Corning Third-Quarter Earnings Up Across the Board.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. 13, 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) ), the world's leading supplier of optical fiber, reported strong third-quarter results in all three of its business segments. Net earnings totaled $0.54 per share, an increase of 23% compared with earnings of $0.44 per share in 1998. Net income for the third quarter of 1999 totaled $133.3 million, an increase of 28% compared with $104.4 million in 1998. Commenting on the quarter, Corning Chairman and Chief Executive Officer, Roger G. Ackerman, said, "We continue to achieve across-the-board growth and are particularly pleased to see both our established businesses and new businesses showing strength." Third-quarter sales were just over $1.1 billion, an increase of 25% compared with 1998 third-quarter sales of $906.5 million. Excluding the impact of acquisitions, sales increased 17%. Sales of optical fiber remained strong, with demand for the company's LEAF(R) optical fiber tripling in the quarter over the same period last year. Sales of optical amplifiers A device that boosts light signals in an optical fiber network. Unlike regenerators, which have to convert light to electricity in order to amplify it and then convert it back again to light, the optical amplifier amplifies the light signal itself. used in communication networks drove sales up nearly 50% in the company's photonic Dealing with light (photons). See photon and photonics. technologies business. Demand for 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. glass used in computer monitors, semiconductor materials Semiconductor materials are insulators at absolute zero temperature that conduct electricity in a limited way at room temperature (see also Semiconductor). The defining property of a semiconductor material is that it can be doped with impurities that alter its electronic properties used in the manufacture of 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. , and substrates used in catalytic converters 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. also contributed to the quarter's growth. Equity earnings more than doubled in the quarter due primarily to excellent performance at both Samsung Corning Company, Ltd. and Samsung Corning Precision Glass  The of this article or section may be compromised by "peacock terms".You can help Wikipedia by removing peacock terms. Company, Ltd. Ackerman said, "Performance in the first three quarters of 1999 has been very strong. The positive momentum we have seen gives us confidence that we will achieve earnings growth of 20% for the full year." 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 products 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 revenues in 1998 were $3.5 billion. More information on the company is available at www.corning.com. 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 filings with the Securities and Exchange Commission. -0-
Corning Incorporated and Subsidiary Companies Consolidated Statements
of Income (Unaudited; in millions, except per share amounts)
Nine Months Ended Three Months Ended
Sept. 30, Sept. 30,
1999 1998 1999 1998
Revenues
Net sales $ 3,048.8 $ 2,557.2 $ 1,136.6 $ 906.5
Royalty, interest,
and dividend income 29.6 32.9 8.5 11.8
Non-operating gain 30.0 20.5 30.0
3,108.4 2,610.6 1,175.1 918.3
Deductions
Cost of sales 1,861.6 1,583.4 696.7 546.2
Selling, general and
administrative expenses 428.4 352.1 155.5 112.6
Research, development
and engineering expenses 260.9 213.8 96.5 71.6
Provision for impairment
and restructuring 15.5 84.6 15.5
Amortization of purchased
intangibles 15.9 11.8 5.6 3.9
Interest expense 56.1 43.8 22.6 11.3
Other, net 32.5 40.4 11.9 10.7
Income from continuing
operations before
taxes on income 437.5 280.7 170.8 162.0
Taxes on income from
continuing operations 132.4 84.1 51.1 49.2
Income from continuing
operations before
minority interest and
equity earnings 305.1 196.6 119.7 112.8
Minority interest in
earnings of subsidiaries (46.1) (38.6) (18.6) (20.3)
Dividends on convertible
preferred securities
of subsidiary (2.3) (10.3) (3.4)
Equity in earnings of
associated companies 84.9 75.5 32.2 15.3
Income from continuing
operations 341.6 223.2 133.3 104.4
Income from discontinued
operations,
net of taxes 66.5
Net Income $ 341.6 $ 289.7 $ 133.3 $ 104.4
Basic Earnings Per Share
Continuing operations $ 1.42 $ 0.97 $ 0.55 $ 0.45
Discontinued operations 0.29
Net Income $ 1.42 $ 1.26 $ 0.55 $ 0.45
Diluted Earnings Per Share
Continuing operations $ 1.39 $ 0.95 $ 0.54 $ 0.44
Discontinued operations 0.28
Net Income $ 1.39 $ 1.23 $ 0.54 $ 0.44
Dividends Declared $ 0.54 $ 0.54 $ 0.18 $ 0.18
Shares used in computing
earnings per share
Basic earnings per share 239.7 229.7 243.0 229.5
Diluted earnings per share 247.2 243.9 248.3 242.2
The accompanying notes are an integral part of these statements.
