Corning Reports Fourth-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)--Jan. 22, 2004 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 fourth-quarter sales were $820 million, and it incurred a net loss of $29 million or $0.02 per share. This net loss includes previously announced 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. charges totaling $81 million or $0.06 per share. "We are pleased that our fourth-quarter results met our expectations and that our sales increased for the fourth consecutive time this past year," 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. "More importantly, our goal at the beginning of the year was to restore profitability and, excluding special items, we have accomplished what we set out to do," he said. Fourth-Quarter Charges Corning said its fourth-quarter results include pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern charges of $46 million (after-tax charges of $81 million or $0.06 per share). These include: -- 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). , 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. and other charges of $21 million ($2 million after-tax credit), primarily related to the consolidation of Corning's high purity Purity: see Pearl, The. Purity See also Modesty. almond symbol of the Virgin Mary’s innocence. [O.T.: Numbers 17: 1–11; Art: Hall, 14] crystal its transparency symbolizes pureness. fused silica fused silica n. See quartz glass. and fluoride fluoride, a salt of hydrofluoric acid; see hydrogen fluoride. See also fluoridation; fluorine. crystal materials manufacturing facilities. -- A $25 million charge ($17 million after tax) to reflect the increase in the market value of Corning common stock to be contributed to settle the 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. 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. -- Corning's equity earnings included an after-tax charge of $66 million for Corning's share of an asset impairment charge recorded by Samsung Corning Co., Ltd., a 50 percent-owned equity venture, which manufactures glass funnels and panels for conventional television. Fourth-Quarter Operating Results Fourth-quarter sales of $820 million exceeded the company's guidance range of $740 million to $765 million, and were $48 million higher than third-quarter sales. Corning's Technologies segment sales for the quarter were $457 million, compared to sales of $396 million in the third quarter, driven primarily by strength in the Display Technologies business. Sequential One after the other in some consecutive order such as by name or number. sales of 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 (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. ) glass grew 39 percent, due to volume increases of more than 20 percent, favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. foreign exchange rates and stable pricing. Environmental Technologies sales were essentially flat with third-quarter sales, but better than expected due to increased sales of thin-wall automotive substrates and diesel products. Fourth-quarter profitability for this business was impacted by weak manufacturing performance and start-up Start-up The earliest stage of a new business venture. costs for its new diesel facility. Corning's Telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. segment sales were $357 million for the quarter, a decline from third-quarter sales of $370 million, due to expected seasonal slowdowns of optical fiber volume 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 declines in Japan. Pricing of single-mode optical fiber In fiber-optic communication, a single-mode optical fiber (SMF) is an optical fiber designed to carry only a single ray of light (mode). This ray of light often contains a variety of different wavelengths. continued its moderating trend with only very slight sequential declines in the quarter. Corning's display and environmental businesses and Telecommunications segment all continued to benefit from favorable foreign exchange rates in the fourth quarter. Of the $48 million sequential sales increase, approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $20 million was due to more favorable foreign exchange rates in the fourth quarter. The company's equity earnings were $15 million and included the $66 million impairment charge from Samsung Corning. Excluding this charge, fourth-quarter equity earnings were $81 million, compared to $75 million in the third quarter, due to stronger-than-expected earnings at Samsung Corning Precision Glass  The of this article or section may be compromised by "peacock terms".You can help Wikipedia by removing peacock terms. Co., Ltd., an equity venture which manufactures LCD glass in Korea Korea (kôrē`ə, kə–), Korean Hanguk or Choson, region and historic country (85,049 sq mi/220,277 sq km), E Asia. . Corning's 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 were $18 million for the quarter, compared to $22 million last quarter. Full-Year Results For the year, Corning recorded sales of $3.1 billion, a slight decline from a year ago sales of $3.2 billion. The company's loss from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the for 2003 was $223 million, or $0.18 per