Corning Reports Third-Quarter Results.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 third-quarter sales of $1.006 billion, and that it incurred a net loss of $2.491 billion or $1.78 per share. This net loss includes a number of noncash special items that reduced Corning's results by $2.704 billion or $1.92 per share in the quarter. "Our third-quarter results reflect Corning's highest level of sales since the fourth quarter of 2001," James R. Houghton James R. Houghton is the Retired Chairman of the Board of Corning Incorporated. Houghton has Bachelor of Arts and master of business administration degrees from Harvard University (A.B., 1958, MBA, 1962). , chairman and chief executive officer, said. "We are disappointed with the magnitude magnitude, in astronomy, measure of the brightness of a star or other celestial object. The stars cataloged by Ptolemy (2d cent. A.D.), all visible with the unaided eye, were ranked on a brightness scale such that the brightest stars were of 1st magnitude and the of the noncash accounting charges we took in the quarter, but we continue to be pleased with our sequential One after the other in some consecutive order such as by name or number. revenue improvement and our strong gross margin. We believe that our business strategy is working, and we are well on track to meet our performance objectives for the year," he said. Corning's third-quarter net income was reduced by $2.704 billion or $1.92 per share as a result of the following: --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 of $1.794 billion ($1.798 billion 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) primarily related to the previously announced impairment of goodwill and fixed assets fixed assets npl → activo sg fijo fixed assets npl → immobilisations fpl fixed assets fix npl → in the Telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. segment. --A $50 million gain to reflect the decrease 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 $4 million charge related to Corning's ongoing debt reduction program. --A $937 million increase in the company's income tax expense as a result of the company's previously-announced decision to provide a valuation allowance against a significant portion of its deferred tax assets. --A previously-announced $35 million impairment of equity method investments in the Telecommunications segment, included in equity earnings of associated companies associated company associate n → Partnerfirma f associated company n → società collegata , net of impairments. --A $20 million gain related to the final settlement of escrowed proceeds from the fourth-quarter 2002 sale of Corning Precision Lens, recorded as income from discontinued operation discontinued operation A segment of a business that has been abandoned or sold or for which plans for one or another of these actions have been approved. See also continuing operations. . Third-Quarter Operating Results Corning's third-quarter sales of $1.006 billion increased 4 percent over the previous quarter's sales of $971 million. The sequential increase was the result of continued growth of the Display Technologies segment and stronger than expected sales in the Telecommunications segment. The company's operating performance remained strong with gross margins reaching 40 percent versus 36 percent last quarter. Corning continued to record strong quarterly equity earnings from 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 and 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. Sales for the Display Technologies segment grew 6 percent to $295 million compared to $277 million for the second quarter. 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 volume grew sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen 4 percent and year-over-year it increased greater than 70 percent. Pricing for the quarter remained stable. Net income for the segment increased 5 percent to $142 million from $135 million in the previous quarter. Telecommunications segment sales were $412 million, a 5 percent improvement over second-quarter sales of $392 million. The segment recorded a net loss of $1.820 billion versus a net loss of $21 million in the previous quarter, primarily due to goodwill, fixed assets and equity method investment impairment charges of $1.837 billion. Fiber volume increased more than 20 percent sequentially while pricing was essentially flat. The segment's third-quarter results reflected the strength of the company's fiber and cable and hardware and equipment volumes 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. , principally driven by its participation in Verizon's 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 its fiber-to-the-premises project. Corning