Summary
Corning Incorporated reported a net loss of $90 million, or $0.10 per share, for the first quarter of 2002, a significant decline from the $132 million net income reported in the same period of 2001. This downturn was primarily driven by continued weakness in the Telecommunications Segment, with net sales falling 53% year-over-year to $898 million, largely due to reduced demand for fiber and cable, and photonic technologies. The company anticipates no meaningful recovery in the Telecommunications Segment for the remainder of 2002 and is planning significant restructuring and impairment charges estimated at $600 million to be incurred in the second and third quarters of 2002, impacting approximately 4,000 positions, with the goal of returning to profitability in 2003. Despite the challenging operating environment, Corning maintains a strong liquidity position with $1.8 billion in cash and short-term investments and an available $2.0 billion revolving credit facility. Management expects to fund near-term cash requirements, including working capital, capital expenditures, and restructuring liabilities, from existing resources. The company is also in the process of acquiring two Chinese joint ventures from Lucent Technologies for $225 million, expected to close in the second quarter of 2002. While facing headwinds, particularly in its telecommunications business, Corning is taking decisive steps to streamline operations and reduce costs.
Key Highlights
- 1Corning reported a net loss of $90 million for Q1 2002, compared to a net income of $132 million in Q1 2001.
- 2Net sales decreased by 53% to $898 million in Q1 2002, primarily due to a 68% decline in the Telecommunications Segment.
- 3The company anticipates no significant recovery in the Telecommunications Segment for the remainder of 2002.
- 4Corning plans to undertake restructuring and impairment actions in Q2 and Q3 2002, estimated at $600 million, involving approximately 4,000 job eliminations.
- 5The company maintained a strong liquidity position with $1.8 billion in cash and short-term investments and an unused $2.0 billion revolving credit facility.
- 6Corning adopted SFAS No. 142 (Goodwill and Other Intangible Assets) on January 1, 2002, which stopped the amortization of goodwill but requires annual impairment testing.
- 7The company is expected to complete the acquisition of two Chinese joint ventures from Lucent Technologies for $225 million in the second quarter of 2002.