Corning's Fourth-Quarter Performance Exceeds Expectations with Pro
Forma Earnings Per Share Up 89%
Company Reaffirms Outlook for Full Year 2001 Revenues in 2000 exceeded $7 billion for the first time in company's
history
CORNING, N.Y.--(BUSINESS WIRE)--Jan. 24, 2001-- Corning Incorporated (NYSE: GLW - news), a worldwide leader in optical communications
technologies, today reported fourth-quarter pro forma earnings per share of $0.34, up 89% from $0.18 in the fourth-quarter of 1999 and exceeding the
company's guidance of $0.30.
The company stated that strong demand for its high-data-rate optical fiber and other optical communications products was the driving force for the excellent
performance. Pro forma net income in the fourth quarter of 2000 totaled $314.6 million, more than double the $142.2 million in the fourth-quarter of 1999.
John W. Loose, Corning's chief executive officer stated, ``We continued to see a worldwide drive for more bandwidth in the quarter, which resulted in very
high demand for LEAF®, our high-data-rate optical fiber. We also saw the first significant shipments of MetroCor(TM), our fiber solution for optical
communications in the metropolitan marketplace, and experienced strong sales for Corning's optical amplifiers, a market where we are the world's leading
producer.''
Fourth-quarter sales were $2.1 billion, an increase of 52% compared with 1999 fourth-quarter sales of $1.4 billion. Excluding the impact of acquisitions, sales
increased 36% year-to-year. Sales of optical fiber remained strong, with demand for Corning LEAF optical fiber more than doubling over the same quarter last
year. Sales in the Photonic Technologies business also more than doubled versus 1999, and grew 25% from the third-quarter to the fourth-quarter in 2000.
Sales of flat-panel display glass grew 90% versus last year.
``Last year was an extraordinary year for Corning,'' said Loose. ``Our pro forma net income more than doubled to $1.1 billion versus $524.7 million in 1999.
We posted over $7 billion in sales, as well as record gross margins. The results reflect our ability to execute on our plan. We closed a dozen strategic
acquisitions valued at approximately $10 billion, and we are continuing our successful integration of these businesses into our global optical communications
strategy. Our research and development focus paid off with the launch of numerous new products, including MetroCor optical fiber, an advanced glass for
LCD applications, and DNA microarrays for genomic and pharmaceutical research.''
Loose added, ``We have been aggressive in growing our businesses to meet market demand and to remain at the forefront of technology innovation. This past
year, we announced many significant capacity additions for our high-growth businesses around the world. We have forged several strategic optical
communications alliances, and have won significant new customer contracts as a result of the outstanding value proposition delivered by our new products.''
Pro forma earnings per share for the full year was $1.23, an increase of 84% compared with $0.67 per share in 1999. Sales for the full-year totaled $7.1
billion, an increase of 50%, compared with $4.7 billion in 1999. Excluding the impact of acquisitions, 2000 sales increased 36% over last year.
Outlook
Looking ahead to the first-quarter in 2001, Corning Executive Vice President and Chief Financial Officer, James B. Flaws stated, ``We expect the
telecommunications market to experience some softness due to ongoing issues with capital availability. Several customers in both our optical fiber and photonic
technologies businesses have recently indicated that their order rate may be lower and more uneven than previously expected in the first-half of the year. Also,
with the weak retail environment, we expect our customers to adjust their inventory levels of finished LCD monitors in the first quarter. As a result, we are
widening our pro forma earnings per share guidance range for the first quarter from $0.29 - $0.30 to $0.28 - $0.31. With this new guidance range, earnings
per share would be up 20% to 35% from the prior year. We expect sales in the first quarter to be in the range of $1.9 billion to $2 billion.''
Flaws added that ``We are reaffirming our pro forma earnings per share guidance for the full year of 2001 of $1.40 - $1.43. By reallocating fiber volume to
previously unmet customer needs, adding new customers for optical amplifiers and other optical components, and by controlling spending, we are very
confident that we will achieve our full-year guidance. We continue to believe sales for 2001 will reach $9 billion.''
Fourth Quarter and Calendar Year Results
Corning recorded a fourth-quarter charge of $322.9 million for in-process research and development related to the Pirelli S.p.A.'s optical technologies business
acquisition. Equity earnings included a one-time gain of $11.7 million due to Samsung Corning Co., Ltd.'s divestiture of its interest in Samsung Corning
Precision Glass Company, Ltd. Including these nonrecurring items and $73.6 million of amortization of purchased intangibles and goodwill, Corning's loss from
continuing operations for the fourth quarter of 2000 totaled $(70.2) million, or $(0.08) per share, compared with income of $145.6 million, or $0.18 per share,
for the fourth-quarter of 1999.
