UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report: (Date of earliest event reported) April 26, 2005
CORNING INCORPORATED
(Exact name of registrant as specified in its charter)
New York 1-3247 16-0393470
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
One Riverfront Plaza, Corning, New York 14831
(Address of principal executive offices) (Zip Code)
(607) 974-9000
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition
Item 7.01. Regulation FD Disclosure
The Corning Incorporated press release dated April 26, 2005, regarding its
financial results for the quarter ended March 31, 2005, and its second quarter
2005 earnings guidance, is attached hereto as Exhibit 99.
The information in this report, being furnished pursuant to Item 2.01 and 7.01
of Form 8-K, shall not be deemed to be "filed" for purposes of Section 18 of the
Securities and Exchange Act of 1934, as amended (the "Exchange Act"), or
otherwise subject to the liabilities of that Section, and is not incorporated by
reference in any filing under the Securities Act of 1933, as amended, or the
Exchange Act, except as expressly set forth by specific reference in such
filing.
Safe Harbor Statement
Statements contained in the Item 7.01 Regulation FD Disclosure and the exhibit
to this report that state the Company's or its management's expectations or
predictions of the future are forward-looking statements intended to be covered
by the safe harbor provisions of the Securities Act of 1933 and the Exchange
Act. The Company's actual results could differ materially from those projected
in such forward-looking statements. Factors that could affect those results
include those mentioned in the documents that the Company has filed with the
Securities and Exchange Commission.
Item 9.01. Financial Statements and Exhibits
(c) Exhibit
99 Press Release dated April 26, 2005, issued by Corning Incorporated.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CORNING INCORPORATED
Registrant
Date: April 26, 2005 By /s/ KATHERINE A. ASBECK
------------------------------------
Katherine A. Asbeck
Senior Vice President and Controller
Exhibit 99
----------
FOR RELEASE -- APRIL 26, 2005
Media Relations Contact: Investor Relations Contact:
Daniel F. Collins Kenneth C. Sofio
(607) 974-4197 (607) 974-7705
collinsdf@corning.com sofiokc@corning.com
Corning Reports First-Quarter Results
Earnings per share of $0.17 exceeds guidance
Sales strong over year-ago results
CORNING, N.Y. -- Corning Incorporated (NYSE: GLW) today announced first-quarter
sales of $1.05 billion, with net income of $249 million, or $0.17 per share. The
company's first-quarter results exceeded its sales guidance and far exceeded its
guidance for earnings.
"We are extremely pleased with our overall results and we believe that we are
well positioned to take advantage of continuing growth opportunities," James R.
Houghton, chairman and chief executive officer, said.
First-Quarter Operating Results
Corning's first-quarter sales of $1.05 billion increased 2 percent over last
year's fourth-quarter sales of $1.033 billion, and increased 24 percent over
last year's first-quarter sales of $844 million. Gross margin for the first
quarter improved to 41 percent versus 35 percent in the previous quarter. About
half of the first-quarter sequential improvement in gross margin was due to
stronger operating performance in all the company's operating segments,
particularly Display Technologies and Environmental Technologies. The remainder
was due to the absence of a number of unusual items which occurred in the fourth
quarter.
Equity earnings for the first quarter were $166 million, an increase of 25
percent over fourth-quarter equity earnings of $133 million. The sequential
increase was primarily due to Dow Corning Corporation, which experienced strong
volume growth, improved pricing and favorable exchange rates. Corning's equity
earnings from Dow Corning were $68 million in the first quarter, nearly doubling
fourth-quarter equity earnings of $35 million.
(more)
Corning Reports First-Quarter Results
Page Two
Corning recorded $320 million in first-quarter sales in its Display Technologies
segment, a 3 percent increase over last year's fourth-quarter sales of $311
million. The sequential sales increase was primarily driven by a 5 percent
volume increase and a favorable Japanese yen exchange rate, offset by average
glass pricing declines of less than 4 percent. Sequential first-quarter volume
and pricing were within the company's guidance. Volume grew approximately 35
percent and average pricing was flat in comparison to a year ago.