share, compared to a loss from continuing operations of $1.8 billion, or $1.85 per share, last year. Corning's 2003 full-year results include net charges totaling $505 million ($351 million after tax or $0.28 per share) including: -- Restructuring, impairment and other charges of $111 million ($26 million after tax and minority interest). -- The asbestos litigation charge for Pittsburgh Corning Corporation of $413 million ($263 million after tax). -- A $66 million after-tax asset impairment charge in equity earnings from Samsung Corning and $8 million after-tax equity investment impairments, primarily from the exit of the photonics photonics, the science and technology based on and concerned with the controlled flow of photons, or light particles. It is the optical equivalent of electronics, and the two technologies coexist in such innovations as optoelectronic integrated circuits. product line. -- Net gains on repurchases of debt of $19 million ($12 million after tax). Cash Flow Update Corning ended the year with $1.3 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 slight decline from the previous quarter's balance of $1.4 billion. The decline included debt repayments of approximately $95 million, restructuring payments of $32 million and an additional voluntary contribution of $60 million to the company's pension fund. For the year, Corning paid off approximately $1.4 billion in total debt and reduced its debt-to-capital ratio to 33.8 percent, a substantial decline from a year ago levels of 46.7 percent. "This was a year of great progress for Corning," Houghton Hough·ton , Henry Oscar 1823-1895. American publisher who founded (1852) the printing office that became the Houghton Mifflin Company. Noun 1. said. "We improved our profitability by more than $500 million, before special items, by reducing operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. more than 20 percent and making substantial gains in our gross margins. We continued to invest in research and development, which has Corning well-positioned for growth this year," he said. Outlook The company said that it expects first-quarter sales to be in the range of $770 million to $830 million, with earnings per share in the range of $0.04 to $0.05, before special items. This estimate is a non-GAAP financial measure, and is reconciled rec·on·cile v. rec·on·ciled, rec·on·cil·ing, rec·on·ciles v.tr. 1. To reestablish a close relationship between. 2. To settle or resolve. 3. on our Investor Relations Investor relations The process by which the corporation communicates with its investors. Web site. Corning expects that foreign exchange rates will remain stable for the first quarter. Telecommunications segment sales are anticipated to decline approximately 10 percent due to beginning-of-the-year normal optical fiber pricing reductions, lower project and services sales and the final exit from photonics. Sequential optical fiber volume for the first quarter is expected to be stable. The environmental business is expected to see quarterly sales increases due to seasonal trends in the automotive and diesel industries. The company's Life Sciences business also expects first-quarter sales increases. The company expects to continue to be sold out in LCD glass in the first quarter, despite bringing on additional capacity. Sequential LCD glass volume growth should be about 5 percent to 10 percent with current capacity constraints CONSTRAINTS - A language for solving constraints using value inference. ["CONSTRAINTS: A Language for Expressing Almost-Hierarchical Descriptions", G.J. Sussman et al, Artif Intell 14(1):1-39 (Aug 1980)]. . Pricing for the first quarter should remain stable. "We anticipate demand for flat-screen monitors flat-screen monitor n → Flachbildschirm m to remain robust in 2004. LCD television is now in the early stages of acceptance and continuing demand is expected to double market penetration Noun 1. market penetration - the extent to which a product is recognized and bought by customers in a particular market penetration - the act of entering into or through something; "the penetration of upper management by women" this year. We continue to invest in next generation large panel manufacturing, and we will bring additional Generation 6 manufacturing capacity on line this quarter and Generation 7 production later in the 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. He said that the company's automotive and diesel emission EMISSION, med. jur. The act by which any matter whatever is thrown from the body; thus it is usual to say, emission of urine, emission of semen, &c. 2. products are sold out in the first quarter. The business is ramping up production in its new diesel facility and plans to have two manufacturing lines operating by the end of the quarter. Flaws also noted that the environmental manufacturing performance is improving in the first quarter. Flaws also noted that the company was encouraged with the selection of Corning as a leading supplier to Verizon for their fiber-to-the-premises initiative. "When Verizon begins to implement its FTTP (Fiber To The Premises) The installation of optical fiber from the carrier directly into the home or office. Also called "fiber to the home" (FTTH). See