What is the main impact of SFAS No. 142 on Corning's financial reporting?

The adoption of SFAS No. 142, effective January 1, 2002, will eliminate the amortization of goodwill. This means goodwill will no longer be expensed over time, which will impact reported net income. As a result, Corning will also discontinue using pro forma earnings as its primary performance measure, as goodwill amortization was a major difference between pro forma and reported results.

What significant charges is Corning taking in the fourth quarter of 2001?

Corning is taking approximately $178 million in pre-tax operating charges in Q4 2001. These include a $90 million charge related to the release of restrictions on employee stock, a $60 million charge for inventory write-offs in the telecommunications segment (primarily Photonic Technologies), and a $28 million write-off of an intellectual property investment. These are in addition to previously announced restructuring charges.

How will the revised pro forma net income definition affect reported numbers?

Corning is revising its pro forma net income definition to include the amortization of intangible assets, excluding goodwill. Previously, both goodwill and intangible asset amortization were excluded. This change will make pro forma results more consistent with future reported results under SFAS 142 and reduces Corning's full-year 2001 pro forma net income per share by $0.03.

What is the expected financial outcome for the fourth quarter of 2001?

Due to the significant charges announced, Corning now expects a pro forma net loss in the range of $0.28 to $0.29 per share for the fourth quarter of 2001. This is higher than their previous guidance. Including restructuring charges and goodwill amortization, the total expected net loss per share for Q4 2001 is estimated to be between $0.69 and $0.70.

GLW 8-K SEC Disclosure — Jan 14, 2002

Summary

Corning Inc. (GLW) filed an 8-K on January 14, 2002, primarily to disclose accounting standard changes and significant fourth-quarter 2001 charges. The company announced its adoption of SFAS No. 142, effective January 1, 2002, which will eliminate goodwill amortization. This change significantly impacts how the company will report future earnings and will lead to the discontinuation of pro forma earnings as a primary performance measure. Additionally, Corning will take substantial pre-tax charges in the fourth quarter of 2001, including those related to employee stock, inventory write-offs in the telecommunications segment, and an intellectual property investment, alongside previously announced restructuring charges. These charges are expected to result in a higher-than-anticipated pro forma net loss for the fourth quarter of 2001. Despite these charges, management indicated that underlying business performance was in line with expectations for revenues and cost controls. The company also revised its pro forma net income definition to include amortization of intangible assets (excluding goodwill) to align with future reporting. Investors should note that while the core operations performed as expected, the significant charges and accounting changes represent key developments impacting the reported financial picture.

Key Highlights

1Adoption of SFAS No. 142 effective January 1, 2002, eliminating goodwill amortization.
2Discontinuation of pro forma earnings as a primary performance measure starting in 2002 due to SFAS 142.
3Revision of pro forma net income definition to include amortization of intangible assets (excluding goodwill).
4Announcement of approximately $178 million in pre-tax operating charges for Q4 2001.
5Q4 2001 charges include $90 million for employee stock restrictions, $60 million for telecommunications inventory write-off, and $28 million for intellectual property investment.
6Expectation of a higher-than-anticipated pro forma net loss for Q4 2001 due to these charges.
7Despite charges, underlying business performance (revenues and cost controls) was in line with expectations.

CORNING INC /NY 8-K Report (Jan 14, 2002)

Summary

Key Highlights

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