Samsung Corning Precision Glass Co. Ltd., a 50-percent equity venture in Korea,
increased its sequential glass volume by 6 percent. In comparison to a year ago,
volume at Samsung Corning Precision was up 44 percent in the first quarter.
Equity earnings from Samsung Corning Precision were $80 million for the first
quarter, compared to $73 million last quarter.
Total volume in the Display Technologies segment, including both Corning's
wholly-owned business and Samsung Corning Precision, increased 6 percent
sequentially in the first quarter. Net income for the Display Technologies
segment was $161 million in the first quarter, compared to $151 million in the
fourth quarter.
Wendell P. Weeks, president and chief operating officer, said, "In the first
quarter, we saw increased indications that panel manufacturers are continuing to
ramp up capacity for larger-generation (Gens. 5, 6 and 7) panel sizes. We are
pleased to report that we have signed four additional long-term supply
agreements for liquid crystal display (LCD) glass that include customer
deposits. We now have five long-term supply agreements with customer deposits, a
clear indication that our customers continue to see Corning as the first choice
for meeting their large-size glass needs."
Telecommunications segment sales were $427 million for the first quarter,
consistent with the previous quarter's sales of $423 million, and higher than
the company's expectations. The better-than-expected sales were primarily due to
higher volumes of hardware and equipment products to support Verizon
Communication's fiber-to-the-premises (FTTP) build-out in North America and
continued strong demand in Europe. The segment recognized net income of $9
million compared to a net loss of $9 million in last year's fourth quarter.
Optical fiber volume in the first quarter decreased 6 percent from
fourth-quarter volume, while fiber pricing declined approximately 2 percent for
the quarter. In comparison to a year ago, fiber volumes increased more than 50
percent.
Weeks said, "We were pleased with the performance of our Telecommunications
segment in North America, but we continue to be challenged by the overall lower
demand and strong pricing pressures for fiber in China."
(more)
Corning Reports First-Quarter Results
Page Three
Environmental Technologies segment sales were $148 million for the first
quarter, a 14 percent sequential sales increase. These results were driven by
seasonal increases and strong volume for both the automotive and diesel product
lines, the latter related to a Korean diesel engine retrofit program underway.
Enhanced manufacturing performance also drove improved segment results in first
quarter compared to the fourth quarter.
The company's Life Sciences segment recorded first-quarter sales of $74 million,
an increase over fourth-quarter sales of $71 million.
Special Items
Corning's first-quarter results included special items netting to a $3 million
charge, which had no impact on the company's earnings per share. The special
items include a charge of $19 million to impair the company's investment in
Avanex Corporation, and a $16 million gain to reflect the decline in the market
value of Corning common stock to be contributed to settle the asbestos
litigation related to Pittsburgh Corning Corporation.
Cash Flow/Liquidity Update
Corning ended the first quarter with $1.5 billion in cash and short-term
investments, a decline from the previous quarter's balance of $1.9 billion. This
decline was due to capital spending in excess of operating cash flow and the net
repayment of $146 million of debt in the first quarter. Also in the first
quarter, Corning converted nearly $100 million in debentures into Corning stock.
These items resulted in the company's debt-to-capital ratio improving to 36.4
percent compared to the previous quarter's ratio of 41 percent. The company
expects to redeem the remaining $191 million of its 3.5 percent debentures,
subject to market conditions, by the end of 2005.
James B. Flaws, vice chairman and chief financial officer, said, "We continue to
make progress on all of our financial goals. We are carefully managing our cash
flow, reducing the company's overall debt levels and making strides toward
achieving investment-grade ratings."
Second-Quarter Outlook
Corning said that it expects second-quarter sales to be in the range of $1.08
billion to $1.13 billion and EPS in the range of $0.17 to $0.19 before special
items. This EPS estimate is a non-GAAP financial measure and excludes any
possible special items. This and all non-GAAP financial measures are reconciled
on the company's investor relations Web site and in attachments to this news
release. The company expects gross margins will be about 40 percent for the
quarter and equity earnings will be consistent with the first quarter. Corning
expects that the second-quarter corporate tax rate will be between 20 percent
and 25 percent. For the second half of the year, the company believes the tax
rate will be between 20 percent and 30 percent.