Including the amortization of purchased intangibles and goodwill, and a number of non-recurring gains and losses, Corning reported full-year 2000 income from
continuing operations of $409.5 million, or $0.46 per share, compared to $511 million, or $0.65 per share, from the same operations in 1999.
Conference Call Information
The company will host a conference call at 8:30 a.m. EST on Thursday, January 25, 2001. To access the call, dial 888-730-9136 or 712-271-3213 and use
password: Corning. A replay of the call will begin at approximately 10:30 a.m. and will run through 5:00 p.m. EST on Friday, February 2, 2001. To access the
replay, dial 888-562-6892 or 402-220-6538; a password is not required. To listen to a live audio webcast of the call, go to
corning.com and follow the instructions. The webcast will be archived on the www.corning.com site for 30 days following the
call.
Pro forma net income excludes amortization of purchased intangibles and goodwill, purchased in-process research and development, one-time acquisition
costs, discontinued operations and other non-recurring items.
Established in 1851, Corning Incorporated (www.corning.com) 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 industry; and high-performance displays and components for
television and other communications-related industries. The company also uses advanced materials to manufacture products for scientific, semiconductor and
environmental markets.
Forward-Looking and Cautionary Statements
Except for historical information and discussions contained herein, statements included in this release may constitute ``forward-looking statements'' within the
meaning of the Private Securities Litigation Reform Act 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.
Corning Incorporated and Subsidiary Companies
Pro Forma Consolidated Statements of Income
Excluding Amortization of Purchased
Intangibles and Goodwill, Purchased In-Process
Research and Development, Acquisition-Related
Costs and Non-Recurring Items
(In millions, except per share amounts)
Year Ended Three Months Ended
Dec. 31, Dec. 31,
----------------------- ---------------------
2000 1999 2000 1999
----------- ----------- ----------- ---------
Revenues
Net sales $ 7,127.1 $ 4,741.1 $ 2,084.3 $ 1,369.1
Interest
income 104.6 11.7 49.9 3.8
Royalty and
dividend
income 34.6 29.7 10.7 7.6
----------- ----------- ----------- ---------
7,266.3 4,782.5 2,144.9 1,380.5
Deductions
Cost of sales 4,131.1 2,930.3 1,200.7 856.1
Selling, general
and administrative
expenses 1,047.4 667.4 333.8 192.0
Research,
development and
engineering
expenses 539.9 378.2 168.6 106.1
Interest expense 106.6 93.2 28.7 27.1
Other, net 49.1 39.3 9.4 6.8
----------- ----------- ----------- ---------
Income before taxes 1,392.2 674.1 403.7 192.4
Taxes on income 451.0 202.1 130.8 57.7
----------- ----------- ----------- ---------
Income before minority
interest and
equity earnings 941.2 472.0 272.9 134.7
Minority interest in
earnings of
subsidiaries (23.7) (57.3) (6.3) (20.7)
Dividends on convertible
preferred
securities of
subsidiary (2.3)
Equity in earnings of
associated companies 173.5 112.3 48.0 28.2
----------- ----------- ----------- ---------
Pro Forma Net Income $ 1,091.0 $ 524.7 $ 314.6 $ 142.2
=========== =========== =========== =========
Pro Forma Basic
Earnings Per Share $ 1.27 $ 0.68 $ 0.35 $ 0.18
=========== =========== =========== =========
Pro Forma Diluted
Earnings Per Share $ 1.23 $ 0.67 $ 0.34 $ 0.18
=========== =========== =========== =========
Dividends Declared $ 0.24 $ 0.24 $ 0.06 $ 0.06
=========== =========== =========== =========
Shares used in
computing pro forma
per share amounts:
Pro forma basic
earnings per share 858.4 765.3 901.1 773.4
=========== =========== =========== =========
Pro forma diluted
earnings per share 890.8 795.0 943.8 799.5
=========== =========== =========== =========
The above pro forma amounts for the year ended December 31, 2000
have been adjusted to eliminate $245.0 million ($218.4 million after
tax) of amortization of purchased intangibles and goodwill, $415.6
million ($399.3 million after tax) of in-process research and
development charges, $47 million ($43.4 million after tax) of
transaction costs from the Oak acquisition, $36.3 million after tax
for the impairment of the entire equity investment in Pittsburgh
Corning Corporation, $6.8 million ($4.2 million after tax) for a
nonoperating gain related to the sale of Quanterra Incorporated, $11.7
million after tax for a nonoperating gain included in equity earnings,
and $12.5 million after tax of income from discontinued operations.
