An exciting portfolio of business growth opportunities, a
significantly improved financial picture and a culture of
successful innovation have Corning Incorporated (NYSE: GLW) well
positioned to deliver on a fourth consecutive year of improved
profitability, Wendell P. Weeks, president and chief executive
officer, will tell investors today. Weeks and other Corning
executives will review Corning's 2005 financial performance and
2006 market opportunities at the company's annual investor
relations meeting, which will be held at the Mandarin Oriental
Hotel in New York City beginning at 9 a.m. "We have made excellent
progress on the financial goals that we laid out several years
ago," Weeks will say. "For the first time in more than 25 years we
ended the year with more cash on hand than debt. This is a
significant achievement for a company that only three years ago had
more than $5 billion in outstanding debt on its books. "Our
operating cash flow is strong, we returned to an investment grade
credit rating during the past year," he will tell investors, "and
we have now completed three successive years of $500 million of
earnings improvement." This is a non-GAAP financial measure. This
and all non-GAAP financial measures are reconciled on the company's
investor relations Web site and in attachments to this news
release. He will note that Corning has accomplished these financial
objectives, while at the same time maintaining its commitment to
investing in the long-term future of the company. "Corning is a
technology company and we grow through global innovation," Weeks
will say. "We will continue to invest about 10 percent of our sales
into our research and development initiatives as we look for new
products that will create our next wave of growth." 2006 Growth
Opportunities Display Technologies Peter F. Volanakis, chief
operating officer, will tell investors the global liquid crystal
display (LCD) glass substrate market, measured in square feet of
glass, is expected to grow more than 40 percent this year.
Worldwide glass demand will exceed 1.4 billion square feet by 2007,
he will say. "While we believe that the market will continue to
grow at more than 40 percent this year, at Corning we expect our
volume will grow faster than the overall market," Volanakis will
say. "Presently desktop monitors dominate the LCD market; however,
as retail prices for LCD TVs continue to fall and screen sizes
become larger, televisions will be the largest user of LCD glass in
2007." Corning will say that glass demand for LCD TVs alone is
expected to nearly triple from 210 million square feet last year to
approximately 585 million square feet by 2007. LCD TVs comprise
approximately 11 percent of all televisions sold today and the
company expects this market penetration rate to be approximately 25
percent by 2007. Volanakis will also point out that Generation 5.5
and larger substrates will account for almost 50 percent of the
total glass demand of 1.4 billion square feet by 2007. Corning has
been producing Generation 7 and Generation 7.5 glass through its
jointly-owned company, Samsung Corning Precision Glass Co., Ltd.,
and Corning will soon produce these larger generation substrates at
its newest LCD facility in Taichung, Taiwan. Corning expects to be
producing Generation 8 glass substrates by the third quarter of
this year. Volanakis also will note that earlier this week, Corning
announced plans to build an LCD glass finishing facility in the
People's Republic of China. Corning is the first LCD substrate
manufacturer to locate a plant on the China mainland. Diesel
Technologies With the implementation of more stringent emissions
regulations beginning last year in Europe and continuing in the
U.S. and Japan throughout the remainder of the decade, the diesel
emissions products market will grow to approximately $1.2 billion
to $1.3 billion by 2010, Thomas R. Hinman, vice president and
general manager, Corning Diesel Technologies, will tell investors.
"It is our belief that our innovative technologies and our ability
to meet the growing product demands of both the light-duty and
heavy-duty diesel engine manufacturers could result in Corning
capturing as much as $500 million to $600 million in market
opportunity by 2010," he will say. Hinman will caution investors to
look beyond the U.S. automotive industry, pointing out that,
"Diesel engines are an important source of economical power
throughout the world. While in the U.S. we consider them as
predominately work engines, in Europe and elsewhere, they also
represent a significant portion of the passenger car market. Diesel
engines offer long-term durability and significantly improved fuel
efficiency over gasoline engines, resulting in reduced greenhouse
gases." Corning recently announced that its new aluminum titanate
filter, DuraTrap(R) AT is now being used on several Volkswagen
models in Europe. "This robust, high performance product continues
to gain acceptance by key European and Asian car manufacturers,"
Hinman will say. "The largest market opportunity lies with the
heavy-duty engine manufacturers," Hinman will explain. "There will
be about two million heavy-duty (trucks, buses and non-road
construction) vehicles that will require some form of emissions
control by 2010. Corning is well positioned to capture a leading
share of this emerging market opportunity. We already have letters
of intent from more than half of all the heavy-duty diesel engine
manufacturers," he will tell investors. Telecommunications Larry
Aiello, president and chief executive officer, Corning Cable
Systems, will tell investors, "we are seeing a measure of
improvement in the telecommunications segment, but it is not a
full-blown recovery." He will explain that Corning's
telecommunications segment continues to see growth across all three
major FTTx platforms and that technology innovation in the
company's hardware and equipment has resulted in significantly
reducing the cost and the impact of fiber-to-the-premises
installations. Financial Outlook "We were extremely pleased with
our financial performance last year," James B. Flaws, vice chairman
and chief financial officer, will tell attendees. "We continue to
work diligently on protecting the company's financial health. We
will maintain significant cash balances going forward. This will
enable us to meet any future capital expenditure needs, support
investments in research and development and pursue new business
developments." Flaws said the company will use any excess cash to
further reduce outstanding debt levels before it considers a stock
repurchase program or dividends. Flaws will explain that the
company expects its 2006 capital expenditures to be in the range of
$1.3 billion to $1.5 billion. The company has a goal to achieve
positive free cash flow of approximately $200 million in 2006.
