Corning Announces Third-Quarter Results LCD volume strong

Corning Announces Third-Quarter Results LCD volume strong

October 26, 2006

    CORNING, N.Y., Oct. 26 /Xinhua-PRNewswire/ -- Corning
Incorporated (NYSE: GLW) announced on October 24, 2006,
third-quarter sales of $1.28 billion and net income of $438
million, or $0.27 per share.

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    Corning's third-quarter results include a charge of $13
million, or $0.01 per share, primarily reflecting the
increase in market value of Corning common stock to be
contributed to settle the asbestos litigation related to
Pittsburgh Corning Corporation.  Excluding this charge,
Corning's third-quarter net income would have been $451
million, or $0.28 per share.  These are non-GAAP financial
measures.  These and all non-GAAP financial measures are
reconciled on the company's investor relations Web site and
in attachments to this news release.

    "This was an excellent quarter for Corning,"
Wendell P. Weeks, president and chief executive officer,
said.  "At the beginning of the third quarter, we were
uncertain about the pace of the recovery from the excess
panel inventory correction in the liquid crystal display
(LCD) supply chain. We were pleased that glass demand
improved each month throughout the quarter as our customers
geared up to meet the anticipated fourth-quarter demand for
LCD televisions, notebook computers and desktop
monitors," he said.

    Third-Quarter Operating Results

    Corning's third-quarter sales of $1.28 billion
increased slightly over second-quarter sales of $1.26
billion and by 8 percent over last year's third-quarter
sales of $1.19 billion. Gross margin for the third quarter
remained strong at 44 percent.

    Equity earnings for the third quarter were $232 million
compared to second-quarter equity earnings of $256 million,
which included a $33 million tax gain at Dow Corning
Corporation.  Dow Corning's third-quarter equity earnings
were $78 million.

    Third-quarter sales for Corning's Display Technologies
segment were $506 million, a 3-percent increase over 2005
third-quarter sales of $489 million. Year-over-year LCD
glass volume increased 31 percent in the third quarter,
largely offset by price declines and the impact of foreign
exchange rates. Sequentially, third-quarter sales increased
10 percent from second-quarter sales of $461 million as
volume increases of 16 percent were offset somewhat by
price declines and the impact of foreign exchange rates.

    Samsung Corning Precision Glass Co., Ltd.'s (SCP)
third-quarter volume increased 38 percent year-over-year
and 11 percent sequentially.  Equity earnings from SCP were
$135 million, up 18 percent over last year and up about 2
percent compared with the second quarter.

    Total LCD glass volume, including both Corning's wholly
owned business and SCP, increased 35 percent year-over-year
and 13 percent sequentially.

    Telecommunications segment sales for the third quarter
were $456 million, declining 3 percent from the previous
quarter but in line with expectations. The decline was
primarily due to lower volume of fiber-to-the-premises
(FTTP) products and price declines.

    The company's Environmental Technologies segment had
sales of $153 million compared to second-quarter sales of
$152 million, reflecting relatively flat sales of both
automotive and diesel products.  In early October, Corning
announced its first long-term diesel emissions-control
products supply agreement with Cummins Emissions Solutions,
a business unit of Cummins Inc. Sales in Corning's Life
Sciences segment declined sequentially primarily due to a
softer market in North America and Europe.

    Cash Flow/Liquidity Update

    Corning ended the third quarter with $2.8 billion in
cash and short-term investments, an increase from $2.5
billion in the previous quarter.  The increase in cash and
short-term investments is primarily due to the issuance of
$250 million of long-term debt to replace debt repurchased
in the second quarter.  "Maintaining significant cash
is important to Corning's long-term financial health and to
enable us to invest in new business opportunities that
emerge from our research laboratories," James B.
Flaws, vice chairman and chief financial officer, said.

    In the third quarter, Corning had positive free cash
flow of $76 million and remains on track to be free cash
flow positive for the year.  Free cash flow is a non-GAAP
financial measure.

    Fourth-Quarter Outlook

    Corning expects fourth-quarter sales to be in the range
of $1.28 billion to $1.33 billion and EPS in the range of
$0.26 to $0.29, before special items. This EPS estimate is
a non-GAAP financial measure and excludes any special
items.

    Gross margin for the fourth quarter is expected to be
in the range of 44 percent to 46 percent and selling,
general and administrative expenses are expected to be in
the range of 17 percent to 18 percent of sales.  The
fourth-quarter tax rate is expected to be in the range of
13 percent to 15 percent.

    In its Display Technologies segment, Corning expects
that fourth-quarter sequential volume growth for its wholly
owned business will be in the range of 20 percent to 30
percent as the strong demand experienced at the end of the
third quarter continues into the fourth quarter.  Samsung
Corning Precision's fourth-quarter volume is expected to
increase sequentially between 8 percent and 12 percent. 
Corning expects that fourth-quarter price declines will be
consistent with the third quarter.

    "We are expecting our display segment to perform
well in the fourth quarter," Flaws said.  "We
anticipate that LCD TV sales will exceed 20 percent of the
global television market this year," he said.

