Corning Reports Second-Quarter Results; Company posts 15 percent sequential sales gain.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. -- 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 second-quarter sales of $971 million and net income of $108 million, or $0.07 per share. Net income includes net 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 of $61 million, or $0.04 per share. "We clearly exceeded our expectations for the quarter," 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 saw very strong performance in our Telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. and Display Technologies segments. In addition, this was our sixth quarter of sequential One after the other in some consecutive order such as by name or number. revenue growth," he said. Corning's second-quarter net after-tax charges of $61 million, or $0.04 per share, include: --A $47 million charge ($45 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. --A $34 million gain ($14 million after-tax and minority interest) from 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). activities, primarily related to the sale of Corning Asahi Asahi (朝日 or 旭) means "morning sun" in Japanese. It is a name of several places in Japan:
--A $9 million charge ($9 million after-tax) related to Corning's ongoing debt reduction program. --Charges totaling $21 million in equity earnings related to restructuring actions at 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 and adjustments to interest liabilities recorded on its emergence from bankruptcy bankruptcy, in law, settlement of the liabilities of a person or organization wholly or partially unable to meet financial obligations. The purposes are to distribute, through a court-appointed receiver, the bankrupt's assets equitably among creditors and, in most . Second-Quarter Operating Results The company's second-quarter sales of $971 million increased 15 percent over first-quarter sales of $844 million. The sales improvement was driven by seasonal increases in the Telecommunications segment and continued growth in the Display Technologies segment. Corning's net income of $108 million almost doubled compared to first-quarter net income of $55 million. The net income increase was primarily the result of higher sales in the company's Telecommunications and Display Technologies segments. In addition, equity earnings from Dow Corning Corporation and 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. were strong in the quarter. Segment Results Display Technologies segment sales grew 20 percent to $277 million compared to first-quarter sales of $230 million. This increase reflects 22 percent volume growth 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 (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 and stable prices. Second-quarter volume growth was particularly strong in Taiwan Taiwan (tī`wän`), Portuguese Formosa, officially Republic of China, island nation (2005 est. pop. 22,894,000), 13,885 sq mi (35,961 sq km), in the Pacific Ocean, separated from the mainland of S China by the 100-mi-wide (161-km) Taiwan . Segment net income increased 14 percent to $135 million compared to $118 million in the previous quarter. Telecommunications segment sales were $392 million and net loss was $21 million for the quarter, compared to first-quarter sales of $312 million and net loss of $43 million. The improved quarterly performance was driven primarily by sequential fiber and cable volume gains 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). , and strong demand for the company's hardware
and equipment products in part due to Verizon's
fiber-to-the-premises build-out Build-out is an urban planner’s estimate of the amount and location of potential development for an area. Build-out is one step of the land use planning process. Evaluation of potential development impacts begins with a build-out analysis. . Fiber volume increased 31 percent
sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen and price declines were moderate. Corning also said that the recent anti-dumping preliminary determination in China is beginning to have an impact on fiber exported to China. The company is continuing to cooperate with the Chinese Chinese, subfamily of the Sino-Tibetan family of languages (see Sino-Tibetan languages), which is also sometimes grouped with the Tai, or Thai, languages in a Sinitic subfamily of the Sino-Tibetan language stock. Ministry of Commerce to reach a final determination. Both Environmental Technologies and Life Sciences segment sales and earnings were about even with the first-quarter results. The Environmental Technologies segment had sales of $141 million for the second quarter. The company said sales of its diesel products increased sequentially and its automotive product sales were down slightly from a record first-quarter performance. In the Life Sciences segment, second-quarter sales were $79 million, keeping pace with stronger-than-expected first-quarter sales. Cash Flow/Liquidity Update Corning ended the quarter with approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $1.6 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 compared to $1.5 billion in the first quarter. The increase was primarily due to strong 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. , which more than offset the company's 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. . Corning's debt-to-capital ratio was 31.2 percent at the end of the second quarter versus 33.1 percent in the first quarter. Third-Quarter Outlook Corning said that it expects third-quarter sales to be in the range of $950 million to $1 billion, with earnings per share in the range of $0.10 to $0.12 before special items. This estimate is a non-GAAP financial measure and excludes the previously announced charge of approximately $25 million pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern for the sale of the company's frequency control business and other potential gains and charges. The non-GAAP financial estimate 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 the company's Investor Relations Investor relations The process by which the corporation communicates with its investors. Web site and in the financial statements accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. this release. Corning expects that its gross margins will be in the range of 36 percent to 37 percent and foreign exchange rates will remain stable. Corning is increasing its estimate of capital spending for the year to $950 million to $1 billion. This increase reflects the company's intent to keep up with the strong growth in the LCD market, as well as the faster-than-anticipated cash outflows for its construction projects in Taiwan. In the Telecommunications segment, Corning expects that sequential fiber volume will decrease between 10 percent and 15 percent in the third quarter and pricing declines will remain moderate. The company said that it expects seasonal gains in fiber volume in North America and Europe to be offset by declines in China as a result of the recent anti-dumping preliminary ruling. Corning also expects to continue to see strong hardware and equipment sales in the quarter. Corning expects that its Display Technologies segment will have another strong quarter. Sequential volume is expected to increase approximately 10 percent for the quarter and is being limited by the company's ability to bring on new capacity. Pricing is expected to remain stable. "We believe that we will remain sold out of LCD manufacturing capacity throughout 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. "And we are adding capacity to meet the industry's demand for larger generation state-of-the-market LCD substrates," he said. Flaws also said that Corning is pleased with the improving performance of the company's Telecommunications segment, but that it is too early to see a recovery trend in the market. "We are encouraged by the sales we are experiencing for the fiber-to-the-premises build-outs," he added. Flaws remarked that, "We are making excellent progress on our key business priorities, and we believe we can sustain this momentum into the third quarter. It feels good to us right now. We see positive trends across many of our businesses, and we are looking forward to the third quarter." Presentation of Information in this News Release Corning's earnings estimate for the third quarter is a non-GAAP financial measure as it excludes any potential gains or losses arising from previously announced restructuring actions; previously announced loss on the sale of the frequency control business; 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. This earnings estimate is reconciled in this press release. 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, life sciences and semiconductor industries. Second-Quarter Conference Call Information The company will host a second-quarter conference call at 8:30 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy on Tuesday Tuesday: see week. , July July: see month. 20. To access the call, dial (517) 319-9285. 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. , Tuesday, Aug. 3. To listen, dial (203) 369-0446, no pass code is required. To listen to a live audio webcast of the call at 8:30 a.m. on Tuesday, July 20, please go to Corning's Web site and follow the instructions: http://www.corning.com/investor_relations. The audio webcast will be archived for one year 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:
The earliest stage of a new business venture. 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 per share amounts)
For the three For the six
months ended months ended
June 30, June 30,
2004 2003 2004 2003
------- ------- ------- -------
Net sales $ 971 $ 752 $1,815 $1,498
Cost of sales 625 571 1,169 1,117
------- ------- ------- -------
Gross margin 346 181 646 381
Operating expenses:
Selling, general and
administrative expenses 166 148 326 300
Research, development and
engineering expenses 85 85 169 178
Amortization of purchased
intangibles 9 9 19 18
Restructuring, impairment and
other charges and (credits) (34) 49 100
Asbestos settlement 47 39 66 337
------- ------- ------- -------
Operating income (loss) 73 (149) 66 (552)
Interest income 4 9 10 17
Interest expense (37) (42) (73) (82)
(Loss) gain on repurchases
and retirement of debt, net (9) 13 (32) 17
Other income, net 5 20 1 6
------- ------- ------- -------
Income (loss) before income taxes 36 (149) (28) (594)
(Provision) benefit for income taxes (24) 34 (12) 178
------- ------- ------- -------
Income (loss) before minority
interests and equity earnings 12 (115) (40) (416)
Minority interests (11) 33 (11) 70
Equity in earnings of associated
companies, net of impairments 107 60 214 119
------- ------- ------- -------
Net income (loss) $ 108 $ (22) $ 163 $ (227)
======= ======= ======= =======
Basic earnings (loss) per
common share $ 0.08 $(0.02) $ 0.12 $(0.19)
======= ======= ======= =======
Diluted earnings (loss) per
common share $ 0.07 $(0.02) $ 0.11 $(0.19)
======= ======= ======= =======
Shares used in computing per
share amounts for:
Basic earnings (loss) per
common share 1,383 1,244 1,371 1,222
======= ======= ======= =======
Diluted earnings (loss) per
common share 1,495 1,244 1,446 1,222
======= ======= ======= =======
Certain amounts for 2003 were reclassified to conform with 2004
classifications.