PON and FTTC. See also FTP. plan, we believe it will present a long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. revenue opportunity for Corning," Flaws said. "We are pleased with the improvements we have made in the company's financial health over the past year. Our focus in 2004 remains on our three core priorities of protecting our financial health, increasing profitability and investing in future growth opportunities," he said. The company will provide additional information about its 2004 financial performance at its annual investor meeting on Feb. 6, 2004 at the Pierre Pierre (pēr), city (1990 pop. 12,906), state capital (since 1889) and seat of Hughes co., central S.Dak., on the east bank of the Missouri River, opposite Fort Pierre; inc. 1883. Hotel in New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. and simultaneously si·mul·ta·ne·ous adj. 1. Happening, existing, or done at the same time. See Synonyms at contemporary. 2. Mathematics via audio webcast. Investors can register for the event on line through the Investor Relations Web site at www.corning.com. Presentation of Information in this News Release Corning's earnings estimate for the first quarter is a non-GAAP financial measure as it excludes any potential gains or losses arising from previously announced restructuring actions, any further adjustments to the asbestos settlement reserve required by movement in Corning's stock price and income from discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. . The company believes presenting earnings estimates that exclude these items is helpful in understanding Corning's operating results. The company's comment about "...improved our profitability by more than $500 million, before special items," is also a non-GAAP financial measure that excludes the special items in the periods being compared. The company believes presenting this comparison is helpful in understanding the improvement in Corning's operating results including equity earnings. Corning provides a reconciliation of the non-GAAP earnings per share estimate to GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). earnings per share estimate, as well as a reconciliation of profitability, on our Investor Relations Web site at: (www.corning.com/investor_relations). About Corning Incorporated Corning Incorporated (www.corning.com) is a diversified diversified (di·verˑ·s technology company that concentrates its efforts on high-impact growth opportunities. Corning combines its expertise in specialty A contract under seal. A specialty is a written document that has been sealed and delivered and is given as security for the payment of a specifically indicated debt. glass, ceramic This article is about ceramic materials. For the fine art, see Ceramic art. The word ceramic is derived from the Greek word κεραμικός (keramikos). materials, polymers and the manipulation Manipulation Dealing in a security to create a false appearance of active trading, in order to bring in more traders. Illegal. of the properties of light, with strong process and manufacturing capabilities to develop, engineer and commercialize significant innovative products for the telecommunications, flat panel display A thin display screen for computer and TV usage. The first flat panels appeared on laptop computers in the mid-1980s, and the LCD technology became the standard. Stand-alone LCD screens became available for desktop computers in the mid-1990s and exceeded sales of CRTs for the first time , environmental, semiconductor, and life sciences industries. Fourth-Quarter Conference Call Information The company will host a fourth-quarter conference call at 8:30 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy on Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , Jan. 23. To access the call, dial (773) 756-4622. 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 Earnings. The leader is Sofio. A replay of the call will begin at approximately 10:30 a.m. EST and will run through 5 p.m. EST P.M. also p.m. or p.m. abbr. post meridiem Usage Note: By definition, 12 a.m. , Friday, Feb. 6. To listen, dial (402) 998-0771, no pass code is required. To listen to a live audio webcast of the call at 8:30 a.m. on Friday, Jan. 23, please go to our Web site and follow the instructions: http://www.corning.com/investor_relations. The audio 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 and political conditions; tariffs This is a list of tariffs and trade legislation:
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 liquid crystal display industry and other businesses; changes in the mix of sales between premium and non-premium products; facility expansions and new plant start-up costs; 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, armed conflict, political instability instability /in·sta·bil·i·ty/ (-stah-bil´i-te) lack of steadiness or stability. detrusor instability or major health concerns; ability to obtain financing and capital on commercially reasonable terms; adequacy and availability of insurance; capital resource and cash flow activities; capital spending; equity company activities; interest costs; 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 rate of technology change; the ability to enforce patents; product and components performance issues; changes in key personnel; stock price fluctuations; and adverse litigation or regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. developments. 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 share and per share amounts)
