GLW Corning Inc

Following a fifth consecutive year of increased sales and profitability in 2007, Corning Incorporated�s (NYSE:GLW) strong innovation portfolio has the company excited about its future growth prospects, Wendell P. Weeks, chairman and chief executive officer, will tell analysts and investors today. �Our strategy is to grow through global innovation,� he will say. Weeks and other Corning executives will review 2007 performance, detail the company�s 2008 outlook and discuss Corning�s growing portfolio of new business opportunities at the company�s annual investor meeting beginning at 9 a.m. today at the Mandarin Oriental Hotel in New York. �Last year was a year of outstanding execution for Corning,� Weeks will remark in his opening comments. �We had record earnings per share, excluding special items, of $1.41*, gross margins at 47%, and operating cash flow of more than $2 billion.� �Innovation will continue to drive the company�s long-term growth, as it has throughout the company�s past,� Weeks will tell investors. He will remind the audience of the company�s extensive innovation portfolio, noting, �a number of emerging technologies are on the verge of commercialization.� Corning�s Growth Opportunities Display Technologies Consumer demand for LCD TVs will be the primary driver behind an anticipated 25% to 30% increase in total LCD glass demand in 2008, Peter F. Volanakis, president and chief operating officer, will tell investors. �We expect a compound volume growth rate of 25% through 2009 as overall glass demand grows by more than 450 million square feet each year.� * These are non-GAAP financial measures. The reconciliation between GAAP and non-GAAP measures is provided in the tables following this news release, as well as on the company�s investor relations website. In addressing anticipated 2008 LCD glass market dynamics, Volanakis will reiterate the company�s expectations for a tightened supply-and-demand balance, moderate price declines and less significant fluctuations in quarter-to-quarter glass demand patterns. �For Corning,� he will say, �2008 is expected to be yet another year of process improvement, cost reduction and excellent gross margins in the display segment.� Volanakis will tell investors, �We expect LCD TV penetration to be 60% of the global television market by 2009.� LCD televisions were 38% of the market in 2007. This year LCD will surpass CRT for the first time as the dominant TV technology. The combination of a faster-than-expected decline in CRT-based televisions, a rapid increase in LCD TV penetration and increased popularity of larger-size LCD TVs is expected to result in worldwide glass demand of approximately 2.7 billion square feet by 2009, Volanakis will conclude. He will explain that the company is also exploring a number of new market factors that could provide significantly greater LCD glass market demand in the future. (See related Corning news release for more details.) Diesel Products �We are anticipating another year of strong sales growth and improved operating performance,� Thomas R. Hinman, senior vice president and general manager, Corning Diesel Technologies, will tell investors. �Overall, we expect that our diesel product sales will grow by more than 25% this year, but this is dependent on the U.S. economy.� Last year Corning�s diesel product sales were $249 million. Globally, the market for heavy-duty (trucks, buses, etc.) diesel products sales could be in the range of $500 million to $600 million in 2008. �New emissions regulations taking effect over the next several years in the United States, Europe and Japan should provide a significant longer-term market opportunity for our heavy-duty diesel particulate filter and substrate products,� he will tell investors. �We also expect this year to be one of substantial progress for Corning�s light-duty (passenger vehicles) diesel business,� he will also say. �Our DuraTrap� Aluminum Titanate and Advanced Cordierite filter solutions are quickly gaining hold with engine manufacturers. We expect to expand our share of the European market for platforms beyond 2009 that must meet EU 5 regulations.� The diesel passenger market today is primarily a European opportunity, but there are a number of new diesel vehicles being introduced into the North American market, which could bring about some modest growth opportunities, he will note. Hinman will say that the global market opportunity for light-duty diesel product sales this year will be between $750 million and $850 million. Telecommunications Larry Aiello, president and chief executive officer, Corning Cable Systems, will tell investors that the conversion to HDTV, increased subscription rates for high-speed Internet service and increasing entertainment options may all combine to dramatically increase fiber-to-the-home and fiber-to-the node penetration rates in the U.S., Europe and Asia. Aiello will also say that Corning�s newest telecommunications innovation, ClearCurve�, is an ideal solution for providing optical fiber-based service to multi-dwelling units (MDUs). This revolutionary, bend-insensitive technology could provide Corning with revenue potential in the range of $90 to $200 per household. Aiello will describe a growing opportunity for Corning�s telecommunications business in private networks, which currently represents about 25% of Corning�s total segment sales. �We believe this market is growing at about 10% annually as companies move toward higher bandwidth systems for improved local network speeds and more centralized applications. More and more data center managers are replacing their older, copper-based systems with optical fiber solutions. The optical fiber solutions are more efficient, offer significantly improved performance and reduce cooling costs,� Aiello will explain. Emerging Technologies Noting that 2008 will mark the 100th anniversary of a formalized research and development organization at Corning, Dr. Joseph A. Miller, executive vice president and chief technology officer, will review the company�s emerging technology portfolio. �We are continuing to make substantial progress on four exciting new technology applications,� Miller will tell investors. The company is currently prototyping a green laser in handheld devices for micro-projection; microreactor technology for specialty chemicals; carbon-based substrates to reduce mercury emissions for coal-fired power plants; and silicon-on-glass technology for organic light-emitting diode (OLED) applications. �Additionally, we have developed an optical-quality glass that is highly scratch resistant and durable and retains its optical characteristics after extended use. This glass, which we have named Gorilla� glass, is now commercially available and being used as a cover glass for several touch screen applications,� he will explain. (See Corning�s separate release on its emerging technologies for further details.) Financial Outlook �Although we are not recession-proof, we have not seen any signs of a slowdown in our businesses, except in our heavy-duty diesel business, which has been impacted by a decline in the U.S. trucking industry,� James B. Flaws, vice chairman and chief financial officer, will tell investors. �We are not ignoring the possibility of a potential slowing of the economy, and we are monitoring all of our businesses closely.