Corning plans to take non-cash charges in the range of $2.8 billion to $2.9 billion against its third-quarter results. The charges will include approximately $1.4 billion to impair goodwill related to its Telecommunications segment; approximately $420 million to impair fixed assets and equity method investments in its Telecommunications segment; and up to $1 billion to establish a valuation allowance against certain deferred tax assets.
James B. Flaws, Corning’ s vice chairman and CFO, said: “Although our results in the Telecommunications segment in 2003 and 2004 have been on track with our projections, we are not seeing significant signs of the broad uplift in industry conditions previously projected for 2005 and beyond. As a result, we have updated and lowered our estimates of future cash flows for the Telecommunications segment. Our revised cash flow projections no longer support the goodwill related to this segment. Therefore, it is appropriate that we take an impairment charge.”
Flaws said the company “remains pleased with the current strength in North American telecommunications sales, due in large part to Corning’s participation in Verizon Communications fiber-to-the-premises build out. However, it is not enough to signal a broad recovery in the global telecommunications market.”http://www.corning.com
