Corning is Well Positioned for Growth LCD TV to Help Drive Glass Demand Company's Financial Position Improved.CORNING, N.Y. -- Continued investments in three major business growth opportunities and a significantly improved balance sheet has 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) ) well positioned for success, Wendell Wendell is a name that has many uses: Places
The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. , will tell investors today. Weeks and other Corning executives will address an audience of more than 300 financial analysts and investors at the company's annual investors meeting beginning at 9 a.m. at the Mandarin Mandarin (măn`dərĭn) [Port. mandar=to govern, or from Malay mantri=counselor of state], a high official of imperial China. For each of the nine grades there was a different colored button worn on the dress cap. Oriental oriental having some connection with the Orient. oriental avian eye fluke see philophthalmusgralli. oriental blood fluke schistosomajaponicum. oriental cattle plague see rinderpest. Hotel in New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of . In an opening address to conference attendees, 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). , chairman and chief executive officer, will say, "Corning is a unique company...we are a company devoted to creating innovations that are useful to society and become successful businesses for Corning." He will explain that Corning has repeatedly brought forth innovations "that truly helped to change society," highlighting Corning's invention of the glass light bulb bulb, thickened, fleshy plant bud, usually formed under the surface of the soil, which carries the plant over from one blooming season to another. It may have many fleshy layers (as in the onion and hyacinth) or thin dry scales (as in some lilies)—both of which which led to the commercialization of electricity, the creation of the color picture tube which revolutionized the television industry, and optical fiber which has helped make the internet a reality. Houghton also will reiterate re·it·er·ate tr.v. re·it·er·at·ed, re·it·er·at·ing, re·it·er·ates To say or do again or repeatedly. See Synonyms at repeat. re·it his announcement of Jan. 26 that he will turn over the role of chief executive officer to Weeks at the company's annual shareholders' meeting shareholders' meeting n. a meeting, usually annual, of all shareholders of a corporation (although in large corporations only a small percentage attend) to elect the Board of Directors and hear reports on the company's business situation. on April 28 and retain his position as chairman of the board of directors. Peter F. Volanakis, current president of Corning Technologies, will become chief operating officer. Leadership Priorities Weeks will tell investors, "Corning has a much stronger balance sheet today than when we began our restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). program in 2001. We have reduced the company's overall debt by more than $2 billion and improved our operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. to over $1 billion last year. We have seen a $1 billion turn-around in our profitability before special items over the past two years." This is a non-GAAP financial measure. This and all non-GAAP financial measures disclosed during the annual investors meeting 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. While addressing Corning's 2005 priorities, Weeks will say, "We must continue to improve the company's overall profitability, generate positive free cash flow, and manage our significant 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. investments for future growth. We are optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op that we will achieve an investment grade credit rating this year." Weeks will also emphasize that this year is critical to Corning's growth businesses, adding, "We will learn a lot about how ambitious the regional bell operating companies The Regional Bell Operating Companies (RBOC) are the result of the U.S. Department of Justice antitrust suit against American Telephone & Telegraph. History will be with their fiber build outs, engine manufacturers will announce their 2007 platform choices for diesel emissions control Emissions control may refer to:
Growth Opportunities Telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. Larry Aiello, president and chief executive officer of Corning Cable Systems, will tell investors that while the overall telecommunications industry is showing some signs of improvement, there remains significant excess capacity in the fiber and cable industry. "We are seeing public policy improvements that encourage investment by telecommunications customers, while profitable broadband service See broadband and broadband service provider. models are emerging among providers, and overall network demand is increasing," he will say. "A sustainable industry recovery must ultimately be led by strong customer demand for new service capabilities. As broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). subscriber growth continues, service and product requirements will increase. Optical fiber is the gold standard to deliver these end-user requirements," Aiello will say. "For example, a broadband subscriber with fiber-to-the-premises could download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. the movie, 'The Matrix Reloaded' in only 520 seconds, while a dial-up telephone connection would tie up the line for 11 days. And it would take almost two and half hours to download this movie with a cable modem cable modem Modem used to convert analog data signals to digital form and vise