-----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, PVA0jtG5kwG2FZ3ZWQ3sXGb5zZEiJDJdO+wDszjC+3FVh7sN2n55lwq25WWPkbHc PPHiusjADu0HzRUgWlV+fw== 0000024741-02-000020.txt : 20020422 0000024741-02-000020.hdr.sgml : 20020422 ACCESSION NUMBER: 0000024741-02-000020 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020331 ITEM INFORMATION: Other events FILED AS OF DATE: 20020422 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CORNING INC /NY CENTRAL INDEX KEY: 0000024741 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE & TELEGRAPH APPARATUS [3661] IRS NUMBER: 160393470 STATE OF INCORPORATION: NY FISCAL YEAR END: 1228 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-03247 FILM NUMBER: 02617273 BUSINESS ADDRESS: STREET 1: ONE RIVERFRONT PLAZA CITY: CORNING STATE: NY ZIP: 14831 BUSINESS PHONE: 6079749000 MAIL ADDRESS: STREET 1: ONE RIVERFRONT PLAZA CITY: CORNING STATE: NY ZIP: 14831 FORMER COMPANY: FORMER CONFORMED NAME: CORNING GLASS WORKS DATE OF NAME CHANGE: 19890512 8-K 1 q1028k.txt CORNING Q1 FORM 8K SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report: (Date of earliest event reported) April 22, 2002 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 and Regulation FD Disclosure. Item 7. Financial Statements and Exhibits. Exhibits: The Registrant's press release of April 22, 2002. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CORNING INCORPORATED Registrant Date: April 22, 2002 By /s/ KATHERINE A. ASBECK Katherine A. Asbeck Senior Vice President and Controller FOR RELEASE: APRIL 22, 2002 Corning Contacts: Media Relations Investor Relations Daniel F. Collins Katherine M. Dietz (607) 974-4197 (607) 974-8217 collinsdf@corning.com dietzkm@corning.com Corning Announces First-Quarter Results CORNING, N.Y. - Corning Incorporated (NYSE:GLW) today announced that its first-quarter net loss was $90 million or $0.10 per share, a decline from 2001 first quarter net earnings of $132 million, or $0.14 per share, which included after-tax goodwill amortization of $136 million, or $0.15 per share. "We are somewhat encouraged by the general direction of the results for the quarter. Sales began to stabilize compared to the quarter-to-quarter declines last year. Performance improved in our Environmental Technologies and Life Sciences businesses and the Display Technologies business continued its strong growth. Results were also favorably impacted by our cost savings actions. Unfortunately, the telecommunications market remains weak and continues to dampen our results," James B. Flaws, Corning's chief financial officer, said. First-quarter Operating Results First-quarter sales were $898 million, compared with $1.9 billion during the same period last year primarily due to the major falloff in the telecommunications segment. The rate of decline in Corning's sales slowed substantially in the first quarter as sales were 8% below fourth quarter 2001 sales of $974 million. In comparison to 2001, fiber and cable sales continued to be negatively impacted by the global slowdown in the telecommunications sector. However, kilometer shipments of optical fiber to cablers grew 10% to 15% for the first quarter of 2002 compared with the fourth quarter of 2001, in line with the company's guidance, and shipments from Corning Cable Systems were also up in the same range. Continued demand for notebook computers and flat panel desktop monitors drove a 16% sequential increase in volume of liquid crystal glass in the quarter. However, the translation impact of the weak yen resulted in consolidated sales for the Display Technologies business consistent with the fourth quarter of 2001. First-quarter sales for the Environmental Technologies business increased 11% over last year's fourth- quarter sales as U.S. auto manufacturers replenished inventory. (more) Corning Announces First-Quarter Results Page Two "We were very pleased to see the benefit of our restructuring actions from last year show up in reduced operating expenses compared with the fourth quarter of last year," Flaws said. Corning also noted that manufacturing cost reductions and the resumption of fiber production in the first quarter resulted in the sequential improvement in the company's gross margins. Corning reported that it had $1.8 billion in cash and short-term investments at the end of the first quarter, down from $2.2 billion at the end of last year. The decline in cash and short-term investments includes approximately $140 million of net debt repayments and $60 million of restructuring payments. Second-Quarter Outlook The company expects second-quarter sales of approximately $900 to $925 million and a net loss similar to the first quarter's results, excluding previously announced restructuring charges. Corning said it anticipates continued growth in its liquid crystal display business with the increase in the popularity of flat-panel desktop monitors. The Advanced Materials segment is expected to post modest gains in line with general economic improvements. Shipments of fiber are expected to be consistent with the first quarter sequential volume growth of 10 to 15%. Price pressure is expected to erode these volume gains. Corning expects