-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, R+oUIk2Yys/UEfwJlXpT1SgPRLicp1ET+vLAd1+GgQlt+bHAEpvlQ6uZhDjctjNH 4xmLDO5KFyfUzUWC7xOlcA== /in/edgar/work/0000024741-00-000043/0000024741-00-000043.txt : 20000718 0000024741-00-000043.hdr.sgml : 20000718 ACCESSION NUMBER: 0000024741-00-000043 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20000630 ITEM INFORMATION: FILED AS OF DATE: 20000717 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CORNING INC /NY CENTRAL INDEX KEY: 0000024741 STANDARD INDUSTRIAL CLASSIFICATION: [3661 ] IRS NUMBER: 160393470 STATE OF INCORPORATION: NY FISCAL YEAR END: 1228 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-03247 FILM NUMBER: 673836 BUSINESS ADDRESS: STREET 1: ONE RIVERFRONT PLAZA CITY: CORNING STATE: NY ZIP: 14831 BUSINESS PHONE: 6079749000 FORMER COMPANY: FORMER CONFORMED NAME: CORNING INC /NY / CORNING LAB SERVICES INC DATE OF NAME CHANGE: 19930713 FORMER COMPANY: FORMER CONFORMED NAME: CORNING GLASS WORKS DATE OF NAME CHANGE: 19890512 8-K 1 0001.txt CORNING'S QUARTER 2, 2000 PRESS RELEASE 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) July 17, 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) Item 5. Other Events. Item 7. Financial Statements. Exhibits: The Registrant's press release of July 17, 2000. 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: July 17, 2000 By /s/ KATHERINE A. ASBECK Katherine A. Asbeck Vice President and Controller FOR RELEASE - JULY 17, 2000 Corning Contacts: Media Relations Investor Relations Monica L. Ott Katherine M. Dietz (607) 974-8769 (607) 974-8217 ottml@corning.com dietzkm@corning.com Corning Pro Forma Earnings Per Share Up 80% in Second Quarter Strong Demand for Corning's High-Tech Products Drives Results, Company's Full-Year Earnings Outlook Increases CORNING, N.Y. Corning Incorporated (NYSE:GLW) reported today that its second quarter pro forma earnings per share increased 80%. The performance was driven by strong demand for Corning's high-technology products, particularly its high-data rate optical fiber and cable, and LCD flat-panel display glass. The company reported second-quarter pro forma earnings of $0.94 per share, compared with $0.52 per share in the same quarter of 1999. Pro forma net income for the second quarter of 2000 totaled $271.1 million, approximately double the $136.5 million from the second quarter of 1999. 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. "Clearly, this is a blockbuster quarter for Corning," said Roger G. Ackerman, Corning's chairman and chief executive officer. "We are living in an increasingly bandwidth-intensive economy and our financial performance is evidence that Corning has truly emerged as a world-leading provider of technologies and products in the optical layer, where fiber joins with photonic devices to power today's optical networks." The company also announced that it is raising its full-year pro forma earnings per share outlook to a range of $3.15 - $3.25, an increase of approximately 60% versus last year's $2.00. (more) Corning Reports Q2 Earnings Page 2 "This revised outlook reflects our very strong performance this quarter and confidence for continued unprecedented demand for Corning's market-leading products through year-end," said Ackerman. "Our strategy is working. We are winning significant contracts, making the right strategic acquisition decisions, investing in capacity, and continuing with aggressive research and development to ensure our future success." Second quarter sales were $1.78 billion, an increase of 57% over 1999 second quarter sales of $1.13 billion. Excluding the impact of acquisitions, sales increased 41%. Overall demand for optical fiber increased with a year-over-year growth rate of approximately 40%. Sales in Photonic Technologies nearly doubled, led by demand for the company's optical amplifiers. Sales of flat-panel display glass used primarily in computer monitors grew more than 70%. Equity earnings were up 28% 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. Corning also recorded a second quarter charge of $50.7 million after tax, or $0.17 per share, related to recent acquisitions. Including this non-recurring item and the amortization of purchased intangibles and goodwill, Corning's net income for the second quarter of 2000 totaled $149.2 million, or $0.52 per share. This compares with second quarter 1999 net income of $131.0 million, or $0.50 per share. 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. 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)
