James P. Clappin President, Corning Glass Technologies Investor Meeting February 8, 2013 Forward Looking and Cautionary Statements Certain statements in this presentation constitute forward looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Such forward looking statements are based on current expectations and involve certain risks and uncertainties. Actual results might differ from those projected in the forward looking statements. Additional information concerning factors that could cause actual results to materially differ from those in the forward looking statements is contained in the Securities and Exchange Commission filings on the Company and at the end of this presentation. 2 1
Information access anywhere, anytime 3 The display is the essential framing device for our digital age 4 2
Next wave of innovation, enabled by glass Scalability and Proliferation of Touch Immersive Visual Experience Thin Form Factors and New Capability 5 specifically, glass precisely engineered by Corning Display Glass Award-winning EAGLE XG Glass for a-si applications Corning Lotus Glass for high-performance displays Ultra-thin Corning Willow Glass for next-generation displays Cover Glass Corning Gorilla Glass 3 with Native Damage Resistance for mobile applications The leading one-glass solution for low-cost touch technologies 6 3
Display Technologies and Corning Gorilla Glass working together Thickness in mm CADR '08 - '12 '12 - '16 Gorilla (12%) (5%) Display (3%) (4%) Gorilla Capacity in Mft 2 CAGR '08 - '12 '12 - '16 Total 14% 13% Assets (# Tanks) Gorilla Display Display '08 '10 '12 '14E '16E '08 '10 '12 '14E '16E 7 The Display market is still growing Glass Market Growth Drivers TV area growth Unit growth of TV will be faster than historical rate of 3-4% Growth in screen size: 50 + TV doubling every two years Bft 2 LCD Glass Market LCD TV Mobile applications - high-performance displays Explosive growth of tablets will sustain IT glass demand Larger phone screens will drive area growth IT apps S/M apps '09 '10 '11 '12 '13F '14E '15E '16E 8 4
with continued focus on TVs FPTV Growth Drivers TV installed base grows past 2.5B Increasing TVs per household in developed regions New TV households in emerging regions FPTV replacement will form an increasing portion of demand FPTV replacement 6-8 years Continued innovation and value drives demand B Units TV Installed Base 3.0 2.5 2.0 CRT TV 1.5 1.0 0.5 LCD TV 0.0 '09 '11 '13F '15E M Units 300 250 200 150 100 Flat Panel Annual TV Shipment CRT TV FPTV replacement 50 FPTV FPTV replacement 0 '09 '11 '13F '15E Source: DisplaySearch, Corning Analysis 9 Innovation and value shorten replacement cycle 2006 Screen Size: 40 Thickness: 5 Resolution: 720p Florescent Backlight Price: $2,500 + 2013 Screen Size: 60 Thickness: 1 Resolution: 1080p LED - more vivid color Price: <$1,000 Beyond Screen Size: >60 Thickness: <1 Resolution: 2K4K Expanded color gamut Price: <$1,000 10 5
More technically advanced glass is required High performance displays (HPD) are growing rapidly High resolution LCDs OLEDs HPDs require advanced backplanes Metal oxide Polysilicon Corning Lotus Glass designed to offer best performance for HPDs HPD Market Mft 2 CAGR 47% 2013F 2016E 11 Industry solution for OLED - two pieces of engineered glass Hermetic Low cost Reliable Proven OLED Glass Thin Film Poor barrier Possible Shorter product life Cover Glass Metal Expansion mismatch Low yields Shorter product life Touch Sensor Encapsulation Glass Backplane 12 6
Corning Willow TM Glass offers flexible solutions and is superior to plastic Thinner and Lighter Devices Hermetic Conformable and Flexible Next Generation Processing vs. plastic Higher Temp Processing Better Optical Clarity Large Cover Glass 13 Display stabilizes Share Stability Low-Cost Manufacturing Capital Efficiency Quarterly % Change Share Base Metal Expansion Volume Mft2 Price 09-'16 CADR 12% 2009 2013E 2009 2016E Share stability and moderate price declines 2009 2016E Ongoing declines in + + manufacturing cost Increasing asset efficiency 14 7
