Corning Returns To Double Digit Earnings Growth.CORNING Corning, city (1990 pop. 11,938), Steuben co., S N.Y., on the Chemung River, in a dairy and vineyard region; settled 1788, inc. as a city 1890. The glass industry for which the city is famous began in 1868. , N.Y.--(BUSINESS WIRE)--April 14, 1999-- 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) ) reported today that demand for its LEAF(R) brand optical fiber, the most successful new optical fiber in the company's history, helped lift 1999 first quarter earnings to $0.36 per share, an increase of 33 percent compared with earnings of $0.27 per share from the same operations in 1998. Net income for the first quarter of 1999 totaled $86.5 million, an increase of 39 percent compared with $62.1 million for the same operations in 1998. First quarter sales were $892 million, compared to 1998 first quarter sales of $795 million, an increase of 12 percent. This sales growth was driven by gains in the optical fiber and cable and photonic Dealing with light (photons). See photon and photonics. technologies businesses. First quarter 1998 sales and income were adversely impacted by economic downturns in Asian markets. Corning's Chairman and Chief Executive Officer Roger G. Ackerman said, "While LEAF fiber was clearly the main driver for the quarter's improved results, increased sales of new catalytic converter catalytic converter: see internal-combustion engine. catalytic converter In automobiles, a component of emission control systems used to reduce the discharge of noxious gases from the internal-combustion engine. substrates and 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 glass used by computer manufacturers also contributed to the strong performance. These growth engines illustrate the value of our balanced portfolio." Sales of materials to the semiconductor industry remained soft due to the worldwide slump Slump A temporary fall in performance, often describing consistently falling security prices for several weeks or months. in the construction of new manufacturing plants for integrated circuits Integrated circuits Miniature electronic circuits produced within and upon a single semiconductor crystal, usually silicon. Integrated circuits range in complexity from simple logic circuits and amplifiers, about 1/20 in. (1. . Equity earnings fell 21 percent primarily due to Samsung-Corning Company Ltd., a Korean Korean, language of uncertain ancestry. It is thought by some scholars to be akin to Japanese, by others to be a member of the Altaic subfamily of the Ural-Altaic family of languages (see Uralic and Altaic languages), and by still others to be unrelated to any known manufacturer of glass panels and funnels for television and display monitors, which had an exceptionally strong first quarter in 1998 due in part to favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. exchange rates. Ackerman also said that, "The favorable trends in many of our growth businesses lead us to anticipate that we will achieve 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. goal of 15 percent earnings growth for the remainder of the year. At the same time, we will continue to invest in new products and facilities for our future." Established in 1851, Corning Incorporated creates leading-edge technologies for the fastest-growing markets of the world's economy. Corning manufactures optical fiber, cable and photonic components for the telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. industry; and high-performance Adj. 1. high-performance - modified to give superior performance; "a high-performance car" superior - of high or superior quality or performance; "superior wisdom derived from experience"; "superior math students" displays and components for television and other communications-related industries. The company also uses advanced materials Advanced Materials is a leading peer-reviewed materials science journal published every two weeks. Advanced Materials includes Communications, Reviews, and Feature Articles from the cutting edge of materials science, including topics in chemistry, physics, to manufacture products for scientific, semiconductor and environmental markets. Corning's total revenues in 1998 were $3.5 billion. More information on the company is available at http://www.corning.com, Corning's website. 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 Except for historical information and discussions contained herein, statements included in this release may constitute "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. " 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. These statements involve a number of risks, uncertainties and other factors that could cause results to differ materially, as discussed in the company's filing with the Securities and Exchange Commission.
