Corning 2007 Annual Report

We also remain committed to investing in manufacturing capacity to match increased demand in our businesses. Our capital
expenditures were primarily focused on expanding manufacturing capacity for LCD glass substrates in the Display Technologies
segment and diesel products in the Environmental Technologies segment. Total capital expenditures for 2007 were $1.3 billion, of
which $883 million was directed toward our Display Technologies segment and $67 million was invested in our Environmental
Technologies segment. In addition, in April 2007, we announced a $300 million facility improvement plan for the Company’s
Sullivan Park Research and Development campus near Corning, New York. The expansion is expected to be completed over a
six-year period.
We expect our 2008 capital spending to be in the range of $1.5 billion to $1.7 billion, of which approximately $800 million to $1.0
billion will be directed toward our Display Technologies segment. In December 2007, we announced a 5-year capital expenditure plan
of $795 million to locate a glass manufacturing facility at Sharp Corporation’s plant in Sakai City, Japan. Production from this new
facility is expected to meet Sharp Corporation’s plan to begin production of LCD panels for large televisions by March 2010. In
February 2008, we announced a $453 million expansion of our LCD manufacturing facility in Taichung, Taiwan. The range provided
for 2008 for our Display Technologies segment includes some spending for recently announced projects.
RESULTS OF OPERATIONS
Selected highlights from our continuing operations follow (dollars in millions):
2007 2006 2005
% Change
07 vs. 06 06 vs. 05
Net sales $ 5,860 $ 5,174 $ 4,579 13 13
Gross margin $ 2,749 $ 2,283 $ 1,984 20 15
(gross margin %) 47% 44% 43%
Selling, general and administrative expenses $ 912 $ 857 $ 756 6 13
(as a % of revenues) 16% 17% 17%
Research, development and engineering expenses $ 565 $ 517 $ 443 9 17
(as a % of revenues)
Restructuring, impairment and other charges and
10% 10% 10%
(credits) $ (4) $ 54 $ (38) (107) (242)
(as a % of revenues) 0% 1% (1)%
Asbestos settlement $ 185 $ (2) $ 218 (9,350) (101)
(as a % of revenues)
Income (loss) from continuing operations before
3% 0% 5%
income taxes $ 1,291 $ 961 $ 559 34 72
(as a % of revenues) 22% 19% 12%
Provision for income taxes $ (80) $ (55) $ (578) 45 (90)
(as a % of revenues)
Equity in earnings of affiliated companies, net of
(1)% (1)% (13)%
impairments $ 942 $ 960 $ 611 (2) 57
(as a % of revenues) 16% 19% 13%
Net income $ 2,150 $ 1,855 $ 585 16 217
(as a % of revenues) 37% 36% 13%
Net Sales
The net sales increase in 2007 compared to 2006 was primarily the result of increased volumes in the Display Technologies,
Environmental Technologies, and Telecommunications segments. For those three segments, sales volume increases were offset
somewhat by price declines. Movements in foreign exchange rates did not have a significant impact on 2007 net sales when compared
with last year.
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