Corning Chairman: Company is Growing Through Innovation, 'The Way We Do It Best'; Weeks named chief executive officer.CORNING, N.Y. -- Corning Incorporated's (NYSE NYSE See: New York Stock Exchange :GLW GLW Glasgow Airport (UK) GLW Gross Laden Weight GLW Good Lady Wife (Australia) ) Chairman and Chief Executive Officer James R. Houghton James R. Houghton is the Retired Chairman of the Board of Corning Incorporated. Houghton has Bachelor of Arts and master of business administration degrees from Harvard University (A.B., 1958, MBA, 1962). , today told shareholders that the company has demonstrated a multi-year pattern of progress toward its financial goals resulting in a renewed sense of pride and confidence. Reflecting on the company's accomplishments since he returned as chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. in 2002, Houghton said, "Three years ago, I told you we would succeed and we did. We continued on our path, clearly defining our priorities, focusing intently on what we do best--applying generations of knowledge of materials and processes toward remarkable, life changing inventions. Three years later, our message is not about losses, but about profits. Three years later, we can talk not about cutbacks, but about real growth, growth the way we do it best, growth through innovation." Houghton made the remarks to more than 500 shareholders assembled for the company's annual meeting in Corning, N.Y. He reminded them that sales are up and debt is down. He said the balance sheet gets stronger with each passing quarter and that the company continues to innovate in·no·vate v. in·no·vat·ed, in·no·vat·ing, in·no·vates v.tr. To begin or introduce (something new) for or as if for the first time. v.intr. To begin or introduce something new. . "We've been able to make successes like these because we have focused relentlessly on a set of very basic priorities," Houghton said. "One, to protect our financial health; two, to improve our profitability; three, to invest in our future; and four, to do all of these things "These Things" is an EP by She Wants Revenge, released in 2005 by Perfect Kiss, a subsidiary of Geffen Records. Music Video The music video stars Shirley Manson, lead singer of the band Garbage. Track Listing 1. "These Things [Radio Edit]" - 3:17 2. while living our Values. These priorities have been the foundation of our progress over the past three years and our results have been excellent," Houghton added. Financial Health and Improving Profitability Houghton pointed out that the company's balance sheet has become stronger over the past three years. He said the company has consistently reduced its debt and plans to further reduce it to below $2 billion by the end of the year. He also told shareholders that Corning's liquidity remains strong with $1.9 billion in cash and short-term investments at the end of last year. "With all these encouraging factors in place, I am pleased to say that just yesterday two of the three rating agencies have upgraded our credit to BBB-, an investment-grade rating," Houghton added. "This was one of our key priorities for this year and is recognition from the financial community that we have delivered on our goal to strengthen the balance sheet." Regarding profitability, Houghton pointed to the fact that the company improved net profit before special charges by $500 million in each of the past two years and that the company was well on its way to achieving profitability targets for 2005. This improvement in net profit before special charges is a non-GAAP financial measure. This and all non-GAAP financial measures are reconciled on the company's investor relations Investor relations The process by which the corporation communicates with its investors. Web site and in attachments to this news release. "We just announced first-quarter results that were significantly better than expected," Houghton said. "And we are confident in our prospects and ability to succeed." Investing in the Future Houghton reminded shareholders of the company's continued investment in research and development for near-term and long-term growth opportunities. "We continue to invest 10 percent of our revenues into research and development," he said. "Our world-class researchers are working not only on innovations for today's opportunities; they are truly creating the next wave of growth." He said Corning's technology investments are helping to maintain and secure Corning's leadership position for its growth businesses; liquid crystal display liquid crystal display (LCD) Optoelectronic device used in displays for watches, calculators, notebook computers, and other electronic devices. Current passed through specific portions of the liquid crystal solution causes the crystals to align, blocking the passage of light. glass for 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. , flat-panel computer screens and LCD (Liquid Crystal Display) A display technology that uses rod-shaped molecules (liquid crystals) that flow like liquid and bend light. Unenergized, the crystals direct light through two polarizing filters, allowing a natural background color to show. televisions; for the fiber to the premises Fiber to the premises (FTTP) is a form of fiber-optic communication delivery in which an optical fiber is run directly onto the customers' premises. This contrasts with other fiber-optic communication delivery strategies such as fiber to the node (FTTN), fiber to the curb market; and for diesel emissions control Emissions control may refer to:
Weeks Named CEO Houghton also recognized Wendell P. Weeks, 45, who today succeeds him as chief executive officer. The company had announced the transition plan in January. Houghton told shareholders that Weeks, "has led some of our most significant product development and innovation initiatives over the years...and has the respect and full support of the board, the rest of the Management Committee, and our employees around the world." Houghton also recognized Peter F. Volanakis, 49, who succeeds Weeks as chief operating officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. . Other Business In other business during the Annual Meeting, shareholders elected the following directors to three-year terms: John Seely Brown John Seely Brown (also known as JSB) is a researcher who specializes in organizational studies with a particular bent towards the organizational implications of computer-supported activities. , 64, retired chief scientist for Xerox Corporation (company) XEROX Corporation - http://xerox.com/. See