said that its fiber exports to China have been impacted by the recent anti-dumping preliminary determination but not to the levels originally anticipated. Environmental Technologies segment sales for the third quarter were $136 million, a decline from the previous quarter's sales of $141 million. Quarterly sales were impacted by a recent slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. in diesel products retrofit ret·ro·fit v. ret·ro·fit·ted or ret·ro·fit, ret·ro·fit·ting, ret·ro·fits v.tr. 1. To provide (a jet, automobile, computer, or factory, for example) with parts, devices, or equipment not in sales. Segment earnings were down primarily due to disappointing manufacturing performance and higher development spending on diesel products. The Life Sciences segment saw third-quarter revenues and earnings off slightly from the previous quarter. Cash Flow/Liquidity Update Corning ended the third quarter with $1.7 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, an increase from the previous quarter's balance of $1.6 billion. The improved cash flow performance was primarily due to the receipt of customer deposits and proceeds from divestitures. The company's debt-to-capital ratio increased to 42 percent versus 31 percent at the end of last quarter as a result of the loss in the third quarter. "Putting aside the noncash accounting charges, we had a very strong third quarter," 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 surpassed a billion dollars in quarterly sales, we continued to improve our gross margins, and we again experienced strong cash flow," he said. Fourth-Quarter Outlook The company said that it expects fourth-quarter sales to be in the range of $950 million to $1 billion and earnings per share in the range of $0.10 to $0.12 before special items. This earning per share Noun 1. earning per share - the portion of a company's profit allocated to each outstanding share of common stock net income, net profit, profit, profits, earnings, lucre, net - the excess of revenues over outlays in a given period of time (including depreciation estimate is a non-GAAP financial measure and excludes any previously announced special items. A reconciliation of the non-GAAP financial estimate is on the company's Investor Relations Investor relations The process by which the corporation communicates with its investors. web site and accompanies this news release. Corning expects that foreign exchange rates will remain stable, and that its gross margin will be in the range of 37 percent to 38 percent. In its Display Technologies segment, Corning expects that its LCD glass sequential sales volume will increase between 3 percent and 10 percent, with continued stable pricing. The company expects to bring on some additional capacity this quarter, but it said that current customer demand exceeds Corning's ability to supply the market. Wendell Wendell is a name that has many uses: Places
The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. , said that the consumer electronics industry has recently begun to reduce retail pricing on LCD monitors A flat panel display that uses liquid crystals. Although laptops have used LCDs as their flat panel technology almost exclusively, LCD is also the most popular for flat panel desktop monitors. Toward the end of 2003, sales of LCD displays for desktops overtook CRTs for the first time. and LCD televisions. "We are now seeing some historically low prices for LCD monitors, which we believe in turn, will drive retail sales in the fourth quarter. It is our belief that the global LCD glass market volume will grow approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 60 percent this year, and Corning's glass volume will grow 65 percent to 70 percent this year. It is important to note that the pace of growth is subject to normal business factors, including the level of inventory supply within the supply chain," Weeks said. In the Telecommunications segment, the company anticipates that fourth-quarter fiber volumes will decline 10 percent to 20 percent, reflecting typical seasonal declines in North America and greater Europe Greater Europe is an increasingly popular term in the scholarly community for referring to the area of the Earth inhabited by ethnic Europeans, whether in Europe itself or in former European colonies. , while volumes in China should be similar to the third quarter. Fourth-quarter pricing declines are expected to be less than 5 percent. Presentation of Information in this News Release Corning's earnings estimate for the fourth quarter is a non-GAAP financial measure as it excludes the impact of any potential gains or losses arising from previously announced 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). actions; any