The above pro forma amounts for the quarter ended December 31,
2000 have been adjusted to eliminate $100.8 million ($73.6 million
after tax) of amortization of purchased intangibles and goodwill,
$322.9 million of in-process research and development charges, $11.7
million after tax for a nonoperating gain included in equity earnings,
and $12.5 million after tax of income from discontinued operations.
The above pro forma amounts for the year ended December 31, 1999
have been adjusted to eliminate $27.8 million ($21.8 million after
tax) of amortization of purchased intangibles and goodwill, $30.0
million ($9.5 million after tax and minority interest) of nonoperating
gain related to the sale of Republic Wire and Cable, $15.5 million
($10.0 million after tax) for the impairment of assets related to
management's decision to sell Quanterra Incorporated, $14.1 million
($8.6 million after tax) for the release of restructuring reserves and
$7.9 million ($4.8 million after tax) of income from discontinued
operations.
The above pro forma amounts for the quarter ended December 31,
1999 have been adjusted to eliminate $6.6 million ($5.2 million after
tax) of amortization of purchased intangibles and goodwill, $14.1
million ($8.6 million after tax) for the release of restructuring
reserves and $7.9 million ($4.8 million after tax) of income from
discontinued operations.
----------------------------------------------------------------------
Pro Forma
----------------------------------------------------------------------
Corning Incorporated and Subsidiary Companies
Condensed Consolidated Statements of Income
(Unaudited; in millions, except per share amounts)
Year Ended Three Months Ended
Dec. 31, Dec. 31,
---------------------- --------------------
2000 1999 2000 1999
---------------------- --------------------
Revenues
Net sales $ 7,127.1 $ 4,741.1 $ 2,084.3 $ 1,369.1
Interest income 104.6 11.7 49.9 3.8
Royalty and
dividend income 34.6 29.7 10.7 7.6
Nonoperating gains 6.8 30.0
---------- ----------- ---------- ---------
7,273.1 4,812.5 2,144.9 1,380.5
Deductions
Cost of sales 4,131.1 2,930.3 1,200.7 856.1
Selling, general
and administrative
expenses 1,047.4 667.4 333.8 192.0
Research,
development and
engineering
expenses 539.9 378.2 168.6 106.1
Amortization of
purchased
intangibles,
including goodwill 245.0 27.8 100.8 6.6
Interest expense 106.6 93.2 28.7 27.1
Acquisition-related
charges 462.6 322.9
Provision for
impairment and
restructuring 1.4 (14.1)
Other, net 49.1 39.3 9.4 6.8
---------- ----------- ---------- ---------
Income (loss)
from continuing
operations
before taxes 691.4 674.9 (20.0) 199.9
Taxes on income
(loss) from
continuing
operations 407.1 207.1 103.6 61.8
---------- ----------- ---------- ---------
Income (loss)
from continuing
operations
before minority
interest and
equity earnings 284.3 467.8 (123.6) 138.1
Minority interest
in earnings
of subsidiaries (23.7) (66.8) (6.3) (20.7)
Dividends on
convertible
preferred
securities of
subsidiary (2.3)
Equity in earnings
of associated
companies 185.2 112.3 59.7 28.2
Impairment of
equity investment (36.3)
---------- ----------- ---------- ----------
Income (loss) from
continuing
operations 409.5 511.0 (70.2) 145.6
Income from
discontinued
operations,
net of income
taxes 12.5 4.8 12.5 4.8
----------- ----------- ---------- ---------
Net Income
(Loss) $ 422.0 $ 515.8 $ (57.7) $ 150.4
========== =========== ========== =========
Basic Earnings
(Loss) Per Share
Continuing
operations $ 0.48 $ 0.67 $ (0.08) $ 0.19
Discontinued
operations 0.01 0.02
----------- ----------- --------- ---------
Net Income (Loss) $ 0.49 $ 0.67 $ (0.06) $ 0.19
========== =========== ========== =========
Diluted Earnings
(Loss) Per Share
Continuing
operations $ 0.46 $ 0.65 $ (0.08) $ 0.18
Discontinued
operations 0.02 0.01 0.02 0.01
---------- ----------- ---------- ---------
Net Income
(Loss) $ 0.48 $ 0.66 $ (0.06) $ 0.19
========== =========== ========== =========
Dividends Declared $ 0.24 $ 0.24 $ 0.06 $ 0.06
========== =========== ========== =========
Shares used in
computing
per share amounts:
Basic earnings
per share 858.4 765.3 901.1 773.4
========== =========== ============ =========
Diluted earnings
per share 879.3 795.0 901.1 799.5
========== =========== ============ =========
The accompanying notes are an integral part of these statements.
