Corning Reports Third Quarter Net Income.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)--Oct. 22, 2003 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 it had third-quarter sales of $772 million and net income of $33 million or $0.02 diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of . "We have been relentless throughout the year in focusing on our three leadership priorities: maintaining our financial health; restoring profitability; and continuing to invest in our future. I am particularly pleased that we achieved our profitability goal in the third 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. "The hard work and dedication of all our employees is paying off," he said. Corning said its third-quarter results include net pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern charges of $39 million (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. and minority interest charges of $22 million or $0.02 per share). These include: -- A $51 million charge ($31 million after-tax) to reflect the increase in the market value of Corning's 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 $10 million gain ($8 million after-tax and minority interest) primarily related to the reversal reversal n. the decision of a court of appeal ruling that the judgment of a lower court was incorrect and is reversed. The result is that the lower court which tried the case is instructed to dismiss the original action, retry the case, or is ordered to change its of prior years' 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. This amount also includes a gain on the sale of certain Corning Asahi Asahi (朝日 or 旭) means "morning sun" in Japanese. It is a name of several places in Japan:
Products Company (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. ) assets, a loss on the sale of certain 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. business assets and a minor 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. in the telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. segment. -- A net gain of $2 million ($1 million after-tax) related to debt repurchases. Third-Quarter Operating Results Third-quarter sales of $772 million surpassed the company's guidance range of $740 million to $765 million and increased by $20 million over second-quarter sales. Corning's technologies segment sales for the quarter were $396 million compared to sales of $400 million for the second quarter. Sales increases in the company's Display Technologies and Environmental Technologies businesses were offset primarily by declines in the conventional television tube business (CAV), which Corning decided to exit earlier this year. The Display Technologies business recorded its eighth consecutive quarter of sequential One after the other in some consecutive order such as by name or number. sales growth 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 with a 7 percent volume increase over the previous quarter. The volume increase was due to the continued 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. , the displacement displacement, in psychology: see defense mechanism. Same as offset. See base/displacement. at the desktop of CRTs by flat panel monitors See flat panel display. and the migration to larger screen sizes by panel manufacturers. The business experienced stable prices and continued favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. foreign exchange rates in the quarter. Sales in Corning's environmental business were $121 million for the third quarter versus $117 million for the previous quarter, a sequential increase of 3 percent. The increase was the result of diesel and automotive 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). substrate The base layer of a structure such as a chip, multichip module (MCM), printed circuit board or disk platter. Silicon is the most widely used substrate for chips. Fiberglass (FR4) is mostly used for printed circuit boards, and ceramic is used for MCMs. demand and the industry's shift to thin-wall and ultra-thin wall solutions. This business also continued to benefit from favorable foreign exchange rates in the quarter. Corning's telecommunications segment sales were $370 million, an increase of $23 million over second-quarter sales of $347 million. The gain was due to a sequential increase in fiber volume of almost 20 percent, driven primarily by seasonal strength 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). , along with continued demand in Japan and China. Fiber pricing
