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Corning to close TV glass plant with loss of 1,000 jobs

Fiber optic cable leader Corning Inc. plans to cease production of cathode-ray-tube glass used in conventional television sets sold into the North American Free Trade Agreement market, leading to the …

Fiber optic cable leader Corning Inc. plans to cease production of cathode-ray-tube glass used in conventional television sets sold into the North American Free Trade Agreement market, leading to the loss of 1,000 jobs and charges against earnings. Corning said 15 April 2003 that Corning Asahi Video Products Co. continued to experience a weakening of NAFTA CRT glass sales in the 1Q 2003. Increased competition from imports was partly to blame. Corning Asahi Video is a partnership between Corning and Asahi Glass America, a unit of Asahi Glass Co. Ltd. of Tokyo. As a result, Corning plans to close its factory in State College, Pennsylvania, and to incur pretax charges of USD 140 million to USD 170 million in the first half of 2003. Of the total, about USD 62 million, or USD 20 million after taxes, will be recorded in the 1Q. About half of the charges will be cash and will be shared between Corning and Asahi Glass. In the 4Q 2002, Corning took a charge of USD 44 million to impair tangible assets in the Corning Asahi Video business, which has faced a declining customer base for several years and is now losing money. “In our relentless drive to restore profitability to Corning, we cannot carry money-losing mature businesses,” Chairman and Chief Executive James R. Houghton said in a statement. Chief Financial Officer James B. Flaws said that although Corning Asahi Video“s 4Q results were disappointing, the company had expected some improvement in profitability in 2003. “However, the business has continued to deteriorate through the first quarter, and we now believe there are no prospects for a sustainable recovery,” Mr. Flaws said. In spite of that, Corning expects to equal or better 1Q estimates for revenue of USD 700 million to USD 730 million, and a net loss of USD 10 million to USD 50 million, or USD 0.01 to USD 0.04 per share, excluding previously announced items related to an asbestos-litigation settlement, gains from debt repurchases, and charges from restructuring and impairment. Wall Street currently expects the company to record a 1Q loss excluding items of USD 0.03 a share on revenue of USD 716.8 million. Mr. Flaws said Corning remains on course to return to profitability, before items, by the 3Q 2003, adding that the closing of Corning Asahi Video will improve its cash-flow prospects in the long-term. Corning first became involved in CRT production when their main use was in radar screens during the Second World War.

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