See Notes to Consolidated Financial Statements.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(Unaudited; in millions, except per share amounts)
June 30, December 31,
2004 2003
Assets --------- ------------
Current assets:
Cash and cash equivalents $ 964 $ 833
Short-term investments, at fair value 623 433
--------- ----------
Total cash, cash equivalents and
short-term investments 1,587 1,266
Trade accounts receivable, net 566 525
Inventories 501 467
Deferred income taxes 236 242
Other current assets 175 194
--------- ----------
Total current assets 3,065 2,694
Investments 1,132 1,045
Property, net 3,663 3,620
Goodwill 1,729 1,735
Other intangible assets, net 146 166
Deferred income taxes 1,278 1,225
Other assets 236 267
--------- ----------
Total Assets $11,249 $10,752
========= ==========
Liabilities and Shareholders' Equity
Current liabilities:
Loans payable $ 312 $ 146
Accounts payable 377 333
Other accrued liabilities 1,065 1,074
--------- ----------
Total current liabilities 1,754 1,553
Long-term debt 2,448 2,668
Postretirement benefits other than pensions 610 619
Other liabilities 405 412
Commitments and contingencies
Minority interests 30 36
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:
637 thousand and 854 thousand 64 85
Common stock - Par value $0.50 per share;
Shares authorized: 3.8 billion;
Shares issued: 1,417 million and
1,401 million 708 701
Additional paid-in capital 10,350 10,298
Accumulated deficit (4,981) (5,144)
Treasury stock, at cost; Shares held:
23 million and 58 million (234) (574)
Accumulated other comprehensive income 95 98
--------- ----------
Total shareholders' equity 6,002 5,464
--------- ----------
Total Liabilities and Shareholders' Equity $11,249 $10,752
========= ==========
Certain amounts for 2003 were reclassified to conform with 2004
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 six
months ended months ended
------------------ --------------
June 30, March 31, June 30,
2004 2004 2004 2003
Cash flows from operating --------- ------- ------ -------
activities:
Net income (loss) $ 108 $ 55 $ 163 $ (227)
Adjustments to reconcile net
income (loss) to net cash
provided by operating
activities:
Amortization of purchased
intangibles 9 10 19 18
Depreciation 120 120 240 250
Restructuring, impairment and
other charges and credits (34) 34 100
Asbestos settlement 47 19 66 337
Loss (gain) on repurchases
and retirement of debt, net 9 23 32 (17)
Undistributed earnings of
associated companies (63) (29) (92) (24)
Minority interests, net of
dividends paid 11 11 (70)
Deferred tax benefit 5 (40) (35) (234)
Interest expense on
convertible debentures 1 2 3 13
Restructuring payments (22) (34) (56) (143)
Income tax refund 191
Tax benefit on stock options 5 6 11
Changes in certain working
capital items:
Trade accounts receivable (26) (17) (43) 17
Inventories (1) (32) (33) 34
Other current assets 4 3 7 (4)
Accounts payable and other
current liabilities,
net of restructuring
payments 60 (66) (6) (173)
Other, net 29 (9) 20 (20)
--------- ------- ------ -------
Net cash provided by operating
activities 262 45 307 48
--------- ------- ------ -------
Cash flows from investing
activities:
Capital expenditures (168) (134) (302) (110)
Net proceeds from sale of
precision lens business 9
Net proceeds from sale or
disposal of assets 26 9 35 43
Net increase in long-term
investments and other
long-term assets (4)
Short-term investments
- acquisitions (404) (302) (706) (1,060)
Short-term investments
- liquidations 230 284 514 956
Restricted investments
- liquidations 3 2 5 6
--------- ------- ------ -------
Net cash used in investing
activities (313) (141) (454) (160)
--------- ------- ------ -------
Cash flows from financing
activities:
Net repayments of loans
payable (7) (2) (9) (54)
Proceeds from issuance of
long-term debt, net 396 396
Repayments of long-term debt (9) (141) (150) (823)
Proceeds from issuance of
common stock, net 13 11 24 281
Cash dividends to preferred
shareholders (3) (2) (5) (6)
Proceeds from the exercise
of stock options 15 12 27
--------- ------- ------ -------
Net cash provided by (used in)
financing activities 9 274 283 (602)
--------- ------- ------ -------
Effect of exchange rates on cash (4) (1) (5) 35
--------- ------- ------ -------
Net (decrease) increase in cash
and cash equivalents (46) 177 131 (679)
Cash and cash equivalents at
beginning of period 1,010 833 833 1,426
--------- ------- ------ -------
Cash and cash equivalents at
end of period $ 964 $1,010 $ 964 $ 747
========= ======= ====== ========
Certain amounts for 2003 were reclassified to conform with 2004
classifications.