(more)
Corning Reports First-Quarter Results
Page Four
In the Display Technologies segment, Corning anticipates that second-quarter
sequential volume growth for its wholly-owned business and Samsung Corning
Precision will be in the range of 10 percent to 20 percent, both individually
and in the aggregate. Corning said that the actual rate of glass volume growth
could vary by geographic market. In addition, the level of volume growth will be
influenced by the industry's ability to efficiently bring on new panel
manufacturing capacity during the quarter and the level of end market demand for
LCD products. Pricing pressures are expected to be slightly less than what
occurred in the first quarter.
"We believe that in the second quarter our panel customers will continue to ramp
up capacity at their Gen 6 and Gen 7 plants in anticipation of increasing LCD
television demand," Weeks, said. "There are indications that the retail price of
LCD televisions will continue to drop throughout the year and we believe that
overall LCD television penetration could reach 10 percent of the TV market in
2005." He said that the second quarter should also see sustained strength in LCD
monitor demand. The company continues to forecast that the total LCD glass
market volume will grow in excess of 50 percent for the year.
Telecommunications segment second-quarter sales are expected to grow
approximately 5 percent, led primarily by the seasonal strength in hardware and
equipment products. The company's second-quarter fiber volume increase is
expected to be in the range of flat to a 10 percent increase. Second-quarter
fiber pricing is expected to decline less than 5 percent sequentially. Corning
believes that second-quarter volumes of FTTP products sold to Verizon will be
similar to the very strong first quarter. The company also expects that FTTP
sales will decline in the second quarter with the implementation of expected
price reductions as the Verizon project enters its second year.
The company also expects equity earnings from Dow Corning to be in the range of
$50 million to $60 million in the second quarter, and it believes this is a
reasonable expectation per quarter for the remainder of the year.
Weeks said, "We have had an outstanding start to the year and we are excited
about our prospects. We believe we have excellent momentum coming into this
quarter and we are well positioned for growth in 2005."
Annual Shareholders Meeting
Corning will hold its annual shareholder meeting on Thursday, April 28, 2005
beginning at 11 a.m., EDT, at The Corning Museum of Glass Auditorium in Corning,
N.Y.
First-Quarter Conference Call Information
The company will host a first-quarter conference call at 8:30 a.m. EDT on
Wednesday, April 27. To access the call, dial (630) 395-0017.
(more)
Corning Reports First-Quarter Results
Page Five
The password is RESULTS. A replay of the call will begin at approximately 10:30
a.m. EDT and will run through 5 p.m. EDT, Wednesday, May 11. To listen, dial
(203) 369-2041, no pass code is required. To listen to a live audio webcast of
the call please go to Corning's Web site and follow the instructions:
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 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 resulting from
the impairment of equity or cost method investments 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
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 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.
(more)
Corning Reports First-Quarter Results
Page Six
Forward-Looking and Cautionary Statements
This news 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.
###
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; in millions, except per share amounts)
For the three months ended
March 31,
-----------------------------
2005 2004
--------- ---------
Net sales $ 1,050 $ 844
Cost of sales 621 544
--------- ---------
Gross margin 429 300
Operating expenses:
Selling, general and administrative expenses 184 160
Research, development and engineering expenses 98 84
Amortization of purchased intangibles 5 10
Restructuring, impairment and other charges and (credits) 19 34
Asbestos settlement (16) 19
--------- ---------
Operating income (loss) 139 (7)
Interest income 10 6
Interest expense (37) (36)
Loss on repurchases and retirement of debt, net (23)
Other expense, net (9) (4)
--------- ---------
Income (loss) before income taxes 103 (64)
(Provision) benefit for income taxes (19) 12
--------- ---------
Income (loss) before minority interests and equity earnings 84 (52)
Minority interests (1)
