Corning Reports First-Quarter Results.Business Editors CORNING Corning, city (1990 pop. 11,938), Steuben co., S N.Y., on the Chemung River, in a dairy and vineyard region; settled 1788, inc. as a city 1890. The glass industry for which the city is famous began in 1868. , N.Y.--(BUSINESS WIRE)--April 22, 2003 Performance exceeds guidance Continued strength seen in LCD (Liquid Crystal Display) A display technology that uses rod-shaped molecules (liquid crystals) that flow like liquid and bend light. Unenergized, the crystals direct light through two polarizing filters, allowing a natural background color to show. market Corning Incorporated Corning Incorporated NYSE: GLW is an American manufacturer of glass, ceramics and related materials, primarily for industrial and scientific applications. The company was known until 1989 as Corning Glass Works. (NYSE NYSE See: New York Stock Exchange :GLW GLW Glasgow Airport (UK) GLW Gross Laden Weight GLW Good Lady Wife (Australia) ) today announced that its first-quarter results exceeded quarterly guidance and sales increased sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen for the first time in two years. The company said sales were $746 million and that it recorded a net loss of $205 million or $0.17 per share. This net loss includes $201 million or $0.17 per share of charges primarily related to the previously announced asbestos asbestos, mineral asbestos, common name for any of a variety of silicate minerals within the amphibole and serpentine groups that are fibrous in structure and more or less resistant to acid and fire. litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. settlement and restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charges. James R. Houghton James R. Houghton is the Retired Chairman of the Board of Corning Incorporated. Houghton has Bachelor of Arts and master of business administration degrees from Harvard University (A.B., 1958, MBA, 1962). , chairman and chief executive officer, said, "We are extremely pleased with the improvement in our quarterly performance. Our results reflect stronger than expected demand for fiber and cable in Japan and the continued strength of our technologies businesses, particularly the Display Technologies and Environmental Technologies businesses." Houghton Hough·ton , Henry Oscar 1823-1895. American publisher who founded (1852) the printing office that became the Houghton Mifflin Company. Noun 1. said that the company continues to focus on its goal of returning to profitability by the third quarter of this year. "We are seeing significant improvement in our gross margin and lower operating costs operating costs npl → gastos mpl operacionales due to our restructuring efforts over the past year," he said. Previously Announced Charges Corning said its first-quarter results include net charges totaling $345 million ($201 million after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. and minority interest) or $0.17 per share. These include the following: -- A previously announced charge of $298 million ($192 million after-tax) for asbestos litigation related to Pittsburgh Pittsburgh (pĭts`bərg), city (1990 pop. 369,879), seat of Allegheny co., SW Pa., at the confluence of the Allegheny and the Monongahela rivers, which there form the Ohio River; inc. 1816. Corning Corporation. -- Net restructuring and impairment charges of $51 million ($12 million after-tax and minority interest) related to the previously announced decisions to shut down Corning Asahi Asahi (朝日 or 旭) means "morning sun" in Japanese. It is a name of several places in Japan:
Video (CAV (1) (Component Analog Video) See YPbPr. (2) (Constant Angular Velocity) Rotating an optical disc or hard disk at a constant speed. Contrast with "constant linear velocity" (CLV), in which the platter rotates at varying speeds. ) and the optical switching business, offset by adjustments to the company's existing restructuring reserves. -- A net gain of $4 million ($3 million after-tax) related to the repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. of debt using cash and common stock. First-Quarter Operating Results Sales for the quarter of $746 million represent a sequential One after the other in some consecutive order such as by name or number. increase from fourth- quarter sales of $736 million. Telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. segment sales were $352 million, compared to fourth-quarter sales of $363 million. Fiber volume increased approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 15 percent sequentially due to stronger than expected demand in Japan and China, offset by continued softness in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. and Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). . Sequential
price declines, as expected, were in the 10 to 15 percent range for the
quarter.