Corning Incorporated and Subsidiary Companies
Condensed Consolidated Balance Sheets
(Unaudited; in millions)
Dec. 31, 2000 Dec. 31, 1999
------------- -------------
Assets
Current Assets
Cash and short-term
investments $ 1,793.8 $ 280.4
Accounts receivable,
net 1,489.7 872.4
Inventories 1,039.9 602.2
Deferred taxes on
income and other
current assets 311.0 229.2
------------- ------------
Total current assets 4,634.4 1,984.2
Investments 634.8 504.4
Plant and equipment, net 4,679.0 3,201.7
Goodwill and other
intangible assets, net 7,339.9 506.7
Other assets 237.6 329.0
------------- ------------
Total Assets $ 17,525.7 $ 6,526.0
============= ============
Liabilities and
Shareholders' Equity
Current Liabilities
Loans payable $ 128.4 $ 420.7
Accounts payable 854.7 418.0
Other accrued liabilities 965.6 715.3
------------- ------------
Total current
liabilities 1,948.7 1,554.0
Long-term debt 3,966.4 1,490.4
Other liabilities 829.9 720.6
Minority interest in
subsidiary companies 139.1 284.8
Mandatorily redeemable
convertible preferred
stock 8.7 13.5
Common shareholders'
equity 10,632.9 2,462.7
------------- ------------
Total Liabilities and
Shareholders' Equity $ 17,525.7 $ 6,526.0
============= ============
The accompanying notes are an integral part of these statements.
Corning Incorporated and Subsidiary Companies
Notes to Consolidated Financial Statements
Quarter 4, 2000
(1) Information by Operating Segment
Information about the performance of Corning's three
operating segments for the fourth quarter and year ended
December 31, 2000 and 1999 is presented below. These amounts
exclude revenues, expenses and equity earnings not
specifically identifiable to segments. In the first quarter
of 2000, Corning changed the performance measurement of its
operating segments to a new metric - net income excluding
amortization of purchased intangibles and goodwill, purchased
in-process research and development costs, one-time
acquisition costs and other non-recurring items. This measure
is not in accordance with generally accepted accounting
principles (GAAP) and may not be consistent with measures
used by other companies. The segment results for 1999 have
been restated to conform to the new measure.
Corning prepared the financial results for its three
operating segments on a basis that is consistent with the
manner in which Corning management internally disaggregates
financial information to assist in making internal operating
decisions. Corning has allocated some common expenses among
segments differently than it would for stand alone financial
information prepared in accordance with GAAP.
Year ended Three months ended
December 31, December 31,
----------------------------------------------
2000 1999 2000 1999
---------- ---------- ---------- --------
Telecommunications
Net sales $ 5,120.7 $ 2,958.2 $ 1,543.0 $ 869.0
Research,
development and
engineering
expenses $ 390.4 $ 260.8 $ 126.1 $ 73.8
Interest expense $ 69.0 $ 58.8 $ 19.0 $ 16.3
Segment earnings
before minority
interest and
equity earnings $ 677.2 $ 330.4 $ 200.7 $ 98.9
Minority interest
in (earnings)
losses of
subsidiaries 3.0 (34.6) (14.2)
Equity in
earnings of
associated
companies 1.0 14.9 4.1 3.4
---------- ---------- ---------- --------
Segment net income $ 681.2 $ 310.7 $ 204.8 $ 88.1
========== ========== ========== ========
Advanced Materials
Net sales $ 1,086.0 $ 1,053.9 $ 278.0 $ 279.4
Research,
development and
engineering
expenses $ 120.3 $ 94.5 $ 31.4 $ 25.7
Interest expense $ 18.2 $ 22.7 $ 3.2 $ 7.5
Segment earnings
before minority
interest and equity
earnings $ 88.0 $ 90.9 $ 13.5 $ 19.3
Minority interest
in earnings of
subsidiaries
Equity in earnings
of associated
companies 22.6 21.7 5.4 8.0
---------- ---------- ---------- --------
Segment net income $ 110.6 $ 112.6 $ 18.9 $ 27.3
========== ========== ========== ========
Information Display
Net sales $ 894.1 $ 701.2 $ 253.8 $ 210.8
Research, development
and engineering
expenses $ 29.2 $ 22.9 $ 11.1 $ 6.5
Interest expense $ 19.1 $ 11.2 $ 6.5 $ 3.2
Segment earnings
before minority