versa, for transmission or receipt over cable television lines, especially for connecting to the Internet. ," he will state. Corning will note that Verizon's FTTP (Fiber To The Premises) The installation of optical fiber from the carrier directly into the home or office. Also called "fiber to the home" (FTTH). See PON and FTTC. See also FTP. project successfully passed more than one million homes last year and they plan to add an additional two million homes this year. Corning's total revenue opportunity for each home passed is between $130 and $220. Additionally, SBC (1) (SBC Communications Inc., San Antonio, TX, www.sbc.com) A large, national telecommunications company that grew from a multitude of local and regional companies, including Southwestern Bell, Pacific Bell and Nevada Bell, into a single, unified brand by 2002. and Bell South have begun fiber-based network infrastructure projects which may provide $35 to $55 per home in potential revenue opportunities for Corning. Diesel Products Volanakis will tell investors that while the global diesel product market is about $200 million today, growth will accelerate strongly after 2006 driven by U.S. regulatory requirements Regulatory requirements are part of the process of drug discovery and drug development. Regulatory requirements describe what is necessary for a new drug to be approved for marketing in any particular country. and could reach a $1 billion market in 2008. "This is a very important year for us in the heavy duty diesel engine market. Diesel manufacturers will be making decisions for the 2007 vehicle engine platforms and we believe we are extremely well positioned in this market. We have already received several letters of intent from engine manufacturers and expect these will lead to supply agreements this year," he will say. Display Technologies Corning will tell investors that overall market demand for 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. (LCD) glass is expected to grow between 40 percent and 60 percent in 2005 and continue to grow at a compound annual rate of 40 percent through 2007. "Corning's current view of this year's market growth is that it will be above 50 percent," Volanakis will say. "The majority of the recent growth has been the result of LCD monitors A flat panel display that uses liquid crystals. Although laptops have used LCDs as their flat panel technology almost exclusively, LCD is also the most popular for flat panel desktop monitors. Toward the end of 2003, sales of LCD displays for desktops overtook CRTs for the first time. replacing the traditional desktop CRT (1) (C RunTime) See runtime library. (2) (Cathode Ray Tube) A vacuum tube used as a display screen in a computer monitor or TV. The viewing end of the tube is coated with phosphors, which emit light when struck by electrons. and steady increases in 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. . However, in 2005, LCD TV A flat panel TV that uses LCD technology or a rear-projection TV that is based on LCD microdisplay panels. See flat panel TV, rear-projection TV and LCD. will continue its momentum, creating a third wave of glass demand for our industry," Volanakis will say. LCD TV's were 5 percent of all televisions sold in 2004 and the company believes they will reach 10 percent 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" in 2005. Corning will say that LCD TV's may account for as much as 21 percent of the world's television unit sales unit sales Sales measured in terms of physical units rather than dollars. Unit sales data are often used by financial analysts when evaluating the health of a company. by 2007. LCD glass for TV, currently at 75 million square feet of demand will grow to more than 500 million square feet in 2007. Volanakis will tell investors that they should not focus on U.S. LCD TV sales alone in order to determine global market demand or trends. More than 75 percent of the world's televisions are sold outside of North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. . Regarding LCD glass price declines, Volanakis will say, "Historically, we have seen a compound annual rate of decline near 5 percent. We expect to see price declines on LCD glass in this range during the first quarter of this year after two years of price stability. However, we anticipate that our continued focus on manufacturing cost reduction will allow us to maintain our gross margins despite expected price declines this year." Financial Outlook James B. Flaws, vice chairman and chief financial officer, will tell attendees, "Corning has been on a journey with three phases. We wanted to improve our profitability and we have done that. We have a goal of returning to an investment grade credit rating by 2005 and believe that we have made significant progress toward that goal. And, we want to achieve top quartile Quartile A statistical term describing a division of observations into four defined intervals based upon the values of the data and how they compare to the entire set of observations. Notes: Each quartile contains 25% of the total observations. financial performance by 2007." He will tell investors that Corning expects its capital expenditures to be in the range of $1.2 billion to $1.4 billion in 2005, with approximately 75 percent of this funding for LCD expansions. The majority of the LCD capital spending is for previously announced expansion projects. He will note that the company's LCD expansions are paced by the industry's growth patterns and remain modular as they can be adjusted according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. actual market demand. Flaws will also say that the company has a goal to achieve