Corning Incorporated and Subsidiary Companies
Consolidated Statements of Income
(Unaudited; in millions, except per share amounts)
Three Months Ended March 31,
1999 1998
Revenues
Net sales $ 892.2 $ 794.8
Royalty, interest and dividend income 9.9 9.1
902.1 803.9
Deductions
Cost of sales 548.3 514.7
Selling, general and administrative
expenses 136.8 112.9
Research, development and
engineering expenses 79.6 67.1
Interest expense 16.3 17.6
Other, net 9.9 27.1
Income from continuing operations
before taxes on income 111.2 64.5
Taxes on income from continuing operations 33.9 21.0
Income from continuing operations
before minority interest and
equity earnings 77.3 43.5
Minority interest in earnings
of subsidiaries (10.1) (5.5)
Dividends on convertible preferred
securities of subsidiary (2.3) (3.4)
Equity in earnings of
associated companies 21.6 27.5
Income from continuing operations 86.5 62.1
Loss from discontinued operations,
net of taxes (0.6)
Net Income $ 86.5 $ 61.5
Basic Earnings Per Share
Continuing operations $ 0.37 $ 0.27
Discontinued operations
Net Income $ 0.37 $ 0.27
Diluted Earnings Per Share
Continuing operations $ 0.36 $ 0.27
Discontinued operations (0.01)
Net Income $ 0.36 $ 0.26
Dividends Declared $ 0.18 $ 0.18
Shares used in computing
earnings per share
Basic earnings per share 233.8 229.6
Diluted earnings per share 245.2 232.6
The accompanying notes are an integral part of these statements.
Corning Incorporated and Subsidiary Companies
Condensed Consolidated Balance Sheets
(Unaudited; in millions)
March 31, 1999 Dec. 31, 1998
Assets
Current Assets
Cash and short-term investments $ 151.9 $ 45.4
Accounts receivable, net 592.3 636.0
Inventories 514.0 458.7
Deferred taxes on income and
other current assets 180.2 170.2
Total current assets 1,438.4 1,310.3
Investments 377.5 366.2
Plant and equipment, net 2,729.4 2,684.9
Goodwill and other intangible
assets, net 309.0 309.7
Other assets 312.1 310.8
Total Assets $ 5,166.4 $ 4,981.9
Liabilities and Shareholders'
Equity
Current Liabilities
Loans payable $ 143.9 $ 204.6
Accounts payable 250.5 291.7
Other accrued liabilities 524.2 578.4
Total current liabilities 918.6 1,074.7
Other liabilities 683.1 674.1
Loans payable beyond one year 1,291.1 998.3
Minority interest in subsidiary companies 349.6 346.1
Convertible preferred securities
of subsidiary 365.2
Convertible preferred stock 16.0 17.9
Common shareholders' equity 1,908.0 1,505.6
Total Liabilities and
Shareholders' Equity $ 5,166.4 $ 4,981.9
The accompanying notes are an integral part of these statements.
Corning Incorporated and Subsidiary Companies
Notes to Consolidated Financial Statements
Quarter 1, 1999
(1) Information about the performance of Corning's three operating
segments for the first quarter of 1999 and 1998 are below. These
amounts do not include revenues, expenses and equity earnings not
specifically identifiable to segments.
Three months ended
March 31,
1999 1998
Telecommunications
Net sales $ 488.5 $ 387.2
Income from continuing
operations before
minority interest and
equity earnings $ 48.6 $ 34.9
Minority interest in
earnings of subsidiaries (4.3) (6.9)
Equity in earnings of
associated companies 4.4 4.5
Segment net income $ 48.7 $ 32.5
Advanced Materials
Net sales $ 252.1 $ 258.7
Income from continuing
operations before
minority interest
and equity earnings $ 20.0 $ 18.9
Minority interest in earnings
of subsidiaries 0.1 0.2
Equity in earnings of
associated companies 4.1 3.2
Segment net income $ 24.2 $ 22.3
Information Display
Net sales $ 145.7 $ 143.3
Income from continuing operations
before minority interest and
equity earnings $ 9.4 $ (9.4)
Minority interest in earnings
of subsidiaries (5.9) 1.2
Equity in earnings of associated
companies 12.4 16.4
Segment net income $ 15.9 $ 8.2
Total segments
Net sales $ 886.3 $ 789.2
Income from continuing
operations before
minority interest and
equity earnings $ 78.0 $ 44.4
Minority interest in earnings
of subsidiaries (10.1) (5.5)
Equity in earnings of
associated companies 20.9 24.1
Segment net income $ 88.8 $ 63.0
(2) Depreciation and amortization charged to continuing operations
during the first quarters of 1999 and 1998 totaled $94.6 million
and $78.9 million, respectively. These amounts include
amortization of purchased intangibles totaling $5.1 million and
$3.9 million in the first quarters of 1999 and 1998,
respectively.