for the quarter was down less than 5 percent. The telecommunications
segment also benefited from several submarine cable See Telegraph.See See also: Cable Submarine project sales in the third quarter. Equity earnings for the third quarter were $75 million, a $15 million increase over second quarter equity earnings, driven by strong performance by Samsung Corning Precision Glass  The of this article or section may be compromised by "peacock terms".You can help Wikipedia by removing peacock terms. Company. 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. were $22 million for the quarter compared to $25 million in the second quarter. Corning began to recognize equity earnings from Dow Corning in January January: see month. of this year. Cash Flow Update The company ended the third quarter with $1.4 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 of $96 million from the second quarter. The decline included $383 million of net debt repayments, substantially offset by $370 million of net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). from the July July: see month. common stock offering. In addition, Corning made $58 million in restructuring payments and a $70 million voluntary pension fund contribution. The company's debt-to-capital ratio was 35 percent at the end of the third quarter, a significant improvement from the second-quarter ratio of 40 percent. Fourth-Quarter Outlook Corning said it anticipates fourth-quarter sales to be in the range of $740 million to $765 million, with earnings per share in the range of $0.03 to $0.04, before special items. The company expects fourth-quarter sales in its technologies segment to grow, led by sequential volume increases in LCD glass of 15 percent to 20 percent, with continued stable pricing. The company said that the volume increase will be driven by the rapid ramp up Ramp Up To increase a company's operations in anticipation of increased demand. Notes: A company might 'ramp up' operations if they just signed a contract creating substantially more demand for their product. See also: Demand, Economies of Scale of Generation 5 glass production 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 and Generation 6 glass manufacturing in Japan. The growth in Display Technologies is expected to be partially offset by seasonal declines in the Life Sciences and Environmental Technologies businesses. Telecommunications segment fourth-quarter sales are expected to be down from third quarter levels due to lower submarine cable project sales and anticipated fiber volume declines of 15 percent to 20 percent. The expected decline in fiber volume is primarily the result of traditional seasonal slowdowns in North America and Europe. Fiber pricing declines are expected to be less than 5 percent. Remarking on the company's performance, 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, "We clearly have been tested over the past two years by the severe 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 market. We have passed this test with our return to profitability and improved balance sheet and are now poised for 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. growth with three exciting business opportunities. "First, demand for flat panel desktop monitors is approaching 40 percent 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" and their popularity continues to grow. The number of LCD televisions purchased this year will double over last year, and we should see significant growth in larger size glass panels for LCD televisions in the future. The combination of an emerging LCD TV A flat panel TV that uses LCD technology or a rear-projection TV that is based on LCD microdisplay panels. See flat panel TV, rear-projection TV and LCD. market and larger flat panel desktop monitors plays to a unique competitive advantage for Corning as we bring on additional Generation 5 and Generation 6 manufacturing capacity next year to meet the expected market demand," he said. Flaws added, "We also are investing to seize seize v. To exhibit symptoms of seizure activity, usually with convulsions. the significant opportunities that the global diesel emissions emissions npl → émissions fpl emissions npl → Emissionen pl market presents, and we will continue innovating our product offering for the automotive passenger car market. Finally, we believe that fiber-to-the-premises represents a long-term opportunity for Corning as favorable public policy in the U.S. and elsewhere will spur future telecommunications industry investment." On Thursday Thursday: see week. , Oct. 30, Corning