Six Months Ended Three Months Ended June 30, June 30, ------------------ ------------------ 2000 1999 2000 1999 -------- -------- -------- -------- Revenues Net sales $3,127.0 $2,126.7 $1,775.6 $1,129.7 Royalty, interest, and dividend income 50.4 21.3 26.9 11.3 -------- -------- -------- -------- 3,177.4 2,148.0 1,802.5 1,141.0 Deductions Cost of sales 1,817.7 1,307.2 1,029.9 693.3 Selling, general and administrative expenses 457.8 303.4 258.0 151.2 Research, development and engineering expenses 230.2 171.9 120.1 88.5 Interest expense 52.7 40.1 28.5 20.4 Other, net 32.7 20.6 11.8 10.7 -------- -------- -------- -------- Income before taxes 586.3 304.8 354.2 176.9 Taxes on income 190.0 92.6 114.9 53.8 -------- -------- -------- -------- Income before minority interest and equity earnings 396.3 212.2 239.3 123.1 Minority interest in earnings of subsidiaries (10.1) (27.5) (7.5) (17.4) Dividends on convertible preferred securities of subsidiary (2.3) Equity in earnings of associated companies 73.2 52.0 39.3 30.8 -------- -------- -------- -------- Pro Forma Net Income $ 459.4 $ 234.4 $ 271.1 $ 136.5 ======== ======== ======== ======== Pro Forma Basic Earnings Per Share $ 1.66 $ 0.92 $ 0.96 $ 0.53 ======== ======== ======== ======== Pro Forma Diluted Earnings Per Share $ 1.62 $ 0.90 $ 0.94 $ 0.52 ======== ======== ======== ======== Dividends Declared $ 0.36 $ 0.36 $ 0.18 $ 0.18 ======== ======== ======== ======== Shares used in computing pro forma earnings per share Pro forma basic earnings per share 275.9 252.8 281.5 257.3 ======== ======== ======== ======== Pro forma diluted earnings per share 282.7 263.5 290.7 265.3 ======== ======== ======== ========
The above pro forma amounts for the six months ended June 30, 2000 have been adjusted to eliminate $62.3 million ($81.4 million after tax) or $0.29 per share of amortization of purchased intangibles and goodwill, $92.7 million ($76.4 million after tax) or $0.27 per share of in-process research and development charges, $47 million ($43.4 million after tax) or $0.15 per share of transaction costs from the Oak acquisition, $36.3 million after tax or $0.13 per share for the impairment of the entire equity investment in Pittsburgh Corning Corporation, and $6.8 million ($4.2 million after tax) or $0.01 per share for a non-operating gain related to the sale of Quanterra Incorporated. The above pro forma amounts for the quarter ended June 30, 2000 have been adjusted to eliminate $49.2 million ($71.2 million after tax) or $0.25 per share of amortization of purchased intangibles and goodwill and $50.7 million, or $0.17 per share of in-process research and development charges. The above pro forma amounts for the six months ended June 30, 1999 have been adjusted to eliminate $13.9 million ($10.9 million after tax) or $0.04 per share of amortization of purchased intangibles and goodwill. The above pro forma amounts for the quarter ended June 30, 1999 have been adjusted to eliminate $7.0 million ($5.5 million after tax) or $0.02 per share of amortization of purchased intangibles and goodwill. - Pro Forma - Corning Incorporated and Subsidiary Companies Condensed Consolidated Statements of Income (Unaudited; in millions, except per share amounts)
Six Months Ended Three Months Ended June 30, June 30, ------------------ ------------------- 2000 1999 2000 1999 -------- -------- -------- -------- Revenues Net sales $3,127.0 $2,126.7 $1,775.6 $1,129.7 Royalty, interest, and dividend income 50.4 21.3 26.9 11.3 Non-operating gains 6.8 -------- -------- -------- -------- 3,184.2 2,148.0 1,802.5 1,141.0 Deductions Cost of sales 1,817.7 1,307.2 1,029.9 693.3 Selling, general and administrative expenses 457.8 303.4 258.0 151.2 Research, development and engineering expenses 230.2 171.9 120.1 88.5 Amortization of purchased intangibles including goodwill 62.3 13.9 49.2 7.0 Interest expense 52.7 40.1 28.5 20.4 Acquisition-related charges 139.7 50.7 Other, net 32.7 20.6 11.8 10.7 -------- -------- -------- -------- Income before taxes 391.1 290.9 254.3 169.9 Taxes on income 191.8 89.6 136.9 52.3 -------- -------- -------- -------- Income before minority