See Notes to Consolidated Financial Statements.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
SEGMENT RESULTS
(Unaudited; in millions)
Effective with the first quarter of 2004, we have revised our
reportable operating segments from Telecommunications and Technologies
to Telecommunications, Display Technologies, Environmental
Technologies, and Life Sciences. Prior year information has been
restated to conform with this revision.
Environ- Unallo-
Tele- Display mental cated Consol-
communi- Tech- Tech- Life and idated
cations nologies nologies Sciences Other Total
For the three --------- --------- -------- -------- ------ -------
months ended
June 30, 2004
Net sales $392 $277 $141 $ 79 $ 82 $ 971
Research,
development and
engineering
expenses (1) $ 23 $ 19 $ 21 $ 9 $ 13 $ 85
Restructuring,
impairment and
other charges
and (credits) (2) $ (1) $ (33) $ (34)
Interest expense (3) $ 16 $ 11 $ 5 $ 2 $ 3 $ 37
Benefit (provision)
for income taxes $ 11 $(32) $ (2) $ (2) $ 1 $ (24)
(Loss) income
before minority
interests and
equity (losses)
earnings (4)(5) $(21) $ 64 $ 4 $ 5 $ (40) $ 12
Minority
interests (6) (11) (11)
Equity in earnings
of associated
companies, net
of impairments 71 36 107
--------- -------- ------- ------ ------- -------
Net (loss) income $(21) $135 $ 4 $ 5 $ (15) $ 108
========= ======== ======= ====== ======= =======
For the three
months ended
June 30, 2003
Net sales $347 $135 $117 $ 72 $ 81 $ 752
Research,
development and
engineering
expenses (1) $ 32 $ 12 $ 20 $ 7 $ 14 $ 85
Restructuring,
impairment and
other charges
and (credits) (2) $(19) $ 68 $ 49
Interest expense (3) $ 22 $ 9 $ 5 $ 2 $ 4 $ 42
Benefit (provision)
for income taxes $ 5 $(11) $ (2) $ (2) $ 44 $ 34
(Loss) income
before minority
interests and
equity
earnings (4)(5) $(53) $ 22 $ 6 $ 4 $ (94) $ (115)
Minority interests (6) 33 33
Equity in (losses)
earnings of
associated
companies, net
of impairments (7) (8) 31 (3) 40 60
--------- -------- ------- ------ ------- -------
Net (loss) income $(61) $ 53 $ 3 $ 4 $ (21) $ (22)
========= ======== ======= ====== ======= =======
For the six
months ended
June 30, 2004
Net sales $704 $507 $282 $158 $ 164 $1,815
Research,
development and
engineering
expenses (1) $ 48 $ 35 $ 41 $ 18 $ 27 $ 169
Restructuring,
impairment and
other charges
and (credits) (2) $ (5) $ 5
Interest expense (3) $ 32 $ 22 $ 10 $ 3 $ 6 $ 73
Benefit (provision)
for income taxes $ 34 $(58) $ (5) $ (5) $ 22 $ (12)
(Loss) income
before minority
interests and
equity (losses)
earnings (4)(5) $(68) $117 $ 10 $ 10 $(109) $ (40)
Minority interests (6) 1 (12) (11)
Equity in
earnings of
associated
companies, net
of impairments 3 136 75 214
--------- -------- ------- ------ ------- -------
Net (loss) income $(64) $253 $ 10 $ 10 $ (46) $ 163
========= ======== ======= ====== ======= =======
Environ- Unallo-
Tele- Display mental cated Consol-
communi- Tech- Tech- Life and idated
cations nologies nologies Sciences Other Total
For the six --------- --------- -------- -------- ------ -------
months ended
June 30, 2003
Net sales $ 699 $252 $232 $145 $ 170 $1,498
Research,
development and
engineering
expenses (1) $ 70 $ 24 $ 41 $ 14 $ 29 $ 178
Restructuring,
impairment and
other charges
and (credits) (2) $ (28) $ 128 $ 100
Interest expense (3) $ 43 $ 18 $ 10 $ 4 $ 7 $ 82
Benefit (provision)
for income taxes $ 30 $(17) $ (4) $ (6) $ 175 $ 178
(Loss) income before
minority interests
and equity (losses)
earnings (4)(5) $(113) $ 35 $ 9 $ 12 $(359) $ (416)
Minority interests (6) 70 70
Equity in (losses)
earnings of
associated
companies, net
of impairments (7) (11) 55 (1) 76 119
------ ------- ------ ------ ------- -------
Net (loss) income $(124) $ 90 $ 8 $ 12 $(213) $ (227)
====== ======= ====== ====== ======= =======
(1) Non-direct research, development and engineering expenses are
allocated based upon direct project spending for each segment.