will be hosting an investor luncheon at the Hilton Hil·ton , Conrad Nicholson 1887-1979. American hotel-chain organizer who acquired hotels in many American cities and in 1946 founded the Hilton Hotel Corporation. Hotel in San Francisco San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden . Corning also will host an investor luncheon at the Westin Hotel in Portland Portland, town, England Portland, town (1991 pop. 12,945), Dorset, S England. It is on the Isle of Portland, a small rocky peninsula. Portland stone has been used in St. Paul's Cathedral and other important London buildings. Lobsters and crabs are harvested. , Oregon Oregon, city, United States Oregon, city (1990 pop. 18,334), Lucas co., NW Ohio, a suburb adjacent to Toledo, on Lake Erie; inc. 1958. It is a port with railroad-owned and -operated docks. The city has industries producing oil, chemicals, and metal products. , on Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , Nov. 7. Both luncheons, which will begin at noon, are a part of the company's ongoing investor outreach Outreach is an effort by an organization or group to connect its ideas or practices to the efforts of other organizations, groups, specific audiences or the general public. program. To reserve a seat at either luncheon, please register through the investor relations Investor relations The process by which the corporation communicates with its investors. Web page at www.corning.com/investor_relations or contact Corning's investor relations department by calling 607-974-8764. Presentation of Information in this News Release Corning's earnings estimate for the fourth 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. Corning provides a reconciliation of the non-GAAP earnings per share estimate to a GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). earnings per share estimate 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 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, information display, environmental, semiconductor, and life sciences industries. Third-Quarter Conference Call Information The company will host a third-quarter conference call at 8:30 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT on Thursday, Oct. 23. To access the call, dial (630) 395-0018. 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 ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 10:30 a.m. EDT and will run through 5 p.m. EDT, Thursday, Nov. 6. To listen, dial (402) 220-3489, no passcode is required. To listen to a live audio webcast of the call at 8:30 a.m. on Thursday, Oct. 23, please go to our website 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 Start-up 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 nine
months ended months ended
September 30, September 30,
-------------------------------
2003 2002 2003 2002
------ ------ ------ ------
Net sales $ 772 $ 762 $2,270 $2,428
Cost of sales 546 633 1,663 1,931
------ ------ ------ ------
Gross margin 226 129 607 497
Operating expenses
Selling, general and
administrative expenses 147 157 447 533
Research, development and
engineering expenses 80 113 258 370
Amortization of purchased
intangibles 10 11 28 33
Restructuring, impairment
and other charges
and credits (10) 125 90 619
------ ------ ------ ------
Operating loss (1) (277) (216) (1,058)
Interest income 7 10 24 34
Interest expense (36) (44) (118) (136)
Asbestos settlement (51) (388)
Gain on repurchases of debt, net 2 22 19 90
Other income (expense), net 5 (1) 11 (10)
------ ------ ------ ------
Loss from continuing operations
before income taxes (74) (290) (668) (1,080)
Benefit for income taxes (30) (91) (208) (325)
------ ------ ------ ------
Loss from continuing operations
before minority
interests and equity earnings (44) (199) (460) (755)
Minority interests 2 5 72 17
Equity in earnings of associated
companies, net
of impairments 75 42 194 97
------ ------ ------ ------
Income (loss) from continuing
operations 33 (152) (194) (641)
Income from discontinued operations,
net of income taxes 19 48
------ ------ ------ ------
Net income (loss) 33 (133) (194) (593)
Dividend requirements of
preferred stock (128) (128)
------ ------ ------ ------
Earnings (loss) attributable to
common shareholders $ 33 $ (261) $ (194) $ (721)
====== ====== ====== ======
Basic earnings (loss) per
common share from:
Continuing operations $ 0.03 $(0.27) $(0.15) $(0.79)
Discontinued operations 0.02 0.05
------ ------ ------ ------
Basic earnings (loss) per
common share $ 0.03 $(0.25) $(0.15) $(0.74)
====== ====== ====== ======
Diluted earnings (loss) per
