Corning Incorporated Chief Executive Officer Wendell P. Weeks told shareholders on 27 April 2006 that the company is continuing to make progress on its financial goals and on growing its position in k…
Corning Incorporated Chief Executive Officer Wendell P. Weeks told shareholders on 27 April 2006 that the company is continuing to make progress on its financial goals and on growing its position in key markets, including liquid crystal display (LCD) glass substrates. At the same time, he said, it is working to become a more balanced company. Reflecting on the company“s accomplishments over the past year, Mr. Weeks said, “We have focused on consistent operating priorities: protecting our financial health, improving our profitability, investing in our future, and always living our values. These priorities have been the foundation of our success over the past three years, and I think it“s fair to say the results have been remarkable”. Mr. Weeks made his comments to more than 500 shareholders assembled for the company“s annual meeting in Corning, New York and hundreds more listening through a live Web cast. He told them that the penetration of LCD technology into the global TV market has more than doubled in 2005, from 5% to 11%, and that the company expects it to increase to between 18% and 19% during 2006. “We are the world“s leading supplier of LCD glass, and growing consumer demand for LCD TV fuels a continued industry migration to larger sizes, which plays to our strengths”, he said. Mr. Weeks said that Corning has strengthened both its balance sheet and its cash flow over the past year. The company ended 2005 with USD 600 million more cash than debt, the first time it has more cash than debt in 25 years. Improved operating cash flow has funded aggressive expansion of the display and diesel businesses. The overall financial improvements resulted in an important milestone in 2005, he said, when the company regained investment-grade credit ratings. On profitability, Mr. Weeks pointed to the fact that in 2005 the company improved net profit before special charges (a non-GAAP financial measure) by more than USD 500 million for the third year in a row. Mr. Weeks told shareholders that Corning“s focus on three major growth opportunities (LCD glass, fiber-to-the-premises and diesel products) continues to strengthen the company“s position in those markets. While LCD is driving current revenue growth, he added that fiber-to-the-premises (FTTP) is also promising. Mr. Weeks added that 2006 “will be an important year of execution on many fronts. In this year we must deliver in Display, Diesel and FTTP. We also expect to improve performance in all our businesses through continued cost reduction and sustained manufacturing improvement”. In reviewing the company“s business strategy with shareholders, Mr. Weeks emphasized that “we place big bets on long, difficult technology developments for new systems. Sometimes these bets pay off and sometimes they don“t. So our growth rate can behard to predict. The implication is that uncertainty and volatility are facts of life for all of us”. Corning is working to mitigate the effects of this volatility by improving both its financial strength and the diversity of its cash-generating businesses, he said. “This is our goal, but it will take time”. In closing, Mr. Weeks pledged to shareholders to keep the momentum going. “You can count on us to stay focused on our mission. This Management Committee is not after peak performance during our brief time at the helm of this great company. What we are after is sustainable performance. Our goal is to ensure that we set up the next generation of Corning leaders for success”. In other business during the Annual Meeting, shareholders elected the following directors to three-year terms: James B. Flaws, 57, vice chairman and chief financial officer, Corning Incorporated; James R. Houghton, 70, chairman, Corning Incorporated; James J. O“Connor, 68, retired chairman and CEO, Unicom Corporation; Deborah D. Rieman, 56, retired president and CEO, Check Point Software Technologies, Incorporated; Peter F. Volanakis, 50, chief operating officer, Corning Incorporated. Shareholders also elected to a two-year term Padmasree Warrior, 44, executive vice president and chief technology officer, Motorola, Inc. Shareholders also approved the following measures: an amendment to the 2002 Worldwide Employee Share Purchase Plan; the 2006 Variable Compensation Plan; and an amendment of the 2003 Equity Plan for Non-employee Directors. The appointment of PricewaterhouseCoopers LLP as Corning“s independent auditors for 2006 was also ratified. 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 by-laws have specified classified Board elections, putting about a third of the Board up for election each year.