This summary is based on the fourth quarter fiscal 2006 earnings call conducted by Corning Inc. (GLW: chart) on January 24, 2007.

Key Investors Issues

- Sales were $1.37 billion, an increase of 14% from $1.2 billion in the prior year.
- Earnings were $646 million or 42 cents a share up from a loss of $33 million or 2 cents a share in 2005.
- The Board of Directors has established a goal to maintain a cash balance in excess of debt as protection against volatility in the markets.

Full Year Highlights:

- Sales were $5.17 billion, an increase of 13% over 2005 sales of $4.58 billion.
- Net income of $1.86 billion, or $1.16 per share, was up 218% from $585 million, or 38 cents per share in 2005.
- Total debt was $1.7 billion.

Fourth Quarter Highlights

Sales were $1.37 billion, an increase of 14% from $1.2 billion in the prior year driven by strong operating performance in display, higher equity earnings from both SCP and Dow Corning.

- Earnings were $646 million or 42 cents a share up from a loss of $33 million or 2 cents a share in 2005 on revenue growth.
- The firm recorded a pre-tax and after-tax gain of $139 million, primarily reflecting the decrease in market value of Corning common stock to be contributed to settle the asbestos litigation related to Pittsburgh Corning.
- Gross margin was 44%, which was in line with expectations and SG&A was $222 million, 16% of sales.

RD&E was $138 million, about 10% of sales, while interest income was $36 million in, up $4 million sequentially, reflecting the higher cash balance during the quarter.

- Equity earnings were $272 million and included the $28 million non-recurring gain at Samsung Corning CRT and the remaining increase was due to strong performance at SCP and Dow Corning.
- Corning ended the year with about $3.2 billion in cash and short-term investments, up from $2.8 billion in the third quarter and free cash flow was $239 million.
- The Board of Directors has established a goal to maintain a cash balance in excess of debt as protection against volatility in the markets.
- Prior use of cash beyond that level will include repaying debt maturities in the upcoming three years, earmarking funds needed for the potential major new developments coming out of the laboratories and then share repurchases and the reinstatement of dividend payments.

Update on Pittsburgh Corning:

- The judge handling the case denied the plan of reorganization that both sides have been working towards the past few years.
- The firm and others currently have motions for reconsideration, will be argued in the court on February 13.
- The objective is to go forward with the current plan of reorganization.

Segment Results:

- In display, sales were $619 million, a 19% increase over the prior period sales.
- Volume gains of 48% were largely offset by price declines of 21% and a slight unfavorable change in foreign exchange rate.
- Equity earnings from SCP were $147 million with sequential volume growth of 14%.
- Net income, which includes equity earnings, was $461 million with the increase primarily the result of higher volume, strong manufacturing performance in the wholly owned business.

Gross margin percent increased slightly with a strong volume and cost reduction programs helped mitigate the impact of price.

- Preliminary data indicates that the end market shipments were slightly higher than expectations for all three primary applications, notebooks, monitors and televisions.
- About 22 million notebooks were shipped, which was 7% higher than the prior period.
- For LCD monitors, about 36 million were shipped while 16 million LCD televisiobs were shipped.

Update on Glass Mix

- The glass mix of Gen 5 and higher was 87% and slightly higher in the third quarter while the mix of Gen 5.5, 6, 7 and 8 glass was 52% as Gen 8 glass capabilities continue to ramp.
- The firm shipped several million square feet subs genic path to meet their demand.
- EAGLE XG, the new extra green glass continues to progress well and current requests from customers to convert to new glass far outweigh the firm’s ability to supply at this time.

- Environmental sales were $155 million, slightly higher than the third quarter due to higher diesel product sales, which offset lower product sales as expected.
- The segment incurred a net loss of $8 million compared to a profit of $7 million in the third quarter as a result of lower auto demand, which was expected given the industry shutdowns at year-end, as well as inventory reductions.

- Telecommunications sales were $404 million, an 11% decrease from the third quarter but much better than expected.
- Sales for hardware and equipment products were $207 million compared to $215 million in the third quarter, with the decline less than expected due to an increase in demand from European and North American customers.
- Sales in fiber and cable products were $197 million, declining as a result of seasonality and lower private network-related demand.
- The segment incurred a net loss of $54 million.