common share from:
Continuing operations $ 0.02 $(0.27) $(0.15) $(0.79)
Discontinued operations 0.02 0.05
------ ------ ------ ------
Diluted earnings (loss) per
common share $ 0.02 $(0.25) $(0.15) $(0.74)
====== ====== ====== ======
Shares used in computing per
share amounts for:
Basic earnings (loss) per
common share 1,314 1,036 1,253 977
====== ====== ====== ======
Diluted earnings (loss)
per common share 1,390 1,036 1,253 977
====== ====== ====== ======
See notes to consolidated financial statements.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(In millions, except per share amounts)
Unaudited
Sept. 30, Dec. 31,
2003 2002
--------- --------
Assets
Current assets:
Cash and cash equivalents $ 809 $ 1,426
------- -------
Short-term investments, at fair value 608 664
Total cash and short-term investments 1,417 2,090
Trade accounts receivable, net 498 470
Inventories 491 559
Deferred income taxes 375 296
Other accounts receivable 117 358
Prepaid expenses and other current assets 70 52
------- -------
Total current assets 2,968 3,825
Restricted cash and investments 66 82
Investments 985 769
Property, net 3,582 3,705
Goodwill 1,730 1,715
Other intangible assets, net 175 213
Deferred income taxes 1,106 887
Other assets 202 210
------- -------
Total assets $10,814 $11,406
======= =======
Liabilities and Shareholders' Equity
Current liabilities:
Loans payable $ 49 $ 204
Accounts payable 310 339
Other accrued liabilities 1,089 1,137
------- -------
Total current liabilities 1,448 1,680
Long-term debt 2,819 3,963
Postretirement benefits other than pensions 614 617
Other liabilities 615 396
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: 1.05 million and 1.55
million 105 155
Common stock - Par value $0.50 per share; Shares
authorized: 3.8 billion; Shares issued:
1,388 million and 1,267 million 694 634
Additional paid-in capital 10,275 9,695
Accumulated deficit (5,115) (4,921)
Treasury stock, at cost; Shares held: 58 million
and 70 million (581) (702)
Accumulated other comprehensive loss (96) (170)
------- -------
Total shareholders' equity 5,282 4,691
------- -------
Total liabilities and shareholders' equity $10,814 $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 For the
three months nine months
ended ended
Sept. 30, June 30, Sept. 30,
--------- -------- ---------
2003 2003 2003 2002
---- ---- ---- ----
Cash flows from operating
activities:
Income (loss) from
continuing operations $ 33 $ (22) $ (194) $ (641)
Adjustments to reconcile
income (loss) from
continuing operations
to net cash provided by
(used in) operating
activities:
Amortization of purchased
intangibles 10 9 28 33
Depreciation 113 132 363 471
Asbestos settlement 51 39 388
Restructuring, impairment
and other charges and credits (10) 49 90 619
Gain on repurchases of debt,
net of inducements (2) (13) (19) (90)
Undistributed earnings of
associated companies (60) (25) (84) (4)
Minority interests, net of
dividends paid (6) (33) (76) (17)
Deferred tax benefit (25) (56) (259) (145)
Interest expense on
convertible debentures 2 6 15 30
Restructuring payments (58) (49) (201) (193)
Decreases (increases) in
restricted cash 22 (18) 1 (20)
Income tax refund 191
Employee benefits in excess
of expense (65) (8) (93) (27)
Changes in certain working
capital items:
Trade accounts receivable (12) 30 5 97
Inventories 39 27 73 88
Other current assets 38 (14) 34 (117)
Accounts payable and
other current liabilities,
net of restructuring
payments (55) (55) (228) (259)
Other, net 3 26 32 (46)
------ ------ ------ ------
Net cash provided by (used in)
operating activities 18 25 66 (221)
------ ------ ------ ------
Cash flows from investing
activities:
Capital expenditures (94) (55) (204) (279)
Acquisitions of businesses,
net of cash acquired (29)
Proceeds from sale of
precision lens business 9
Net proceeds from sale or
disposal of assets (4) 30 39 62
Increase in long-term
investments and other
long-term assets (4) (4) (18)
Short-term investments
- acquisitions (365) (633) (1,426) (1,557)
Short-term investments
- liquidations 525 587 1,481 2,123
Restricted investments
- acquisitions (117)
Restricted investments
- liquidations 9 3 15 67
------ ------ ------ ------
Other, net 1 (2)
------ ------ ------ ------
Net cash provided by (used in)
investing activities 71 (72) (89) 250
------ ------ ------ ------
Cash flows from financing
activities:
Net (repayments of)
proceeds from loans payable (106) 8 (160) (502)
Proceeds from issuance of
long-term debt 11
Repayments of long-term debt (277) (634) (1,100) (190)
Proceeds from issuance of