(2) Related tax (expense) benefit follows:
For the three months ended June 30, 2004: $0, $0, $0, $0, $(7)
and $(7).
For the three months ended June 30, 2003: $2, $0, $0, $0, $16
and $18.
For the six months ended June 30, 2004: $(1), $0, $0, $0, $8
and $7.
For the six months ended June 30, 2003: $(2), $0, $0, $0, $28
and $26.
(3) Interest expense is allocated to segments based on a percentage of
segment net operating assets. Consolidated subsidiaries with
independent capital structures do not receive additional allocations
of interest expense.
(4) Many of Corning's administrative and staff functions are performed
on a centralized basis. Where practicable, Corning charges these
expenses to segments based upon the extent to which each business uses
a centralized function. Other staff functions, such as corporate
finance, human resources and legal are allocated to segments primarily
as a percentage of sales.
(5) (Loss) income before minority interests and equity (losses)
earnings includes an allocation of depreciation of corporate property,
plant and equipment not specifically identifiable to a segment.
Related depreciable assets are not allocated to segment assets.
(6) (Loss) income before minority interests and equity (losses)
earnings includes the following restructuring, impairment and other
charges and (credits):
For the three and six months ended June 30, 2004, gains from the
sale of assets of Corning Asahi Video Products Company in excess
of assumed salvage value of $13 and $14, respectively.
For the three and six months ended June 30, 2003, charges related
to impairment of long-lived assets of Corning Asahi Video
Products Company of $28 and $59, respectively.
(7) Equity in (losses) earnings of associated companies, net of
impairments includes $7 related to impairments of equity investments
in the Telecommunications segment for the three and six months ended
June 30, 2003.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
SEGMENT RESULTS
(Unaudited; in millions)
A reconciliation of reportable segment net income (loss) to
consolidated net income (loss) follows:
For the three For the six
months ended months ended
June 30, June 30,
-------------- ------------
2004 2003 2004 2003
Net income (loss) of ----- ---- ---- ----
reportable segments $123 $ (1) $209 $ (14)
Non-reportable operating
segments net income (loss) (1) 19 (26) 1 (47)
Unallocated amounts:
Non-segment loss and other (2) (4) (14) (7) (29)
Non-segment restructuring,
impairment and other (charges)
and credits 4 (10) 4 (10)
Asbestos settlement (47) (39) (66) (337)
Interest income 4 9 10 17
(Loss) gain on repurchases of debt (9) 13 (32) 17
Benefit for income taxes (3) 1 21 3 133
Equity in earnings of associated
companies, net of impairments (4) 17 25 41 43
------ ----- ----- ------
Net income (loss) $108 $(22) $163 $(227)
====== ===== ===== ======
(1) Non-reportable operating segments net income (loss) includes the
results of non-reportable operating segments.
(2) Non-segment loss and other includes the results of non-segment
operations and other corporate activities.
(3) Benefit for income taxes includes taxes associated with
non-segment restructuring, impairment and other charges.
(4) Equity in earnings of associated companies, net of impairments
includes amounts derived from corporate investments, primarily Dow
Corning Corporation.