Corning Technologies recorded first-quarter sales of $388 million, an increase over fourth-quarter sales of $367 million. Corning's display glass sales were fueled by strong demand for flat screen desktop monitors, the popularity of notebook computers A laptop computer that weighs in a range from five to seven pounds. The term originated when laptops were routinely more than 10 pounds, and those that became lighter were placed in a special "notebook" category. In practice, notebook computer and laptop computer are synonymous. and growing interest in liquid crystal display liquid crystal display (LCD) Optoelectronic device used in displays for watches, calculators, notebook computers, and other electronic devices. Current passed through specific portions of the liquid crystal solution causes the crystals to align, blocking the passage of light. (LCD) televisions. Sequential quarterly display glass volume gains were about 10 percent and LCD glass pricing was stable. Corning's environmental products business experienced volume increases worldwide. Both of these businesses benefited from favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. exchange rates. Corning's first-quarter results benefited from the initial recognition of $17 million of equity earnings from Dow Corning Dow Corning is a multinational corporation headquartered in Midland, Michigan, USA. Dow Corning specializes in silicon and silicone-based technology, offering more than 7,000 products and services. Dow Corning is equally owned by The Dow Chemical Company and Corning, Inc. Corporation. Corning's total equity earnings for the first quarter were $59 million. Liquidity Update Corning said that it ended the first quarter with $1.85 billion in cash and short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investments, a decline from $2.1 billion at the end of last year. The decline was primarily due to the use of cash to retire retire v. 1) to stop working at one's occupation. 2) to pay off a promissory note, and thus "retire" the loan. 3) for a jury to go into the jury room to decide on a verdict after all evidence, argument and jury instructions have been completed. debt. Operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. included a $191 million federal income tax refund Tax refund Money back from the government when too much tax has been paid or withheld from a salary. . In the first quarter, Corning used $251 million for scheduled debt repayments and open market repurchases. In addition, Corning exchanged 6.5 million shares of Corning common stock for debt with an accreted value accreted value The current value of an original-issue discount bond, taking into account imputed interest that has accumulated. of $43 million. Corning said that it might continue from time-to-time to retire its debt securities in open market, privately negotiated or other transactions. Corning ended the quarter with a debt-to-capital ratio of 45.6 percent, down from 46.7 percent from year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. . Second-Quarter Outlook Corning said that it expects second-quarter sales to be in the range of $715 million to $745 million. It also anticipates results in the range of a loss of $0.02 per share to income of $0.01 per share. These results exclude the impact of previously announced restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. and any adjustments to the asbestos settlement reserve required by movement in Corning's stock price. Corning expects continued strong performance from its LCD glass business, with sequential volume gains of about 10 percent and stable pricing. Second quarter fiber volumes are expected to decline sequentially by about 25 percent, driven by the seasonal slowdowns in Japan and the continued softness across the North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. market. Corning said it also continues to explore a number of options for its Photonic Dealing with light (photons). See photon and photonics. Technologies business and expects to reach a decision by mid-year. James James, person in the Bible James, in the Gospel of St. Luke, kinsman of St. Jude. The original does not specify the relationship. James, rivers, United States James. B. Flaws, vice chairman and chief financial officer, said, "Putting aside the strength of our fiber and cable business in Asia last quarter, we are not seeing a lift in our telecommunications businesses, but this does not surprise us. Global events, the long winter in North America and the overall malaise malaise /mal·aise/ (mal-az´) a vague feeling of discomfort. mal·aise n. A vague feeling of bodily discomfort, as at the beginning of an illness. in the economy appear to be delaying any potential seasonal improvements in telecom sales. We anticipate that with normal seasonality in the Japanese Japanese (jăp'ənēz`), language of uncertain origin that is spoken by more than 125 million people, most of whom live in Japan. There are also many speakers of Japanese in the Ryukyu Islands, Korea, Taiwan, parts of the United States, and fiber market, there will be a pick up in volume in the second half of the year. Flaws said that the company has been closely monitoring external trends across all its markets and said, "While it is too early to tell, there are indications that a general economic slow down in North America may affect some of Corning's businesses such as Environmental Technologies where potential inventory corrections in the auto industry could dampen second-quarter sales. However, our plan to return to profitability is mostly dependent on strong performance of our display business and our own cost cutting actions. Our first-quarter performance on these fronts was strong and we remain optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op that our profitability goal is achievable." About Corning Incorporated Established in 1851, Corning Incorporated (www.corning.com) creates leading-edge