2001 WORLDWIDE REVENUES CORNING TELECOMMUNICATIONS 74% CORNING TECHNOLOGIES 26% So, armed with full recognition of both our challenges and our strengths, we set out to re-shape the company, adjusting to the new realities of the market. During 2002, we relied on our Values to set the context in which we operated. From there, we focused relentlessly on a very clear plan with three priorities: During the course of the year — with a recovery in the telecommunications industry still nowhere in sight — we restructured the company and dramatically lowered our cost structure. Meanwhile, we focused our research and develop- ment efforts and recommitted ourselves to building those  businesses which presented the most attractive near-term opportunities for growth — a large part of which are outside the telecommunications segment. Our diverse portfolio and wealth of skills across a wide variety of markets had never been more important. Now, let’s take a look at our financial picture. Our 2002 sales from continuing operations were $3.2 billion, a significant decline from 2001 sales of $6.1 billion. Losses in our telecommunications segment and significant restructuring and impairment charges drove a net loss of $1.3 billion or $1.39 per share in 2002. Despite these lowered revenues and net loss, I take great pride in saying that Corning continues to be a financially sound company. We developed a three-part plan for achieving this goal: maintaining significant cash balances; using excess cash to reduce our debt; and continuing to have access to our $2 billion revolving line of credit. And we have achieved significant success in each of these areas.  Although it has been a very painful process, we have dramat- ically slowed the rate at which we are consuming cash and short term investments. Much of this, regrettably, was through a variety of plant closures and the elimination of about 7,100 jobs, in addition to the 12,000 jobs we eliminated last year. As a result, a major drain on cash has been due to severance payments. Beyond severance, our actual cash usage for our operations has become very low. We have also added to our cash reserves through such actions as our preferred stock offering in July, and the sale of our Ohio-based precision lens business to 3M late in the year. As a result of all these actions, we were able to end the year with about $2.1 billion in cash and short-term investments.  In keeping with this strategy, we also continue to pay down debt each quarter. Over the course of 2002 and the first month of this year, we repaid about $975 million in debt, including commercial paper. We haven’t touched our $2 billion in credit — and we don’t intend to. We maintain our access to this credit by keeping our debt-to-capital ratio lower than 60 percent. Our ratio at year end was 46.7 percent, well within the compliance range in our credit agreement. And as we execute on our plan to pay down debt, that ratio will drop even further. All that said, we are preserving what we believe is a strong liquidity position. And our balance sheet will continue to improve in 2003 as we gain more benefits from last year’s restructuring actions. We will continue to maintain our focus on improving our cash flow and reducing our debt levels as we look ahead to our longer-term goal of regaining an invest- ment-grade debt rating.  In 2003, we will focus our energy on the plan to return to profitability. We are on track to reach that goal, and let me explain a few of the reasons why. Our Technologies segment has had a strong year, and has set aggressive goals for both sales and profit growth for 2003. The time is right for these businesses to lead the way to our return to profitability — particularly our liquid-crystal display, envi- ronmental and semiconductor optics businesses. These are strong businesses which continue to set the standard for their markets and have plenty of growth potential. If the industries in which we participate expand as we expect, we have every confidence these businesses will be able to meet their goals. We are also well on our way toward getting our optical fiber and cable operations back to profitability as we reduce our fixed cost structure. In October, we announced plans to close several of our fiber plants and to streamline our cable R ETURNING TO PROFITABILITY P RESERVING OUR FINANCIAL HEALTH TO PRESERVE THE FINANCIAL HEALTH OF THE COMPANY; TO RETURN TO PROFITABILITY IN 2003; TO CONTINUE TO INVEST IN OUR FUTURE . W HAT WE DID 2 The plan — painful though it is — is working.