leading to consistent profits and cash generation while Corning Gorilla Glass grows Display has stabilized and generates significant cash '11 '16 Market growth / New Products Moderate Price Declines Cost Reduction Asset Utilization Display Technologies NPAT '11 '12 '13F '16E Gorilla Glass will continue to grow '11 '16 Asset Utilization Cost Reduction Market growth / Asset New Utilization Products Specialty Materials NPAT '11 '12 '13F '16E 15 Corning Gorilla Glass Successes Market Acceptance Glass of choice for device manufacturers Featured on: >33 major brands >975 product models >1 billion devices worldwide Innovation Launched Corning Gorilla Glass 3 with Native Damage Resistance in January 2013 Performance Surpassed U.S. $1 billion in sales in 2012 Cumulative Devices One Billion Annual Revenue One Billion $ 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 16 16 8
Smartphone growth remains strong M Units 1,500 Feature Phones Smartphones Screen Size 1,000 500 Cover Glass Other/Plastic + Screen size area (in 2 ) 10.1 in 2 + 30% 13.1 in 2 0 '08 '12 '16E '08 '12 '16E Smartphones replacing feature phones Source: DisplaySearch, IDC, isuppli, Corning Analysis '12 '16E Average screen size increasing 17 with potential to dramatically increase the market opportunity Tablet PCs Units (M) Notebooks* Units (M) 300 300 200 Other Cover Glass 200 Other Cover Glass 100 100 Touch on notebooks could create dramatic growth 0 2008 2012 2016E 0 2008 2012 2016E Source: DisplaySearch, IDC, isuppli, Corning Analysis * includes convertible notebooks / convertible tablets 18 9
Corning Gorilla Glass has potential to more than double Cover Glass Market Size* Market Size (ft 2 ) $1B in Gorilla Glass Sales Units, size, & touch drive 2-3x volume growth 2010 2012 2014E 2016E Mobile Phones Tablets Notebooks Source: Third party reports and Corning analysis *Glass sold in devices 19 Promising applications for Corning Gorilla Glass Application Applicable Market Benefits Transportation 5 + Bft 2 Lower Emissions Fuel Economy Lower Center of Gravity Faster Acceleration Auto glazing Rail Air Modern Design Optical Clarity Touch Interface Durable Easy to Clean Interior Architecture 9 + Bft 2 Wall coverings Lighting Appliances 400M units Shaped surfaces Interactive Large Cover Glass 100Mft 2 Interactive white boards Large format public signage Television Large Cover Glass 20 10
Specifically, in the automotive industry Property Benefits We are working with major premium auto OEMs for the glazing application of Gorilla Glass Reduce overall glazing weight Features Faster acceleration Center of gravity Better acoustics Less emissions Lighter window components Theft security Better fuel economy Lighter liftgate Ejection safety Lower energy Less heat load Less A/C, better mpg Lower energy defog 21 Corning has evolved the pace of innovation 2011 Setting the industry standard 2012 Same durability, 20% thinner 2013 Improved scratch resistance 22 11
and continues to solve for the future The future holds multiple opportunities to address customers needs. They re not easy to solve which plays to Corning s strengths. Anti-reflective Anti-microbial 3D Shapes 23 Summary Key Takeaways Display to stabilize its profitability while continuing to generate significant cash Ongoing drive to thin and productivity gains reduce cost and add significant capacity to support both Display and Gorilla growth with limited investment Corning Gorilla Glass market has potential to more than double; with additional opportunities on the horizon 24 12
Glass matters 25 Forward Looking and Cautionary Statements This presentation contains forward looking statements that involve a variety of business risks and other uncertainties that could cause actual results to differ materially. These risks and uncertainties include the possibility of changes or fluctuations in global economic conditions; currency exchange rates; product demand and industry capacity; competitive products and pricing; availability and costs of critical components and materials; new product development and commercialization; order activity and demand from major customers; capital spending by larger customers in the telecommunications industry and other business segments; the mix of sales between premium and non-premium products; possible disruption in commercial activities due to terrorist activity and armed conflict; ability to obtain financing and capital on commercially reasonable terms; acquisition and divestiture activities; the level of excess or obsolete inventory; the ability to enforce patents; product and components performance issues; and litigation. These and other risk factors are identified 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. 26 13