interest and equity earnings 199.3 201.3 117.4 117.6 Minority interest in earnings of subsidiaries (10.1) (27.5) (7.5) (17.4) Dividends on convertible preferred securities of subsidiary (2.3) Equity in earnings of associated companies 73.2 52.0 39.3 30.8 Impairment of equity investment (36.3) -------- -------- -------- -------- Net Income $ 226.1 $ 223.5 $ 149.2 $ 131.0 ======== ======== ======== ======== Basic Earnings Per Share $ 0.82 $ 0.88 $ 0.53 $ 0.51 ======== ======== ======== ======== Diluted Earnings Per Share $ 0.80 $ 0.86 $ 0.52 $ 0.50 ======== ======== ======== ======== Dividends Declared $ 0.36 $ 0.36 $ 0.18 $ 0.18 ======== ======== ======== ======== Shares used in computing earnings per share Basic earnings per share 275.9 252.8 281.5 257.3 ======== ======== ======== ======== Diluted earnings per share 282.7 263.5 290.7 265.3 ======== ======== ======== ========
The accompanying notes are an integral part of these statements. Corning Incorporated and Subsidiary Companies Condensed Consolidated Balance Sheets (Unaudited; in millions)
June 30, 2000 Dec. 31, 1999 ------------- ------------- Assets Current Assets Cash and short-term investments $ 1,379.5 $ 280.4 Accounts receivable, net 1,219.6 872.4 Inventories 839.8 602.2 Deferred taxes on income and other current assets 207.6 229.2 --------- -------- Total current assets 3,646.5 1,984.2 Investments 515.7 504.4 Plant and equipment, net 3,856.5 3,201.7 Goodwill and other intangible assets, net 3,586.3 506.7 Other assets 328.9 329.0 --------- -------- Total Assets $11,933.9 $6,526.0 ========= ======== Liabilities and Shareholders' Equity Current Liabilities Loans payable $ 126.3 $ 420.7 Accounts payable 445.0 418.0 Other accrued liabilities 835.4 715.3 --------- -------- Total current liabilities 1,406.7 1,554.0 Other liabilities 802.4 720.6 Loans payable beyond one year 1,977.3 1,490.4 Minority interest in subsidiary companies 132.6 284.8 Convertible preferred stock 9.6 13.5 Common shareholders' equity 7,605.3 2,462.7 --------- -------- Total Liabilities and Shareholders' Equity $11,933.9 $6,526.0 ========= ========
The accompanying notes are an integral part of these statements. Corning Incorporated and Subsidiary Companies Notes to Consolidated Financial Statements Quarter 2, 2000 (1) Information by Operating Segment Information about the performance of Corning's three operating segments for the second quarter and six 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.
Six months ended Three months ended June 30, June 30, ----------------- ------------------ 2000 1999 2000 1999 -------- -------- -------- --------- Telecommunications Net sales $2,175.6 $1,285.8 $1,282.2 $ 692.5 Research, development and engineering expenses $ 161.3 $ 115.7 $ 84.2 $ 59.6 Interest expense $ 33.7 $ 25.2 $ 18.5 $ 12.8 Segment earnings before minority interest and equity earnings $ 282.2 $ 141.8 $ 174.4 $ 81.4 Minority interest in earnings of subsidiaries 3.0 (13.0) (8.7) Equity in earnings of associated companies (3.2) 6.6 (2.8) 2.6 -------- -------- -------- -------- Segment net income $ 282.0 $ 135.4 $ 171.6 $ 75.3 ======== ======== ======== ======== Advanced Materials Net sales $ 536.3 $ 516.8 $ 272.1 $ 264.7 Research, development and engineering expenses $ 57.3 $ 45.1 $ 30.1 $ 23.2 Interest expense $ 11.2 $ 9.2 $ 5.7 $ 4.9 Segment earnings before minority interest and equity earnings $ 45.8 $ 48.0 $ 23.9 $ 28.0 Minority interest in earnings of subsidiaries 0.1 Equity in earnings of associated companies 11.8 7.6 5.3 3.5 -------- -------- -------- -------- Segment net income $ 57.6 $ 55.7 $ 29.2 $ 31.5 ======== ======== ======== ======== Information Display Net sales $ 403.5 $ 311.7 $ 215.6 $ 166.0 Research, development and engineering expenses $ 11.6 $ 11.1 $ 5.8 $ 5.7 Interest expense $ 7.5 $ 5.3 $ 4.1 $ 2.7 Segment earnings before minority interest and equity earnings $ 52.4 $ 27.2 $ 33.1 $ 17.8 Minority interest in earnings of subsidiaries (13.1) (14.7) (7.5) (8.8) Equity in earnings of associated companies 62.1 34.6 35.3 22.2 -------- -------- -------- -------- Segment net income $ 101.4 $ 47.1 $ 60.9 $ 31.2 ======== ======== ======== ======== Total segments Net sales $3,115.4 $2,114.3 $1,769.9 $1,123.2 Research, development and engineering expenses $ 230.2 $ 171.9 $ 120.1 $ 88.5 Interest expense $ 52.4 $ 39.7 $ 28.3 $ 20.4 Segment earnings before minority interest and equity earnings $ 380.4 $ 217.0 $ 231.4 $ 127.2 Minority interest in earnings of subsidiaries (10.1) (27.6) (7.5) (17.5) Equity in earnings of associated companies 70.7 48.8 37.8 28.3 -------- -------- -------- -------- Segment net income $ 441.0 $ 238.2 $ 261.7 $ 138.0 ======== ======== ======== ========