For the three For the
months ended year ended
December 31, December 31,
----------------- -----------------
2003 2002 2003 2002
-------- -------- -------- --------
Net sales $ 820 $ 736 $ 3,090 $ 3,164
Cost of sales 578 631 2,241 2,562
-------- -------- -------- --------
Gross margin 242 105 849 602
Operating expenses
Selling, general and
administrative expenses 152 183 599 716
Research, development
and engineering expenses 86 113 344 483
Amortization of purchased
intangibles 9 10 37 43
Restructuring, impairment
and other charges
and credits, net 21 1,461 111 2,080
-------- -------- -------- --------
Operating loss (26) (1,662) (242) (2,720)
Interest income 8 7 32 41
Interest expense (36) (43) (154) (179)
Asbestos settlement (25) (413)
Gain on repurchases of
debt, net 86 19 176
Other expense, net (12) (28) (1) (38)
-------- -------- -------- --------
Loss from continuing
operations before income taxes (91) (1,640) (759) (2,720)
Benefit for income taxes (46) (401) (254) (726)
-------- -------- -------- --------
Loss from continuing operations
before minority
interests and equity earnings (45) (1,239) (505) (1,994)
Minority interests 1 81 73 98
Equity in earnings of
associated companies,
net of impairments 15 19 209 116
-------- -------- -------- --------
Loss from continuing operations (29) (1,139) (223) (1,780)
Income from discontinued
operations, net of
income taxes 430 478
-------- -------- -------- --------
Net loss (29) (709) (223) (1,302)
Dividend requirements of
preferred stock (128)
-------- -------- -------- --------
Loss attributable to common
shareholders $ (29) $ (709) $ (223) $(1,430)
======== ======== ======== ========
Basic and diluted (loss)
earnings per common
share from:
Continuing operations $ (0.02) $ (0.96) $ (0.18) $ (1.85)
Discontinued operations 0.36 0.46
-------- -------- -------- --------
Basic and diluted loss per
common share $ (0.02) $ (0.60) $ (0.18) $ (1.39)
======== ======== ======== ========
Shares used in computing per
share amounts for
basic and diluted loss
per common share 1,335 1,188 1,274 1,030
======== ======== ======== ========
See notes to consolidated financial statements.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(Unaudited; in millions, except share and per share amounts)
December December
31, 31,
2003 2002
--------- ---------
Assets
Current assets:
Cash and cash equivalents $ 833 $ 1,426
Short-term investments, at fair value 433 664
--------- ---------
Total cash and short-term investments 1,266 2,090
Trade accounts receivable, net 525 470
Inventories 467 559
Deferred income taxes 242 296
Other accounts receivable 117 358
Prepaid expenses and other current assets 77 52
--------- ---------
Total current assets 2,694 3,825
Restricted cash and investments 66 82
Investments 1,045 769
Property, net 3,620 3,705
Goodwill 1,735 1,715
Other intangible assets, net 166 213
Deferred income taxes 1,225 887
Other assets 201 210
--------- ---------
Total assets $ 10,752 $ 11,406
========= =========
Liabilities and Shareholders' Equity
Current liabilities:
Loans payable $ 146 $ 204
Accounts payable 333 339
Other accrued liabilities 1,074 1,137
--------- ---------
Total current liabilities 1,553 1,680
Long-term debt 2,668 3,963
Postretirement benefits other than pensions 619 617
Other liabilities 412 396
Commitments and contingencies
Minority interests 36 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: 854 thousand and 1.55
million 85 155
Common stock - Par value $0.50 per share; Shares
authorized: 3.8 billion;
Shares issued: 1,401 million and 1,267 million 701 634
Additional paid-in capital 10,298 9,695
Accumulated deficit (5,144) (4,921)
Treasury stock, at cost; Shares held: 58 million
and 70 million (574) (702)
Accumulated other comprehensive income (loss) 98 (170)
--------- ---------
Total shareholders' equity 5,464 4,691
--------- ---------
Total liabilities and shareholders' equity $ 10,752 $ 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 For the
months ended year ended
December 31, December 31,
----------------- -----------------
2003 2002 2003 2002
-------- -------- -------- --------
Cash flows from operating
activities:
Loss from continuing operations $ (29) $(1,139) $ (223) $(1,780)
Adjustments to reconcile loss
from continuing operations
to net cash provided by
(used in) operating activities:
Amortization of purchased
intangibles 9 10 37 43
Depreciation 117 147 480 618
Asbestos settlement 25 413
Restructuring, impairment and
other charges and credits, net 21 1,461 111 2,080
Gain on repurchases of debt,
net of inducements (86) (19) (176)
Undistributed earnings of
associated companies (13) (17) (97) (33)
Minority interests, net of
dividends paid (1) (81) (77) (98)
Deferred tax benefit (4) (287) (263) (432)
Interest expense on convertible
debentures 3 8 18 38
Restructuring payments (32) (85) (233) (278)
Increases in restricted cash (4) (33) (3) (53)
Income tax refund 191
Tax benefit on stock options 2 2
Employee benefit payments in