Series C preferred stock 558
Proceeds from issuance of
common stock, net 370 278 651 47
Repurchases of common stock
for treasury (23)
Cash dividends paid to
preferred shareholders (9) (3) (15) (67)
------ ------ ------ ------
Other, net (8)
Net cash used in financing
activities (22) (351) (624) (174)
------ ------ ------ ------
Effect of exchange rates
on cash (5) 18 30 23
------ ------ ------ ------
Cash provided by (used in)
continuing operations 62 (380) (617) (122)
Cash provided by discontinued
operations 68
------ ------ ------ ------
Net increase (decrease) in
cash and cash equivalents 62 (380) (617) (54)
Cash and cash equivalents
at beginning of period 747 1,127 1,426 1,037
------ ------ ------ ------
Cash and cash equivalents
at end of period $ 809 $ 747 $ 809 $ 983
====== ====== ====== ======
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)
Non-segment/ Consoli-
Telecom- Techno- Other dated
munications logies items Total
----------- ------- ------------ --------
For the three months
ended September 30, 2003
Net sales $ 370 $ 396 $ 6 $ 772
Research, development
and engineering expenses $ 25 $ 55 $ 80
Restructuring, impairment
and other charges and
credits (1) $ (2) $ (11) $ 3 $ (10)
Interest expense $ 16 $ 20 $ 36
(Benefit) provision for
income taxes $ (16) $ 5 $ (19) $ (30)
(Loss) income before
minority interests
and equity earnings $ (28) $ 14 $ (30) $ (44)
Minority interests 2 2
Equity in earnings of
associated companies 1 53 21 75
------ ------ ------ ------
Net (loss) income $ (27) $ 69 $ (9) $ 33
====== ====== ====== ======
For the three months
ended September 30, 2002
Net sales $ 366 $ 392 $ 4 $ 762
Research, development
and engineering expenses $ 71 $ 42 $ 113
Restructuring, impairment
and other charges
and credits (1) $ 90 $ 6 $ 29 $ 125
Interest expense $ 27 $ 19 $ (2) $ 44
(Benefit) provision for
income taxes $ (91) $ 1 $ (1) $ (91)
Loss before minority
interests and equity
(losses) earnings $ (193) $ (5) $ (1) $ (199)
Minority interests 5 5
Equity in (losses)
earnings of associated
companies (5) 43 4 42
Income from discontinued
operations 19 19
------ ------ ------ ------
Net (loss) income $ (198) $ 43 $ 22 $ (133)
====== ====== ====== ======
For the nine months
ended September 30, 2003
Net sales $1,069 $1,184 $ 17 $2,270
Research, development
and engineering expenses $ 95 $ 165 $ (2) $ 258
Restructuring, impairment
and other charges
and credits (1) $ (30) $ 107 $ 13 $ 90
Interest expense $ 59 $ 59 $ 118
Benefit for income taxes $ (46) $ (10) $ (152) $ (208)
Loss before minority
interests and equity
(losses) earnings $ (141) $ (84) $ (235) $ (460)
Minority interests 72 72
Equity in (losses)
earnings of associated
companies (10) 140 64 194
------ ------ ------ ------
Net (loss) income $ (151) $ 128 $ (171) $ (194)
====== ====== ====== ======
For the nine months
ended September 30, 2002
Net sales $1,268 $1,146 $ 14 $2,428
Research, development
and engineering expenses $ 243 $ 127 $ 370
Restructuring, impairment
and other charges
and credits (1) $ 459 $ 9 $ 151 $ 619
Interest expense $ 84 $ 52 $ 136
(Benefit) provision
for income taxes $ (346) $ 5 $ 16 $ (325)
Loss before minority
interests and equity
(losses) earnings $ (715) $ (13) $ (27) $ (755)
Minority interests 16 1 17
Equity in (losses)
earnings of associated
companies (26) 117 6 97
Income from discontinued
operations 48 48
------ ------ ------ ------
Net (loss) income $ (741) $ 120 $ 28 $ (593)
====== ====== ====== ======
(1) Related tax (expense) benefit:
Three months ended September 30, 2003: $2, $(2), $0 and $0.
Three months ended September 30, 2002: $28, $2, $9 and $39.
Nine months ended September 30, 2003: $0, $22, $4 and $26.
Nine months ended September 30, 2002: $153, $3, $49 and $205.
See notes to the consolidated financial statements.
Non-segment/other items net (loss) income is detailed below:
Three months ended Nine months ended
September 30, September 30,
------------------ -----------------
2003 2002 2003 2002
------- ------- ------ ------
Non-segment (loss) income
and other (1) $ (4) $ (5) $ (29) $ 16
Non-segment restructuring,
impairment and other
charges and credits (3) (29) (13) (151)
Interest income 7 10 24 34
Asbestos settlement (51) (388)
Gain on repurchases of
debt, net 2 22 19 90
Benefit (provision) for
income taxes 19 1 152 (16)
Minority interests 1
Equity in earnings of
associated companies (2) 21 4 64 6
Income from discontinued
operations 19 48
----- ----- ----- -----
Net (loss) income $ (9) $ 22 $(171) $ 28
===== ===== ===== =====
(1) Includes non-segment operations and other corporate
activities.