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 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 and (Credits) In the second quarter of 2004, we recorded credits of $34 million ($14 million after-tax and minority interest) included in restructuring, impairment and other charges and (credits). A summary of these credits follows: --a $25 million gain ($8 million after-tax and minority interest) related to proceeds in excess of assumed salvage values 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. for assets of Corning Asahi Video Products Company that were previously impaired See assistive technology. but later sold to a third party in China; and --a $9 million credit ($6 million after-tax) comprised of reversals of reserves related to prior years' 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. . 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 million ($192 million after-tax) in the first quarter of 2003. The charge included the value of 25 million shares of Corning common stock that 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 $47 million ($45 million after-tax) in the second quarter of 2004 reflecting the increased fair value of Corning's common stock. Since the first quarter of 2003, we have recorded total charges of $479 million ($327 million after-tax) to reflect the settlement and to mark-to-market the value of our common stock. 3. Long-Term Debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. During the second quarter of 2004, we issued 10 million shares of common stock and paid $9 million in cash in exchange for 3.5% 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 a book value of $98 million. As a result of these transactions, we recorded a $9 million charge ($9 million after-tax) relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the retirement of debt. 4. Dow Corning Corporation In the second quarter of 2004, Corning's 50-percent owned equity company, Dow Corning Corporation, recorded a restructuring charge and a charge to adjust interest liabilities due to court rulings on its emergence from bankruptcy. Our equity earnings in the second quarter of 2004 included $21 million related to these charges. 5. Subsequent Event On July 8, 2004, we announced the sale of our frequency control business, which is part of our Telecommunications segment. The frequency control business had 2003 annual sales of approximately $70 million. We expect to close the transaction and recognize a pretax loss pretax loss A loss reported before tax benefits are considered. approximating approximating, adj See approximal. $25 million in the third quarter of 2004.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
QUARTERLY SALES INFORMATION
(Unaudited; in millions)
2004
----------------------------------
Three Six Months
Months Ended Ended
-------------------- -----------
March 31 June 30 June 30
---------- ------- -----------
Telecommunications
Fiber and cable $149 $192 $ 341
Hardware and equipment 163 200 363
------- -------- ---------
312 392 704
Display Technologies 230 277 507
Environmental Technologies 141 141 282
Life Sciences 79 79 158
Other
Conventional video
components 2 2
Other businesses 80 82 162
------- -------- ---------
82 82 164
Total $844 $971 $1,815
======= ======== =========
2003
----------------------------------------------
Three Months Ended
-------------------------------------
March 31 June 30 Sept. 30 Dec. 31 Total
-------- ------- -------- ------- --------
Telecommunications
Fiber and cable $193 $178 $209 $180 $ 760
Hardware and equipment 141 154 151 166 612
Photonic technologies 18 15 10 11 54
-------- ------- -------- ------- --------
352 347 370 357 1,426
Display Technologies 117 135 144 199 595
Environmental Technologies 115 117 121 123 476
Life Sciences 73 72 70 66 281
Other
Conventional video
components 25 24 14 2 65
Other businesses 64 57 53 73 247
-------- ------- -------- ------- --------
89 81 67 75 312
Total $746 $752 $772 $820 $3,090
======== ======= ======== ======= ========
The above supplemental information is intended to facilitate analysis
of Corning's businesses.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE TO GAAP FINANCIAL MEASURE
Three Months Ended June 30, 2004
(Unaudited; amounts in millions, except per share amounts)
Corning's earnings excluding certain items for the second quarter is a
non-GAAP financial measure within the meaning of Regulation G of the
Securities and Exchange Commission. The company believes presenting
earnings estimates that exclude these items is helpful in
understanding Corning's operating results. This non-GAAP measure is
not in accordance with and should not be considered an alternative of
measurements required under generally accepted accounting principles
(GAAP). A detailed reconciliation is provided below outlining the
differences between this non-GAAP measure and the directly related
GAAP measure.