excess of expense (49) (28) (142) (55)
Changes in certain working
capital items 54 (42) (62) (233)
Other, net (32) 69 35
-------- -------- -------- --------
Net cash provided by (used in)
operating activities 67 (103) 133 (324)
-------- -------- -------- --------
Cash flows from investing
activities:
Capital expenditures (162) (78) (366) (357)
Acquisitions of businesses, net
of cash acquired (7) (27) (6) (56)
Proceeds from sale of precision
lens business 787 9 787
Net proceeds from sale or
disposal of assets 7 30 46 92
Increase in long-term investments
and other long-term assets (6) (13) (10) (31)
Short-term investments -
acquisitions (158) (665) (1,584) (2,222)
Short-term investments -
liquidations 333 619 1,814 2,742
Restricted investments -
acquisitions (117)
Restricted investments -
liquidations 4 21 19 88
Other, net (2)
-------- -------- -------- --------
Net cash provided by (used in)
investing activities 11 674 (78) 924
-------- -------- -------- --------
Cash flows from financing
activities:
Net (repayments of) proceeds from
loans payable (2) 12 (162) (490)
Proceeds from issuance of
long-term debt 11
Repayments of long-term debt (93) (135) (1,193) (325)
Proceeds from issuance of
Series C preferred stock, net (1) 557
Proceeds from issuance of common
stock, net 15 5 667 52
Repurchases of common stock for
treasury (23)
Cash dividends paid to preferred
shareholders (4) (21) (19) (88)
Other, net (1) (8)
-------- -------- -------- --------
Net cash used in financing
activities (84) (140) (708) (314)
-------- -------- -------- --------
Effect of exchange rates on cash 30 20 60 43
-------- -------- -------- --------
Cash provided by (used in)
continuing operations 24 451 (593) 329
Cash (used in) provided by
discontinued operations (8) 60
-------- -------- -------- --------
Net increase (decrease) in cash
and cash equivalents 24 443 (593) 389
Cash and cash equivalents at
beginning of period 809 983 1,426 1,037
-------- -------- -------- --------
Cash and cash equivalents at
end of period $ 833 $ 1,426 $ 833 $ 1,426
======== ======== ======== ========
Certain amounts for 2002 were reclassified to conform with 2003
classifications.
See notes to the consolidated financial statements.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
SEGMENT RESULTS
(Unaudited; in millions)
Telecom- Non-segment/ Consolidated
munications Technologies Other items Total
------------ ------------ ------------ ------------
For the three
months ended
December 31, 2003
Net sales $ 357 $ 457 $ 6 $ 820
Research,
development and
engineering
expenses $ 25 $ 62 $ (1) $ 86
Restructuring,
impairment
and other charges
and credits (1) $ (6) $ 27 $ 21
Interest expense $ 16 $ 20 $ 36
(Benefit) provision
for income taxes $ (32) $ 4 $ (18) $ (46)
Loss before minority
interests and
equity earnings $ (17) $ (14) $ (14) $ (45)
Minority interests 1 1
Equity in earnings
of associated
companies, net of
impairments (1) (3) 19 15
------------ ------------ ------------ ------------
Net (loss) income $ (18) $ (16) $ 5 $ (29)
============ ============ ============ ============
For the three
months ended
December 31, 2002
Net sales $ 363 $ 367 $ 6 $ 736
Research,
development and
engineering
expenses $ 65 $ 50 $ (2) $ 113
Restructuring,
impairment and
other charges
and credits (1) $ 1,263 $ 141 $ 57 $ 1,461
Interest expense $ 15 $ 19 $ 9 $ 43
(Benefit) provision
for income taxes $ (376) $ (33) $ 8 $ (401)
(Loss) income before
minority interests
and equity earnings$ (1,123) $ (132) $ 16 $ (1,239)
Minority interests 1 80 81
Equity in earnings
of associated
companies, net of
impairments (34) 51 2 19
Income from
discontinued
operations 430 430
------------ ------------ ------------ ------------
Net (loss) income $ (1,156) $ (1) $ 448 $ (709)
============ ============ ============ ============
For the year ended
December 31, 2003
Net sales $ 1,426 $ 1,641 $ 23 $ 3,090
Research,
development and
engineering
expenses $ 120 $ 227 $ (3) $ 344
Restructuring,
impairment and
other charges
and credits (1) $ (36) $ 134 $ 13 $ 111
Interest expense $ 75 $ 79 $ 154
Benefit for income
taxes $ (78) $ (6) $ (170) $ (254)
Loss before minority
interests and
equity earnings $ (158) $ (98) $ (249) $ (505)
Minority interests 73 73
Equity in earnings
of associated
companies, net of
impairments (11) 137 83 209
------------ ------------ ------------ ------------
Net (loss) income $ (169) $ 112 $ (166) $ (223)
============ ============ ============ ============
For the year ended
December 31, 2002
Net sales $ 1,631 $ 1,513 $ 20 $ 3,164
Research,
development and
engineering
expenses $ 308 $ 177 $ (2) $ 483
Restructuring,
impairment
and other charges
and credits (1) $ 1,722 $ 150 $ 208 $ 2,080
Interest expense $ 99 $ 71 $ 9 $ 179
(Benefit) provision
for income taxes $ (722) $ (28) $ 24 $ (726)
Loss before minority
interests and
equity earnings $ (1,838) $ (145) $ (11) $ (1,994)
Minority interests 1 96 1 98
Equity in earnings
of associated
companies, net of
impairments (60) 168 8 116
Income from
discontinued
operations 478 478
------------ ------------ ------------ ------------
Net (loss) income $ (1,897) $ 119 $ 476 $ (1,302)
============ ============ ============ ============
(1) Related tax benefit:
Three months ended December 31, 2003: $17, $6, $0 and $23.