    Corning's LCD glass volume for the first three
quarters, including both its wholly owned business and SCP,
increased more than 50 percent versus last year.  "With
the expected fourth-quarter growth, Corning's full-year
volume growth should be in line with our expectations for
the year.  Our capability to deliver larger-generation
substrate solutions and environmentally green glass with
our EAGLE XG(TM) composition has allowed us to maintain a
market leadership position," Flaws said.

    Corning's fourth-quarter Telecommunications segment
sales are expected to decline sequentially by 20 percent to
25 percent due to normal seasonality, lower FTTP volume and
price declines.  Fourth-quarter sales in the company's
Environmental Technologies segment are expected to be flat
with the previous quarter.  Fourth-quarter equity earnings
are expected to be flat to down 5 percent.

    Flaws also said that the company has been encouraged by
its initial diesel products sales and expects that volume
should continue to build as the industry gears up for the
implementation of the stricter 2007 U.S. environmental
emissions requirements for diesel engines.  He said that
the volume ramp should occur over several quarters into
next year.

    "An important goal for the long-term success of
the company is the development of a more balanced product
portfolio," Weeks said. "We continue to maintain
an investment of approximately 10 percent of our sales into
research, development and engineering.  A highlight of our
third quarter was the introduction of Corning's Epic(TM)
system, the life science industry's first label-free,
high-throughput drug screening system.  Our exploration
into new advanced displays such as single-crystal
silicon-on-glass technology, green laser applications,
carbon-based energy storage (fuel cells) and optical
fiber-radio technology are a few examples of some of our
more promising early-stage developments currently in our
laboratories," Weeks said.  He noted that these types
of technology developments often take as long as 10 years
before they are commercialized into the marketplace.

    Additionally, the company announced that it will be
meeting with investors and presenting at four upcoming
conferences: Western New York Investor Conference in
Buffalo, N.Y. on Oct. 31; UBS Global Communications and
Technology Conference in New York on Nov. 14; Credit Suisse
Annual Technology Conference in Scottsdale, Ariz., on Nov.
28 and Lehman Brothers Global Technology Conference in San
Francisco on Dec. 7.

    Third-Quarter Conference Call Information

    The company will host a third-quarter conference call
at 8:30 a.m. EDT on Wednesday, Oct. 25.  To access the
call, dial [phone].  The password is QUARTER THREE.
The leader is SOFIO. A replay of the call will begin at
approximately 10:30 a.m. EDT, and will run through 5 p.m.
EDT, Wednesday, Nov. 8. To listen, dial [phone]. No
pass code is required.  To listen to a live audio webcast
of the call, go to Corning's Web site:
http://www.corning.com/investor_relations , and follow the
instructions. The audio webcast will be archived for one
year following the call.

    Presentation of Information in this News Release

    Non-GAAP financial measures are not in accordance with,
or an alternative to, GAAP.  Corning's non-GAAP net income
and EPS measure excludes restructuring, impairment and
other charges and adjustments to prior estimates for such
charges.  Additionally, the company's non-GAAP measure
excludes adjustments to asbestos settlement reserves
required by movements in Corning's common stock price,
gains and losses arising from debt retirements, charges
resulting from the impairment of equity or cost method
investments, or adjustments to deferred tax assets, and
gains or losses recognized in equity earnings from
restructuring, impairment or other charges or credits taken
by equity method companies.  Corning's free cash flow
financial measures are also non-GAAP measures.  The company
believes presenting non-GAAP free cash flow; net income and
EPS measures are helpful to analyze financial performance
without the impact of unusual items that may obscure trends
in the company's underlying performance.  These non-GAAP
measures are reconciled on the company's Web site at
http://www.corning.com/investor_relations and accompany
this news release.

    About Corning Incorporated

    Corning Incorporated ( http://www.corning.com ) is a
diversified technology company that concentrates its
efforts on high-impact growth opportunities.  Corning
combines its expertise in specialty glass, ceramic
materials, polymers and the manipulation of the properties
of light, with strong process and manufacturing
capabilities to develop, engineer and commercialize
significant innovative products for the telecommunications,
flat panel display, environmental, semiconductor, and life
sciences industries.

    Forward-Looking and Cautionary Statements

    This press release 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 in global economic and political
conditions; tariffs, import duties and currency
fluctuations; product demand and industry capacity;
competition; manufacturing efficiencies; cost reductions;
availability and costs of critical components and
materials; new product development and commercialization;
order activity and demand from major customers; changes in
the mix of sales between premium and non-premium products;
facility expansions and new plant start-up costs; possible
disruption in commercial activities due to terrorist
activity, armed conflict, political instability or major
health concerns; adequacy and availability of insurance;
capital spending; equity company activities; acquisition
and divestiture activities; the level of excess or obsolete
inventory; the rate of technology change; the ability to
enforce patents; product and components performance issues;
stock price fluctuations; and adverse litigation or
regulatory developments.  Additional 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.

    For more information, please contact:

    Media Relations Contact:			
     Daniel F. Collins						
     Tel:   [phone]
     Email: [e-mail]	

    Investor Relations Contact:
     Kenneth C. Sofio
     Tel:   [phone]
     Email: [e-mail]

    Media Relations Contact - China:
     Lydia Lu
     Tel:   [phone] x1900
     Email: [e-mail]

SOURCE  Corning Incorporated