Corning Takes $800M in Charges

Corning is hit with fourth quarter goodwill and impairment charges of $800M to $825M

December 5, 2002

2 Min Read

CORNING, N.Y. -- Corning Incorporated (NYSE:GLW - News) today announced that its fourth quarter results will include additional pretax non-cash charges in the range of $800 to $825 million.The charges will include approximately $400 million to impair goodwill in the company's telecommunications segment and $400 to $425 million of impairment charges related to the tangible and intangible assets in Corning's conventional television glass and photonic technologies businesses.The company determined its goodwill charge after completing its annual assessment of goodwill as required under Statement of Financial Accounting Standards No. 142, (SFAS 142) of the Financial Accounting Standards Board. At the end of the third quarter, Corning had $2.1 billion in goodwill, with approximately $1.9 billion related to the telecommunications segment."The goodwill charge is consistent with what we told investors they might expect during our third-quarter conference call," James B. Flaws, vice chairman and chief financial officer said. "The accounting for SFAS142 is complex, but at its core is Corning's long-term view of the telecommunications marketplace and the resulting estimated cash flow and fair market values of its telecommunications segment. Our outlook does not anticipate any significant growth in the telecommunications segment until late 2004. However, we expect longer term improvement as bandwidth demand continues to grow absorbing existing network capacity. This recovery could be enhanced by public policy changes, consolidation of the industry and the introduction of new broadband applications."Corning said its other pretax impairment charges of $400 to $425 million are related to the decline in expected future cash flows from its conventional television glass and photonic technologies businesses. The charge related to the conventional television glass business of approximately $150 million reflects the impact of the decline in the conventional television tube industry in North America. The charge related to photonic technologies of $250 to $275 million reflects the very significant decline and the prolonged expected downturn in the optical components marketplace.Corning Inc.

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