(3) Corning's effective tax rate for continuing operations was 30.5%
for the first quarter of 1999 and 32.5% for the first quarter of
1998. The lower 1999 rate was due to a higher percentage of
Corning's earnings resulting from consolidated entities with
lower effective tax rates.
(4) During the first quarter of 1999, Corning issued $300 million of
debt securities under a shelf registration agreement previously
filed with the Securities and Exchange Commission. This issuance
consisted of $150 million of notes with a 6.30% coupon due in
2009, and $150 million of debentures with a 6.85% coupon due in
2029. The proceeds from these borrowings will be used for the
repayment of short and long-term debt, working capital, capital
spending and acquisitions.
(5) During the first quarter of 1999, Corning Delaware L.P., a
special purpose limited partnership in which Corning is the sole
general partner, called for the redemption of all Convertible
Monthly Income Preferred Securities (MIPS). The MIPS were
guaranteed by Corning and convertible into Corning common stock
at a rate of 1.534 shares of Corning common stock for each MIPS.
As of March 31, 1999, all of the MIPS were converted into 11.5
million shares of Corning common stock. The conversion will cause
Corning's reported income to increase in comparison to 1998, but
will have no impact on Corning's diluted earnings per share.
(6) Dow Corning and the Committee of Tort Claimants, one of Dow
Corning's Chapter 11 creditor committees, filed with the United
States Bankruptcy Court (the Bankruptcy Court) a joint plan of
reorganization on November 9, 1998 (the Joint Plan). After
hearings held in early 1999, the Bankruptcy Court ruled in early
February 1999 that the disclosure statement related to the Joint
Plan was adequate to send to Dow Corning's creditors for
consideration. In that ruling, the Bankruptcy Court indicated
that the period for voting will extend through May 14, 1999 and
hearings to confirm the Joint Plan are scheduled to begin on June
28, 1999. To become effective, the Joint Plan will require a
favorable vote by many classes of creditors and final Bankruptcy
Court approval after confirmation hearings. In addition, appeals
of the Bankruptcy Court's confirmation order are possible. The
recent developments, including the support of the Committee of
Tort Claimants, tend to increase the probability that Dow Corning
will successfully emerge from Chapter 11 proceedings, but the
timing and the eventual outcome of these proceedings is
uncertain.
(7) On March 1, 1999, Corning announced that it will acquire BICC's
telecommunication cable business and the 50 percent equity
interest in Optical Waveguides Australia, Pty. Ltd. it does not
already own for cash consideration of approximately $135 million.
The transaction is expected to be completed during the second
quarter of 1999. Total sales for these businesses in 1998
approximated $400 million.