Three months ended December 31, 2002: $299, $27, $17 and $343.
Year ended December 31, 2003: $17, $28, $4 and $49.
Year ended December 31, 2002: $452, $30, $66 and $548.
See notes to the consolidated financial statements.
Non-segment/other items net income (loss) is detailed below:
Three months Year
ended ended
December 31, December 31,
----------------- -----------------
2003 2002 2003 2002
-------- -------- -------- --------
Non-segment (loss) income and
other (1) $ (15) $ (12) $ (44) $ 4
Non-segment restructuring,
impairment and other charges
and credits (57) (13) (208)
Interest income 8 7 32 41
Asbestos settlement (25) (413)
Gain on repurchases of debt, net 86 19 176
Benefit (provision) for income
taxes 18 (8) 170 (24)
Minority interests 1
Equity in earnings of associated
companies (2) 19 2 83 8
Income from discontinued
operations 430 478
-------- -------- -------- --------
Net income (loss) $ 5 $ 448 $ (166) $ 476
======== ======== ======== ========
(1) Includes non-segment operations and other corporate activities.
(2) Includes amounts derived from corporate investments and
activities, primarily Dow Corning Corporation in 2003.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; in millions except headcount)
When used in these notes, the terms "we," "our" or "us" refer to Corning Incorporated and its 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: subsidiaries. 1. Restructuring, Impairment and Other Charges and Credits In the fourth quarter of 2003, we recorded restructuring, impairment and other charges of $34 ($26 after tax), offset by credits of $13 ($28 after tax), resulting in a net charge of $21 ($2 after-tax credit). A summary of these charges and credits follow: Specialty Materials On December December: see month. 4, 2003, we announced our plans to consolidate Consolidate To combine the assets, liabilities, and other financial items of two or more entities into one. Notes: This term is generally used in the context of consolidated financial statements. our high purity fused silica and fluoride crystal manufacturing operations Manufacturing operations concern the operation of a facility, as opposed to maintenance, supply and distribution, health, and safety, emergency response, human resources, security, information technology and other infrastructural support organizations. into other locations. These actions resulted in the closure of our North Brookfield North Brookfield is the name of some places in the United States.