potential gains or losses arising from debt repurchases or debt retirements; and any further adjustments to the asbestos settlement reserve required by movement in Corning's stock price. The company believes presenting earnings estimates that exclude these items is helpful in understanding Corning's operating results. This earnings 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 website at www.corning.com/investor_relations and accompanies this news 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. Third-Quarter Conference Call Information The company will host a third-quarter conference call at 8:30 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy on Thursday Thursday: see week. , Oct.21. To access the call, dial (517) 308-9004. 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. , Thursday, Nov. 4. To listen, dial (203) 369-1765, no pass code is required. To listen to a live audio webcast of the call at 8:30 a.m. on Thursday, Oct.21, 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 news 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 For the
three months ended nine months ended
September 30, September 30,
------------------- -------------------
2004 2003 2004 2003
--------- --------- --------- ---------
Net sales $ 1,006 $ 772 $ 2,821 $ 2,270
Cost of sales 602 546 1,771 1,663
--------- --------- --------- ---------
Gross margin 404 226 1,050 607
Operating expenses:
Selling, general and
administrative expenses 153 147 479 447
Research, development and
engineering expenses 88 80 257 258
Amortization of purchased
intangibles 9 10 28 28
Restructuring, impairment and
other charges and (credits) 1,794 (10) 1,794 90
Asbestos settlement (50) 51 16 388
--------- --------- --------- ---------
Operating loss (1,590) (52) (1,524) (604)
Interest income 6 7 16 24
Interest expense (36) (36) (109) (118)
(Loss) gain on repurchases
and retirement
of debt, net (4) 2 (36) 19
Other income, net 5 5 6 11
--------- --------- --------- ---------
Loss from continuing operations
before income taxes (1,619) (74) (1,647) (668)
(Provision) benefit for income
taxes (985) 30 (997) 208
--------- --------- --------- ---------
Loss from continuing operations
before minority interests
and equity earnings (2,604) (44) (2,644) (460)
Minority interests (3) 2 (14) 72
Equity in earnings of associated
companies, net of
impairments 96 75 310 194
--------- --------- --------- ---------
(Loss) income from continuing
operations (2,511) 33 (2,348) (194)
Income from discontinued
operation 20 20
--------- --------- --------- ---------
Net (loss) income $ (2,491) $ 33 $ (2,328) $ (194)
========= ========= ========= =========
Basic (loss) earnings per
common share from:
Continuing operations $ (1.79) $ 0.03 $ (1.70) $ (0.15)
Discontinued operation 0.01 0.01
--------- --------- --------- ---------
Basic (loss) earnings per
common share $ (1.78) $ 0.03 $ (1.69) $ (0.15)
========= ========= ========= =========
Diluted (loss) earnings per
common share from:
Continuing operations $ (1.79) $ 0.02 $ (1.70) $ (0.15)
Discontinued operation 0.01 0.01
--------- --------- --------- ---------
Diluted (loss) earnings per
common share $ (1.78) $ 0.02 $ (1.69) $ (0.15)
========= ========= ========= =========
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)
September 30, December 31,
2004 2003
------------- -------------
Assets
Current assets:
Cash and cash equivalents $ 1,147 $ 833
Short-term investments, at fair value 592 433
------------- -------------
Total cash, cash equivalents and
short-term investments 1,739 1,266
Trade accounts receivable, net 538 525
Inventories 498 467
Deferred income taxes 81 242
Other current assets 214 194
------------- -------------
Total current assets 3,070 2,694
Investments 1,233 1,045
Property, net 3,505 3,620
Goodwill 276 1,735
Other intangible assets, net 132 166
Deferred income taxes 450 1,225
Other assets 203 267
------------- -------------
Total Assets $ 8,869 $ 10,752
============= =============
Liabilities and Shareholders' Equity
Current liabilities:
Loans payable $ 214 $ 146
Accounts payable 489 333
Other accrued liabilities 1,027 1,074
------------- -------------
Total current liabilities 1,730 1,553
Long-term debt 2,438 2,668
Postretirement benefits other than pensions 605 619
Other liabilities 498 412
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: 1,418 million and 1,401
million 709 701
Additional paid-in capital 10,342 10,298
Accumulated deficit (7,472) (5,144)
Treasury stock, at cost; Shares held:
17 million and 58 million (166) (574)
Accumulated other comprehensive income 91 98
------------- -------------
Total shareholders' equity 3,568 5,464
------------- -------------