Equity in earnings of associated companies 166 107
--------- ---------
Net income $ 249 $ 55
========= =========
Basic earnings per common share $ 0.18 $ 0.04
========= =========
Diluted earnings per common share $ 0.17 $ 0.04
========= =========
Shares used in computing per share amounts for:
Basic earnings per common share 1,411 1,358
========= =========
Diluted earnings per common share 1,503 1,437
========= =========
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(Unaudited; in millions, except share and per share amounts)
March 31, December 31,
2005 2004
----------- -------------
Assets
Current assets:
Cash and cash equivalents $ 847 $ 1,009
Short-term investments, at fair value 700 872
--------- ---------
Total cash, cash equivalents and short-term investments 1,547 1,881
Trade accounts receivable, net of doubtful accounts and allowances 621 585
Inventories 562 535
Deferred income taxes 90 94
Other current assets 208 188
--------- ---------
Total current assets 3,028 3,283
Investments 1,485 1,484
Property, net 4,096 3,941
Goodwill and other intangible assets, net 387 398
Deferred income taxes 478 472
Other assets 159 166
--------- ---------
Total Assets $ 9,633 $ 9,744
========= =========
Liabilities and Shareholders' Equity
Current liabilities:
Short-term borrowings, including current portion of long-term debt $ 288 $ 478
Accounts payable 667 682
Other accrued liabilities 1,001 1,178
--------- ---------
Total current liabilities 1,956 2,338
Long-term debt 2,125 2,214
Postretirement benefits other than pensions 595 600
Other liabilities 740 747
--------- ---------
Total liabilities 5,416 5,899
--------- ---------
Commitments and contingencies
Minority interests 29 29
Shareholders' equity:
Preferred stock - Par value $100.00 per share; Shares authorized: 10 million
Series C mandatory convertible preferred stock - Shares issued: 5.75 million;
Shares outstanding: 633 thousand and 637 thousand 63 64
Common stock - Par value $0.50 per share; Shares authorized: 3.8 billion;
Shares issued: 1,437 million and 1,424 million 719 712
Additional paid-in capital 10,484 10,363
Accumulated deficit (7,060) (7,309)
Treasury stock, at cost; Shares held: 15 million and 16 million (155) (162)
Accumulated other comprehensive income 137 148
--------- ---------
Total shareholders' equity 4,188 3,816
--------- ---------
Total Liabilities and Shareholders' Equity $ 9,633 $ 9,744
========= =========
Certain amounts for 2004 were reclassified to conform to 2005 classifications.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in millions)
For the three months ended
March 31,
-----------------------------
2005 2004
--------- ---------
Cash Flows from Operating Activities:
Income from continuing operations $ 249 $ 55
Adjustments to reconcile income from continuing operations to net
cash provided by operating activities:
Depreciation 120 120
Amortization of purchased intangibles 5 10
Asbestos settlement (16) 19
Restructuring, impairment and other charges and (credits) 19 34
Loss on repurchases and retirement of debt 23
Undistributed earnings of associated companies (23) (29)
Deferred taxes 3 (40)
Restructuring payments (9) (34)
Customer deposits 20
Changes in certain working capital items:
Trade accounts receivable (54) (17)
Inventories (39) (32)
Other current assets (16) 3
Accounts payable and other current liabilities, net of restructuring payments (151) (66)
Other, net 34 (1)
--------- ---------
Net cash provided by operating activities 142 45
--------- ---------
Cash Flows from Investing Activities:
Capital expenditures (323) (134)
Short-term investments - acquisitions (314) (544)
Short-term investments - liquidations 486 421
Other, net 2 11
--------- ---------
Net cash used in investing activities (149) (246)
--------- ---------
Cash Flows from Financing Activities:
Repayments of short-term borrowings and current portion of long-term debt (192) (2)
Proceeds from issuance of long-term debt, net 48 396
Retirements of long-term debt (2) (141)
Proceeds from issuance of common stock, net 12 11
Proceeds from the exercise of stock options 9 12
Other, net (5) (2)
--------- ---------
Net cash (used in) provided by financing activities (130) 274
--------- ---------
Effect of exchange rates on cash (25) (1)
--------- ---------
Net (decrease) increase in cash and cash equivalents (162) 72
Cash and cash equivalents at beginning of period 1,009 688
--------- ---------
Cash and cash equivalents at end of period $ 847 $ 760
========= =========
Certain amounts for 2004 were reclassified to conform to 2005 classifications.