First-Quarter Outlook Corning will reaffirm its first-quarter
guidance of sales in the range of $1.2 billion to $1.25 billion and
earnings per share of $0.21 to $0.23 before special items. This is
a non-GAAP financial measure. Corning said that it will begin
expensing employee stock options in 2006 and that the EPS range of
$0.21 to $0.23 includes about $0.01 related to this new expense in
the first quarter. The company expects first-quarter gross margin
to be between 43 percent and 45 percent. Corning's first-quarter
equity earnings from Dow Corning are expected to be in the range of
$60 million to $65 million. Flaws will note that Corning expects
its total LCD glass volume to increase sequentially in the range of
3 percent to 8 percent and pricing for the quarter will be down
more significantly than in previous quarters. In its
Telecommunications segment, Corning expects total sales for the
first quarter to be flat with fourth-quarter sales and its
Environmental segment sales to increase by about 5 percent in the
first quarter. Separately the company announced that it will be
meeting with investors in Dallas on Feb. 6 and in Houston on Feb.
7. 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
Friday, Feb. 3, 2006 at 9 a.m. EST. The dial-in number is (630)
395-0017. 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 on Friday, Feb. 17, 2006. To access the replay,
dial (203) 369-3231; a password is not required. A live audio
webcast will be available at
http://www.corning.com/investor_relations/. The audio webcast will
be archived for one year following the call. Presentation of
Information in this News Release Non-GAAP financial measures are
not in accordance with, or an alternative to, GAAP. Corning's
non-GAAP EPS measure excludes restructuring, impairment and other
charges and adjustments to prior estimates for such charges.
Additionally, the company's non-GAAP measure excludes adjustments
to asbestos settlement reserves required by movements in Corning's
common stock price, gains and losses arising from debt retirements,
charges resulting from the impairment of equity or cost method
investments, or adjustments to deferred tax assets, and gains or
losses recognized in equity earnings from restructuring, impairment
or other charges or credits taken by equity method companies. The
company believes presenting a non-GAAP EPS 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 accompanies this news
release. About Corning Incorporated Corning Incorporated
(www.corning.com) is a diversified 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, environmental,
semiconductor, and life sciences industries. Forward-Looking and
Cautionary Statements This press release contains forward-looking
statements 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 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 activities; the level of excess or obsolete
inventory; 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 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. -0- *T CORNING
INCORPORATED AND SUBSIDIARY COMPANIES RECONCILIATION OF NON-GAAP
FINANCIAL MEASURE TO GAAP FINANCIAL MEASURE Year Ended December 31,
2005 (Unaudited; amounts in millions)
----------------------------------------------------------------------
Corning's comment, "and we have now completed three successive
years of $500 million of earnings improvement." 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, 2005 2004 2003 --------------------------------- vs.
vs. vs. 2005(a) 2004(a) 2003 2002 2004 2003 2002 ------- -------
----- ------- ----- ---- ----- Net income, excluding special items
$ 1,302 $ 674 $ 128 $ (392) $628 $546 $520 ===== ==== ===== Special
items: Restructuring, impairment and other (charges) and credits
(b) 34 (1,802) (26) (1,462) Asbestos settlement (c) (197) (30)
(263) (Loss) gain on repurchases and Retirement of debt, net (d)
(16) (34) 12 108 (Provision) benefit for income taxes (443) (937)
Equity in earnings of associated companies, net of impairments (e)
(95) (56) (74) (34) Income from discontinued operations (f) 20 478
-------- ------- ------ ------- Net income (loss) $ 585 $(2,165)
$(223) $(1,302) ======== ======== ====== ======== (a) For 2005 and
2004, 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. 2003 Special Items: (b) Corning
recorded net charges of $11 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. (c) 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 and our investment in Pittsburgh Corning Europe to a
trust. This charge represents recording the initial liability based
on the terms of the settlement agreement ($298 million or $190
million after-tax) plus the charge to reflect movements in
Corning's common stock price from the settlement arrangement date
and December 31, 2003 ($115 million or $73 million after-tax). (d)
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: (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. (d) 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. CORNING INCORPORATED AND SUBSIDIARY COMPANIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE TO GAAP FINANCIAL
MEASURE Three Months Ended March 31, 2006 (Unaudited; amounts in
millions, except per share amounts)
----------------------------------------------------------------------
Corning's earnings per share (EPS) excluding special items for the
first quarter of 2006 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 $0.21
$0.23 Special items: Restructuring, impairment and other (charges)
and credits (a) Asbestos settlement (b) (Loss) gain on repurchases
and retirements of debt, net ------- ------- 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
2006, Corning will record a charge or credit for the change in its
common stock price as of March 31, 2006 compared to $19.66, the
common stock price at December 31, 2005. *T 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 2006
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. -0- *T CORNING INCORPORATED AND
SUBSIDIARY COMPANIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURE
TO GAAP FINANCIAL MEASURE Years Ended December 31, 2006 and 2005
(Unaudited; amounts in millions)
----------------------------------------------------------------------
Corning's free cash flow financial measures for the years ended
December 31, 2006 and 2005 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.
----------------------------------------------------------------------
Year ended Year ended December 31, 2006 December 31, 2005
----------------- ----------------- Operating cash flow $ $ 1,939
Less: Investing cash flow (1,712) Plus: Short-term investments -
acquisitions 1,668 Less: Short-term investments - liquidations
(1,452) ------------ ------------ Free cash flow $ $ 443
============ ============ *T
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