� Corning will reaffirm its first-quarter guidance of sales in the range of $1.59 billion to $1.62 billion and earnings per share, excluding special items*, of $0.41 to $0.43. Corning will also tell investors that beginning with its 2008 first-quarter financial report, the company will add a fifth reporting segment, Specialty Materials, and will increase transparency about how much the company is investing in its innovation portfolio. Flaws will also tell investors that, due to improved profitability in its U.S.-based operations in 2007, it is now possible that Corning may release its valuation allowance on its U.S. deferred tax assets in mid-2008. This is earlier than the company�s previous expectation of 2009. Corning�s effective tax rate would increase by about 10 percentage points if this happens, but it would have no impact on cash taxes paid. �Investors should note that on a pro forma basis, EPS growth would remain unchanged as a result of this potential change,� Flaws will add. �Last year was a record year for Corning in many respects and we believe that we are off to a strong start this year. Some of our recent technology innovations are beginning to generate sales and we are very excited about many others in our emerging technologies portfolio. Corning is positioned for success well into the next decade,� Flaws will conclude. Conference Broadcast Information Corning will make the presentation at its annual investor conference available to the public through a video and audio webcast and telephone access. The broadcast will be held Friday, Feb. 8, 2008 at 9 a.m. ET. The dial-in number is (210) 839-8502. The password is Investor. The leader is Sofio. A replay of the call will begin approximately 1-2 hours after the call ends and will run through 5 p.m. ET on Wednesday, Feb. 27, 2008. To access the replay, dial (203) 369-0740; a password is not required. A live audio and video 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 indicated with an ASTERISK and not in accordance with, or an alternative to, GAAP. Corning�s non-GAAP net income and EPS measures exclude restructuring, impairment and other charges and adjustments to prior estimates for such charges. Additionally, the company�s non-GAAP measures exclude adjustments to asbestos 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. 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 accompanies this news release. About Corning Incorporated Corning Incorporated (www.corning.com) is the world leader in specialty glass and ceramics. Drawing on more than 150 years of materials science and process engineering knowledge, Corning creates and makes keystone components that enable high-technology systems for consumer electronics, mobile emissions control, telecommunications and life sciences. Our products include glass substrates for LCD televisions, computer monitors and laptops; ceramic substrates and filters for mobile emission control systems; optical fiber, cable, hardware & equipment for telecommunications networks; optical biosensors for drug discovery; and other advanced optics and specialty glass solutions for a number of industries including semiconductor, aerospace, defense, astronomy and metrology. 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 in global economic and political conditions; currency fluctuations; product demand and industry capacity; competition; manufacturing efficiencies; cost reductions; availability of critical components and materials; new product commercialization; changes in the mix of sales between premium and non-premium products; new plant start-up costs; possible disruption in commercial activities due to terrorist activity, armed conflict, political instability or major health concerns; adequacy of insurance; equity company activities; 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; stock price fluctuations; and adverse litigation or regulatory developments. Additional 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, 2007 (Unaudited; amounts in millions, except per share amounts) � Corning�s net income and earnings per share (EPS) excluding special items for the year ended December 31, 2007 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 net income and 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 these non-GAAP measures and the directly related GAAP measures. � Per Share � Income (Loss) Before Income Taxes � Net Income (Loss) � Earnings per share (EPS) and net income, excluding special items $ 1.41 $ 1,392 $ 2,260 � Special items: Asbestos settlement (a) (0.12 ) (185 ) (185 ) � Loss on repurchases of debt, net (b) (0.01 ) (15 ) (15 ) � Gain on sale of business, net (c) 0.01 19 19 � Provision for income taxes (d) 0.07 103 � Equity in earnings of affiliated companies (e) � (0.02 ) � � � (32 ) � Total EPS and net income $ 1.34 � $ 1,211 � $ 2,150 � (a) As a result of Corning�s proposed asbestos settlement, any changes in the estimated fair value of the components of the proposed settlement agreement will be recognized in Corning�s quarterly results until the date of the contribution to the settlement trust. For 2007, Corning recorded a charge of $185 million (before- and after-tax) including a charge of $132 million for the change in Corning�s common stock price of $23.99 at December 31, 2007, compared to $18.71 at December 31, 2006 and a $53 million charge for the change in estimated fair value of certain other components of the proposed asbestos settlement liability. (b) Amount reflects a $15 million loss on the repurchase of $223 million principal amount of our 6.25% Euro notes due 2010. (c) Amount reflects a $19 million gain on the sale of the European submarine cabling business. (d) Amount reflects a $103 million tax benefit from the release of our valuation allowance on certain deferred tax assets in Germany. (e) In 2007, equity in earnings of affiliated companies includes a $32 million charge (net of tax) for Corning�s share of restructuring, impairment and other charges at Samsung Corning Co. Ltd. (Samsung Corning). CORNING INCORPORATED AND SUBSIDIARY COMPANIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURE TO GAAP FINANCIAL MEASURE Three Months Ended March 31, 2008 (Unaudited; amounts in millions, except per share amounts) � Corning�s earnings per share (EPS) excluding special items for the first quarter of 2008 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 $ 0.41 � $ 0.43 � Special items: Restructuring, impairment, and other (charges) and credits (a) � Asbestos settlement (b) � � � � � 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, if the reorganization plan is approved, 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 2008, Corning will record a charge or credit for the change in its common stock price as of March 31, 2008 compared to $23.99, the common stock price at December 31, 2007. In addition, Corning will record an adjustment to the asbestos liability to reflect the change in settlement value of any of the other components of the proposed asbestos settlement. 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 2008 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.