Per Income Before Net
Share Income Taxes Income
-------- ------------ ------
Earnings per share (EPS) and net income,
excluding certain items $ 0.11 $ 58 $169
Certain items:
Asbestos settlement (a) (0.03) (47) (45)
Restructuring, impairment and other
charges and (credits) (b) 0.01 34 14
Loss on repurchases and retirement
of debt, net (c) (0.01) (9) (9)
Equity in earnings of associated
companies (d) (0.01) (21)
--------- --------- ------
Total EPS and net income $ 0.07 $ 36 $108
========= ========= ======
(a) As part of Corning's asbestos settlement arrangement to be
incorporated into the Pittsburgh Corning Corporation reorganization
plan, Corning will contribute, when the reorganization plan becomes
effective, 25 million shares of Corning common stock to a trust. The
common stock is currently expected to be contributed to the trust in
2004, after the plan has been approved by the asbestos claimants and
bankruptcy court. The portion of the asbestos liability to be settled
in common stock requires adjustment each quarter based upon movements
in the common stock price prior to contribution of the shares to the
trust. At the end of the second quarter, we recorded a pretax charge
of $47 million ($45 million after-tax) to reflect the increase in
Corning's stock price over the past quarter from $11.18 to $13.06.
(b) This gain relates to restructuring activities, which is primarily
comprised of the sale of Corning Asahi Video Products Company assets
during the second quarter of 2004.
(c) From time to time, Corning may repurchase or retire debt, which
could result in a gain or loss during a quarter. In the second quarter
of 2004, Corning retired certain amounts of its 3.5% convertible bonds
due 2008, resulting in a pretax and after-tax loss of $9 million.
(d) This amount reflects charges of $21 million in equity earnings
related to restructuring actions and adjustments to interest
liabilities recorded by Dow Corning Corporation on its emergence from
bankruptcy.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE TO GAAP FINANCIAL MEASURE
Three Months Ended September 30, 2004
(Unaudited; amounts in millions, except per share amounts)
Corning's earnings estimate excluding certain items for the third
quarter is a non-GAAP financial measure within the meaning of
Regulation G of the Securities and Exchange Commission. The company
believes presenting earnings estimates that exclude these items is
helpful in understanding Corning's operating results. This non-GAAP
measure is not in accordance with and should not be considered an
alternative of measurements required under generally accepted
accounting principles (GAAP). A detailed reconciliation is provided
below outlining the differences between this non-GAAP measure and the
directly related GAAP measure.
Range
Guidance: Earnings per share (EPS) ---------------------
excluding certain items $0.10 $0.12
Certain items excluded from guidance:
Asbestos settlement (a)
Restructuring, impairment and other
charges and (credits) (b)
Gain (loss) on repurchases and
retirements of debt, net (c)
Earnings per share ---------- ---------
This schedule will be updated as additional announcements occur.
(a) As part of Corning's asbestos settlement arrangement to be
incorporated into the Pittsburgh Corning Corporation reorganization
plan, Corning will contribute, when the reorganization plan becomes
effective, 25 million shares of Corning common stock to a trust. The
common stock is currently expected to be contributed to the trust in
2004, after the plan has been approved by the asbestos claimants and
bankruptcy court. The portion of the asbestos liability to be settled
in common stock requires adjustment each quarter based upon movements
in the common stock price prior to contribution of the shares to the
trust. In the third quarter of 2004, Corning will record a charge for
the change in its common stock price as of September 30, 2004 compared
to $13.06, the common stock price at June 30, 2004.
(b) Corning expects to record pretax charges approximating $18 million
in the third quarter of 2004. In the third quarter of 2004, Corning
announced that it reached an agreement to sell its Frequency Controls
business, the sale of which is expected to generate a pretax loss
approximating $25 million. Also in the third quarter of 2004, Corning
will complete the sale of Corning Asahi Video Products Company assets
to Henan Anyang CPT Glass Bulb Group, Xinyi Electronic Glass., Co.,
LTD. and record a pretax gain approximating $7 million.
(c) From time to time, Corning may repurchase or retire debt, which
could result in a gain or loss during the quarter.
Please note that the company may pursue other financing, restructuring and divestiture activities at any time in the future, and that the potential impact of these events is not included within Corning's third quarter guidance. This schedule contains forward looking statements within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Such forward looking statements are based on current expectations and involve certain risks and uncertainties. Actual results may differ from those projected in the forward looking statements. Additional information concerning factors that could cause actual results to materially differ from those in the forward looking statements is contained in the Securities and Exchange Commission filings of this Company. |
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