10-QPeriod: Q1 FY2001

CORNING INC /NY Quarterly Report for Q1 Ended Mar 31, 2001

Filed May 2, 2001For Securities:GLW

Summary

Corning Incorporated reported strong top-line growth in the first quarter of 2001, with net sales increasing by 42% year-over-year to $1.9 billion. This growth was primarily driven by the Telecommunications segment, which saw a 58% increase in sales, boosted by acquisitions and strong demand for its fiber and cable products. Net income also saw a significant increase of 71% to $132 million, with diluted earnings per share rising to $0.14. However, the company's outlook for the full year has been significantly revised downwards due to a substantial reduction in telecommunications industry capital spending and a softening U.S. economy. Corning now anticipates lower revenue growth (9-12%) and a decrease in pro forma earnings per share (20-25%) compared to previous projections. In response, the company has initiated cost-saving measures, including workforce reductions of approximately 3,300 employees and a decrease in capital spending forecasts. Despite these headwinds, Corning continues to invest in new product development and targeted capacity expansion, while also navigating potential liabilities related to past ventures like Dow Corning and Pittsburgh Corning.

Key Highlights

  • 1Net sales grew 42% year-over-year to $1.9 billion, driven by a 58% increase in the Telecommunications segment.
  • 2Net income increased 71% to $132 million, with diluted EPS rising 55% to $0.14.
  • 3Full-year outlook significantly revised downwards due to industry slowdown, expecting 9-12% revenue growth (down from 20-25%) and a 20-25% decrease in pro forma EPS.
  • 4Company implemented workforce reductions of approximately 3,300 employees to adjust cost structure.
  • 5Capital expenditure forecast for 2001 reduced from $2.5 billion to approximately $2 billion.
  • 6Acquisition of Tropel Corporation for approximately $160 million completed in March 2001.
  • 7Significant increase in amortization of purchased intangibles and goodwill ($156 million vs. $13 million) due to acquisitions.

Frequently Asked Questions

The substantial increase in net sales was primarily driven by the Telecommunications Segment, which experienced a 58% year-over-year growth. This was fueled by acquisitions and strong demand for Corning's premium fiber, cable, and photonics products. Overall net sales increased by 42% to $1.9 billion.

Corning has significantly revised its full-year outlook downwards due to a substantial reduction in capital spending within the telecommunications industry and a general softening of the U.S. economy. This has led to lower revenue growth expectations and a projected decrease in pro forma earnings per share compared to prior forecasts.

In response to reduced revenue expectations, Corning has implemented several cost-saving measures. These include workforce reductions of approximately 3,300 employees, primarily in photonic technologies and hardware/equipment businesses, and a decrease in the capital spending forecast for 2001 from $2.5 billion to approximately $2 billion.

Dow Corning's Chapter 11 bankruptcy proceeding is still pending, with appeals related to its Plan of Reorganization ongoing. Corning expects to recognize equity earnings from Dow Corning once it emerges from bankruptcy. Pittsburgh Corning Corporation (PCC) also filed for Chapter 11 reorganization due to asbestos-related claims; its plan is under negotiation, and while Corning has impaired its investment, it believes these matters will be resolved without material adverse impact.