8-KOther Events

CORNING INC /NY 8-K Report (Jul 9, 2001)

Filed July 9, 2001For Securities:GLW

Summary

Corning Incorporated (GLW) announced significant operational adjustments on July 9, 2001, in response to severe downturns in the telecommunications industry, particularly impacting its Photonic Technologies business. The company is implementing a plan to downsize this segment, which includes closing three manufacturing facilities and reducing its workforce by 1,000 employees. These actions are expected to incur third-quarter pre-tax charges ranging from $300 million to $400 million, with a significant portion being non-cash. This strategic move aims to lower costs and improve future profitability in a market experiencing an unprecedented downturn expected to last 12 to 18 months. Furthermore, Corning will record a substantial pre-tax charge of approximately $5.1 billion in its second-quarter results. This charge is primarily due to goodwill impairment and inventory write-offs related to its Photonic Technologies acquisitions and excess inventory. In a separate but significant announcement, Corning's Board of Directors has decided to discontinue the payment of dividends on its common stock, effective immediately. This decision reflects a strategy to reinvest all generated cash back into the company for long-term shareholder value creation. The company anticipates its second-half earnings will be below current analyst consensus due to these industry challenges.

Key Highlights

  • 1Corning is downsizing its Photonic Technologies business due to severely reduced market demand in the telecommunications industry.
  • 2Three manufacturing facilities will be closed, resulting in a reduction of 1,000 employees, with further workforce reductions considered.
  • 3A pre-tax charge of approximately $5.1 billion will be recognized in Q2 2001 for goodwill impairment and inventory write-offs within Photonic Technologies.
  • 4Additional pre-tax charges of $300 million to $400 million are expected in Q3 2001 related to facility closures and restructuring.
  • 5The company is discontinuing dividend payments on its common stock to reinvest cash for future growth and long-term shareholder value.
  • 6Corning expects its second-half 2001 pro forma earnings to be below current analyst consensus due to industry conditions.
  • 7The company will not provide forward-looking earnings guidance but will offer an update during its Q2 earnings announcement on July 25, 2001.

Frequently Asked Questions

Corning is downsizing its Photonic Technologies business in response to a severe and rapid reduction in market demand for photonic components and modules, driven by decreased infrastructure spending in the telecommunications industry. The company anticipates this market downturn could last 12 to 18 months.

Corning will record a substantial pre-tax charge of approximately $5.1 billion in its second quarter of 2001, primarily for goodwill impairment ($4.8 billion) and inventory write-offs ($300 million) related to its Photonic Technologies segment. Additionally, an estimated $300 million to $400 million in pre-tax charges are expected in the third quarter for restructuring and facility closures.

The discontinuation of common stock dividends signifies a strategic shift to reinvest all cash generated by Corning's businesses back into the company. This decision is aimed at supporting future growth and creating greater, long-term shareholder value, rather than distributing cash to shareholders through dividends.

Corning expects its pro forma earnings for the second half of 2001 to be below current analyst consensus estimates. This outlook is attributed to the reduced forecast for the Photonic Technologies unit and the general low visibility across the telecommunications industry. The company will no longer provide earnings guidance but will update investors on its business status during the Q2 earnings announcement.