Weeks Elected Chairman; Houghton Steps Down
CORNING, N.Y., April 27 /Xinhua-PRNewswire/ -- "The key to the company's strategic framework" is to grow through global innovation," Wendell P. Weeks, president and chief executive officer, told more than 500 shareholders attending Corning Incorporated's (NYSE: GLW) annual meeting on April 26th morning. Acknowledging that there are risks in any strategy, Weeks said that Corning has been successful at leveraging its distinctive innovation culture to create significant growth opportunities over the company's 156-year history.
(Logo: http://www.prnasia.com/sa/200612081746.jpg )
Weeks reminded shareholders that Corning is often faced with the reality that it not only invents the materials for business success, but also the manufacturing processes necessary to create "keystone components that enable high technology systems," which drive customer solutions. He pointed out to shareholders that as the company went through a "life-changing experience" in 2002, the leadership team and the Board of Directors thought carefully about the kind of company Corning would be in the future. "It's at times like this that many companies decide to fundamentally change who they are and what they do. We made a different choice. We embraced the core of our identity... Our choice was not to change the fundamental nature of Corning, but rather to make Corning a better version of itself," he said.
Financial Strength
Weeks reviewed the continued strengthening of the company's financial position, noting that since 2001, Corning has reduced its outstanding debt by two-thirds and increased cash by over 40 percent to $3.2 billion. The company has generated operating cash flow in excess of the significant investments it has made for the last three years. He also said that while Corning regained its investment grade credit rating in 2005, "Our continued strong performance resulted in further credit rating improvement last year."
Business Performance
"Our second priority is to improve profitability and once again, we've made excellent progress," Weeks said. Sales reached $5.2 billion in 2006 and net income, before special items, reached $1.8 billion, an increase of 35 percent over 2005 and an all-time record for the company. This is a non-GAAP financial measure and it is reconciled on the company's investor relations Web site and in an attachment to this news release.
Weeks said that this strong business performance was the result of continued success in Display Technologies, where overall sales volume improved by 35 percent, driven largely by the doubling of liquid crystal display (LCD) television sales in 2006. Last year, LCD TVs accounted for 23 percent of the global television market.
Weeks said that the company's Telecommunications segment also performed well in 2006. He said the company maintained its global lead in the fiber-to-the-premises market. "The telecommunications market is growing again, and as the leader in fiber optics we are well positioned to capture this growth," he said.
Future Investments
Weeks told shareholders that the investments the company has been making in its diesel filters for heavy- and light-duty vehicles will start to pay-off in 2007. New U.S. heavy-duty emissions regulations took effect on January 1 of this year. He also noted that last year Corning launched its Epic System, the world's first high-throughput label-free drug screening system, and the early industry response has been positive.
Corning's strategic growth portfolio is also advancing, with the company making significant progress in the area of synthetic green lasers, which could enable small mobile devices, like cell phones to project larger images; microreactors, which have the potential to deliver significant process innovation and cost reduction for the chemical processing industry; and silicon on glass, which could enable significant innovation and potential longer battery life for handheld consumer electronic devices. "We feel very good about the promise of our innovation portfolio," he said.
Looking Forward
Weeks said the company will continue to work on bringing about a more balanced business portfolio to protect against downturns in any particular business segment. "We won't achieve balance over night, but we are taking deliberate steps to improve balance over time," he said.
He also said that the company's 2007 priorities remain the same as the previous year and he is looking for the company to execute a new pricing strategy in its Display business, deliver sales volume from its new diesel products, capture the returning growth in the Telecommunications arena, and improve its financial performance in Life Sciences.
In closing, Weeks paid tribute to James R. Houghton, who retired for the second time as the company's CEO in 2005 and today stepped down as chairman of the board. Weeks said that when Houghton returned to head the company in 2002, "we faced the most challenging time in our history... but we held strong and then moved on to achieve last year's record financial performance.
"Jamie put his reputation at risk for us by returning to the CEO role in May 2002," Weeks said. "We all owe him a great deal of gratitude."