(2) Includes amounts derived from corporate investments and
activities, primarily Dow Corning Corporation in 2003.
See notes to the consolidated financial statements.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; in millions except headcount and per share amounts)
When used in these notes, the terms "we," "our" or "us" refer to
Corning Incorporated and its consolidated subsidiaries.
1. Restructuring, Impairment and Other Charges and Credits
In the third quarter of 2003, we recorded restructuring, impairment
and other charges of $16 ($13 after-tax), offset by credits of $26
($21 after-tax and minority interest), resulting in a net pre-tax
credit of $10 ($8 after-tax and minority interest). A summary of these
charges and credits follow:
Photonic Technologies
On July 31, 2003, we completed the sale of certain photonic
technologies business assets to Avanex Corporation ("Avanex") in
exchange for 21 restricted shares of Avanex common stock, which we
valued at approximately $53. The transaction generated a loss on sale
of $13 ($9 after-tax). In accordance with the sale agreement, Avanex
acquired assets related to the optical amplifier facility in Erwin, NY
and the optical component plant in Milan, Italy. We also paid Avanex
$22 in cash. Approximately 400 employees of the photonic technologies
business became employees of Avanex in the third quarter.
In the third quarter of 2003, we recorded a charge of $3 ($4
after-tax) related to the exit of the photonic technologies business
for employee separation costs.
We expect to close our pump laser facility in Bedford, MA by the end
of the year. Pursuant to a separate arrangement with Avanex, we are
manufacturing pump lasers for sale to Avanex in the fourth quarter of
2003. This activity will be completed and the facility closed by
December 31, 2003.
Credits
In the third quarter of 2003, we reversed $20 ($18 after-tax) of
restructuring reserves related to prior years restructuring charges,
primarily in the Telecommunications segment. The reversals included
$10 related to employee separation costs which were less than
estimated, $6 related to exit costs which were less than estimated and
$4 related to proceeds in excess of assumed salvage values for assets
that were previously impaired and certain assets management decided to
retain as abandoned factories were being dismantled. Approximately $5
of the exit cost reversals listed above related directly to the Avanex
transaction.
In addition to the above mentioned credits, we also recorded credits
for the following in the third quarter:
-- a $5 credit ($2 after-tax and minority interest) related to
assets from Corning Asahi Video that were previously impaired
but later sold to a third party based in China, and
-- a $1 gain on the sale of previously-impaired cost investments
in the Telecommunications segment that were sold.
The current restructuring reserve continues to be evaluated as plans
are being executed. 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), 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 charge of $51 ($31 after-tax) in the
third quarter reflecting the increased fair value of the shares to its
common stock contribution. We have recorded total charges of $388
($247 after-tax) to reflect the settlement and to mark-to-market the
value of our common stock for the nine months ended September 30,
2003.
3. Income Tax
In the third quarter of 2003, the effective tax benefit rate excluding
certain items such as restructuring, impairment, asbestos settlement
and debt transactions was 33 percent for the quarter and nine months
ended September 30, 2003.
CORNING INCORPORATED
QUARTERLY SEGMENT SALES INFORMATION
(In millions)
2003
--------------------------------
Q1 Q2 Q3 9 Months
------ ------ ------ --------
Telecommunications
Fiber and cable $ 193 $ 178 $ 209 $ 580
Hardware and equipment 122 136 134 392
Photonic technologies 18 15 10 43
Controls and connectors 19 18 17 54
------ ------ ------ ------
Segment net sales $ 352 $ 347 $ 370 $1,069
====== ====== ====== ======
Technologies
Display technologies $ 117 $ 135 $ 144 $ 396
Environmental 115 117 121 353
Life sciences 73 72 70 215
Conventional video
components 25 24 14 63
Other technologies
businesses 58 52 47 157
------ ------ ------ ------
Segment net sales $ 388 $ 400 $ 396 $1,184
====== ====== ====== ======
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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