issued common stock, as well as raise $1.2 billion
in proceeds through an offering of zero coupon convertible debentures.
The offering is expected to close in early November.
(3) Depreciation and Amortization
Depreciation and amortization charged to operations for the third quarters
of 2000 and 1999 totaled $219.1 million and $98.4 million, respectively.
Depreciation and amortization charged to operations for the first nine
months of 2000 and 1999 totaled $521.1 million and $302.1 million,
respectively.
(4) Taxes on Income
Corning's effective income tax rate for the third quarter and nine months
of 2000 was 34.9% and 42.7%, an increase over 1999 rates of 30.3% and
30.6%, respectively. The increase in the quarter and nine months was
primarily due to the large amounts of non deductible purchased intangibles
and goodwill acquired in the second quarter along with non deductible
purchased in-process research and development costs associated with
acquisitions and other acquisition-related items. Excluding the impact of
the amortization of purchased intangibles and goodwill, purchased in-
process research and development costs, one-time acquisition costs and
other non-recurring items, the effective income tax rate for the third
quarter and nine months of 2000 was 32.4% and 32.4%, an increase over 1999
rates of 29.3% and 30.0%, respectively.
(5) Shareholders' Equity
On April 27, 2000, the shareholders of Corning approved an increase to the
authorized number of shares of common stock from 500 million to 1.2 billion
shares. In August 2000, Corning authorized a three-for-one stock split of
its common stock, effected in the form of a stock dividend, which was
distributed on October 3, 2000, to shareholders of record on September 5,
2000. All of the share and per share data in these financial statements
and footnotes have been retroactively adjusted to reflect the stock split.