Corning Incorporated and Subsidiary Companies
Condensed Consolidated Balance Sheets
(Unaudited; in millions)
Sept. 30, 1999 Dec. 31, 1998
Assets
Current Assets
Cash and short-term investments $ 101.5 $ 45.4
Accounts receivable, net 768.4 636.0
Inventories 550.6 458.7
Deferred taxes on income and
other current assets 211.5 170.2
Total current assets 1,632.0 1,310.3
Investments 451.8 366.2
Plant and equipment, net 2,909.9 2,684.9
Goodwill and other intangible assets, net 344.5 309.7
Other assets 335.6 310.8
Total Assets $ 5,673.8 $ 4,981.9
Liabilities and Shareholders' Equity
Current Liabilities
Loans payable $ 297.8 $ 204.6
Accounts payable 283.8 291.7
Other accrued liabilities 637.1 578.4
Total current liabilities 1,218.7 1,074.7
Other liabilities 690.1 674.1
Loans payable beyond one year 1,287.6 998.3
Minority interest in subsidiary companies 361.4 346.1
Convertible preferred securities of subsidiary 365.2
Covertible preferred stock 15.2 17.9
Common shareholders' equity 2,100.8 1,505.6
Total Liabilities and Shareholders'
Equity $ 5,673.8 $ 4,981.9
The accompanying notes are an integral part of these statements.
Corning Incorporated and Subsidiary Companies
Notes to Consolidated Financial Statements
Quarter 3, 1999
(1) Information about the performance of Corning's three operating
segments for the third quarter and first nine months of 1999 and
1998 are below. These amounts do not include revenues, expenses
and equity earnings not specifically identifiable to segments.
Nine months ended Three months ended
Sept. 30, Sept. 30,
1999 1998 1999 1998
Telecommunications
Net sales $ 1,766.0 $ 1,312.4 $ 694.7 $ 483.8
Research, development and
engineering expenses $ 175.8 $ 136.5 $ 67.6 $ 46.7
Income from continuing
operations before
minority interest and
equity earnings $ 190.3 $ 166.6 $ 75.5 $ 78.9
Minority interest in
earnings of subsidiaries (20.4) (30.4 (7.5) (12.5)
Equity in earnings of
associated companies 12.3 14.4 4.9 1.5
Segment net income (1) $ 182.2 $ 150.6 $ 72.9 $ 67.9
Advanced Materials
Net sales $ 774.5 $ 767.7 $ 257.7 $ 247.7
Research, development and
engineering expenses $ 68.8 $ 60.3 $ 23.7 $ 19.8
Income from continuing
operations before minority
interest and equity earnings $ 71.6 $ 55.7 $ 23.5 $ 17.0
Minority interest in
earnings of subsidiaries 0.3
Equity in earnings of
associated companies 13.7 11.2 6.1 3.7
Segment net income (2) $ 85.3 $ 67.2 $ 29.6 $ 20.7
Information Display
Net sales $ 490.4 $ 459.3 $ 178.7 $ 169.8
Research, development and
engineering expenses $ 16.4 $ 16.9 $ 5.3 $ 5.0
Income from continuing
operations before minority
interest and equity earnings $ 40.1 $ 15.3 $ 13.0 $ 17.5
Minority interest in earnings
of subsidiaries (16.2) (12.2 (1.6) (7.8)
Equity in earnings of
associated companies 52.9 40.5 18.3 6.6
Segment net income $ 76.8 $ 43.6 $ 29.7 $ 16.3
Total segments
Net sales $ 3,030.9 $ 2,539.4 $ 1,131.1 $ 901.3
Research, development and
engineering expenses $ 261.0 $ 213.7 $ 96.6 $ 71.5
Income from continuing
operations before minority
interest and equity earnings $ 302.0 $ 237.6 $ 112.0 $ 113.4
Minority interest in
earnings of subsidiaries (36.6) (42.3) (9.1) (20.3)
Equity in earnings of
associated companies 78.9 66.1 29.3 11.8
Segment net income (1)(2) $ 344.3 $ 261.4 $ 132.2 $ 104.9
(1) Does not include a non-operating gain described in Footnote 4.