revenues in the Photonics Technologies business to continue to be very weak. Last week, the company announced that it plans a new series of restructuring actions to further reduce costs that will result in total restructuring and impairment charges in the range of $600 million pretax spread over the second and third quarters. Flaws said, "While we have not reached any specific decisions on our actions, we must adjust our cost structure to meet the new realities of today's marketplace. We will be making specific announcements over the course of the second quarter which will outline details of our restructuring program." James R. Houghton, chairman and chief executive officer, said, "At its core, Corning is a technology company with a leadership position in telecommunications and the optical revolution. We intend to strengthen our industry leadership position and we will continue investing in technologies to build the next generation of optical solutions. We also are committed to protecting and extending our technological advantage as the world's leading producer of glass substrates for flat panel displays, and leading-edge solutions for environmental technologies." "In order to do so, the first priority of our new management team and the employees of Corning will be to return this company to profitability in 2003," he concluded. (more) Corning Announces First-Quarter Results Page Three About Corning Incorporated 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, information technology and other communications-related industries. The company also uses advanced materials to manufacture products for scientific, semiconductor and environmental markets. Corning revenues for 2001 were $6.3 billion. ### Conference Call Information The company will host a conference call at 8:30 a.m. EST on Tuesday, April 23, 2002. To access the call, dial 712-271-0936. The password is Earnings. The leader is Dietz. A replay of the call will begin at approximately 10:30 a.m. and will run through 5 p.m. EST on Monday, May 6, 2002. To access the replay, dial 402-998-0863; a password is not required. To listen to a live audio webcast of the call, go to http://www.corning.com/investor_relations/ and follow the instructions. The webcast will be archived on the http://www.corning.com/investor_relations/ site for 14 days following the call. Forward-Looking and Cautionary Statements This press release contains forward-looking statements that involve a variety of business risks and other uncertainties that could cause actual results to differ materially. These risks and uncertainties include the possibility of changes or fluctuations in global economic conditions; currency exchange rates; product demand and industry capacity; competitive products and pricing; availability and costs of critical components and materials; new product development and commercialization; order activity and demand from major customers; capital spending by larger customers in the telecommunications industry and other business segments; the mix of sales between premium and non-premium products; possible disruption in commercial activities due to terrorist activity and armed conflict; ability to obtain financing and capital on commercially reasonable terms; acquisition and divestiture activities; the level of excess or obsolete inventory; the ability to enforce patents; product and components performance issues; and litigation. These and other risk factors are identified in Corning's filings with the Securities and Exchange Commission. Forward-looking statements speak only as of the day that they are made, and Corning undertakes no obligation to update them in light of new information or future events. CORNING INCORPORATED AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited; in millions, except per share amounts)
For the three months ended March 31, ---------------------------- 2002 2001 ---------- ---------- Net sales $ 898 $ 1,921 Cost of sales 694 1,105 --------- --------- Gross margin 204 816 Operating expenses: Selling, general and administrative expenses 190 270 Research, development and engineering expenses 128 160 Amortization of purchased intangibles 11 13 Amortization of goodwill 143 --------- --------- Operating (loss) income (125) 230 Interest income 14 24 Interest expense (48) (34) Other expense, net (9) (9) --------- --------- (Loss) income before income taxes (168) 211 (Benefit) provision for income taxes (42) 108 --------- --------- (Loss) income before minority interest and equity earnings (126) 103 Minority interest in losses (earnings) of subsidiaries 6 (5) Equity in earnings of associated companies 30 34 --------- --------- Net (loss) income $ (90) $ 132 ========= ========= Basic and diluted (loss) earnings per share $ (0.10) $ 0.14 ========= ========= Net (loss) income adjusted for the impact of SFAS No. 142 in 2001 $ (90) $ 268 ========= ========= Basic and diluted (loss) earnings per share adjusted for the impact of SFAS No. 142 in 2001 $ (0.10) $ 0.29 ========= ========= Shares used in computing per share amounts: Basic 945 923 ========= ========= Diluted 945 937 ========= ========= Diluted - adjusted for SFAS No. 142 in 2001 945 943 ========= =========