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CORNING INCORPORATED AND SUBSIDIARY COMPANIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURE TO GAAP FINANCIAL MEASURE (Unaudited; amounts in millions) Corning s free cash flow financial measure is a non-gaap financial measure within the meaning of Regulation G of the Securities and Exchange Commission. Non-GAAP financial measures are not in accordance with, or an alternative to, generally accepted accounting principles (GAAP). The company believes presenting non-gaap financial measures are helpful to analyze financial performance without the impact of unusual items that may obscure trends in the company s underlying performance. A detailed reconciliation is provided below outlining the differences between this non-gaap measure and the directly related GAAP measures. ended Dec. 31, 2004 ended Dec. 31, 2005 ended Dec. 31, 2006 ended Dec. 31, 2007 ended Dec. 31, 2008 ended Dec. 31, 2009 ended Dec. 31, 2010 ended Dec. 31, 2011 ended Dec. 31, 2012 Cash flows from operating activities $1,009 $1,939 $1,803 $2,077 $2,128 $2,077 $3,835 $3,189 $3,206 Less: Cash flows from investing activities (922) (1,712) (2,181) (561) (1,699) (1,370) (1,769) (2,056) (2,628) Plus: Short-term investments acquisitions 1,685 1,668 2,894 2,152 1,865 1,372 2,768 2,582 2,270 Less: Short-term investments liquidations (1,389) (1,452) (1,976) (2,862) (2,083) (1,281) (2,061) (3,171) (2,269) Free cash flow $ 383 $ 443 $ 540 $ 806 $ 211 $ 798 $2,773 $ 544 $ 579
CORNING INCORPORATED AND SUBSIDIARY COMPANIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURE TO GAAP FINANCIAL MEASURE Specialty Materials Segment s Ended December 31, 2012 and December 31, 2011 (Unaudited; amounts in millions) Corning s net income from the Specialty Materials segment excluding special items for the years ended December 31, 2012 and December 31, 2011 is a non-gaap financial measure within the meaning of Regulation G of the Securities and Exchange Commission. Non-GAAP financial measures are not in accordance with, or an alternative to, generally accepted accounting principles (GAAP). The company believes presenting non-gaap net income is helpful to analyze financial performance without the impact of unusual items that may obscure trends in the company s underlying performance. A detailed reconciliation is provided below outlining the differences between these non-gaap measures and the directly related GAAP measures. December 31, 2012 December 31, 2011 over % Change Net income from the Specialty Materials segment, excluding special items $ 175 $ 47 272% Restructuring, impairments and other charges (a) (33) (83) Net income from the Specialty Materials segment $ 142 $ (36) (a) In 2012, the Specialty Materials segment recorded a $33 million after tax charge for workforce reductions and asset impairments. In 2011, the Specialty Materials segment recorded an $83 million after tax charge for asset impairments. - 2 -
CORNING INCORPORATED AND SUBSIDIARY COMPANIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURE TO GAAP FINANCIAL MEASURE Dow Corning Corporation, Affiliated Company of Corning Incorporated Ended December 31, 2011 (Unaudited; amounts in millions) Income before income taxes, income tax provision, non-controlling interests and net income, excluding special items, from Dow Corning Corporation, an equity affiliate of Corning Incorporated, for the year ended December 31, 2011 are non-gaap financial measures within the meaning of Regulation G of the Securities and Exchange Commission. Non-GAAP financial measures are not in accordance with, or an alternative to, generally accepted accounting principles (GAAP). The company believes presenting non- GAAP financial measures is helpful to analyze financial performance without the impact of unusual items that may obscure trends in the company s underlying performance. A detailed reconciliation is provided below outlining the differences between these non-gaap measures and the directly related GAAP measures. Income before income taxes ended December 31, 2011 Silicones Polysilicon Total Dow Corning Income Income Income Non- before Income Non- before Income Nontax Controlling Net income tax Controlling Net income tax Controlling provision interests income taxes provision interests income taxes provision interests Net income Income before income taxes, income tax provision, noncontrolling interests and net income, excluding special items $756 $249 $50 $456 $515 $191 $134 $190 $1,271 $440 $184 $646 Special items: Contract settlement (a) 372 121 93 160 372 121 93 160 Income before income taxes, income tax provision, noncontrolling interests and net income $756 $249 $50 $456 $887 $312 $227 $350 $1,643 $561 $277 $806 (a) In 2011, Dow Corning Corporation recorded a $372 million ($160 million after-tax) credit for settlement of a dispute related to long term supply agreements. - 3 -
