Corning CFO Meets with Investors at Morgan Stanley Conference; Company Reaffirms Forecast of Third Quarter Profitability.Business Editors CORNING, N.Y.--(BUSINESS WIRE)--March 4, 2003 While outlining four key elements of a plan to provide a $400 million profit improvement in 2003, James B. Flaws, vice chairman and chief financial officer, reaffirmed that Corning Incorporated Corning Incorporated NYSE: GLW is an American manufacturer of glass, ceramics and related materials, primarily for industrial and scientific applications. The company was known until 1989 as Corning Glass Works. (NYSE NYSE See: New York Stock Exchange :GLW GLW Glasgow Airport (UK) GLW Gross Laden Weight GLW Good Lady Wife (Australia) ) expects to return to profitability in the third quarter this year. Flaws made his comments today to investors and financial analysts attending the Morgan Stanley  To comply with Wikipedia's , the introduction of this article needs a complete rewrite. Semiconductor and Systems Conference in Dana Point,
Calif.
Flaws said that the company continues to make significant progress on its priorities to protect the financial health of the company, restore profitability in 2003 and invest in its future. He said, "We have been able to maintain access to cash and liquidity, while reducing our debt levels substantially." Corning had $2.1 billion in cash and short-term investments at the end of 2002 and continues to have access to additional capital through untapped credit lines. "We believe this is very adequate to meet our ongoing operating needs," Flaws said. Restoring Profitability Flaws outlined four key elements of the company's plan to restore operating profitability by the third quarter of this year, including stable sales volume in optical fiber and cable, significant cost reductions across the company's telecommunications segment, continued growth in the Corning Technologies segment and further reduced corporate spending. Flaws said, "Although we believe in the long-term growth prospects for telecommunications, we have not built our plan around an industry recovery in 2003. There is some evidence that the fiber and cable markets are stabilizing." He pointed out that the company expects fiber and cable volumes to be stable and price declines to continue, but at more moderate rates than previously experienced. Flaws reiterated that Corning's telecommunications segment expects to see $300 million to $330 million of earnings improvement this year on $200 million to $250 million of lower revenue. He said that the real improvements in Corning's telecommunications segment are the result of "the painful restructuring actions we took last year. Eighty percent of the cost reduction is the result of actions that will be completed this quarter." He reminded investors that Corning has closed or mothballed three optical fiber factories, cut overall optical fiber manufacturing capacity by 50 percent from its peak in 2001, and made corresponding cuts in the company's global cable capacity as well. Corning is also moving much of its hardware and equipment capacity to countries with lower labor costs. In the photonics business, Flaws told investors that Corning has significantly narrowed its product line in 2002 and in early 2003, closed six facilities, drastically cut operating and R&D expenses and streamlined the organization. As he previously said, Flaws repeated, "Photonics is our only telecommunications business that continues to burn significant cash. We are exploring several strategic options including continuing to run the business after having now narrowed the product line and reducing cash burn; partnering the business in some form; or exiting completely, which could include a sale of some or all of the business's assets. We intend to make a decision no later than mid-year." Flaws told investors that Corning was pleased with the recent Federal Communication Commission's (FCC (1) (Federal Communications Commission, Washington, DC, www.fcc.gov) The U.S. government agency that regulates interstate and international communications including wire, cable, radio, TV and satellite. The FCC was created under the U.S. ) ruling on broadband. "We wanted the FCC in its triennal review to set a national policy for relieving fiber to the home from unbundling A regulatory requirement that enables a competing service provider to purchase parts of the incumbent local exchange carrier's network in order to provide service to its customers. See ILEC. and wholesale pricing rules. This is exactly what the FCC did in its Feb. 20 ruling," he said. "We believe that this ruling will help the Telecommunications industry tremendously over the long-term." Display Technologies Growth He reminded investors that Corning's Technologies segment presents significant opportunity for growth and the company expects these businesses to deliver $100 million to $120 million in earnings improvement this year. This will be led by expected strong sales of flat-panel glass for liquid-crystal displays (LCD), a potential recovery in the semiconductor materials Semiconductor materials are insulators at absolute zero temperature that conduct electricity in a limited way at room temperature (see also Semiconductor). The defining property of a semiconductor material is that it can be doped with impurities that alter its electronic properties segment and continued increases in sales of ceramic substrates for gasoline and diesel engines. "We think that today is the beginning of the golden age of LCD and that glass demand could quadruple quad·ru·ple adj. 1. Consisting of four parts or members. 