Reflecting on the past five years, Houghton told shareholders that the company's Management Committee followed a path back to prosperity that it had crafted before Houghton returned. "The path was clear, but not easy. It was tough on our people and on our communities. But we kept the beacon of hope alive because we knew it was far, far too soon for this remarkable company to even think of calling it quits."
Houghton reminded shareholders that, "Moving from more than $5 billion in losses to nearly $2 billion in profits over a five-year span is true testimony to the grit and skill of this management team -- especially in this risky, globally competitive technology game."
Concluding, Houghton said he has "the utmost confidence in Wendell (Weeks) and Peter (Volanakis) as they continue to lead the company. They have earned the confidence of our people around the world and they are passionate stewards of our treasured values."
Weeks Elected Chairman
Corning's Board of Directors elected Weeks its chairman. He will retain the position of chief executive officer. Volanakis was elected president and will continue as chief operating officer. Houghton was named chairman emeritus of the board and will continue as a board member. Jeremy R. Knowles, 70, a distinguished faculty member at Harvard University, has retired from Corning's board. He was first elected a director in 2002. Knowles was named board member emeritus.
Other Business
In other business during the annual meeting, shareholders elected the following directors to three-year terms: Eugene C. Sit, 68, chairman, chief executive officer and chief investment officer, Sit Investment Associates, Inc.; William D. Smithburg, 68, retired chairman, president and chief executive officer, The Quaker Oats Company; Hansel E. Tookes II, 59, retired chairman and chief executive officer, Raytheon Aircraft Company; Wendell P. Weeks, 47, president and chief executive officer, Corning Incorporated. Shareholders also elected Robert F. Cummings, Jr., 58, senior managing director, GSC Group, Inc., to a two-year term.
Shareholders approved the ratification of PricewaterhouseCoopers LLP as the independent auditors for the 2007 fiscal year.
A shareholder proposal seeking annual election of all directors passed. The non-binding proposal requests the Board of Directors to take necessary steps, in the most expeditious manner possible, to adopt annual election of each director. The Board agreed to review this matter following the vote. Since 1985, Corning's certificate of incorporation and bylaws has specified classified Board elections, putting about one-third of the Board up for election each year.
Specialty Materials Presentation
In an address to shareholders immediately following the formal business meeting, James R. Steiner, senior vice president and general manager, Specialty Materials, outlined a number of growth opportunities for this $400 million division. Steiner told shareholders that the division has been focusing on leveraging existing technologies and capabilities into several new market opportunities.
He noted that over the years Corning has repurposed several technologies into new products. Borosilicate glass, first used to manufacture PYREX(R) more than 80 years ago, is now the basis for optical windows used in digital light processors such as business projectors and projection television. The fundamental process used to make fiber optics, known as vapor deposition, is being leveraged to produce a number of specialty optical products, including space shuttle windows, large mirror blanks for telescopes and highly complex lenses for optical equipment.
Finally, he said that his division is using an original glass composition created in the 1960s for automotive windshields to develop a highly protective glass for cell phones and other handheld smaller devices. This glass would withstand scratching and surface marring.
Webcast Information
The company hosted a live audio webcast of the 2007 annual meeting of shareholders in Corning, N.Y., from 11 a.m. to 12:15 p.m. EDT, April 26, 2007. To access the webcast archive, please go to http://www.corning.com/investor_relations and click on the webcast archive link. No password or registration is required. The audio webcast will be archived on the Web site for one year following the broadcast.
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 net income and 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. Corning's free cash flow financial measures are also non-GAAP measures. The company believes presenting non-GAAP free cash flow; net income and EPS measures are 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 http://www.corning.com/investor_relations and accompany this news release.
About Corning Incorporated
Corning Incorporated ( http://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.
Attached File: CORNING INCORPORATED AND SUBSIDIARY COMPANIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURE TO GAAP FINANCIAL MEASURE
( http://corning.com/media_center/press_releases/2007/2007042602.pdf )