positive free cash flow again in 2005. First-Quarter Outlook Corning will also reaffirm re·af·firm tr.v. re·af·firmed, re·af·firm·ing, re·af·firms To affirm or assert again. re its first-quarter guidance of sales in the range of $980 million to $1.03 billion and earnings per share, before special items, in the range of $0.11 to $0.13. This is a non-GAAP financial measure. Company officials will tell investors they expect Corning's total LCD glass volume, for the combination of its wholly-owned business and 50 percent owned equity venture Samsung Corning Precision Glass  The of this article or section may be compromised by "peacock terms".You can help Wikipedia by removing peacock terms. Co. Ltd., to increase sequentially for the first quarter in the range of 5 percent to 10 percent and LCD glass pricing could decline by about 5 percent. Sequential optical fiber volume will be in the range of flat to a 10 percent decline and pricing should decline by less than 5 percent. The company's sales of premium fiber will be less than 10 percent. Conference Broadcast Information Corning will make the presentation at its annual investor conference available to the public by webcast and telephone access. The broadcast will be held today at 9 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy . The dial-in number is (212) 547-0204. The password is Investor. The leader is Sofio. A replay of the call will begin at approximately 3:30 p.m. and will run through 5 p.m. EST P.M. also p.m. or p.m. abbr. post meridiem Usage Note: By definition, 12 a.m. on Friday, Feb. 18, 2005. To access the replay, dial (402) 220-3037; a password is not required. A live audio webcast will be available at http://www.corning.com/investor_relations/ and will remain there for 14 days following the call. Presentation of Information in this News Release Non-GAAP financial measures are not in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with, or an alternative to, GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). . Corning's non-GAAP net income and EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. measures exclude 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 measures exclude 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 non-GAAP net income and EPS measures is helpful to analyze financial performance without the impact of unusual items that may obscure trends in the company's underlying performance. These non-GAAP measures are reconciled on the company's Web site at www.corning.com/investor-relations and accompany this news release. About Corning Incorporated 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 This article is about ceramic materials. For the fine art, see Ceramic art. The word ceramic is derived from the Greek word κεραμικός (keramikos). 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 This is a list of tariffs and trade legislation:
The earliest stage of a new business venture. costs; possible disruption disruption /dis·rup·tion/ (dis-rup´shun) a morphologic defect resulting from the extrinsic breakdown of, or interference with, a developmental process. in commercial activities due to terrorist activity, armed conflict, political instability instability /in·sta·bil·i·ty/ (-stah-bil´i-te) lack of steadiness or stability. detrusor 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, "We have a $1 billion turn-around in our
profitability before special items over 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 (a) 2003 (a) 2002 vs. 2003 vs. 2002 Cumulative
-------- -------- ---- -------- -------- ----------
Net income,
excluding
special items $ 674 $ 128 $ (392) $ 546 $ 520 $ 1,066
======== ======= =========
Special items:
Restructuring,
impairment and
other
(charges)and
credits (b) (1,802) (26) (1,462)
Asbestos
settlement (30) (263)
(Loss) gain on
repurchases and
retirement
of debt,
net (c) (34) 12 108
(Provision)
benefit for
income taxes (937)
Equity in
earnings of
associated
companies, net
of impairments
(d) (56) (74) (34)
Income from
discontinued
operations (e) 20 478
------ ------ ------
Net loss $ (2,165) $ (223) $(1,302)
(a)For 2004 and 2003, refer to separate reconciliations of
non-GAAP financial measure to the comparable GAAP measure on Corning's
web site at www.corning.com/investor-relations for an explanation of
the special items being excluded. For 2004 and 2003, refer to separate
reconciliations of non-GAAP financial measure to the comparable GAAP
measure on Corning's web site at www.corning.com/investor-relations
for an explanation of the special items being excluded.
2002 Special Items:
(b) 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. 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). During 2002, Corning retired a significant portion of
long-term debt resulting in a gain of $176 million ($108 million
after-tax).
(d) This amount reflects charges for impairments of certain equity
method investments in Corning's Telecommunications segment. This
amount reflects charges for impairments of certain equity method
investments in Corning's Telecommunications segment.
(e) 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.(e) 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.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE TO GAAP FINANCIAL MEASURE
Three Months and Year Ended December 31, 2004
(Unaudited; amounts in millions)
Corning's free cash flow financial measures for the three months
and year ended December 31, 2004 are non-GAAP financial measures
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 non-GAAP financial measures 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 these non-GAAP measures and the directly related GAAP
measures.