(2) Does not include an impairment charge described in Footnote 5.
(2) Depreciation and amortization charged to continuing operations
during the third quarter year-to-date 1999 and 1998 totaled $281
million and $233 million, respectively.
(3) Corning's effective tax rate for continuing operations, excluding
the impact of special items, was 29.2% and 30.0% for the third
quarter and year-to-date 1999, respectively, and 30.4% and 31.5%
for the same periods in 1998. The lower 1999 rates are due to a
higher percentage of Corning's earnings resulting from
consolidated entities with lower effective tax rates.
(4) During the third quarter of 1999, Corning sold Republic Wire and
Cable, a manufacturer of elevator cables and a subsidiary of
Siecor Corporation, for approximately $52 million in cash and
short-term notes. Corning recorded a non-operating gain of $30
million ($9.5 million after tax and minority interest) or $0.04
per share as a result of this transaction.
(5) In the third quarter of 1999, Corning recognized an impairment
loss of $15.5 million pretax ($10.0 million after tax), or $0.04
per share, in connection with management's decision to sell or
dispose of certain assets within the Advanced Materials segment.
The impairment loss reduces Corning's investment in these assets
to an amount equal to management's current estimate of fair
value.
(6) During the third quarter of 1999, Corning acquired the 21%
interest in Corning Japan KK it did not own for cash
consideration of approximately $32 million. The excess purchase
price over the fair value of the net assets acquired, accounted
for as goodwill, was approximately $18 million and is being
amortized over 20 years. Corning Japan KK produces flat panel
display glass within the Information Display Segment, and will
continue to be consolidated within Corning's operating results.
(7) On April 30, 1999, Corning acquired BICC's telecommunications
cable business and the 50 percent equity interest in Optical
Waveguides Australia, Pty. Ltd. it did not already own for cash
consideration of approximately $135 million. The excess purchase
price over the fair value of the net assets acquired, accounted
for as goodwill and other intangible assets, was approximately
$30 million and is being amortized over periods ranging from 5 to
25 years.
(8) 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 have been used for the
repayment of short and long-term debt, working capital, capital
spending and acquisitions.
(9) 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.
(10) Dow Corning and the Committee of Tort Claimants, one of Dow
Corning's Chapter 11 creditor committees, filed with the United
States Bankruptcy Court a joint plan of reorganization on
November 9, 1998 (the Joint Plan). In the first half of 1999, the
Joint Plan received a favorable vote from nearly all of the
creditor classes, although four creditor classes did not support
the Plan and certain groups of creditors have opposed the Plan.
Beginning on June 28, 1999, the Bankruptcy Court conducted ten
days of hearings on the application by Dow Corning and the
Committee of Tort Claimants to confirm the Joint Plan. The
hearings concluded with oral arguments on July 30, 1999.
Post-hearing briefing was completed by mid-September 1999. The
parties are awaiting the decision of the Bankruptcy Court. The
determinations to be made by the Bankruptcy Court are likely to
be subject to further review in the District Court for the
Eastern District of Michigan and further appeals are possible.
The recent developments tend to increase the probability that Dow
Corning will successfully emerge from Chapter 11 proceedings, but
the timing and eventual outcome of these proceedings remain
uncertain.