The accompanying notes are an integral part of these statements. CORNING INCORPORATED AND SUBSIDIARY COMPANIES CONSOLIDATED BALANCE SHEETS (In millions, except per share amounts)
Unaudited Unaudited March 31, December 31, March 31, 2002 2001 2001 -------- ------------- --------- ASSETS Current assets: Cash and cash equivalents $ 958 $ 1,037 $ 564 Short-term investments, at fair value 867 1,182 585 -------- --------- --------- Total cash and short-term investments 1,825 2,219 1,149 Trade accounts receivable, net of doubtful accounts and allowances - $54, $60 and $47 616 593 1,245 Inventories 717 725 1,215 Deferred income taxes 329 347 232 Other current assets 209 223 233 -------- --------- --------- Total current assets 3,696 4,107 4,074 Investments: Associated companies, at equity 616 636 474 Others, at cost or fair value 134 142 137 -------- --------- --------- Total investments 750 778 611 Property, plant and equipment, at cost, net of accumulated depreciation - $3,222, $3,067 and $2,785 4,967 5,097 4,939 Goodwill, net of accumulated amortization - $661, $661 and $445 1,941 1,937 6,720 Other intangible assets, net of accumulated amortization - $99, $90 and $62 329 352 566 Other assets 605 522 263 -------- --------- --------- Total Assets $ 12,288 $ 12,793 $ 17,173 ======== ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Loans payable $ 385 $ 477 $ 197 Accounts payable 338 441 614 Other accrued liabilities 910 1,076 827 -------- --------- --------- Total current liabilities 1,633 1,994 1,638 Long-term debt 4,418 4,461 3,838 Postretirement benefits other than pensions 613 608 594 Other liabilities 189 190 204 Minority interest in subsidiary companies 113 119 140 Convertible preferred stock 7 7 8 Common shareholders' equity: Common stock, including excess over par value and other capital - par value $0.50 per share; Shares authorized: 3.8 billion; Shares issued: 1.0 billion 10,039 10,044 9,685 (Accumulated deficit) retained earnings (3,700) (3,610) 2,077 Less: cost of 77 million, 79 million and 76 million shares of common stock in treasury (806) (827) (777) Accumulated other comprehensive loss (218) (193) (234) -------- --------- --------- Total common shareholders' equity 5,315 5,414 10,751 -------- --------- --------- Total Liabilities and Shareholders' Equity $ 12,288 $ 12,793 $ 17,173 ======== ========= =========
The accompanying notes are an integral part of these statements. CORNING INCORPORATED AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited; in millions)
For the three months ended March 31, -------------------------- 2002 2001 -------- --------- Cash flows from operating activities: Net (loss) income $ (90) $ 132 Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: Amortization of purchased intangibles 11 13 Amortization of goodwill 143 Depreciation 163 155 Stock compensation charges 1 12 Equity in earnings of associated companies less than (in excess of) dividends received 23 (36) Minority interest, net of dividends paid (6) 1 Deferred tax benefit (70) (11) Tax benefit on stock options 24 Interest expense on convertible debentures 10 10 Restructuring payments (58) Changes in certain working capital items (145) (271) Other, net (10) 4 ------- -------- Net cash (used in) provided by operating activities (171) 176 ------- -------- Cash flows from investing activities: Capital expenditures (102) (576) Acquisitions of businesses, net of cash acquired (66) Net proceeds from sale or disposal of assets 5 6 Net decrease (increase) in long-term investments and other long-term assets 1 (47) Short-term investments - acquisitions (603) (77) Short-term investments - liquidations 919 207 Other, net (1) ------- -------- Net cash provided by (used in) investing activities 219 (553) ------- -------- Cash flows from financing activities: Net repayments of short-term debt (143) (12) Proceeds from issuance of long-term debt 11 38 Repayments of long-term debt (4) (85) Proceeds from issuance of common stock 15 7 Redemption of common stock for income tax withholding (19) Dividends paid (56) ------- -------- Net cash used in financing activities (121) (127) ------- -------- Effect of exchange rates on cash (6) (2) ------- -------- Cash used in continuing operations (79) (506) ------- -------- Cash used in discontinued operations (9) ------- -------- Net decrease in cash and cash equivalents (79) (515) Cash and cash equivalents at beginning of year 1,037 1,079 ------- -------- Cash and cash equivalents at end of period $ 958 $ 564 ======= ========
The accompanying notes are an integral part of these statements. CORNING INCORPORATED AND SUBSIDIARY COMPANIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Quarter 1, 2002 1. Information by Operating Segment Information about the performance of Corning's three operating segments for the first quarter of 2002 and 2001 are presented below. These amounts exclude revenues, expenses and equity earnings not specifically identifiable to segments. 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 generally accepted accounting principles. Segment net income may not be consistent with measures used by other companies.