CORNING INCORPORATED AND SUBSIDIARY COMPANIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURE TO GAAP FINANCIAL MEASURE Dow Corning Corporation, Affiliated Company of Corning Incorporated Ended December 31, 2012 (Unaudited; amounts in millions) Income before income taxes, income tax provision, non-controlling interests and net income, excluding special items, from Dow Corning Corporation, an equity affiliate of Corning Incorporated, for the year ended December 31, 2012 are non-gaap financial measures within the meaning of Regulation G of the Securities and Exchange Commission. Non-GAAP financial measures are not in accordance with, or an alternative to, generally accepted accounting principles (GAAP). The company believes presenting non- GAAP financial measures is helpful to analyze financial performance without the impact of unusual items that may obscure trends in the company s underlying performance. A detailed reconciliation is provided below outlining the differences between these non-gaap measures and the directly related GAAP measures. Income before income taxes Ended December 31, 2012 Silicones Polysilicon Total Dow Corning Income Income Income Non- before Income Non- before Income Nontax Controlling Net income tax Controlling Net income tax Controlling provision interests income taxes provision interests income taxes provision interests Net income Income before income taxes, income tax provision, noncontrolling interests and net income, excluding special items $553 $200 $50 $304 $ 113 $42 $37 $34 $666 $242 $87 $338 Special items: Restructuring, impairment and other credits (a) (81) (24) (57) (285) (72) (100) (113) (366) (96) (100) (170) Contract settlement (b) 48 17 11 20 48 17 11 20 Income before income taxes, income tax provision, noncontrolling interests and net income $472 $176 $50 $247 $(124) $(13) $(52) $(59) $348 $163 $(2) $188 (a) (b) In 2012, Dow Corning Corporation recorded a $366 million ($170 million after-tax) charge for workforce reductions and asset impairments. In 2012, Dow Corning Corporation recorded a $48 million ($20 million after-tax) credit for settlement of a dispute related to long term supply agreements. - 4 -
CORNING INCORPORATED AND SUBSIDIARY COMPANIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURE TO GAAP FINANCIAL MEASURE s Ended December 31, 2004, and December 31, 2005 through December 31, 2011 (Unaudited; amounts in millions) Earnings before interest and income taxes, excluding special items, of the Hemlock Semiconductor Group, a consolidated subsidiary of Dow Corning Corporation, an equity affiliate of Corning Incorporated, is a non- GAAP financial measure within the meaning of Regulation G of the Securities and Exchange Commission. Non-GAAP financial measures are not in accordance with, or an alternative to, generally accepted accounting principles (GAAP). The company believes presenting non-gaap earnings before interest and income taxes is helpful to analyze financial performance without the impact of unusual items that may obscure trends in the company s underlying performance. A detailed reconciliation is provided below outlining the differences between these non-gaap measures and the directly related GAAP measures. 2004 2006 2007 2008 2009 2010 2011 Earnings before interest and taxes of Hemlock Semiconductor, a consolidated subsidiary of Dow Corning Corporation, excluding special items $ 55 $371 $570 $716 $626 $582 $515 Special items: Contract settlement (a) 372 Other-than-temporary impairment of securities (b) 37 Income tax provision (20) (137) (211) (278) (232) (146) (328) Minority interest (13) (86) (132) (161) (145) (160) (209) Net income attributable to Hemlock Semiconductor 22 148 227 314 249 276 350 Net income attributable to Silicones 216 520 463 425 349 590 456 Net income attributable to Dow Corning Corporation $238 $668 $690 $739 $598 $866 $806 (a) (b) In 2011, Hemlock Semiconductor recorded a $372 million ($160 million after-tax) credit for settlement of a dispute related to long term supply agreements. In 2008, Hemlock Semiconductor recorded a $37 million charge ($24 million after-tax) for an other-than-temporary impairment of auction rate securities. - 5 -