technologies that offer growth opportunities in markets that fuel the world's economy. Corning manufactures optical fiber, cable and photonic products in its Telecommunications segment. Corning's Technologies segment manufactures high-performance Adj. 1. high-performance - modified to give superior performance; "a high-performance car" superior - of high or superior quality or performance; "superior wisdom derived from experience"; "superior math students" display glass, and products for the environmental, life sciences, and semiconductor markets. First-Quarter Conference Call Information The company will host a first quarter conference call at 8:30 a.m. ET on Wednesday Wednesday: see week. , April 23, 2003. To access the call, dial (312) 470-0008. The password A secret word or code used to serve as a security measure against unauthorized access to data. It is normally managed by the operating system or DBMS. However, the computer can only verify the legitimacy of the password, not the legitimacy of the user. See NCSC. is Corning. The leader is Sofio. A replay of the call will begin at approximately 10:30 a.m. ET and will run through 5 p.m. ET, Wednesday, May 7, 2003. To listen, dial (402) 220-4617, no passcode required. To listen to a live audio webcast of the call at 8:30 a.m. on Wednesday, April 23, please go to our Web site and follow the instructions: http://www.corning.com/investor_relations. The webcast will be archived for 14 days following the call. Forward-Looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. and Cautionary Statements This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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 capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. by larger customers in the telecommunications industry and other business segments; the mix of sales between premium and non-premium products; possible disruption disruption /dis·rup·tion/ (dis-rup´shun) a morphologic defect resulting from the extrinsic breakdown of, or interference with, a developmental process. in commercial activities due to terrorist activity and armed conflict; ability to obtain financing and capital on commercially reasonable terms; acquisition and divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). activities; the level of excess or obsolete inventory Obsolete Inventory Term that refers to inventory that is at the end of its product life cycle and has not seen any sales or usage for a set period of time usually determined by the industry. This type of inventory has to be written down and can cause large losses for a company. ; 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 OPERATIONS
(Unaudited; in millions, except per share amounts)
For the three
months ended
March 31,
-----------------
2003 2002
---- ----
Net sales $ 746 $ 839
Cost of sales 546 655
------ ------
Gross margin 200 184
Operating expenses:
Selling, general and administrative
expenses 152 188
Research, development and engineering expenses 93 126
Amortization of purchased intangibles 9 11
Restructuring, impairment and other charges and
credits 51
------ ------
Operating loss (105) (141)
Interest income 8 14
Interest expense (40) (48)
Asbestos settlement (298)
Gain on repurchases of debt, net of
inducements 4
Other expense, net (14) (9)
------ ------
Loss from continuing operations before income
taxes (445) (184)
Benefit for income taxes (144) (50)
------ ------
Loss from continuing operations
before minority interests and equity
earnings (301) (134)
Minority interests 37 6
Equity in earnings of associated companies 59 30
------ ------
Loss from continuing operations (205) (98)
Income from discontinued operations, net of
income taxes 8
------ ------
Net loss $ (205) $ (90)
====== ======
Basic and diluted loss per common
share from:
Continuing operations $(0.17) $(0.10)
Discontinued operations
------ ------
Loss per common share $(0.17) $(0.10)
====== ======
Shares used in computing per share amounts
for basic and diluted loss per common share 1,200 945
====== ======
See Notes to Consolidated Financial Statements.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(In millions, except per share amounts)
Unaudited
March 31, December 31,
2003 2002
--------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 1,127 $ 1,426
Short-term investments, at fair value 722 664
------- -------
Total cash and short-term investments 1,849 2,090
Trade accounts receivable, net 494 470
Inventories 556 559
Deferred income taxes 323 296
Other accounts receivable 140 358
Prepaid expenses and other current assets 58 52
------- -------
Total current assets 3,420 3,825
Restricted cash and investments 82 82
Investments 773 769
Property, net 3,576 3,705
Goodwill 1,721 1,715
Other intangible assets, net 205 213
Deferred income taxes 1,018 887
Other assets 202 210
------- -------
Total Assets $10,997 $11,406
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Loans payable $ 145 $ 204
Accounts payable 299 339
Other accrued liabilities 1,115 1,137
------- -------
Total current liabilities 1,559 1,680
Long-term debt 3,710 3,963
Postretirement benefits other than pensions 609 617
Other liabilities 512 396
Commitments and contingencies
Minority interests 19 59
Shareholders' equity:
Preferred stock - Par value
$100.00 per share; Shares authorized: 10
million Series C mandatory convertible
preferred stock - Shares issued: 5.75
million; Shares outstanding: 1.55 million 155 155
Common stock - Par value $0.50 per share;
Shares authorized: 3.8 billion;
Shares issued: 1,267 million 634 634
Additional paid-in capital 9,671 9,695
Accumulated deficit (5,126) (4,921)
Treasury stock, at cost: 61 million;
70 million (613) (702)
Accumulated other comprehensive loss (133) (170)
------- -------
Total shareholders' equity 4,588 4,691
------- -------
Total Liabilities and Shareholders' Equity $10,997 $11,406
======= =======
Certain amounts for 2002 were reclassified to conform with 2003
classifications.