Corning Incorporated and Subsidiary Companies
(Unaudited; in millions, except per share amounts)
Exhibit 1
1999
Q1 Q2 Q3 TOTAL
Revenues
Net sales $ 892.2 $ 1,020.0 $ 1,136.6 $ 3,048.8
Royalty, interest and
dividend income 9.9 11.2 8.5 29.6
Non-operating gains 30.0 30.0
902.1 1,031.2 1,175.1 3,108.4
Deductions
Cost of sales 543.2 621.7 696.7 1,861.6
Selling, general and
administrative expenses 136.8 136.1 155.5 428.4
Research, development and
engineering expenses 79.6 84.8 96.5 260.9
Provision for impairment
and restructuring 15.5 15.5
Amortization of purchased
intangibles 5.1 5.2 5.6 15.9
Interest expense 16.3 17.2 22.6 56.1
Other, net 9.9 10.7 11.9 32.5
Income from continuing operations
before taxes on income 111.2 155.5 170.8 437.5
Taxes on income from
continuing operations 33.9 47.4 51.1 132.4
Income from continuing
operations before minority
interest and equity earnings 77.3 108.1 119.7 305.1
Minority interest and
equity earnings (10.1) (17.4) (18.6) (46.1)
Dividends on convertible
preferred securities
of subsidiary (2.3) (2.3)
Equity in earnings of
associated companies 21.6 31.1 32.2 84.9
Income from continuing
operations 86.5 121.8 133.3 341.6
Income (loss) from
discontinued operations,
net of income taxes
Net income $ 86.5 $ 121.8 $ 133.3 $ 341.6
Diluted earnings per share:
Continuing operations $ 0.36 $ 0.49 $ 0.54 $ 1.39
Discontinued operations
$ 0.36 $ 0.49 $ 0.54 $ 1.39
Shares used in computing
earnings per share:
Basic earnings per share 233.8 242.4 243.0 239.7
Diluted earnings per share 245.2 247.5 248.3 247.2
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 510.8 526.4 546.3 554.8 2,138.3
Selling, general and
administrative expenses 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 impairment
and restructuring 84.6 84.6
Amortization of purchased
intangibles 3.9 4.0 3.8 3.9 15.6
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 and
equity earnings (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
earnings per share:
Basic earnings per share 229.6 229.9 229.5 229.4 229.6
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
Q1 Q2 Q3 TOTAL
Net Income
Before special items $ 86.5 $ 121.8 $ 133.8 $ 342.1
Provision for impairment
and restructuring (10.0)(1) (10.0)
Non-operating gains 9.5 (2) 9.5
Net income from continuing
operations 86.5 121.8 133.3 341.6
Net income (loss) from discontinued
operations
Net Income $ 86.5 $ 121.8 $ 133.3 $ 341.6
Diluted earnings per share:
Before special items $ 0.36 $ 0.49 $ 0.54 $ 1.39
Provision for impairment
and restructuring (0.04)(1) (0.04)
Non-operating gains 0.04 (2) 0.04
Net income from continuing
operations 0.36 0.49 0.54 1.39
Net income (loss) from discontinued
operations
Net Income $ 0.36 $ 0.49 $ 0.54 $ 1.39
Shares used in computing earnings per share:
Diluted earnings per
share 245.2 247.5 248.3 247.2
1998
Q1 Q2 Q3 Q4 TOTAL
Net Income
Before special items $ 62.1 $ 92.7 $ 104.4 $ 94.6 $353.8
Provision for impairment and
restructuring (49.2)(3) (49.2)
Non-operating gains 13.2 (4) 9.7(5) 22.9
Net income from continuing
operations 62.1 56.7 104.4 104.3 327.5
Net income (loss) from discontinued
operations (0.6) 67.1 66.5
Net Income $ 61.5 $ 123.8 $ 104.4 $ 104.3 $ 394.0
Diluted earnings per share:
Before special items $ 0.27 $ 0.39 $ 0.44 $ 0.40 $ 1.50
Provision for impairment
and restructuring (0.21)(3) (0.21)
Non-operating gains 0.06 (4) 0.04(5) 0.10
Net income from continuing
operations 0.27 0.24 0.44 0.44 1.39
Net income (loss) from discontinued
operations (0.01) 0.29 0.28
Net Income $0.26 $0.53 $0.44 $0.44 $1.67
Shares used in computing earnings per share:
Diluted earnings
per share 232.6 233.9 242.2 243.8 243.9
(1) Reflects a non-operating charge of $15.5 million ($10.0
million after tax), or $0.04 per share.
(2) Reflects a non-operating gain of $30.0 million ($9.5 million
after tax and minority interest), or $0.04 per share.
(3) Reflects a restructuring charge of $84.6 million ($49.2
million after tax and minority interest), or $0.21 per share.
(4) Reflects a non-operating gain of $20.5 million ($13.2 million
after tax), or $0.06 per share.
(5) Reflects a non-operating gain of $19.2 million ($9.7 million
after tax), or $0.04 per share.
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