also XEROX PARC, XEROX Network Services. ; Gordon Gund Gordon Gund (born October 15, 1939) is the former principal owner of the NBA's Cleveland Cavaliers, a co-owner of the San Jose Sharks NHL team, and remains the CEO of Gund Investment Corporation and a minority owner of the Cavaliers. , 65, chairman and chief executive officer of Gund Investment Corporation; John M. Hennessy, 68, senior advisor In some countries, a Senior Advisor is an appointed position by the Head of State to advise on the highest levels of national and government policy. Sometimes a junior position to this is called a National Policy Advisor. to Credit Suisse First Boston Credit Suisse First Boston was originally the trading name of the Financière Crédit Suisse-First Boston, a London-based 50-50 investment banking joint venture formed in 1978 between the First Boston Corporation and Credit Suisse. ; and H. Onno Ruding, 65, retired vice chairman of Citicorp and Citibank, N.A. Shareholders approved the 2005 Employee Equity Participation Program, which is effective for fiscal 2005 and expires on May 1, 2010. This program enables Corning to continue to make use of restricted stock and performance shares, thus providing flexibility in the designing of its performance based compensation programs. In addition, shareholders ratified rat·i·fy tr.v. rat·i·fied, rat·i·fy·ing, rat·i·fies To approve and give formal sanction to; confirm. See Synonyms at approve. the Corning Board audit committee's appointment of PricewaterhouseCoopers LLP LLP - Lower Layer Protocol as independent auditors Independent Auditor An external auditor with a certified public accounting designation that qualifies him or her to provide an auditor's report. Notes: These auditors aren't affiliated with the company being audited. for 2005. Webcast Information The company hosted a live audio webcast of the 2005 annual meeting of shareholders in Corning, N.Y., from 11 a.m. to 12:15 p.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT , April 28, 2005. To access the webcast archive, go to http://www.corning.com/investor_relations and click on the webcast icon. No password or registration is required. The webcast will be archived on the Web site for one year following the broadcast. Presentation of Information Non-GAAP financial measures are not in accordance with, or an alternative to, GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). . Corning's non-GAAP net profit measure excludes restructuring, impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. and other charges and adjustments to prior estimates for such charges. Additionally, the company's non-GAAP measure excludes adjustments to asbestos asbestos, mineral asbestos, common name for any of a variety of silicate minerals within the amphibole and serpentine groups that are fibrous in structure and more or less resistant to acid and fire. settlement reserves required by movements in Corning's common stock price, gains and losses arising from debt retirements, charges or credits arising from adjustments to the valuation allowance against deferred tax assets, equity method charges resulting from impairments of equity method investments or restructuring, impairment or other charges taken by equity method companies, and gains from discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. . The company believes presenting a non-GAAP net profit measure is helpful to analyze financial performance without the impact of unusual items that may obscure trends in the company's underlying performance. This non-GAAP measure is reconciled on the company's Web site at www.corning.com/investor_relations and accompany this news release. About 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. Corning Incorporated (www.corning.com) is a diversified diversified (di·verˑ·s technology company that concentrates its efforts on high-impact growth opportunities. Corning combines its expertise in specialty glass, ceramic materials, polymers and the manipulation of the properties of light, with strong process and manufacturing capabilities to develop, engineer and commercialize significant innovative products for the telecommunications, flat panel display A thin display screen for computer and TV usage. The first flat panels appeared on laptop computers in the mid-1980s, and the LCD technology became the standard. Stand-alone LCD screens became available for desktop computers in the mid-1990s and exceeded sales of CRTs for the first time , environmental, semiconductor, and life sciences industries. 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 and political conditions; tariffs, import duties and currency fluctuations; product demand and industry capacity; competitive products and pricing; manufacturing efficiencies; cost reductions; 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 liquid crystal display industry and other businesses; changes in the mix of sales between premium and non-premium products; facility expansions and new plant start-up costs; possible disruption in commercial activities due to terrorist activity, armed conflict, political instability or major health concerns; ability to obtain financing and capital on commercially reasonable terms; adequacy and availability of insurance; capital resource and cash flow activities; capital spending; equity company activities; interest costs; 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 rate of technology change; the ability to enforce patents; product and components performance issues; changes in key personnel; stock price fluctuations; and adverse 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. or regulatory developments. 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.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE TO GAAP FINANCIAL MEASURE
Year Ended December 31, 2004
(Unaudited; amounts in millions)
Corning's comment, "...the company improved net profit before
special charges by $500 million for the past two years ..." is a
non-GAAP financial measure within the meaning of Regulation G of the
Securities and Exchange Commission. Non-GAAP financial measures are
not in accordance with, or an alternative to, generally accepted
accounting principles (GAAP). The company believes presenting a
non-GAAP improvement in net income is helpful to analyze financial
performance without the impact of unusual items that may obscure
trends in the company's underlying performance. A detailed
reconciliation is provided below outlining the differences between
this non-GAAP measure and the directly related GAAP measure.
