Corning CEO: "We’re laying the groundwork for the next 150 years of Innovation and Independence”

Corning Incorporated (NYSE:GLW)’s Chairman and Chief Executive Officer Wendell P. Weeks acknowledged the continued impact of the global recession on the company’s businesses, but told shareholders, "we are encouraged by the fact that we were profitable for the first quarter and our Display Technologies business performed better than expected,” at the company’s annual meeting this morning.

Weeks began by reminding shareholders of Corning’s distinctive identity and clear corporate strategy, which "provide us with a solid foundation during these uncertain times.” Despite Corning’s need to take difficult actions, he said that the company plans for eventual difficult economic times "even when things are going well,” and entered the recession well prepared. He cited the company’s healthy balance sheet, experienced leadership team, and strong product pipeline as reasons for confidence in the company’s future.

Weeks explained that the company’s lower first-quarter financial performance resulted from the economic recession rather than a failed strategy or industry collapse and noted, "Corning is on the right side of important technology substitutions, and the fundamental growth drivers for our businesses are all still in place.” But Weeks underscored the fact that Corning could not simply wait for things to turn around. "As leaders, we have a responsibility to define reality, establish clear priorities, and take action," he said.

2008 Performance

Weeks described 2008 as a year with a "split personality.” He reminded shareholders that Corning had been on track for another year of record-breaking performance through the first half, but as the global credit crisis took hold of the economy in the third quarter, Corning’s business momentum began to decline. He reported that the first quarter of 2009 remained weak, with company sales down 9 percent sequentially and down 39 percent year over year. However, he noted that Corning benefited from strong LCD TV demand, and the company was profitable and free-cash-flow positive for the quarter.

Despite better-than-expected first-quarter performance, Weeks said the "reality is that we are experiencing a deep and prolonged recession. So, our 2009 priorities are clear.” He said Corning is focused on protecting the financial health of the company by preserving and conserving cash; investing in the future to create new revenue streams; and continuing to live the company’s values.

Rings of Defense

Weeks said that the need to protect the company’s financial health "has made it necessary to take painful actions, including closing plants and letting some of our people go.” He described Corning’s "Rings of Defense” model, explaining it begins with moderate cost-cutting steps and moves on to more severe ones as conditions worsen. He said, "It isn’t a scientific formula and it’s not something we rigidly follow. It really describes directionally how we choose among a range of difficult actions.”

Weeks explained to shareholders that the first ring was part of cost-cutting measures decided last year and implemented in the fourth quarter when the company curbed capital expenditures, questioned discretionary spending and stopped outside hiring. The second ring involved extended plant shutdowns, eliminating contractor and temporary positions, and returning employees from overseas assignments. As the recession deepened in January, the company implemented the third ring which included a global workforce reduction of 13 percent, salary freezes, and plant consolidations.

He reminded shareholders that Corning’s 2009 operating plan is based on approximately $5 billion in revenue, which depends on further improvement in the remaining quarters. Otherwise, the company could face additional restructuring actions. Weeks said the company was "encouraged by the performance of our Display business and the strong LCD TV retail demand for the first quarter,” but explained that there is still a lot of uncertainty in Corning’s markets.

Looking Ahead

Turning to the future, Weeks reaffirmed his confidence in Corning's long-term outlook. He highlighted some of the trends that will drive demand for Corning's products. "Consumers will continue to replace their CRT televisions with LCD TVs," he said. "The appetite for higher bandwidth will continue to create demand for our fiber-to-the-home products. And tighter environmental regulations are going into effect around the globe that will drive adoption of Corning’s substrates and filters for emissions control."Weeks pointed out that the recession has provided an opportunity to strengthen Corning's competitive position with manufacturing process improvements and continued development of new technologies and products. He said Corning’s research and development organization has delivered, on average, at least two new products per year to each of its businesses.

Weeks cited several examples of successful recent product introductions, including the ClearCurve® bend-insensitive fiber suite of products; the Epic® system drug screening technology; and Corning’s durable and lightweight Gorilla™ glass, which has now been designed into 20 different electronic devices including cell phones and notebook computers. He also described several initiatives that would create Corning's next wave of growth. These include:

• synthetic green lasers that make it possible to project large, high-resolution images from portable devices like cell phones;
• glass reactors that increase the efficiency and quality of chemical processing, while reducing the materials and energy used; and
• photovoltaics technology that leverages Corning’s flat glass for solar energy.

Weeks ended by expressing his confidence that Corning will survive this current challenge, as it has survived numerous challenges since 1851. He said, "We are taking the necessary action to weather the year ahead; we are seizing opportunities to make Corning stronger; and we are laying the groundwork for Corning’s next 150-plus years of innovation and independence.”

Formal Business

In other business during the meeting, shareholders elected the following directors to three-year terms: James B. Flaws, 60, vice chairman and chief financial officer, Corning Incorporated; James J. O’Connor, 72, retired chairman and chief executive officer, Unicom Corporation; Deborah D. Rieman, 59, managing director, Equus Management Company; Peter F. Volanakis, 53, president and chief operating officer, Corning Incorporated; and Mark S. Wrighton, 59, chancellor and professor of chemistry, Washington University, St. Louis. Shareholders elected James R. Houghton, 73, chairman emeritus, Corning Incorporated, for a one-year term.

Shareholders also approved the ratification of PricewaterhouseCoopers LLP as the independent registered public accounting firm for the 2009 fiscal year.

Two non-binding shareholder proposals passed: the first proposal asked the board to take steps to elect directors by majority vote in uncontested elections; and a second proposal requested the company to reorganize the board for annual election of all directors. Following the vote, the board agreed to review the proposals at a future meeting. Corning’s directors are currently elected by plurality voting, which is the default standard under New York law. Since 1985, Corning’s certificate of incorporation and by-laws have specified classified board elections, putting about one-third of the board up for election each year.

Telecommunications Presentation

In a special presentation immediately following the formal business meeting, Clark S. Kinlin, president and chief executive officer, Corning Cable Systems, provided an overview of Corning’s Telecommunications segment and outlook for the future. He noted that telecommunications continues to deliver balance and stability for Corning, and cited key macro trends such as bandwidth demand and public policy that will create future market growth.

"Only optical communications systems have the capability to keep pace with the world’s insatiable demand for bandwidth,” explained Kinlin, "and Corning technology is leading the way.”

He shared examples of several Corning innovations that were addressing critical customer needs at the long-haul, access, and enterprise network level. Said Kinlin, "We will improve our market position by solving our customers toughest problems-- expanding their network capabilities and reducing their costs.”

Webcast Information

The company hosted a live audio webcast of the 2009 annual meeting of shareholders in Corning, N.Y., from 11 a.m. to 12:15 p.m. EDT, April 30, 2009. To access the webcast archive, please go to 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.

Forward-Looking and Cautionary Statements

This press release contains "forward-looking statements” (within the meaning of the Private Securities Litigation Reform Act of 1995), which are based on current expectations and assumptions about Corning’s financial results and business operations, that involve substantial risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties include: the effect of global political, economic and business conditions; conditions in the financial and credit markets; currency fluctuations; tax rates; product demand and industry capacity; competition; reliance on a concentrated customer base; manufacturing efficiencies; cost reductions; availability of critical components and materials; new product commercialization; pricing fluctuations and changes in the mix of sales between premium and non-premium products; new plant start-up or restructuring 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. These and other risk factors are detailed 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.

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.