See Notes to Consolidated Financial Statements.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in millions)
For the three
months ended
March 31,
---------------
2003 2002
---- ----
Cash flows from operating activities:
Loss from continuing operations $ (205) $ (98)
Adjustments to reconcile loss from
continuing operations to net cash
provided by (used in) operating
activities:
Amortization of purchased intangibles 9 11
Depreciation 118 157
Asbestos settlement 298
Restructuring, impairment and other charges
and credits 51
Gain on repurchases of debt, net of inducements (4)
Undistributed earnings of associated companies 1 23
Minority interests, net of dividends paid (37) (6)
Deferred tax benefit (178) (87)
Interest expense on convertible debentures 7 10
Restructuring payments (94) (58)
Increases in restricted cash (3)
Income tax refund 191
Changes in certain working capital items:
Trade accounts receivable (13) (26)
Inventories 7 1
Other current assets 10 34
Accounts payable and other current
liabilities, net of restructuring payments (118) (154)
Other, net (17) (9)
------- -------
Net cash provided by (used in) operating
activities 23 (202)
------- -------
Cash flows from investing activities:
Capital expenditures (55) (101)
Net proceeds from sale of precision
lens business 9
Net proceeds from sale or disposal of assets 13 5
Short-term investments - acquisitions (428) (603)
Short-term investments - liquidations 369 919
Restricted investments - liquidations 3
Other, net 1
------- -------
Net cash (used in) provided by investing
activities (88) 220
------- -------
Cash flows from financing activities:
Net repayments of loans payable (62) (143)
Proceeds from issuance of long-term debt 11
Repayments of long-term debt (189) (4)
Proceeds from issuance of common
stock, net 3 15
Cash dividends paid to preferred
shareholders (3)
------- -------
Net cash used in financing activities (251) (121)
------- -------
Effect of exchange rates on cash 17 (6)
------- -------
Cash used in continuing operations (299) (109)
Cash provided by discontinued operations 30
------- -------
Net decrease in cash and cash equivalents (299) (79)
Cash and cash equivalents at beginning
of period 1,426 1,037
------- -------
Cash and cash equivalents at end of period $ 1,127 $ 958
======= =======
Certain amounts for 2002 were reclassified to conform with 2003
classifications.
See Notes to Consolidated Financial Statements.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
SEGMENT RESULTS
(Unaudited; in millions)
Non-
segment/ Consol-
Telecom- Other idated
munications Technologies items Total
----------- ------------ -------- --------
For the three months
ended March 31, 2003
Net sales $ 352 $ 388 $ 6 $ 746
Research, development
and engineering
expenses $ 38 $ 55 $ 93
Restructuring,
impairment and other
(credits) charges $ (9) $ 60 $ 51
Interest expense $ 21 $ 19 $ 40
Benefit for income taxes $ (25) $ (7) $ (112) $ (144)
Loss before minority
interests and equity
(losses) earnings $ (60) $ (55) $ (186) $ (301)
Minority interests 37 37
Equity in (losses)
earnings of associated
companies (3) 44 18 59
------ ------- ------ -------
Net (loss) income $ (63) $ 26 $ (168) $ (205)
====== ======= ====== =======
For the three months
ended March 31, 2002
Net sales $ 465 $ 369 $ 5 $ 839
Research, development
and engineering expenses $ 86 $ 40 $ 126
Interest expense $ 32 $ 16 $ 48
(Benefit) provision for
income taxes $ (64) $ (1) $ 15 $ (50)
(Loss) income before
minority interests and
equity (losses) earnings $ (138) $ (4) $ 8 $ (134)
Minority interests 6 6
Equity in (losses)
earnings of associated
companies (4) 33 1 30
Income from discontinued
operations 8 8
------ ------- ------ -------
Net (loss) income $ (142) $ 35 $ 17 $ (90)
====== ======= ====== =======
Non-segment/other items net (loss) income is detailed below:
Three months ended
March 31,
------------------
2003 2002
---- ----
Non-segment income (loss)
and other (1) $ (12) $ 9
Interest income 8 14
Asbestos settlement (298)
Gain on repurchases of debt, net of
inducements 4
Benefit (provision) for income taxes 112 (15)
Equity in earnings of associated
companies (2) 18 1
Income from discontinued operations 8
------- -------
Net (loss) income $ (168) $ 17
======= =======
(1) Includes non-segment operations and other corporate activities.