2. Four times as much in size, strength, number, or amount. 3. Music Having four beats to the measure. n. in the next eight years," Flaws said. Citing a dramatic increase in the market penetration Noun 1. market penetration - the extent to which a product is recognized and bought by customers in a particular market penetration - the act of entering into or through something; "the penetration of upper management by women" of LCD desktop monitors, continuing growth of notebook computers A laptop computer that weighs in a range from five to seven pounds. The term originated when laptops were routinely more than 10 pounds, and those that became lighter were placed in a special "notebook" category. In practice, notebook computer and laptop computer are synonymous. and the emergence of LCD television as the drivers for the growth, Corning expects 70 percent of all desktop computer monitors to be LCDs by 2006, and notebook computers to represent 23 percent of all PCs sold this year. Flaws added, "LCD television represents only one percent of the color television market today, but new, larger screen sizes will drive market penetration to nearly 10 percent by 2006." Corning expects annual revenue growth for its Display Technologies business of 20 percent to 40 percent through 2006. Flaws also discussed the company's growth opportunity in its semiconductor materials business, where it is a leader in optical components for microlithography for the semiconductor market. Flaws said the company expects sales to recover in the second half of 2003 and that the business could triple in size over the next five years, with a 20 percent compound annual growth rate. First-Quarter Guidance Reiterated Flaws reiterated guidance for the first quarter, which was previously announced on Feb. 7. Corning anticipates first quarter revenues in the range of $700 to $730 million and a net loss in the range of $10 million to $50 million, or $0.01 to $0.04 per share, excluding gains on debt repurchases and restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. . Flaws also told investors that Corning plans to recognize equity earnings of between $10 million and $20 million from Dow Corning Dow Corning is a multinational corporation headquartered in Midland, Michigan, USA. Dow Corning specializes in silicon and silicone-based technology, offering more than 7,000 products and services. Dow Corning is equally owned by The Dow Chemical Company and Corning, Inc. in the first quarter. Flaws' presentation at the Morgan Stanley conference was webcast and replays are available on Corning Incorporated's website at www.corning.com. About Corning Incorporated Established in 1851, Corning Incorporated (www.corning.com) creates leading-edge technologies that offer growth opportunities in markets that fuel the world's economy. Corning manufactures optical fiber, cable and photonic Dealing with light (photons). See photon and photonics. products for the telecommunications industry; and high-performance display glass and components for television, information technology and other communications-related industries. The company also uses advanced materials Advanced Materials is a leading peer-reviewed materials science journal published every two weeks. Advanced Materials includes Communications, Reviews, and Feature Articles from the cutting edge of materials science, including topics in chemistry, physics, to manufacture products for scientific, semiconductor and environmental markets. Forward-Looking and Cautionary Statements This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that involve a variety of business risks and other uncertainties that could cause actual results to differ materially. These risks and uncertainties include the possibility of changes or fluctuations in global economic conditions; currency exchange rates; product demand and industry capacity; competitive products and pricing; availability and costs of critical components and materials; new product development and commercialization; order activity and demand from major customers; capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. by larger customers in the telecommunications industry and other business segments; the mix of sales between premium and non-premium products; possible disruption in commercial activities due to terrorist activity and armed conflict; ability to obtain financing and capital on commercially reasonable terms; acquisition and divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). activities; the level of excess or obsolete inventory Obsolete Inventory Term that refers to inventory that is at the end of its product life cycle and has not seen any sales or usage for a set period of time usually determined by the industry. This type of inventory has to be written down and can cause large losses for a company. ; the ability to enforce patents; product and components performance issues; and litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. . These and other risk factors are identified in Corning's filings with the Securities and Exchange Commission. Forward-looking statements speak only as of the day that they are made, and Corning undertakes no obligation to update them in light of new information or future events. |
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