Three months ended (In millions) March 31, - ---------------------------------------------------------------------------------------------------------- 2002 2001 -------- --------- Telecommunications Net sales: Optical fiber and cable $ 255 $ 875 Hardware and equipment 135 248 Photonic technologies 34 236 Controls and connectors 39 60 Optical networking devices 2 14 -------- --------- Total net sales $ 465 $ 1,433 ======== ========= Research, development and engineering expenses $ 86 $ 122 Interest expense $ 32 $ 25 Segment (loss) earnings before equity (losses) earnings $ (138) $ 177 Equity in (losses) earnings of associated companies (4) 3 -------- --------- Segment net (loss) income $ (142) $ 180 ======== ========= Advanced Materials Net sales: Environmental technologies $ 94 $ 108 Life sciences 70 70 Other advanced materials 69 104 -------- --------- Total net sales $ 233 $ 282 ======== ========= Research, development and engineering expenses $ 31 $ 28 Interest expense $ 8 $ 5 Segment earnings before equity earnings $ 1 $ 26 Equity in earnings of associated companies 8 6 -------- --------- Segment net income $ 9 $ 32 ======== ========= Information Display Net sales: Display technologies $ 93 $ 62 Conventional video components 43 86 Precision lens 59 53 -------- --------- Total net sales $ 195 $ 201 ======== ========= Research, development and engineering expenses $ 11 $ 10 Interest expense $ 8 $ 4 Segment earnings before minority interest and equity earnings $ 3 $ 21 Minority interest in losses (earnings) of subsidiaries 6 (5) Equity in earnings of associated companies 25 25 -------- --------- Segment net income $ 34 $ 41 ======== =========
Three months ended (In millions) March 31, - ---------------------------------------------------------------------------------------------------------- 2002 2001 -------- --------- Total segments Net sales $ 893 $ 1,916 Research, development and engineering expenses $ 128 $ 160 Interest expense $ 48 $ 34 Segment (loss) earnings before minority interest and equity earnings $ (134) $ 224 Minority interest in losses (earnings) of subsidiaries 6 (5) Equity in earnings of associated companies 29 34 -------- --------- Segment net (loss) income $ (99) $ 253 ======== =========
A reconciliation of the totals reported for the operating segments to the applicable line items in the consolidated financial statements is as follows (in millions):
Three months ended March 31, 2002 2001 -------- --------- Net sales Total segment net sales $ 893 $ 1,916 Non-segment net sales (a) 5 5 -------- --------- Total net sales $ 898 $ 1,921 ======== ========= Net income Total segment net (loss) income $ (99) $ 253 Unallocated items: Non-segment loss and other (a) (1) (1) Amortization of goodwill (b) (143) Interest income (c) 14 24 Income tax (d) (5) (1) Equity in earnings of associated companies (a) 1 -------- --------- Net (loss) income $ (90) $ 132 ======== =========
(a) Includes amounts derived from corporate investments. (b) Amortization of goodwill relates primarily to the Telecommunications Segment. (c) Corporate interest income is not allocated to reportable segments. (d) Includes tax associated with unallocated items. 2. Income Taxes Corning's effective income tax benefit rate for the three months ended March 31, 2002 was 25%. The effective tax benefit rate in the quarter is lower than the U.S. statutory income tax rate of 35% due to the impact of unusable tax credits and nondeductible expenses and losses. 3. Accounting Change In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 141, "Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible Assets." Among other provisions, goodwill will no longer be amortized but will be subject to impairment tests at least annually. SFAS No. 142 was effective for Corning on January 1, 2002. Corning completed its initial impairment review during the first quarter and concluded a transitional impairment charge from the adoption of the standard would not be required. The following table presents a reconciliation of reported net income and earnings per share to adjusted net income and earnings per share, as if SFAS No. 142 had been in effect as follows:
For the three months ended (In millions, except per share amounts) March 31, 2001 - ------------------------------------------------------------------------------------------------------------- Reported net income $ 132 Addback: Amortization of goodwill, net of income taxes 136 --------- Adjusted net income $ 268 ========= Reported earnings per share - basic $ 0.14 Addback: Amortization of goodwill, net of income taxes 0.15 --------- Adjusted earnings per share - basic $ 0.29 ========= Reported earnings per share - diluted $ 0.14 Addback: Amortization of goodwill, net of income taxes 0.15 --------- Adjusted earnings per share - diluted $ 0.29 =========
4. Supplementary Statement of Cash Flows Data Supplemental disclosure of cash flow information is as follows (in millions):
For the three months ended March 31, ------------------------------------ 2002 2001 ---------- ----------- Changes in certain working capital items: Trade accounts receivable $ (33) $ 35 Inventories 5 (178) Other current assets 34 135 Accounts payable and other current liabilities, net of restructuring payments (151) (263) -------- --------- Total $ (145) $ (271) ======== =========
5. Reclassifications Certain amounts in 2001 have been reclassified to conform with 2002 classifications. CORNING INCORPORATED QUARTERLY SALES INFORMATION (In millions)
2002 -------------------------------------------------------------- Q1 Q2 Q3 Q4 Total --------- --------- -------- -------- --------- Telecommunications Fiber and cable $ 255 $ $ $ $ 255 Hardware and equipment 135 135 Photonic technologies 34 34 Controls and connectors 39 39 Optical networking devices 2 2 -------- -------- ------- ------- -------- Segment net sales $ 465 $ $ $ $ 465 ======== ======== ======= ======= ======== Advanced Materials Environmental $ 94 $ $ $ $ 94 Life sciences 70 70 Other advanced materials 69 69 -------- -------- ------- ------- -------- Segment net sales $ 233 $ $ $ $ 233 ======== ======== ======= ======= ======== Information Display Display technologies $ 93 $ $ $ $ 93 Conventional video components 43 43 Precision lens 59 59 -------- -------- ------- ------- -------- Segment net sales $ 195 $ $ $ $ 195 ======== ======== ======= ======= ========
2001 -------------------------------------------------------------- Q1 Q2 Q3 Q4 Total --------- --------- -------- -------- --------- Telecommunications Fiber and cable $ 875 $ 939 $ 779 $ 296 $ 2,889 Hardware and equipment 248 231 187 151 817 Photonic technologies 236 158 69 46 509 Controls and connectors 60 55 47 43 205 Optical networking devices 14 10 7 7 38 -------- -------- ------- ------- -------- Segment net sales $ 1,433 $ 1,393 $ 1,089 $ 543 $ 4,458 ======== ======== ======= ======= ======== Advanced Materials Environmental $ 108 $ 96 $ 90 $ 85 $ 379 Life sciences 70 69 65 63 267 Other advanced materials 104 86 79 78 347 -------- -------- ------- ------- -------- Segment net sales $ 282 $ 251 $ 234 $ 226 $ 993 ======== ======== ======= ======= ======== Information Display Display technologies $ 62 $ 87 $ 79 $ 95 $ 323 Conventional video components 86 73 47 46 252 Precision lens 53 58 57 57 225 -------- -------- ------- ------- -------- Segment net sales $ 201 $ 218 $ 183 $ 198 $ 800 ======== ======== ======= ======= ========
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