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 Incorpo…
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 annual meeting on 26 April 2007. 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. Mr. Weeks reminded shareholders that Corning is often faced with the fact 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 identityour choice was not to change the fundamental nature of Corning, but rather to make Corning a better version of itself”, he said. Reviewing the continued strengthening of the company“s financial position, Mr. Weeks noted that since 2001, Corning has reduced its outstanding debt by two-thirds and increased cash by over 40% to USD 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 in 2006”. “Our second priority is to improve profitability and once again, we“ve made excellent progress”, Mr. Weeks said. Sales reached USD 5.2 billion in 2006 and net income, before special items, reached USD 1.8 billion, an increase of 35% over 2005 and an all-time record for the company. Mr. Weeks said that this strong business performance was the result of continued success in Display Technologies, where overall sales volume improved by 35%, driven largely by the doubling of liquid crystal display (LCD) television sales in 2006. In 2006, LCD TVs accounted for 23% of the global television market. Mr. 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 investments the company has been making in its diesel filters for heavy- and light-duty vehicles will start to pay-off in 2007, he said, as new U.S. heavy-duty emissions regulations took effect on 1 January 2007. He also noted that in 2006 Corning launched its Epic(R) 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, microreactors, 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. Mr. 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 in 2006 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, Mr. Weeks paid tribute to James R. Houghton, who retired for the second time as the company“s CEO in 2005 and stepped down as chairman of the board on 26 April 2007. The CEO said that when Mr. Houghton returned to head the company in 2002, “we faced the most challenging time in our historybut we held strong and then moved on to achieve in 2006“s record financial performance. “Jamie put his reputation at risk for us by returning to the CEO role in May 2002”, Mr. Weeks said. “We all owe him a great deal of gratitude”. Mr. Houghton reminded shareholders that, “Moving from more than USD 5 billion in losses to nearly USD 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, Mr. 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”. The Corning board elected Mr. Weeks its chairman. He will continue as chief executive officer. Peter Volanakis was elected president and will continue as chief operating officer. Mr. 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. First elected a director in 2002, he was named board member emeritus. 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 was 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.