(2) Includes amounts derived from corporate investments and
activities, primarily Dow Corning Corporation - $17 million.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge (Unaudited) 1. Restructuring, Impairment and Other Charges and Credits In the first quarter of 2003, Corning recorded charges for the shut-down of the conventional video components business and the optical switching product line which were announced on April 15, 2003 and February February: see month. 13, 2003, respectively. Corning also recorded credits related to the restructuring reserve discussed below. Conventional video components business Corning Asahi Video Products Company, a 51% owned consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: subsidiary, (conventional video components business, or CAV), is a manufacturer of glass panels and funnels for use in conventional tube televisions and is reported in the Technologies segment. On April 15, 2003, Corning announced that it had agreed with its partner to cease production. Corning impaired See assistive technology. the long-lived long-lived adj. 1. Having a long life: a long-lived aunt. 2. Lasting a long time; persistent: a long-lived rumor. 3. assets of this business to estimated salvage value Salvage Value The estimated value that an asset will realize upon its sale at the end of its useful life. Notes: For example, the value of a computer after it depreciates over the number of years specified by the IRS. and recorded a charge of $62 million, ($19 million after-tax and minority interest). Restructuring costs are expected to be recorded in the second quarter and total $80 million to $110 million ($20 million to $35 million after-tax and minority interest). Corning expects the restructuring costs to require $40 million to $65 million in cash spending. Corning has agreed with its partner to a shared funding arrangement based on proportional proportional values expressed as a proportion of the total number of values in a series. proportional dwarf the patient is a miniature without disproportionate reductions or enlargements of body parts. partnership interests. Optical Switching Corning recorded a charge of $17 million associated with the discontinuance Cessation; ending; giving up. The discontinuance of a lawsuit, also known as a dismissal or a non-suit, is the voluntary or involuntary termination of an action. DISCONTINUANCE, pleading. A chasm or interruption in the pleading. 2. of the optical switching product line in the photonic technologies business due to the downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. in the telecommunications industry. In addition to the first quarter charges, Corning expects to record charges of $10 million in the second quarter for certain exit costs. Impairment of Cost Investments In the first quarter, Corning recorded a $5 million ($3 million after-tax) charge for other than temporary declines in certain investments accounted for under the cost method in the Telecommunications segment. Credits The current restructuring reserve continues to be evaluated as plans are being executed executed 1) adj. to have been completed. (Example: "it is an executed contract") 2) v. to have completed or fully performed. (Example: "he executed all the promises made in the contract") 3) v. . As a result, there may be additional charges or reversals. In addition, since the restructuring program is an aggregation of many individual plans currently being executed, actual costs have differed from estimated amounts. During the first quarter, Corning recorded credits of $33 million related to revised cost estimates of existing restructuring plans of which $24 million related to employee separation and exit costs, while $9 million related to adjustments to assumed salvage values of assets that were previously impaired. 2. Asbestos Settlement On March 28, 2003, Corning announced that it had reached agreement with the representatives of asbestos claimants for the settlement of all current and future asbestos claims against Corning and Pittsburgh Corning Corporation (PCC PCC prothrombin complex concentrate. ), which might arise from PCC products or operations. The agreement is expected to be incorporated into a settlement fund as part of a reorganization plan A scheme authorized by federal law and promulgated by the president whereby he or she alters the structure of federal agencies to promote government efficiency and economy through a transfer, consolidation, coordination, authorization, or abolition of functions. for PCC. The plan will be submitted to the federal bankruptcy court bankruptcy court n. the specialized Federal court in which bankruptcy matters under the Federal Bankruptcy Act are conducted. There are several bankruptcy courts in each state, and each one's territory covers several counties. in Pittsburgh for approval, and is subject to a favorable vote by 75 percent of the asbestos claimants voting on the PCC reorganization plan. Corning will make its contributions to the settlement trust under the agreement after the plan is