Net Income Improvement
For the years ended ------------------
December 31, 2004 2003
---------------------------
2004 2003 2002 vs. 2003 vs. 2002
-------- ------- -------- -------- --------
Net income, excluding
special items $ 674 $ 128 $ (392) $ 546 $ 520
======== ========
Special items:
Restructuring,
impairment and
other (charges)
and credits (a) (1,802) (26) (1,462)
Asbestos
settlement (b) (30) (263)
(Loss) gain on
repurchases and
retirement of
debt, net (c) (34) 12 108
(Provision) benefit
for income taxes (d) (937)
Equity in earnings of
associated companies,
net of
impairments (e) (56) (74) (34)
Income from
discontinued
operations (f) 20 478
-------- ------- --------
Net loss $(2,165) $ (223) $(1,302)
======== ======= ========
2004 Special Items:
(a) Corning recorded charges of $1.789 billion ($1.802 billion
after-tax and minority interest) primarily related to the
impairment of goodwill and fixed assets in the Telecommunications
segment.
(b) As part of Corning's asbestos settlement arrangement to be
incorporated into the Pittsburgh Corning Corporation (PCC)
reorganization plan, Corning will contribute, when the
reorganization plan becomes effective, 25 million shares of
Corning common stock to a trust. This portion of the asbestos
liability requires quarterly adjustment based upon movements in
Corning's common stock price prior to contribution of the shares
to the trust. For 2004, Corning recorded a charge of $33 million
($30 million after-tax) for the change in its common stock price
of $11.77 at December 31, 2004 compared to $10.43, the common
stock price at December 31, 2003.
(c) During 2004, Corning retired a significant portion of long-term
debt, resulting in a loss of $36 million ($34 million after-tax).
(d) In the third quarter of 2004, Corning increased income tax expense
by $937 million as a result of the company's decision to provide a
valuation allowance against a significant portion of its deferred
tax assets.
(e) This amount reflects charges of $35 million for impairments of
certain non-strategic equity method investments in Corning's
Telecommunications segment and $21 million related to
restructuring actions and bankruptcy related charges recorded by
Dow Corning Corporation.
(f) This gain relates to the final settlement of escrowed proceeds
from the 2002 sale of Corning's precision lens business to 3M
Company.
2003 Special Items:
(a) Corning recorded net charges of $111 million ($26 million
after-tax) for our decision to shutdown Corning Asahi Video
Products Company, exit the photonics technologies business within
our Telecommunications segment, and shutdown two of our Specialty
Materials manufacturing facilities. The charges for these actions
were partially offset by credits to prior periods' restructuring
plans, most notably for our decision not to exit two cabling sites
previously marked for shutdown in 2002.
(b) This charge represents recording the initial liability based on
the terms of the PCC settlement agreement ($298 million) plus the
charge to reflect movements in Corning's common stock price from
the settlement arrangement date and December 31, 2003 ($115
million).
(c) During 2003, Corning retired a significant portion of long-term
debt, resulting in a gain of $19 million ($12 million after-tax).
(e) This amount primarily reflects our portion of asset impairment
charges recorded by our equity method investment, Samsung Corning
Co., Ltd.
2002 Special Items:
(a) Corning recorded total net charges of $2.08 billion ($1.462
billion after-tax and minority interest) related to the following
significant actions: restructuring charges of $1.271 billion ($929
million after-tax and minority interest) for the closure of
facilities, workforce reductions and abandonment of certain
construction projects, mostly in our Telecommunications segment;
$400 million ($294 million after-tax) for the impairment of
goodwill in our Telecommunications segment; and $409 million ($239
million after-tax) for the impairment of assets of our photonic
technologies and conventional video components businesses.
(c) During 2002, Corning retired a significant portion of long-term
debt resulting in a gain of $176 million ($108 million after-tax).
(e) This amount reflects charges for impairments of certain equity
method investments in Corning's Telecommunications segment.
(f) On December 13, 2002, Corning completed the sale of our precision
lens business to 3M Company for approximately $800 million in cash
and recorded a gain on the sale of $652 million ($415 million
after-tax) included in income from discontinued operations. The
remaining $63 million, net of tax, of income from discontinued
operations represents the 2002 operating results of the precision
lens business prior to the sale to 3M Company.
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