interest and equity
earnings $ 114.2 $ 57.6 $ 26.2 $ 17.5
Minority interest
in earnings of
subsidiaries (26.7) (22.7) (6.3) (6.5)
Equity in earnings
of associated
companies 144.5 67.8 37.4 14.9
---------- ---------- ---------- --------
Segment net income $ 232.0 $ 102.7 $ 57.3 $ 25.9
========== ========== ========== ========
Total segments
Net sales $ 7,100.8 $ 4,713.3 $ 2,074.8 $1,359.2
Research, development
and engineering
expenses $ 539.9 $ 378.2 $ 168.6 $ 106.0
Interest expense $ 106.3 $ 92.7 $ 28.7 $ 27.0
Segment earnings
before minority
interest and
equity earnings $ 879.4 $ 478.9 $ 240.4 $ 135.7
Minority interest
in earnings of
subsidiaries (23.7) (57.3) (6.3) (20.7)
Equity in earnings
of associated
companies 168.1 104.4 46.9 26.3
---------- ---------- ---------- --------
Segment net income $ 1,023.8 $ 526.0 $ 281.0 $ 141.3
========== ========== ========== ========
A reconciliation of the totals reported for the operating segments
to the applicable line items in the consolidated financial statements
is as follows:
Year ended Three months ended
December 31, December 31,
-------------------- -------------------
2000 1999 2000 1999
--------- --------- -------- --------
Revenues
Total segment
net sales $ 7,100.8 $ 4,713.3 $ 2,074.8 $ 1,359.2
Non-segment
net sales (a) 26.3 27.8 9.5 9.9
Interest income 104.6 11.7 49.9 3.8
Royalty and
dividend income 34.6 29.7 10.7 7.6
Nonoperating
gain 6.8 30.0
---------- ---------- ----------- ---------
Total revenues $ 7,273.1 $ 4,812.5 $ 2,144.9 $ 1,380.5
========== ========== ========== =========
Net income
Total segment
income (b) $ 1,023.8 $ 526.0 $ 281.0 $ 141.3
Unallocated
items:
Non-segment
loss and
other (a) (5.8) (9.8) (1.1) (2.1)
Nonoperating gain 6.8 30.0
Amortization of
purchased
intangibles and
goodwill (c) (245.0) (27.8) (100.8) (6.6)
Acquisition-related
charges (462.6) (322.9)
Provision for
impairment and
restructuring (1.4) 14.1
Interest income (d) 103.4 49.9
Interest expense (0.3) (0.5) (0.1)
Income tax (e) 8.4 (1.6) 10.9 (2.8)
Equity in earnings
of associated
companies (a) 5.4 7.9 1.1 1.8
Impairment of
equity investment (36.3)
Nonoperating gain
in equity earnings 11.7 11.7
Minority interest
in nonoperating
gain (9.5)
Dividends on
convertible
preferred
securities of
subsidiary (2.3)
---------- ---------- ----------- ---------
Net income (loss)
from continuing
operations $ 409.5 $ 511.0 $ (70.2) $ 145.6
========== ========== ========== =========
(a) Includes amounts derived from corporate investments.
(b) Includes royalty, interest and dividend income.
(c) Amortization of purchased intangibles and goodwill relates
primarily to the Telecommunications segment.
(d) Corporate interest income is not allocated to reportable segments.
(e) Includes tax associated with unallocated items.
(2) Recent Acquisitions
On December 12, 2000, Corning completed the acquisition of
Optical Technologies USA, a manufacturer of lithium niobate
modulators, pump lasers, certain specialty fibers and fiber
gratings used in optical networks from Pirelli S.p.A. (90%)
and Cisco Systems Inc. (10%) for approximately $3.6 billion
in cash consideration to Pirelli and 5,473,684 shares of
unregistered Corning stock as consideration to Cisco (the
Pirelli acquisition). Based upon the average closing price of
Corning common stock for a range of days surrounding the
agreement with Cisco adjusted for a discount commensurate
with restrictions on the shares, the total purchase price was
$4.0 billion. The excess of the purchase price over the
estimated fair value of tangible assets acquired was
allocated primarily to goodwill, other intangibles and
in-process research and development. Goodwill of
approximately $3.5 billion is being amortized on a
straight-line basis over thirteen years. Patents of
approximately $152 million are also being amortized over
thirteen years. Corning recorded a non-tax deductible charge
of $322.9 million for in-process research and development in
the fourth quarter of 2000 associated with this transaction.
The allocation of the purchase price is based on preliminary |