A reconciliation of the totals reported for the operating segments to the applicable line items in the consolidated financial statements is as follows:
Six months ended Three months ended June 30, June 30, ------------------ ------------------ 2000 1999 2000 1999 -------- -------- -------- -------- Revenues Total segment net sales $3,115.4 $2,114.3 $1,769.9 $1,123.2 Non-segment net sales (a) 11.6 12.4 5.7 6.5 Royalty, interest and dividend income 50.4 21.3 26.9 11.3 Non-operating gain 6.8 -------- -------- -------- -------- Total revenues $3,184.2 $2,148.0 $1,802.5 $1,141.0 ======== ======== ======== ======== Net income Total segment income (b) $ 441.0 $ 238.2 $ 261.7 $ 138.0 Unallocated items: Non-segment loss and other (a) (3.6) (6.4) (1.4) (5.8) Non-operating gain 6.8 Amortization of purchased intangibles and goodwill (c) (62.3) (13.9) (49.2) (7.0) Acquisition-related charges (139.7) (50.7) Interest income (d) 34.2 19.0 Interest expense (0.3) (0.4) (0.2) Income tax (e) (16.2) 5.1 (31.5) 3.3 Equity in earnings of associated companies (a) 2.5 3.2 1.5 2.5 Impairment of equity investment (36.3) Dividends on convertible preferred securities of subsidiary (2.3) -------- -------- -------- -------- Net income $ 226.1 $ 223.5 $ 149.2 $ 131.0 ======== ======== ======== ========
(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) Business Combinations On June 12, 2000, Corning completed the acquisition of its remaining 67% interest in IntelliSense Corporation, a manufacturer of micro-electro- mechanical devices in exchange for 2,016,755 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. An additional 339,921 shares may be issued assuming the achievement of certain product milestones in 2001. The acquisition was accounted for as a purchase. The excess of the purchase price over the estimated fair value of tangible assets acquired was allocated primarily to goodwill and in-process research and development. Goodwill of approximately $388 million will be amortized on a straight-line basis over thirteen years. Corning recorded a charge of $6.7 million, or $0.02 per share for in-process research and development. On May 12, 2000, Corning completed the acquisition of NetOptix Corporation for 11,239,689 shares of Corning common stock and the assumption of stock options convertible into 829,080 Corning shares in a transaction valued at approximately $2.1 billion. NetOptix manufactures thin film filters for use in dense wavelength division multiplexing components. The acquisition was accounted for as a purchase. 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 ten years. On May 5, 2000, Corning completed the acquisition of its 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. The contingent proceeds, if earned, will be recorded at the current fair value of Corning common stock at the time of achievement. The acquisition was accounted for as a purchase. The excess of the purchase price over the estimated fair value of tangible assets acquired was allocated to goodwill and in-process research and development. Goodwill of approximately $30 million will be amortized on a straight-line basis over ten years. Corning recorded a charge of $44.0 million, or $0.15 per share for in-process research and development. (3) Depreciation and Amortization Depreciation and amortization charged to operations for the second quarters of 2000 and 1999 totaled $176.4 million and $102.1 million, respectively. Depreciation and amortization charged to operations for the first six months of 2000 and 1999 totaled $302.0 million and $203.7 million, respectively. (4) Taxes on Income Corning's effective income tax rate for the quarter and six months of 2000 was 53.8% and 49.0%, an increase from 30.8% and 30.8%, respectively. The increase in the quarter and six 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 quarter and six months of 2000 was 32.4% and 32.4%, an increase from 30.4% and 30.4%, respectively. -----END PRIVACY-ENHANCED MESSAGE-----