CORNING INCORPORATED
QUARTERLY SALES INFORMATION
(Unaudited; in millions)
2005 2004
-------- ------------------------------------------------------------
Q1 Q1 Q2 Q3 Q4 Total
-------- ------- ------- -------- -------- --------
Display Technologies $ 320 $ 230 $ 277 $ 295 $ 311 $ 1,113
Telecommunications
Fiber and cable 212 149 192 202 212 755
Hardware and equipment 215 163 200 210 211 784
-------- ------- ------- -------- -------- --------
427 312 392 412 423 1,539
Environmental Technologies
Automotive 127 125 121 119 114 479
Diesel 21 16 20 17 16 69
-------- ------- ------- -------- -------- --------
148 141 141 136 130 548
Life Sciences 74 79 79 75 71 304
Other 81 82 82 88 98 350
-------- ------- ------- -------- -------- --------
Total $ 1,050 $ 844 $ 971 $ 1,006 $ 1,033 $ 3,854
======== ======= ======= ======== ======== ========
The above supplemental information is intended to facilitate analysis of
Corning's businesses.
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 net income and earnings per share (EPS) excluding special items for
the first quarter of 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 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 measure.
--------------------------------------------------------------------------------
Per Income Before Net
Share Income Taxes Income
------- ------------- -------
Earnings per share (EPS) and net income,
excluding special items $ 0.17 $ 106 $ 252
Special items:
Restructuring, impairment and other
(charges) and credits (a) (0.01) (19) (19)
Asbestos settlement (b) 0.01 16 16
------- ------- -------
Total EPS and net income $ 0.17 $ 103 $ 249
======= ======= =======
(a) In the first quarter of 2005, Corning recorded an impairment charge of $19
million for an other than temporary decline in the fair value of its
investment in Avanex Corporation (Avanex). At March 31, 2005, shares of
Avanex were trading at $1.30 per share compared to Corning's average cost
basis of $2.40 per share. Corning believes it will not recover its cost
basis in Avanex shares given the significant decline in its stock price.
(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 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. In the first
quarter of 2005, Corning recorded a credit of $16 million for the change in
its common stock price of $11.13 at March 31, 2005 compared to $11.77, the
common stock price at December 31, 2004.
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE TO GAAP FINANCIAL MEASURE
Three Months Ended December 31, 2004
(Unaudited; amounts in millions, except per share amounts)
--------------------------------------------------------------------------------
Corning's net income and earnings per share (EPS) excluding special items for
the fourth quarter of 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 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 measure.
--------------------------------------------------------------------------------
Per Income Before Net
Share Income Taxes Income
------- ------------- -------
Earnings per share (EPS) and net income,
excluding special items $ 0.12 $ 79 $ 177
Special items:
Restructuring, impairment and other
(charges) and credits (a) 5 3
Asbestos settlement (b) (0.01) (17) (17)
------- ------- -------
Total EPS and net income $ 0.11 $ 67 $ 163
======= ======= =======
(a) Corning recorded net credits of $5 million ($3 million after-tax and
minority interest) for adjustments to prior periods' restructuring and
impairment charges, primarily in the Telecommunications segment.
(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. 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. In the
fourth quarter of 2004, Corning recorded a charge of $17 million for the
change in its common stock price of $11.77 at December 31, 2004 compared to
$11.08, the common stock price at September 30, 2004.
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)
--------------------------------------------------------------------------------
Corning's free cash flow financial measures for the three months ended March 31,
2005 and 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 three
months ended months ended
March 31, 2005 December 31, 2004
-------------- -----------------
Operating cash flow $ 142 $ 366
Less: Investing cash flow (149) (359)
Plus: Short-term investments - acquisitions 314 284
Less: Short-term investments - liquidations (486) (217)
--------- ---------
Free cash flow $ (179) $ 74
========= =========
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE TO GAAP FINANCIAL MEASURE
Three Months Ended June 30, 2005
(Unaudited; amounts in millions, except per share amounts)
--------------------------------------------------------------------------------
Corning's earnings per share (EPS) excluding special items for the second
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 $ 0.17 $ 0.19
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 second quarter of 2005, Corning will record a
charge or credit for the change in its common stock price as of June 30,
2005 compared to $11.13, the common stock price at March 31, 2005.
(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 second 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.