Total Liabilities and Shareholders' Equity $ 8,869 $ 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 nine
months ended months ended
----------------- -----------------
Sept. 30, June 30, September 30,
2004 2004 2004 2003
-------- -------- -------- --------
Cash flows from operating
activities:
(Loss) income from
continuing operations $(2,511) $ 108 $(2,348) $ (194)
Adjustments to reconcile
net (loss) income from
continuing operations to
net cash provided by
operating activities:
Amortization of purchased
intangibles 9 9 28 28
Depreciation 119 120 359 363
Restructuring, impairment and
other charges and (credits) 1,794 (34) 1,794 90
Asbestos settlement (50) 47 16 388
Loss (gain) on repurchases
and retirement of debt, net 4 9 36 (19)
Undistributed earnings of
associated companies (107) (63) (199) (84)
Minority interests, net of
dividends paid 3 11 14 (76)
Deferred taxes 974 5 939 (259)
Interest expense on
convertible debentures 1 1 4 15
Restructuring payments (18) (22) (74) (201)
Income tax refund 191
Customer deposits 100 100
Changes in certain working
capital items:
Trade accounts receivable 14 (26) (29) 5
Inventories (19) (1) (52) 73
Other current assets (32) 4 (25) 34
Accounts payable and other
current liabilities,
net of restructuring
payments 35 60 29 (228)
Other, net 20 34 51 (60)
-------- -------- -------- --------
Net cash provided by
operating activities 336 262 643 66
-------- -------- -------- --------
Cash flows from investing
activities:
Capital expenditures (254) (168) (556) (204)
Net proceeds from sale
of businesses 100 100 9
Net proceeds from sale
or disposal of assets 11 26 46 39
Net increase in long-term
investments and other
long-term assets (4)
Short-term investments
- acquisitions (263) (404) (969) (1,426)
Short-term investments
- liquidations 296 230 810 1,481
Restricted investments
- liquidations 1 3 6 16
-------- -------- -------- --------
Net cash used in investing
activities (109) (313) (563) (89)
-------- -------- -------- --------
Cash flows from financing
activities:
Net repayments of loans
payable (102) (7) (111) (160)
Proceeds from issuance of
long-term debt, net 46 442
Repayments of long-term debt (4) (9) (154) (1,100)
Proceeds from issuance of
common stock, net 9 13 33 651
Cash dividends to preferred
shareholders (1) (3) (6) (15)
Proceeds from the exercise
of stock options 7 15 34
-------- -------- -------- --------
Net cash provided by (used in)
financing activities (45) 9 238 (624)
-------- -------- -------- --------
Effect of exchange rates on cash 1 (4) (4) 30
-------- -------- -------- --------
Net (decrease) increase in cash
and cash equivalents 183 (46) 314 (617)
Cash and cash equivalents at
beginning of period 964 1,010 833 1,426
-------- -------- -------- --------
Cash and cash equivalents at
end of period $ 1,147 $ 964 $ 1,147 $ 809
======== ======== ======== ========
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-
Telecom- Display mental cated Consoli-
munica- Techno- Techno- Life and dated
tions logies logies Sciences Other Total
-------- -------- -------- -------- -------- --------
For the three
months ended
September 30,
2004
Net sales $ 412 $ 295 $ 136 $ 75 $ 88 $ 1,006
Research,
development
and
engineering
expenses (1) $ 21 $ 22 $ 23 $ 9 $ 13 $ 88
Restructuring,
impairment and
other charges
and (credits) $ 1,802 $ (8) $ 1,794
Interest
expense (2) $ 9 $ 15 $ 7 $ 1 $ 4 $ 36
(Provision)
benefit for
income taxes $ (9) $ (39) $ (1) $ (936) $ (985)
(Loss) income
before
minority
interests and
equity
(losses)
earnings
(3)(4) $(1,785) $ 74 $ 2 $ (895) $(2,604)
Minority
interests (5) (3) (3)
Equity in
(losses)
earnings of
associated
companies,
net of
impairments
(6) (35) 68 63 96
Income from
discontinued
operations 20 20
-------- -------- -------- -------- -------- --------
Net (loss)
income $(1,820) $ 142 $ 0 $ 2 $ (815) $(2,491)
======== ======== ======== ======== ======== ========
For the three
months
ended
September 30,
2003
Net sales $ 370 $ 144 $ 121 $ 70 $ 67 $ 772
Research,
development
and
engineering
expenses (1) $ 25 $ 12 $ 22 $ 7 $ 14 $ 80
Restructuring,
impairment and
other charges
and (credits) $ (2) $ (8) $ (10)
Interest expense
(2) $ 16 $ 9 $ 5 $ 6 $ 36
(Provision)
benefit
for income
taxes $ 16 $ (13) $ (2) $ (1) $ 30 $ 30
(Loss) income
before
minority
interests
and equity
earnings
(3)(4) $ (28) $ 25 $ 2 $ 3 $ (46) $ (44)
Minority
interests (5) 2 2
Equity in
(losses)
earnings of
associated
companies, net
of impairments 1 39 1 34 75
-------- -------- -------- -------- -------- --------
Net (loss)
income $ (27) $ 64 $ 3 $ 3 $ (10) $ 33
======== ======== ======== ======== ======== ========
For the nine
months ended
September 30,
2004
Net sales $ 1,116 $ 802 $ 418 $ 233 $ 252 $ 2,821
Research,
development
and
engineering