For the three For the
months ended year ended
December 31, 2004 December 31, 2004
------------------- ------------------
Operating cash flow $ 366 $ 1,009
Less: Investing cash flow (359) (922)
Plus: Short-term investments -
acquisitions 284 1,253
Less: Short-term investments -
liquidations (217) (1,027)
--------- ----------
Free cash flow $ 74 $ 313
========== ===========
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE TO GAAP FINANCIAL MEASURE
Three Months Ended March 31, 2005
(Unaudited; amounts in millions, except per share amounts)
Corning's earnings per share (EPS) excluding special items for the
first quarter of 2005 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 non-GAAP EPS 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.
Range
Guidance: EPS excluding special items --------------------------
$0.11 $0.13
Special items:
Restructuring, impairment
and other (charges) and
credits (a)
Asbestos settlement (b)
(Loss) gain on repurchases
and retirements of debt, net (c) _______ _______
Earnings per share
This schedule will be updated as additional announcements occur.
----------------------------------------------------------------
(a)From time to time, Corning may need to make adjustments to
estimates used in the determination of prior year restructuring and
impairment charges, which could result in a gain or loss during the
quarter.
(b)As part of Corning's asbestos settlement arrangement to be
incorporated into the Pittsburgh Corning Corporation reorganization
plan, Corning will contribute, when the reorganization plan becomes
effective, 25 million shares of Corning common stock to a trust. The
common stock will be contributed to the trust, after the plan has been
approved by the asbestos claimants and bankruptcy court. The portion
of the asbestos liability to be settled in common stock requires
adjustment each quarter based upon movements in Corning's common stock
price prior to contribution of the shares to the trust. In the first
quarter of 2005, Corning will record a charge or credit for the change
in its common stock price as of March 31, 2005 compared to $11.77, the
common stock price at December 31, 2004.
(c) From time to time, Corning may repurchase or retire debt, which
could result in a gain or loss during the quarter.
Please note that the company may pursue other financing,
restructuring and divestiture activities at any time in the future,
and that the potential impact of these events is not included within
Corning's first quarter 2005 guidance.
This schedule contains forward looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Such
forward looking statements are based on current expectations and
involve certain risks and uncertainties. Actual results may differ
from those projected in the forward looking statements. Additional
information concerning factors that could cause actual results to
materially differ from those in the forward looking statements is
contained in the Securities and Exchange Commission filings of this
Company.
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, "...Corning's Telecommunications segment posted
significant improvements in....net income, excluding the non-cash
impairment charges taken in October 2004." 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
For the years ended December 31,
----------------------------------
2004 2003 Improvement
------------- ---------------
Telecommunications
segment net loss,
excluding special
items $ (58) $ (194) $ 136
==========
Special items:
Restructuring,
impairment and
other (charges)
and credits (a) (1,800) 32
Equity in earnings
of associated
companies, net of
impairments (b) (35) (7)
---------- ----------
Telecommunications
segment net loss $ (1,893) $ (169)
========== ==========
2003 Special Items:
(a) Corning recorded net credits of $36 million ($32 million
after-tax) in its Telecommunications segment related to the following
significant actions: charges for the exit and sale of the photonic
technologies business, offset by credits to prior period's
restructuring plans, most notably for our decision not to exit two
cabling sites previously marked for shutdown in 2002.
(b) This amount reflects charges for impairments of certain equity
method investments in Corning's Telecommunications segment.
2004 Special Items:
(a) Corning recorded net charges of $1.798 billion ($1.8 billion
after-tax) in its Telecommunications segment primarily related to the
impairment of goodwill and fixed assets.
(b) This amount reflects charges for impairments of certain equity
method investments in Corning's Telecommunications segment.
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 equity earnings contribution from Dow Corning
Corporation (Dow Corning) 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 non-GAAP financial measures 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
these non-GAAP measures and the directly related GAAP measures.
For the
year ended
December 31, 2004
-------------------
Dow Corning net income $ 238
Corning's equity in earnings
of Dow Corning (a) 116
Special items (b) 21
-------
Corning's equity in earnings
of Dow Corning, excluding
special items $ 137
========
(a) Based on Corning's 50% ownership interest of Dow Corning,
recorded net of tax.
(b)In 2004, Dow Corning recorded a restructuring charge and a
charge to adjust interest liabilities due to court rulings on its
emergence from bankruptcy. Our equity earnings included $21 million
related to these charges.
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