Corning Incorporated and Subsidiary Companies
(Unaudited; in millions, except per share amounts)
Exhibit 1
1999
Q1 TOTAL
Revenues
Net sales $ 892.2 $ 892.2
Royalty, interest and dividend income 9.9 9.9
Non-operating gains
902.1 902.1
Deductions
Cost of sales 548.3 548.3
Selling, general and administrative expenses 136.8 136.8
Research, development and engineering
expenses 79.6 79.6
Provision for restructuring
Interest expense 16.3 16.3
Other, net 9.9 9.9
Income from continuing operations
before taxes on income 111.2 111.2
Taxes on income from continuing operations 33.9 33.9
Income from continuing operations before
minority interest and equity earnings 77.3 77.3
Minority interest in earnings of subsidiaries (10.1) (10.1)
Dividends on convertible preferred
securities of subsidiary (2.3) (2.3)
Equity in earnings of associated companies 21.6 21.6
Income from continuing operations 86.5 86.5
Income (loss) from discontinued operations,
net of income taxes
Net income $ 86.5 $ 86.5
Diluted earnings per share:
Continuing operations $ 0.36 $ 0.36
Discontinued operations
$ 0.36 $ 0.36
Shares used in computing diluted
earnings per share 245.2 245.2
1998
Q1 Q2 Q3 Q4 TOTAL
Revenues
Net sales $ 794.8 $ 855.9 $906.5 $ 926.8 $ 3,484.0
Royalty, interest and
dividend income 9.1 12.0 11.8 15.5 48.4
Non-operating gains 20.5 19.2 39.7
803.9 888.4 918.3 961.5 3,572.1
Deductions
Cost of sales 514.7 530.4 550.1 558.7 2,153.9
Selling, general and
administrative expense 112.9 126.6 112.6 135.6 487.7
Research, development and
engineering expenses 67.1 75.1 71.6 80.1 293.9
Provision for restructuring 84.6 84.6
Interest expense 17.6 14.9 11.3 12.9 56.7
Other, net 27.1 2.6 10.7 15.3 55.7
Income from continuing
operations
before taxes on income 64.5 54.2 162.0 158.9 439.6
Taxes on income from
continuing operations 21.0 13.9 49.2 48.7 132.8
Income from continuing
operations before
minority interest and
equity earnings 43.5 40.3 112.8 110.2 306.8
Minority interest in
earnings of subsidiaries (5.5) (12.8) (20.3) (22.3) (60.9)
Dividends on convertible
preferred securities of
subsidiary (3.4) (3.5) (3.4) (3.4) (13.7)
Equity in earnings of
associated companies 27.5 32.7 15.3 19.8 95.3
Income from continuing
operations 62.1 56.7 104.4 104.3 327.5
Income (loss) from
discontinued operations,
net of income taxes (0.6) 67.1 66.5
Net income $ 61.5 $ 123.8 $104.4 $ 104.3 $ 394.0
Diluted earnings per share:
Continuing operations $ 0.27 $ 0.24 $ 0.44 $ 0.44 $ 1.39
Discontinued operations (0.01) 0.29 0.28
$ 0.26 $ 0.53 $ 0.44 $ 0.44 $ 1.67
Shares used in
computing diluted
earnings per share 232.6 233.9 242.2 243.8 243.9
Corning Incorporated and Subsidiary Companies
(Unaudited; in millions, except per share amounts)
Exhibit 2
1999 1998
Q1 TOTAL Q1 Q2 Q3 Q4 TOTAL
Net Income
Before special
items $ 86.5 $ 86.5 $ 62.1 $92.7 $104.4 $94.6 $353.8
Provision for
restructuring (49.2)(1) (49.2)
Non-operating gains 13.2(2) 9.7(3) 22.9
Net income from
continuing operations 86.5 86.5 62.1 56.7 104.4 104.3 327.5
Net income (loss) from
discontinued operations (0.6) 67.1 66.5
Net Income $ 86.5 $ 86.5 $ 61.5 $123.8 $104.4 $104.3 $394.0
Diluted earnings
per share:
Before special
items $ 0.36 $ 0.36 $ 0.27 $0.39 $0.44 $0.40 $1.50
Provision for
restructuring (0.21)(1) (0.21)
Non-operating gain 0.06(2) 0.04(3) 0.10
Net income from
continuing
operations 0.36 0.36 0.27 0.24 0.44 0.44 1.39
Net (loss) income
from discontinued
operations (0.01) 0.29 0.28
Net Income $ 0.36 $ 0.36 $ 0.26 $0.53 $ 0.44 $0.44 $ 1.67
(1) Reflects a restructuring charge of $84.6 million ($49.2 million
after tax and minority interest), or $0.21 per share.
(2) Reflects a non-operating gain of $20.5 million ($13.2 million
after tax), or $0.06 per share.
(3) Reflects a non-operating gain of $19.2 million ($9.7 million
after tax), or $0.04 per share.
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