expenses (1) $ 69 $ 57 $ 64 $ 27 $ 40 $ 257
Restructuring,
impairment and
other charges
and (credits) $ 1,797 $ (3) $ 1,794
Interest
expense (2) $ 41 $ 37 $ 17 $ 4 $ 10 $ 109
(Provision)
benefit
for income
taxes $ 25 $ (97) $ (5) $ (6) $ (914) $ (997)
(Loss) income
before
minority
interests
and equity
(losses)
earnings
(3)(4) $(1,853) $ 191 $ 10 $ 12 $(1,004) $(2,644)
Minority
interests (5) 1 (15) (14)
Equity in
(losses)
earnings of
associated
companies,
net of
impairments
(6) (32) 204 138 310
Income from
discontinued
operations 20 20
-------- -------- -------- -------- -------- --------
Net (loss)
income $(1,884) $ 395 $ 10 $ 12 $ (861) $(2,328)
======== ======== ======== ======== ======== ========
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
SEGMENT RESULTS
(Unaudited; in millions)
Environ- Unallo-
Telecom- Display mental cated Consoli-
munica- Techno- Techno- Life and dated
tions logies logies Sciences Other Total
-------- -------- -------- -------- -------- --------
For the nine
months
ended
September 30,
2003
Net sales $ 1,069 $ 396 $ 353 $ 215 $ 237 $ 2,270
Research,
development
and
engineering
expenses (1) $ 95 $ 36 $ 63 $ 21 $ 43 $ 258
Restructuring,
impairment and
other charges
and (credits) $ (30) $ 120 $ 90
Interest
expense (2) $ 59 $ 27 $ 15 $ 4 $ 13 $ 118
(Provision)
benefit
for income
taxes $ 46 $ (30) $ (6) $ (7) $ 205 $ 208
(Loss) income
before
minority
interests
and equity
(losses)
earnings
(3)(4) $ (141) $ 60 $ 11 $ 15 $ (405) $ (460)
Minority
interests (5) 72 72
Equity in
(losses)
earnings of
associated
companies, net
of impairments
(6) (10) 94 110 194
-------- -------- -------- -------- -------- --------
Net (loss)
income $ (151) $ 154 $ 11 $ 15 $ (223) $ (194)
======== ======== ======== ======== ======== ========
(1) Non-direct research, development and engineering expenses are
allocated based upon direct project spending for each segment.
(2) 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.
(3) 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.
(4) (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.
(5) Minority interests includes the following restructuring,
impairment and other charges and (credits):
For the three and nine months ended September 30, 2004, gains from
the sale of assets of Corning Asahi Video Products Company in
excess of assumed salvage value of $4 and $17, respectively. For
the nine months ended September 30, 2003, charges of $59 related
to impairment of long-lived assets of Corning Asahi Video Products
Company.
(6) Equity in (losses) earnings of associated companies, net of
impairments includes the following charges related to impairments
of equity investments in the Telecommunications segment:
$35 million for the three and nine months ended September 30,
2004.
$7 million for the nine months ended September 30, 2003.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
SEGMENT RESULTS
(Unaudited; in millions)
A reconciliation of reportable segment net (loss) income to
consolidated net (loss) income follows:
For the three months For the nine months
ended September 30, ended September 30,
2004 2003 2004 2003
--------- --------- --------- ---------
Net income (loss) of
reportable segments $ (1,676) $ 43 $ (1,467) $ 29
Non-reportable operating
segments net income
(loss) (1) 9 (1) 10 (48)
Unallocated amounts:
Non-segment loss and
other (2) (3) (4) (10) (33)
Non-segment restructuring,
impairment and other
(charges) and credits 1 (3) 5 (13)
Asbestos settlement 50 (51) (16) (388)
Interest income 6 7 16 24
(Loss) gain on repurchases
of debt (4) 2 (36) 19
(Provision) benefit for
income taxes (3) (934) 19 (931) 152
Equity in earnings of
associated companies, net
of impairments (4) 40 21 81 64
Income from discontinued
operations 20 20
--------- --------- --------- ---------
Net (loss) income $ (2,491) $ 33 $ (2,328) $ (194)
========= ========= ========= =========
(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) (Provision) benefit for income taxes includes taxes associated
with non-segment restructuring, impairment and other charges and
$937 for the impact of establishing a valuation allowance against
certain deferred tax assets in the third quarter of 2004.
(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
(Unaudited)
1. Restructuring, Impairment and Other Charges and (Credits) In the third quarter of 2004, we recorded net charges of $1,794 million ($1,798 million after-tax and minority interest) included in restructuring, impairment and other charges and (credits). A summary of the charges/(credits) follows:
(a) Telecommunications segment charges totaling $1,802 million
included the following:
-- Goodwill - Pursuant to Financial Accounting Standards Board
(FASB) Statement of Financial Accounting Standards (SFAS) No.