Charleston. 1 City (1990 pop. 20,398), seat of Coles co., E Ill.; inc. 1835. Charleston is an industrial, rail, and trade center located in an agricultural area; shoes are also made. Eastern Illinois Univ. , SC facility by March 31, 2004. Approximately 100 employees will be affected. In connection with these actions, we will record a total charge of $63, of which $27 ($22 after tax) was recorded in the fourth quarter. We recorded a charge of $4 related to exit and employee separation costs and a fixed asset impairment charge of $11 in the fourth quarter. In addition, we are accelerating $48 of depreciation on assets to be disposed dis·pose v. dis·posed, dis·pos·ing, dis·pos·es v.tr. 1. To place or set in a particular order; arrange. 2. of following the closure of our Charleston plant, of which $12 was recorded in the fourth quarter of 2003 and included in restructuring, impairment and other charges and credits. The remaining $36 will be recorded in the first quarter of 2004. Other We also recorded a $7 ($4 after tax) restructuring charge 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. relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc our Telecommunications segment. This charge included $4 of employee separation costs and $3 of exit costs. Credits In the fourth quarter of 2003, we reversed $13 ($28 after tax) of reserves related to prior years' restructuring charges, primarily in the Telecommunications segment. The reversals included $3 related to employee separation costs which were less than estimated, $1 related to exit costs which were less than estimated, and $9 related to assets that were previously impaired See assistive technology. . We also recorded a $20 foreign deferred tax benefit adjustment related to restructuring and impairment charges recorded in the fourth quarter of 2002. 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. . In addition, since the restructuring program is an aggregation of many individual plans currently being executed, actual costs have differed from estimated amounts. As a result, there may be additional charges or reversals. 2. Asbestos Settlement On March 28, 2003, we announced that we had reached agreement with the representatives of asbestos claimants for the settlement of all current and future asbestos claims against us and Pittsburgh Corning Corporation (PCC PCC prothrombin complex concentrate. ), which might arise from PCC products or operations. Accordingly, we recorded a charge of $298 ($192 after tax) in the first quarter. The charge included the value of 25 shares of Corning common stock which we will contribute as part of the settlement. Also at that time, we indicated that any changes in the value of our common stock contribution would be recognized in our quarterly results through the date of contribution to the settlement trust. As required, we recorded a mark-to-market Mark-to-market Adjustment of the book value or collateral value of a security to reflect current market value. charge of $25 ($17 after tax) in the fourth quarter reflecting the increased fair value of the shares to its common stock contribution. We have recorded total charges of $413 ($263 after tax) to reflect the settlement and to mark-to-market the value of our common stock for the year ended December 31, 2003. 3. Samsung Corning Co., Ltd. As a result of a weaker outlook for the conventional television and monitor markets, Corning's 50 percent owned equity venture, Samsung Corning Co., Ltd., recorded an impairment charge in the fourth quarter related to its 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. Our equity earnings in the fourth quarter included $66 after-tax related to this impairment charge. 4. Funding of the Corning Pension Plan We sponsor defined benefit pension plans covering certain hourly and salaried employees in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . Although we are not required by employee benefit and tax laws to make contributions to our pension plans prior to 2005, we contributed $60 in the fourth quarter and $160 in 2003 to our U.S. pension plans to improve these plans' funded status. 5. Supplementary Statements of Cash Flows Data
Supplemental disclosure of cash flow data follows:
For the three For the
months ended year ended
December 31, December 31,
----------------- -----------------
2003 2002 2003 2002
-------- -------- -------- --------
Changes in certain working
capital items:
Trade accounts receivable $ (5) $ 56 $ 153
Inventories 35 47 $ 108 135
Other current assets 15 (246) 49 (363)
Accounts payable and
other current liabilities,
net of restructuring payments 9 101 (219) (158)
-------- -------- -------- --------
Total $ 54 $ (42) $ (62) $ (233)
======== ======== ======== ========
6. Income Tax In the fourth quarter of 2003, the effective tax benefit rate was impacted by certain items such as restructuring, impairment and other charges and credits, the asbestos settlement and debt transactions. Excluding these items, the rate was 33 percent for the quarter and year ended December 31, 2003.
CORNING INCORPORATED
QUARTERLY SEGMENT SALES INFORMATION
(Unaudited; in millions)
2003
--------------------------------------------
Q1 Q2 Q3 Q4 Total
-------- -------- -------- -------- --------
Telecommunications
Fiber and cable $ 193 $ 178 $ 209 $ 180 $ 760
Hardware and equipment 122 136 134 143 535
Photonic technologies 18 15 10 11 54
Controls and connectors 19 18 17 23 77
-------- -------- -------- -------- --------
Segment net sales $ 352 $ 347 $ 370 $ 357 $ 1,426
======== ======== ======== ======== ========
Technologies
Display technologies $ 117 $ 135 $ 144 $ 199 $ 595
Environmental 115 117 121 123 476
Life sciences 73 72 70 66 281
Conventional video
components 25 24 14 2 65
Other technologies
businesses 58 52 47 67 224
-------- -------- -------- -------- --------
Segment net sales $ 388 $ 400 $ 396 $ 457 $ 1,641
======== ======== ======== ======== ========
2002
--------------------------------------------
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
-------- -------- -------- -------- --------
Segment net sales $ 465 $ 437 $ 366 $ 363 $ 1,631
======== ======== ======== ======== ========
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
======== ======== ======== ======== ========
The above supplemental information is intended to facilitate analysis of Corning's businesses. |
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