Wendell P. Weeks, president and chief operating officer, and James B. Flaws, vice chairman and chief financial officer, will address financial analysts at a Smith Barney Citigroup Technology Conference in New York City and Donald B. McNaughton, senior vice president, Display, will speak to analysts at a Credit Suisse First Boston Asian Technology Conference in Taiwan, both on Sept. 9. Financial analysts and investors also will join Corning officials on a tour of the company's Shizuoka, Japan LCD glass manufacturing facility later in the month and will hear from executives in the Display Technologies segment. In addition, Flaws will speak at the Bank of America Securities 34th Annual Investment Conference in San Francisco on Sept. 20.
"We are very pleased with our third-quarter to date business performance," Weeks will tell analysts, "and we are very comfortable with our previously announced earnings per share expectation of $0.10 to $0.12, before special items, for the quarter." Corning's EPS quarterly guidance estimate is a non-GAAP financial measure and excludes the previously announced charge of approximately $25 million pretax for the sale of the company's frequency control business and other potential gains and charges. The non-GAAP financial estimate is reconciled on the company's Investor Relations Web site and accompanies this news release.
LCD market growth remains strong
Corning will tell investors that the company now expects the worldwide market for LCD glass, measured in square feet, to grow by approximately 60 percent this year and that the company's 2004 volume growth is on pace to grow at about 70 percent. "Demand from our LCD customers for our glass remains very strong. Our manufacturing facilities continue to operate at full capacity as the volume gain in July and August was 75 percent over last year, similar to our first-half of the year performance," Weeks will say.
He also will point out that Corning now believes its full third-quarter LCD sequential volume growth will be between 5 percent and 10 percent, versus previous guidance of about 10 percent. The company will note that the change in guidance is due to the need for earlier-than-expected maintenance on one LCD glass melting tank. Regarding the recent news stories indicating potential inventory buildups in certain panel sizes, Weeks will tell investors, "It is our belief, supported by industry experts, that panel manufacturers are now aggressively lowering prices to spur consumer demand for the end products, but it is too soon to see these price declines fully reflected at the retail level. However, we are entering into the traditionally strong season for consumer electronic purchases with expected lower retail prices, which should continue to support overall market growth."
Weeks also will tell attendees that Corning now believes that worldwide annual growth of LCD glass will be in the range of 40 percent to 60 percent through 2006, although growth could be less in any given quarter. He will point out that this market demand is expected to be driven by small applications (with screens under 10 diagonal inches), which are expected to require a near-doubling in glass volume; notebook computers, which are expected to reach up to 34 percent market penetration; LCD monitors, which may reach up to 77 percent market penetration; and LCD televisions, which may reach up to 16 percent market penetration, all by 2006.
He is expected to say that Corning believes its market estimate of up to 16 percent for LCD television penetration is within the range of industry analysts' expectations for the LCD television market. Weeks also will tell investors that expansions announced to date by Corning will support a market penetration rate of approximately 10 percent for LCD televisions. To meet a LCD television penetration rate of 16 percent, additional capacity will have to be added. "Our capacity plans are modular and we will be able to accelerate our expansions or slow them down, if necessary," he will say.
Weeks will tell analysts that Corning now expects its third-quarter optical fiber volume to be in the range of a 5 percent to 15 percent increase over second-quarter volume. Previously, the company said it anticipated its third-quarter fiber volume to experience a sequential decrease between 10 percent and 15 percent. He will explain that the improved fiber performance appears to be the result of unexpected strength in the North American fiber market. Weeks will tell investors that the third-quarter improvements do not signal a recovery in the optical fiber market. "The optical fiber market continues to have depressed pricing, few premium fiber network builds and general oversupply three years after the downturn in the telecommunications industry," Weeks will say. He will add that Corning is also seeing some third-quarter volume improvement as a result of Verizon's fiber-to-the-premises project to pass one million homes this year, primarily in its hardware and equipment products.
A link to the live audio webcasts and presentations for the three upcoming analyst conferences will be made available at www.corning.com/investor_relations and archived for one year following the conference.
Presentation of Information in this News Release
Corning's earnings estimate for the third quarter is a non-GAAP financial measure as it excludes any potential gains or losses arising from previously announced restructuring actions; previously announced loss on the sale of the frequency control business; any further adjustments to the asbestos settlement reserve required by movement in Corning's stock price; and income from discontinued operations. The company believes presenting earnings estimates that exclude these items is helpful in understanding Corning's operating results. This earnings estimate is reconciled in this press 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 in the liquid crystal display industry and other businesses; pace of recovery in telecommunications capital spending, particularly for optical fiber and cabling; 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 Three Months Ended September 30, 2004 (Unaudited; amounts in millions, except per share amounts) Corning's earnings estimate excluding certain items for the third quarter is a non-GAAP financial measure within the meaning of Regulation G of the Securities and Exchange Commission. The company believes presenting earnings estimates that exclude these items is helpful in understanding Corning's operating results. This non-GAAP measure is not in accordance with and should not be considered an alternative of measurements required under generally accepted accounting principles (GAAP). A detailed reconciliation is provided below outlining the differences between this non-GAAP measure and the directly related GAAP measure. Range Guidance: Earnings per share (EPS) --------------------- excluding certain items $0.10 $0.12 Certain items excluded from guidance: Asbestos settlement (a) Restructuring, impairment and other charges and (credits) (b) Gain (loss) on repurchases and retirements of debt, net (c) --------- ---------- Earnings per share This schedule will be updated as additional announcements occur. (a) 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 is currently expected to be contributed to the trust in 2004, 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 the common stock price prior to contribution of the shares to the trust. In the third quarter of 2004, Corning will record a charge or credit for the change in its common stock price as of September 30, 2004 compared to $13.06, the common stock price at June 30, 2004. (b) Corning expects to record pretax charges approximating $18 million in the third quarter of 2004. In the third quarter of 2004, Corning announced that it reached an agreement to sell its Frequency Controls business, the sale of which is expected to generate a pretax loss approximating $25 million. Also in the third quarter of 2004, Corning will complete the sale of Corning Asahi Video Products Company assets to Henan Anyang CPT Glass Bulb Group, Xinyi Electronic Glass., Co., LTD. and record a pretax gain approximating $7 million. (c) From time to time, Corning may repurchase or retire debt, which could result in a gain or loss during the quarter. *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 third quarter 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.