142, "Goodwill and Other Intangible Assets," goodwill is
required to be tested for impairment annually at the reporting
unit level. The reporting unit for our Telecommunications
segment goodwill is our Telecommunications operating segment.
While our annual goodwill recoverability assessment is
completed in the fourth quarter, it is the culmination of our
annual strategic planning process that runs from June to
October. Management performed an assessment in the third
quarter of 2004 and reviewed the outcome with Corning's board
of directors on October 6, 2004. The result of this strategic
review is that we have lowered our estimates and projections
for the long-term revenue growth of the Telecommunications
segment.
Based on our updated estimates for the long-term growth of the
Telecommunications segment, management concluded that the fair
value of the Telecommunications segment was below its carrying
amount. Accordingly, we recorded an impairment charge of
$1,420 million to reduce the carrying value of goodwill to its
estimated fair value of approximately $120 million.
-- Fixed Assets - As a result of the lowered long-term outlook
for the Telecommunications segment discussed above, Corning
recorded asset impairment charges of $374 million in
accordance with SFAS No. 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets." These charges primarily
relate to the permanent abandonment of the unfinished phase II
expansion of the Concord, North Carolina optical fiber plant.
This portion of the facility was only partially completed
before Corning mothballed the entire Concord plant in October
2002.
-- Loss on sale of business - Corning completed the
previously-announced sale of its frequency controls business
for net proceeds of $80 million and recorded a loss of $14
million.
-- Other - Corning recorded net credits of $6 million for
adjustments to prior years' restructuring and impairment
charges.
(b) In the third quarter of 2004, Corning completed the final sale of
Corning Asahi Video Products Company assets to Henan Anyang CPT
Glass Bulb Group, Xinyi Electronic Glass, Co., LTD, a Chinese
corporation. In connection with this asset sale, Corning recorded
a gain of $8 million before minority interest.
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 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. credit of $50 million in the third quarter of 2004 reflecting the decrease in Corning's common stock from June June: see month. 30 to September September: see month. 30, 2004. Beginning with the first quarter of 2003, we have recorded total net charges of $429 million to reflect the initial settlement and to mark-to-market the value of our common stock. We will make our contributions to the settlement trust under the agreement after the plan is approved, becomes effective and is no longer subject to appeal. 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. In the third quarter of 2004, we issued 6 million shares of common stock and paid $4 million in cash in exchange for 57,500 of our 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 $58 million. In accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System No. 84, "Induced induced /in·duced/ (in-dldbomacst´) 1. produced artificially. 2. produced by induction. induced, adj artificially caused to occur. induced induction. Conversions of Convertible Debt," Corning recognized a charge of $4 million reflecting the fair value of the incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. consideration given (i.e., the cash) beyond those required by the terms of the debentures. 4. Provision for Income Taxes In the third quarter of 2004, we increased our tax expense by $937 million as a result of the company's decision to establish a valuation allowance against a significant portion of its deferred tax assets, primarily in the U.S. We performed an assessment of positive and negative evidence regarding the realization (specification) realization - A UML semantic relationship between a classifier that specifies a contract and another classifier that guarantees to carry it out. [Handout by Mr. David Gillibrand]. of our net deferred tax assets as required by SFAS No. 109, "Accounting for Income Taxes" (SFAS 109). SFAS 109 requires that a valuation allowance be established when it is more likely than not that all or a portion of a deferred tax asset will not be realized. SFAS 109 further requires that "greater weight be given to previous cumulative losses than the outlook for future profitability when determining whether deferred tax assets can be used." We have incurred significant losses in the U.S. due primarily to the restructuring and impairment charges and operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. in our Telecommunications segment over the last four years. As a result of the third quarter impairment charges and the lowering of our 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. outlook for the Telecommunications segment, our largest U.S. business, we concluded that a valuation allowance against these tax assets is required until realization is more assured. 5. Equity Investments In the third quarter of 2004, Corning recorded impairment charges of $35 million to write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. certain Telecommunications segment equity-method investments to their estimated fair value. As a result of Corning's revised Telecommunications segment outlook, we determined that these investments were no longer strategic assets. Accordingly, we recorded a charge to fully impair im·pair tr.v. im·paired, im·pair·ing, im·pairs To cause to diminish, as in strength, value, or quality: an injury that impaired my hearing; a severe storm impairing communications. the book values of our investments in these entities. These impairment charges are included in "equity in earnings of associated companies, net of impairments" in the statements of operations. 