approved and no longer subject to appeal. The approval process could take one year or longer. Corning's settlement will require the contribution, when the plan becomes effective, of Corning's equity interest in PCC, its one-half equity interest in Pittsburgh Corning Europe N.V. (PCE PCE pseudocholinesterase; see cholinesterase. erythromycin Apo-Erythro (CA), Apo-Erythro-EC, Diomycin (CA), E-Base, E-Mycin, Erybid (CA), Erymax (UK), Ery-Tab, Erythromid (CA), PCE (CA), Rommix (UK), Tiloryth (UK) ), a Belgian Belgian having some relationship to Belgium. Belgian barge dog see schipperke. Belgian black pied cattle black, Belgian dairy cattle. Belgian blue dual-purpose cattle; blue, white or blue roan. corporation, and 25 million shares of Corning common stock. Corning also will make cash payments with a current value of $130 million over six years beginning in June June: see month. 2005. In addition, Corning will assign insurance policy proceeds from its primary insurance and a portion of its excess insurance as part of the settlement. Corning recorded a charge of $298 million ($192 million after-tax) in the first quarter. The carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of Corning's stock in PCE and the fair value as of March 31, 2003, of 25 million shares of Corning common stock have been reflected in current liabilities Current Liabilities Usually appearing on a company's balance sheet, it represents the amount owed for interest, accounts payable, short-term loans, expenses incurred but unpaid, and other debts due within one year. . The remaining $130 million, representing the net present value of the cash payments, discounted at 5.5%, is recorded in noncurrent liabilities Noncurrent liability A liability due in one year. noncurrent liability A liability not due to be paid within one year during the normal course of business. A long-term debt issue is a noncurrent liability. . Any changes in the value of Corning's common stock contribution will need to be recognized in Corning's quarterly results through the date of contribution to the settlement trust. 3. Gain on Repurchases of Debt, Net of Inducements During the first quarter of 2003, Corning repurchased and retired 298,500 zero coupon A certificate evidencing the obligation to pay an installment of interest or a dividend that must be cut and presented to its issuer for payment when it is due. Coupons are usually attached to a document, such as a promissory note, bond, share of stock, or a bearer convertible debentures Convertible Debenture Any type of debenture that can be converted into some other security. Notes: For example, a convertible bond can be converted into stock. with an accreted value of $231 million in exchange for cash of $189 million in a series of open-market repurchases. Also in the first quarter Corning issued 6.5 million shares of treasury common stock in exchange for zero coupon convertible debentures with an accreted value of $43 million. Corning recorded a net gain of $4 million ($3 million after-tax) associated with retirements of its zero coupon convertible debentures in the first quarter. The increase in equity due to the issuance of shares from treasury stock was $77 million. 4. Income Tax In the first quarter of 2003, the effective tax benefit rate excluding certain items such as restructuring, impairment, asbestos settlement and debt transactions was 30%.
CORNING INCORPORATED
QUARTERLY SALES INFORMATION
(In millions)
2003
--------------------------------------------
Q1 Q2 Q3 Q4 Total
-------- -------- ------- ------- --------
Telecommunications
Fiber and cable $ 193 $ $ $ $ 193
Hardware and equipment 122 122
Photonic technologies 18 18
Controls and connectors 19 19
------- ----- ------ ------- --------
Segment net sales $ 352 $ $ $ $ 352
======= ===== ====== ======= ========
Technologies
Display technologies $ 117 $ $ $ $ 117
Environmental 115 115
Life sciences 73 73
Conventional video
components 25 25
Other technologies
businesses 58 58
------- ----- ------ ------- --------
Segment net sales $ 388 $ $ $ $ 388
======= ====== ====== ======= ========
2002
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Q1 Q2 Q3 Q4 Total
--------- ------- ------- -------- ---------
Telecommunications
Fiber and cable $ 255 $ 212 $ 195 $ 197 $ 859
Hardware and equipment 135 153 136 128 552
Photonic technologies 36 39 17 19 111
Controls and connectors 39 33 18 19 109
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Segment net sales $ 465 $ 437 $ 366 $ 363 $ 1,631
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Technologies
Display technologies $ 93 $ 102 $ 106 $ 104 $ 405
Environmental 94 102 102 96 394
Life sciences 70 74 71 65 280
Conventional video
components 43 41 47 35 166
Other technologies
businesses 69 66 66 67 268
------ ------ ------- ------- -------
Segment net sales $ 369 $ 385 $ 392 $ 367 $ 1,513
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The above supplemental information is intended to facilitate analysis of Corning's businesses. |
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