6. Discontinued Operation In the third quarter of 2004, we reached a final settlement agreement with 3M Company for disbursement DISBURSEMENT. Literally, to take money out of a purse. Figuratively, to pay out money; to expend money; and sometimes it signifies to advance money. 2. of funds held in escrow escrow Instrument, such as a deed, money, or property, that constitutes evidence of obligations between two or more parties and is held by a third party. It is delivered by the third party only upon fulfillment of some condition. as part of our December December: see month. 2002 sale of our precision lens business. Accordingly, we recognized a gain of $20 million upon receipt of these proceeds. This gain is included in "income from discontinued operation" in the statements of operations.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
QUARTERLY SALES INFORMATION
(Unaudited; in millions)
2004
-------------------------
Three
Months Ended Nine Months
------------------------- Ended
March 31 June 30 Sept. 30 Sept. 30
-------- ------- -------- ---------
Telecommunications
Fiber and cable $ 149 $ 192 $ 202 $ 543
Hardware and equipment 163 200 210 573
------ ------ ------- -------
312 392 412 1,116
Display Technologies 230 277 295 802
Environmental Technologies 141 141 136 418
Life Sciences 79 79 75 233
Other
Conventional video components 2 2
Other businesses 80 82 88 250
------ ------ ------- -------
82 82 88 252
Total $ 844 $ 971 $ 1,006 $ 2,821
====== ====== ======= =======
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
Nine Months Ended September 30, 2004
(Unaudited; amounts in millions, except per share amounts)
Corning's earnings 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.
Per Income Before Net
Share Income Taxes Income
----- ------------- ------
Earnings per share (EPS) and net
income, excluding certain items $ 0.14 $ 129 $ 213
Certain items:
Restructuring, impairment and
other charges and (credits) (a) (1.28) (1,794) (1,798)
Asbestos settlement (b) 0.04 50 50
(Loss) gain on repurchases and
retirement of debt, net (c) (4) (4)
(Provision) benefit for income
taxes (d) (0.67) (937)
Equity in earnings of associated
companies, net of impairments (e) (0.02) (35)
Income from discontinued
operations (f) 0.01 20
------ ------- -------
Total EPS and net income $(1.78) $(1,619) $(2,491)
====== ======== =======
(a) Corning recorded charges of $1.794 billion in the third quarter of
2004. The following charges are associated with its
Telecommunications segment: $1.420 billion to impair goodwill;
$374 million to impair certain fixed assets; and $14 million for
the completion of the sale of the frequency controls business.
Also in the third quarter of 2004, Corning completed the final
sale of Corning Asahi Video Products Company assets to Henan
Anyang CPT Glass Bulb Group, Xinyi Electronic Glass, Co., LTD. and
recorded a gain of $8 million before minority interest. Lastly,
Corning recorded net credits of $6 million for adjustments to
prior year restructuring and impairment charges.
(b) 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. This portion of the asbestos
liability requires quarterly adjustment based upon movements in
Corning's common stock price prior to contribution of the shares
to the trust. In the third quarter of 2004, Corning recorded a
credit of $50 million for the change in its common stock price of
$11.08 at September 30, 2004 compared to $13.06, the common stock
price at June 30, 2004.
(c) From time to time, Corning may repurchase or retire debt, which
could result in a gain or loss during the quarter. In the third
quarter of 2004, Corning retired certain amounts of its 3.5%
convertible bonds due 2008, resulting in a loss of $4 million.
(d) In the third quarter of 2004, Corning increased income tax expense
by $937 million as a result of the company's previously-announced
decision to provide a valuation allowance against a significant
portion of its deferred tax assets.
(e) This amount reflects charges for impairments of certain
non-strategic equity method investments in Corning's
Telecommunications segment.
(f) This gain relates to the final settlement of the sale of Corning's
precision lens business to 3M Company.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE TO GAAP FINANCIAL MEASURE
Three Months Ended December 31, 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)
(Loss) gain 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 will be
contributed to the trust, 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 Corning's common
stock price prior to contribution of the shares to the trust. In
the fourth quarter of 2004, Corning will record a charge or credit
for the change in its common stock price as of December 31, 2004
compared to $11.08, the common stock price at September 30, 2004.
(b) From time to time, Corning may need to make adjustments to
estimates used in the determination of prior year restructuring
and impairment charges, which could result in a gain or loss
during the quarter.
(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. |
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion