FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, DC 20549

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

For the quarterly period ended              June 30, 2005
                                   --------------------------------

[ ]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13  OR  15(d) OF THE  SECURITIES
     EXCHANGE ACT OF 1934

For the transition period from ___________to____________

                          Commission file number 1-3247
                                                 ------


                              CORNING INCORPORATED
                              --------------------
                                  (Registrant)


                New York                                16-0393470
- ----------------------------------------   ------------------------------------
       (State of incorporation)            (I.R.S. Employer Identification No.)


One Riverfront Plaza, Corning, New York                   14831
- ----------------------------------------   ------------------------------------
(Address of principal executive offices)                (Zip Code)


Registrant's telephone number, including area code: 607-974-9000
                                                    ------------

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to the filing  requirements for
the past 90 days.

                     Yes   X                No ____
                         -----

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act).

                     Yes   X                No ____
                         -----


Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date:

1,472,062,428   shares  of  Corning's  Common  Stock,   $0.50  Par  Value,  were
outstanding as of July 15, 2005.






                                      INDEX
                                      -----

PART I - FINANCIAL INFORMATION
- ------------------------------

Item 1. Financial Statements

                                                                          Page
                                                                          ----

    Consolidated Statements of Operations (Unaudited) for the three
       and six months ended June 30, 2005 and 2004                          3

    Consolidated Balance Sheets (Unaudited) at June 30, 2005 and
       December 31, 2004                                                    4

    Consolidated Statements of Cash Flows (Unaudited) for the six
       months ended June 30, 2005 and 2004                                  5

    Notes to Consolidated Financial Statements (Unaudited)                  6

Item 2. Management's Discussion and Analysis of Financial Condition
           and Results of Operations                                       22

Item 3. Quantitative and Qualitative Disclosures About Market Risk         42

Item 4. Controls and Procedures                                            42


PART II - OTHER INFORMATION
- ---------------------------

Item 1. Legal Proceedings                                                  43

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds        47

Item 4. Submission of Matters to a Vote of Security Holders                48

Item 6. Exhibits                                                           49

Signatures                                                                 50






                  CORNING INCORPORATED AND SUBSIDIARY COMPANIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
               (Unaudited; in millions, except per share amounts)




                                                                      Three months                    Six months
                                                                     ended June 30,                 ended June 30,
                                                                ------------------------       ------------------------
                                                                   2005           2004           2005            2004
                                                                ---------       --------       ---------      ---------
                                                                                                  
Net sales                                                       $   1,141       $    971       $   2,191      $   1,815
Cost of sales                                                         658            625           1,279          1,169
                                                                ---------       --------       ---------      ---------

Gross margin                                                          483            346             912            646

Operating expenses:
   Selling, general and administrative expenses                       191            166             375            326
   Research, development and engineering expenses                     104             85             202            169
   Amortization of purchased intangibles                                3              9               8             19
   Restructuring, impairment and other charges and
     (credits) (Note 2)                                                (1)           (34)             18
   Asbestos settlement (Note 3)                                       137             47             121             66
                                                                ---------       --------       ---------      ---------

Operating income                                                       49             73             188             66

Interest income                                                        13              4              23             10
Interest expense                                                      (28)           (37)            (65)           (73)
Loss on repurchases and retirement of debt, net (Note 4)              (12)            (9)            (12)           (32)
Other income, net                                                      20              5              11              1
                                                                ---------       --------       ---------      ---------

Income (loss) before income taxes                                      42             36             145            (28)
Provision for income taxes (Note 5)                                   (44)           (24)            (63)           (12)
                                                                ---------       --------       ---------      ---------

(Loss) income before minority interests and
  equity earnings                                                      (2)            12              82            (40)
Minority interests                                                     (5)           (11)             (6)           (11)
Equity in earnings of associated companies                            172            107             338            214
                                                                ---------       --------       ---------      ---------

Net income                                                      $     165       $    108       $     414      $     163
                                                                =========       ========       =========      =========

Basic earnings per common share (Note 6)                        $    0.11       $   0.08       $    0.29      $    0.12
                                                                =========       ========       =========      =========
Diluted earnings per common share (Note 6)                      $    0.11       $   0.07       $    0.28      $    0.11
                                                                =========       ========       =========      =========

Shares used in computing per share amounts for (Note 6):
  Basic earnings per common share                                   1,438          1,383           1,422          1,371
                                                                =========       ========       =========      =========
  Diluted earnings per common share                                 1,517          1,495           1,508          1,446
                                                                =========       ========       =========      =========


The  accompanying  notes are an integral  part of these  consolidated  financial
statements.





                  CORNING INCORPORATED AND SUBSIDIARY COMPANIES
                           CONSOLIDATED BALANCE SHEETS
          (Unaudited; in millions, except share and per share amounts)



                                                                                           June 30,          December 31,
                                                                                             2005                2004
                                                                                          ---------          ------------
                                                                                                        
Assets

Current assets:
   Cash and cash equivalents                                                              $   1,301           $   1,009
   Short-term investments, at fair value                                                        814                 872
                                                                                          ---------           ---------
     Total cash, cash equivalents and short-term investments                                  2,115               1,881
   Trade accounts receivable, net of doubtful accounts and allowances - $27 and $30             645                 585
   Inventories (Note 7)                                                                         552                 535
   Deferred income taxes (Note 5)                                                                93                  94
   Other current assets                                                                         223                 188
                                                                                          ---------           ---------
       Total current assets                                                                   3,628               3,283

Investments (Note 8)                                                                          1,546               1,484
Property, net of accumulated depreciation - $3,515 and $3,532                                 4,220               3,941
Goodwill and other intangible assets, net (Note 9)                                              383                 398
Deferred income taxes (Note 5)                                                                  464                 472
Other assets                                                                                    156                 166
                                                                                          ---------           ---------

Total Assets                                                                              $  10,397           $   9,744
                                                                                          =========           =========

Liabilities and Shareholders' Equity

Current liabilities:
   Short-term borrowings, including current portion of long-term debt (Note 4)            $     288           $     478
   Accounts payable                                                                             609                 682
   Other accrued liabilities (Notes 3 and 10)                                                 1,214               1,178
                                                                                          ---------           ---------
       Total current liabilities                                                              2,111               2,338

Long-term debt (Note 4)                                                                       1,915               2,214
Postretirement benefits other than pensions                                                     593                 600
Other liabilities (Notes 3 and 10)                                                              887                 747
                                                                                          ---------           ---------
       Total liabilities                                                                      5,506               5,899
                                                                                          ---------           ---------

Commitments and contingencies (Note 3)
Minority interests                                                                               28                  29
Shareholders' equity:
   Preferred stock - Par value $100.00 per share; Shares authorized: 10 million
     Series C mandatory convertible preferred stock - Shares issued: 5.75 million;
     Shares outstanding: 616 thousand and 637 thousand                                           62                  64
   Common stock - Par value $0.50 per share; Shares authorized: 3.8 billion;
     Shares issued: 1,487 million and 1,424 million                                             743                 712
   Additional paid-in capital                                                                11,043              10,363
   Accumulated deficit                                                                       (6,895)             (7,309)
   Treasury stock, at cost; Shares held: 16 million                                            (158)               (162)
   Accumulated other comprehensive income (Note 12)                                              68                 148
                                                                                          ---------           ---------
       Total shareholders' equity                                                             4,863               3,816
                                                                                          ---------           ---------

Total Liabilities and Shareholders' Equity                                                $  10,397           $   9,744
                                                                                          =========           =========


The  accompanying  notes are an integral  part of these  consolidated  financial
statements.





                  CORNING INCORPORATED AND SUBSIDIARY COMPANIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (Unaudited; in millions)



                                                                                             Six months ended
                                                                                                  June 30,
                                                                                         -------------------------
                                                                                            2005           2004
                                                                                         ---------       ---------
                                                                                                   
Cash Flows from Operating Activities:
   Net income                                                                            $    414        $   163
   Adjustments to reconcile net income to net
    cash provided by operating activities:
     Depreciation                                                                             246            240
     Amortization of purchased intangibles                                                      8             19
     Restructuring, impairment and other charges and (credits)                                 18
     Asbestos settlement                                                                      121             66
     Loss on repurchases and retirement of debt, net                                           12             32
     Undistributed earnings of associated companies                                          (126)           (92)
     Minority interests, net of dividends paid                                                  6             11
     Deferred taxes                                                                             7            (35)
     Restructuring payments                                                                   (16)           (56)
     Customer deposits, net                                                                   232
     Changes in certain working capital items:
        Trade accounts receivable                                                             (89)           (43)
        Inventories                                                                           (39)           (33)
        Other current assets                                                                  (40)             7
        Accounts payable and other current liabilities, net of restructuring payments        (129)            (6)
     Other, net                                                                                60             34
                                                                                         --------        -------
Net cash provided by operating activities                                                     685            307
                                                                                         --------        -------

Cash Flows from Investing Activities:
   Capital expenditures                                                                      (698)          (302)
   Net proceeds from sale or disposal of assets                                                17             35
   Short-term investments - acquisitions                                                     (703)        (1,102)
   Short-term investments - liquidations                                                      762            745
   Other, net                                                                                  10              5
                                                                                         --------        -------
Net cash used in investing activities                                                        (612)          (619)
                                                                                         --------        -------

Cash Flows from Financing Activities:
   Repayments of short-term borrowings and current portion of long-term debt                 (195)            (9)
   Proceeds from issuance of long-term debt, net                                              147            396
   Repayments of long-term debt                                                              (102)          (150)
   Proceeds from issuance of common stock, net                                                344             24
   Proceeds from exercise of stock options                                                     59             27
   Other, net                                                                                  (6)            (5)
                                                                                         --------        -------
Net cash provided by financing activities                                                     247            283
                                                                                         --------        -------
Effect of exchange rates on cash                                                              (28)            (5)
                                                                                         --------        -------
Net increase (decrease) in cash and cash equivalents                                          292            (34)
Cash and cash equivalents at beginning of period                                            1,009            688
                                                                                         --------        -------

Cash and cash equivalents at end of period                                               $  1,301        $   654
                                                                                         ========        =======


The  accompanying  notes are an integral  part of these  consolidated  financial
statements.





                  CORNING INCORPORATED AND SUBSIDIARY COMPANIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


1.   Basis of Presentation

General

In these  notes,  the terms  "Corning,"  "Company,"  "we,"  "us," or "our"  mean
Corning Incorporated and subsidiary companies.

The accompanying  unaudited consolidated financial statements have been prepared
pursuant to the rules and regulations of the Securities and Exchange  Commission
(SEC) and in accordance with  accounting  principles  generally  accepted in the
United  States of America  (GAAP) for  interim  financial  information.  Certain
information  and note  disclosures  normally  included in  financial  statements
prepared in accordance  with GAAP have been omitted or condensed.  These interim
consolidated  financial  statements should be read in conjunction with Corning's
consolidated  financial  statements  and notes  thereto  included  in its Annual
Report on Form 10-K for the year ended  December  31,  2004  (2004  Form  10-K).
Except as disclosed herein, there has been no material change in the information
disclosed in the notes to the consolidated  financial statements included in the
2004 Form 10-K.

The unaudited  consolidated  financial statements reflect all adjustments which,
in the opinion of management,  are necessary for a fair statement of the results
of  operations,  financial  position  and cash  flows  for the  interim  periods
presented.  All such adjustments are of a normal recurring  nature.  The results
for  interim  periods are not  necessarily  indicative  of results  which may be
expected for any other interim period or for the full year.

Certain amounts for 2004 were reclassified to conform with 2005 classifications.
Additionally,  we have  reclassified  the 2004 interim results to conform to the
2004  year-end   classification   of  auction  rate   securities  as  short-term
investments instead of cash equivalents.  These  reclassifications had no impact
on results of operations or shareholders' equity.

Foreign Currency Translation and Transactions

Effective January 1, 2005, our Taiwan subsidiary changed its functional currency
from the new Taiwan  dollar (its local  currency) to the Japanese yen due to the
increased significance of Japanese yen based transactions of that subsidiary. As
a result of this change in functional  currency,  exchange rate gains and losses
are  recognized on  transactions  in currencies  other than the Japanese yen and
included in income for the period in which the exchange rates changed.

Derivative Instruments

In the second  quarter  of 2005,  Corning  began  using  derivative  instruments
(forwards)  to limit the exposure to foreign  currency  fluctuations  associated
with certain monetary assets and liabilities.  These derivative  instruments are
not designated as hedging  instruments for accounting purposes and, as such, are
referred to as undesignated  hedges.  Changes in the fair values of undesignated
hedges  are  recorded  in  current  period  earnings  in the other  income,  net
component,  along with the foreign  currency  gains and losses  arising from the
underlying  monetary assets or  liabilities,  in the  consolidated  statement of
operations.   At  June  30,  2005,  the  notional  amount  of  the  undesignated
derivatives was $283 million.

Stock-Based Compensation

We apply Accounting Principles Board Opinion (APB) No. 25, "Accounting for Stock
Issued to  Employees"  (APB 25), for our  stock-based  compensation  plans.  The
following  table  illustrates  the effect on income and earnings per share if we
had  applied  the fair value  recognition  provisions  of  Financial  Accounting
Standards Board (FASB)  Statement of Financial  Accounting  Standards (SFAS) No.
123,  "Accounting  for  Stock-Based  Compensation"  (SFAS 123),  to  stock-based
employee compensation.







(In millions, except per share amounts)
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                             Three months                       Six months
                                                                            ended June 30,                    ended June 30,
                                                                       -------------------------        -------------------------
                                                                          2005            2004             2005            2004
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                           
Net income - as reported                                               $    165       $     108         $    414       $     163
Add:  Stock-based employee compensation expense
  determined under APB 25, included in reported
  net income, net of tax                                                      9               1               16               3
Less:  Stock-based employee compensation expense
  determined under fair value based method, net of tax                      (22)            (28)             (42)            (57)
- ------------------------------------------------------------------------------------------------------------------------------------
Net income - pro forma                                                 $    152       $      81         $    388       $     109

Earnings per common share:
    Basic - as reported                                                $   0.11       $    0.08         $   0.29       $    0.12
    Basic - pro forma                                                  $   0.11       $    0.06         $   0.27       $    0.08

    Diluted - as reported                                              $   0.11       $    0.07         $   0.28       $    0.11
    Diluted - pro forma                                                $   0.10       $    0.05         $   0.26       $    0.08
- ------------------------------------------------------------------------------------------------------------------------------------


For purposes of SFAS 123 fair value disclosures,  each option grant's fair value
is estimated on the grant date using the Black-Scholes option-pricing model. The
following  are  weighted-average  assumptions  used for  grants  under our stock
plans:
- --------------------------------------------------------------------------------
                                 Three months                 Six months
                                ended June 30,               ended June 30,
                            ----------------------      ------------------------
                               2005       2004             2005       2004
- --------------------------------------------------------------------------------

Expected life in years            4          4                4          4
Risk free interest rate        3.8%       3.7%             3.7%       3.3%
Expected volatility             40%        50%              45%        50%
- --------------------------------------------------------------------------------


Changes in the status of outstanding options follow:
- --------------------------------------------------------------------------------
                                           Number of Shares    Weighted-Average
                                            (in thousands)      Exercise Price
- --------------------------------------------------------------------------------

Options outstanding December 31, 2004          139,023           $   20.43
Options granted under plans                      7,476           $   12.62
Options exercised                               (9,460)          $    6.69
Options terminated                              (2,106)          $   35.81
                                             ---------

Options outstanding June 30, 2005              134,933           $   20.72
                                             =========
Options exercisable June 30, 2005              106,148           $   24.09
- --------------------------------------------------------------------------------







New Accounting Standards

In December  2004,  the FASB issued SFAS No. 123  (revised  2004),  "Share-Based
Payment"  (SFAS  123(R)),  which  replaces SFAS 123 and  supercedes APB 25. SFAS
123(R)  requires all  share-based  payments to  employees,  including  grants of
employee  stock  options,  to be recognized in the financial  statements at fair
value.  On April 14,  2005,  the SEC issued a new rule that amends the  required
adoption  dates of SFAS 123(R).  Under SFAS 123(R),  Corning must  determine the
appropriate fair value model to be used for valuing  share-based  payments,  the
amortization  method for compensation cost, and the transition method to be used
at date of adoption.  We will implement the provisions of SFAS 123(R) on January
1, 2006 following the "prospective  adoption"  transition method.  This adoption
method  requires  Corning  to begin  expensing  share-based  payments  effective
January 1, 2006. Prior periods will not be restated.

Corning grants  restricted shares and stock options that are subject to specific
vesting conditions (e.g., three-year cliff vesting). The awards specify that the
employee will continue to vest in the award after retirement  without  providing
any  additional  service.  Corning  accounts  for this  type of  arrangement  by
recognizing  compensation  cost over the nominal vesting period (i.e.,  over the
three-year  vesting  period) and, if the employee  retires before the end of the
vesting period,  recognizing any remaining unrecognized compensation cost at the
date of retirement (the "nominal vesting period approach").

SFAS 123(R)  specifies that an award is vested when the employee's  retention of
the  award  is  no  longer  contingent  on  providing  subsequent  service  (the
"non-substantive  vesting period approach").  That would be the case for Corning
awards that vest when  employees  retire and are granted to retirement  eligible
employees. Accordingly, related compensation cost must be recognized immediately
for awards granted to retirement  eligible employees or over the period from the
grant date to the date retirement  eligibility is achieved,  if that is expected
to occur during the nominal vesting period.

We will continue to follow the nominal  vesting period  approach for (1) any new
share-based  awards  granted prior to adopting SFAS 123(R) and (2) the remaining
portion of unvested outstanding awards after adopting SFAS 123(R). Upon adoption
of SFAS 123(R), we will apply the non-substantive vesting period approach to new
grants  that  have  retirement  eligibility  provisions.   Had  we  applied  the
non-substantive  vesting  period  approach  versus the  nominal  vesting  period
approach,  stock-based  compensation  cost  would  have been $7  million  and $3
million higher for the six months ended June 30, 2005 and 2004, respectively, to
stock options and restricted share awards.

In summary, we are currently evaluating the impact that SFAS 123(R) will have on
our  consolidated  results of operations  and financial  condition.  Our current
estimate is that our incremental pretax and after-tax  share-based  compensation
expense  will be up to $90  million in 2006 and  beyond.  This  amount  includes
approximately $20 million related to the impact of applying the  non-substantive
vesting period approach.

In  March  2005,  the  FASB  issued   Interpretation  No.  47,  "Accounting  for
Conditional  Asset Retirement  Obligations - an interpretation of FASB Statement
No.  143" (FIN 47),  which  clarifies  the term  "conditional  asset  retirement
obligation" used in SFAS No. 143, "Accounting for Asset Retirement Obligations,"
and specifically when an entity would have sufficient  information to reasonably
estimate the fair value of an asset retirement  obligation.  Corning is required
to adopt FIN 47 no later than  December  31,  2005.  Corning does not expect the
adoption  of FIN 47 to have a  material  impact on its  consolidated  results of
operations and financial condition.

In May  2005,  the FASB  issued  SFAS No.  154,  "Accounting  Changes  and Error
Corrections"  (SFAS  154),  which  replaces  APB  Opinion  No.  20,  "Accounting
Changes,"  (APB 20) and SFAS No. 3,  "Reporting  Accounting  Changes  in Interim
Financial  Statements." SFAS 154 changes the requirements for the accounting for
and reporting of a change in accounting principle. Upon the adoption of SFAS 154
beginning January 1, 2006, Corning will apply the standard's guidance to changes
in  accounting  methods as required.  At this time,  Corning does not expect the
adoption of SFAS 154 will have a material impact on its consolidated  results of
operations and financial condition.






2.   Restructuring, Impairment and Other Charges and (Credits)

2005 Actions

Second Quarter
- --------------
In the second quarter of 2005, we recorded net credits of $1 million included in
restructuring,  impairment and other charges and  (credits).  A summary of these
credits and charges follows:

..    We recorded net credits of $7 million,  primarily for  adjustments to prior
     years' restructuring and impairment reserves.
..    We recorded an additional impairment charge of $6 million for an other than
     temporary decline in the fair value of our investment in Avanex Corporation
     (Avanex)  below  its  adjusted  cost  basis.  Our  investment  in Avanex is
     accounted  for  as an  available-for-sale  security  under  SFAS  No.  115,
     "Accounting for Certain Investments in Debt and Equity Securities." At June
     30, 2005,  shares of Avanex stock were trading at $0.90 per share  compared
     to our  adjusted  cost basis of $1.30 per share  (after  recording  for the
     first quarter of 2005 impairment charge discussed below). We intend to sell
     our shares of Avanex and, subject to restrictions and the trading volume in
     Avanex  stock,  we expect to complete this activity in early 2006. As we do
     not  expect  the  market  value of the  Avanex  shares to  recover  in this
     timeframe, the additional impairment in the second quarter was required.

First Quarter
- -------------
In the first quarter of 2005, we recorded a $19 million impairment charge for an
other than temporary decline in the fair value of our investment in Avanex.



The  following  table  illustrates  the  charges,  credits  and  balances of the
restructuring  reserves  as of and for the six months  ended  June 30,  2005 (in
millions):
- ------------------------------------------------------------------------------------------------------------------------------------
                                                              Six Months                                                   Remaining
                                                              ended June      Revisions         Net           Cash        reserve at
                                                January 1,     30, 2005      to existing     charges/       payments       June 30,
                                                   2005         charge          plans       (reversals)      in 2005         2005
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                         
Restructuring:
   Employee related costs                        $   18                                                     $    (8)       $    10
   Other charges                                     77                       $   (13)       $  (13)             (8)            56
                                                 -----------------------------------------------------------------------------------
      Total restructuring charges                $   95                           (13)          (13)        $   (16)       $    66
                                                 -----------------------------------------------------------------------------------

Impairment of assets:
   Impairment of available-for-sale
     securities                                                $    25                           25
                                                               ------------------------------------
   Assets to be disposed of by sale or
     abandonment                                                                    6             6
                                                               ------------------------------------
      Total impairment charges                                      25              6            31
                                                               ------------------------------------

Total restructuring, impairment and
  other charges and (credits)                                  $    25        $    (7)       $   18
- ------------------------------------------------------------------------------------------------------------------------------------


Cash payments for employee related costs will be  substantially  complete by the
end of 2005, while payments for other charges will be substantially  complete by
the end of 2008.






2004 Actions

Second Quarter
- --------------
In the second  quarter of 2004, we recorded  credits of $34 million  included in
restructuring,  impairment and other charges and  (credits).  A summary of these
credits follows:

..    We  recorded a $25  million  gain  related to proceeds in excess of assumed
     salvage  values for assets of Corning  Asahi Video  Products  Company (CAV)
     that were previously impaired but later sold to a third party in China. CAV
     was our 51% owned affiliate that manufactured  glass panels and funnels for
     use in conventional televisions and which was shut down in 2003.
..    We recorded a $9 million  credit  related to  adjustments  to prior  years'
     restructuring reserves.

First Quarter
- -------------
In the first quarter of 2004, we recorded net charges of $34 million included in
restructuring,  impairment and other charges and  (credits).  A summary of these
charges and credits follow:

..    We recorded $39 million of accelerated  depreciation and $1 million of exit
     costs  relating  to  the  final  shutdown  of our  semiconductor  materials
     manufacturing facility in Charleston, South Carolina.
..    We recorded credits of $6 million,  primarily related to proceeds in excess
     of assumed salvage values for assets that were previously impaired.



The  following  table  illustrates  the  charges,  credits  and  balances of the
restructuring  reserves  as of and for the six months  ended  June 30,  2004 (in
millions):
- ------------------------------------------------------------------------------------------------------------------------------------
                                                             Six months                                                   Remaining
                                                             ended June        Revisions        Net          Cash        reserve at
                                              January 1,      30, 2004        to existing    charges/      payments       June 30,
                                                 2004          charge            plans      (reversals)     in 2004         2004
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       
Restructuring:
   Employee related costs                      $     78                      $      (2)      $     (2)      $    (41)    $      35
   Other charges                                    108       $       1             (5)            (4)           (15)           89
                                               -------------------------------------------------------------------------------------
     Total restructuring charges               $    186               1             (7)            (6)      $    (56)    $     124
                                               -------------------------------------------------------------------------------------

Impairment of assets:
   Assets to be disposed of by sale
     or abandonment                                                                (33)           (33)

Other:  Accelerated depreciation                                     39                            39
                                                              ------------------------------------------

Total restructuring, impairment and
  other charges and (credits)                                 $      40      $     (40)
- ------------------------------------------------------------------------------------------------------------------------------------







3.   Commitments and Contingencies

Asbestos Settlement

On  March  28,  2003,  we  announced  that we had  reached  agreement  with  the
representatives  of  current  and  future  asbestos  claimants  on a  settlement
arrangement  that  was  thereafter  incorporated  into  the  Pittsburgh  Corning
Corporation (PCC) plan of reorganization (the PCC Plan). This settlement remains
subject  to a number of  contingencies,  including  approval  by the  Bankruptcy
Court.  If the PCC Plan is approved and becomes  effective,  our settlement will
require the  contribution  of our equity  interest in PCC, our  one-half  equity
interest in Pittsburgh  Corning Europe N.V. (PCE),  and 25 million shares of our
common stock. The common stock will be  marked-to-market  each quarter until the
PCC Plan is approved, thus resulting in adjustments to income and the settlement
liability  as  appropriate.  Corning  will also be making cash  payments of $148
million (net present  value as of June 30, 2005) in six  installments  beginning
one year after the plan is  effective.  In  addition,  we will assign  insurance
policy proceeds from our primary insurance and a portion of our excess insurance
as part of the settlement.  Two of Corning's primary insurers and several excess
insurers  have  commenced  litigation  for  a  declaration  of  the  rights  and
obligations of the parties under insurance  policies,  including rights that may
be affected by the settlement arrangement described above. Corning is vigorously
contesting  these  cases.  Management  is unable to predict  the outcome of this
insurance litigation.

The PCC Plan received a favorable vote from creditors in March 2004. Hearings to
consider  objections  to the PCC Plan were held in the  Bankruptcy  Court in May
2004.  The parties  filed  post-hearing  briefs and made oral  arguments  to the
Bankruptcy  Court in November 2004.  The Bankruptcy  Court allowed an additional
round of briefing to address current case law  developments and heard additional
oral  arguments on March 16, 2005. In mid-April  2005, the proponents of the PCC
Plan requested that the court rule on the pending objections.  If the Bankruptcy
Court does not approve the PCC Plan in its current form, changes to the Plan are
probable  as it is likely  that the Court  will  allow  the  proponents  time to
propose  amendments.   The  outcome  of  these  proceedings  is  uncertain,  and
confirmation  of the current  Plan or any amended Plan is subject to a number of
contingencies.  However, apart from the quarterly  mark-to-market  adjustment in
the value of the 25 million  shares of Corning stock,  management  believes that
the likelihood of a material adverse impact to Corning's financial statements is
remote.

The  following  summarizes  the charges we have recorded to  mark-to-market  the
value of our common stock (in millions):
- --------------------------------------------------------------------------------
                                   Three months            Six months
                                  ended June 30,          ended June 30,
                                 ----------------       ----------------
                                  2005       2004        2005       2004
- --------------------------------------------------------------------------------

Asbestos settlement charge       $ 137      $  47       $ 121       $ 66
- --------------------------------------------------------------------------------

Since March 28,  2003,  we have  recorded  total net charges of $567  million to
reflect the initial settlement and subsequent  mark-to-market adjustment for the
change in the value of our common stock.

The  carrying  value of our  investment  in PCE and the fair value of 25 million
shares of our common stock  (totaling $437 million at June 30, 2005) is recorded
in the other accrued liabilities  component in our consolidated  balance sheets.
As the timing of this  obligation's  settlement  will depend on future  judicial
rulings (i.e., controlled by a third party and not Corning), this portion of the
PCC  liability is  considered a "due on demand"  obligation.  Accordingly,  this
portion of the  obligation  has been  classified  as a current  liability,  even
though it is possible that the  contribution  could be made beyond one year. The
remaining  portion of the  settlement  liability,  representing  the net present
value of the cash payments,  is recorded in the other  liabilities  component in
our consolidated balance sheets.






Other Commitments and Contingencies

We provide financial guarantees and incur contingent  liabilities in the form of
stand-by letters of credit and performance  bonds. These guarantees have various
terms, and none of these guarantees are individually  significant.  We have also
agreed to provide a credit facility to Dow Corning  Corporation (Dow Corning) as
discussed in Note 8 to the  consolidated  financial  statements in our 2004 Form
10-K. The funding of the Dow Corning $150 million credit  facility is subject to
events  connected  to  the  Bankruptcy  Plan.  As of  June  30,  2005,  we  were
contingently  liable  for the  items  described  above  totaling  $361  million,
compared  with $368  million at  December  31,  2004.  We believe a  significant
majority of these  guarantees  and  contingent  liabilities  will expire without
being funded.

From time to time, we are subject to  uncertainties  and  litigation and are not
always able to predict the outcome of these items with assurance.  Various legal
actions (including the PCC matter discussed previously),  claims and proceedings
are pending against us,  including those arising out of alleged product defects,
product warranties,  patents, asbestos and environmental matters. In the opinion
of  management,  the  ultimate  disposition  of  these  matters  will not have a
material adverse effect on Corning's consolidated financial position,  liquidity
or results of operations.

4.   Debt

Second Quarter
- --------------
In the second quarter of 2005, we completed the following debt transactions:
..    We issued $100 million of 6.05% senior  unsecured notes for net proceeds of
     approximately  $99 million.  The notes mature on June 15, 2015. We may call
     the debentures at any time on or after June 15, 2010.
..    We redeemed for cash the $100 million principal amount of our 7% debentures
     due March 15, 2007,  which at the time had a book value of $88 million.  We
     recognized  a loss of $12  million  upon  the  early  redemption  of  these
     debentures.
..    We redeemed the remaining $191 million of our outstanding 3.50% convertible
     debentures.  The bondholders elected to convert  substantially all of their
     debentures  into Corning  common  stock at a  conversion  ratio of 103.3592
     shares  per  $1,000  debenture.  We  issued  20  million  shares  upon  the
     conversion  of the  debentures,  resulting in an increase to equity of $191
     million.

In addition, in the second quarter of 2005, we completed a common stock offering
of 20 million  shares for net proceeds of  approximately  $323 million.  The net
proceeds  from this stock  offering are intended to be used  primarily to reduce
debt by repurchasing for cash the remaining zero coupon  convertible  debentures
due on  November  8, 2015.  We may call the  debentures  at any time on or after
November 8, 2005. At June 30, 2005,  the debentures had a carrying value of $275
million.

Both the $100 million of 6.05%  debentures  and the 20 million  shares of common
stock were issued under our  existing $5 billion  universal  shelf  registration
statement. At June 30, 2005, our remaining capacity under the shelf registration
is approximately $2.1 billion.

First Quarter
- -------------
In the first quarter of 2005, we completed the following debt transactions:
..    We obtained a loan of approximately $48 million,  bearing interest at 2.1%,
     from a Japanese bank. This loan is part of a 10-year loan agreement entered
     into in 2004 to fund certain capital expansion activities in Japan.
..    We redeemed $100 million of our outstanding 3.50%  convertible  debentures.
     The bondholders  affected by this redemption elected to convert $98 million
     of their  debentures  into Corning  common  stock at a conversion  ratio of
     103.3592 shares per $1,000 debenture,  with the remaining $2 million repaid
     in cash.  Separately,  bondholders  elected  to  convert  approximately  $6
     million of outstanding  debentures  into Corning common stock. In total, we
     issued 11 million shares upon the conversion of the  debentures,  resulting
     in an increase to equity of $105 million.
..    We repaid a total of $192 million of notes in accordance  with their stated
     repayment schedule. This was primarily comprised of our 5.625% Euro notes.






In addition,  in the first  quarter of 2005,  we completed  negotiations  with a
group of banks on a new revolving credit facility.  The new facility provides us
access to a $975 million unsecured  multi-currency  revolving line of credit and
expires in March 2010. The facility includes two financial covenants,  including
a  leverage  test  (debt  to  capital  ratio)  and an  interest  coverage  ratio
(calculated on the most recent four  quarters).  Concurrent  with the closing of
this credit  facility,  we terminated our previous $2 billion  revolving line of
credit that was set to expire in August 2005.  As of June 30,  2005,  we were in
compliance with these covenants.



The following table  summarizes the activities  related to our debt  retirements
(both current and long-term) for the six months ended June 30, 2005 and 2004 (in
millions):
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                 Book Value of            Cash          Shares
                                                              Debentures Retired          Paid          Issued           Loss
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                          
2005 activity:
   Convertible debentures, 3.5%, due 2008                         $    297             $      2            31
   Other (primarily Euro notes, 5.625%, due 2005)                      195                  195
   Debentures, 7%, due 2007                                             88                  100                       $   (12)
- ------------------------------------------------------------------------------------------------------------------------------------
Total 2005 activity                                               $    580             $    297            31         $   (12)
- ------------------------------------------------------------------------------------------------------------------------------------

2004 activity:
   Convertible debentures, 3.5%, due 2008                         $    311             $     33            32         $   (32)
   Zero coupon convertible debentures, 2%, due 2015                    119                  117
   Other loans payable                                                   9                    9
- ------------------------------------------------------------------------------------------------------------------------------------
Total 2004 activity                                               $    439             $    159            32         $   (32)
- ------------------------------------------------------------------------------------------------------------------------------------


5.   Income Taxes

Our provision for income taxes and the related tax rates follow (in millions):
- --------------------------------------------------------------------------------
                                     Three months              Six months
                                    ended June 30,           ended June 30,
                                  -------------------       -----------------
                                     2005       2004         2005       2004
- --------------------------------------------------------------------------------

Provision for income taxes        $    (44)   $   (24)     $   (63)   $   (12)
Effective tax rate                 (104.8)%    (66.7)%      (43.4)%    (42.9)%
- --------------------------------------------------------------------------------

For the three and six months ended June 30, 2005,  the tax  provision  reflected
the impact of  maintaining  a  valuation  allowance  on the  majority of our net
deferred tax assets. As a result,  U.S.  (federal,  state and local) and certain
foreign income taxes  attributable to pretax income or losses were not provided.
The most  significant item for which a U.S. tax benefit was not provided was the
asbestos  settlement  charge. For the U.S. and certain foreign  operations,  the
income tax  provision  or benefit  attributable  to pretax  income or losses was
recorded as an adjustment to the valuation  allowance.  The income tax provision
for the three and six  months  ended June 30,  2005  included  income  taxes for
certain foreign  operations that were favorably impacted by tax holiday benefits
and investment tax credits.

At June 30,  2005,  we had net deferred  tax assets of $529  million,  which are
primarily U.S. net deferred tax assets. We continue to believe it is more likely
than not that we could  realize  these U.S. net  deferred  tax assets  through a
tax-planning strategy involving the sale of a non-strategic appreciated asset.

We expect to  maintain a valuation  allowance  on future tax  benefits  until an
appropriate  level of  profitability,  primarily  in the U.S.  and  Germany,  is
sustained  or we are able to develop tax planning  strategies  that enable us to
conclude  that it is more likely than not that a larger  portion of our deferred
tax assets would be realizable.  Until then, our tax provision will include only
the net tax expense  attributable to certain foreign  operations and the expense
or benefit from current U.S. and certain foreign  operations will be recorded as
an adjustment to the valuation allowance.






The  effective  tax rate for the three and six  months  ended  June 30,  2004 is
higher than the U.S.  statutory  income tax rate of 35%. Our  effective tax rate
was  impacted by  restructuring,  impairment  and other  charges and  (credits),
asbestos settlement charges and losses on repurchases and retirement of debt.

6.   Earnings Per Common Share



The  reconciliation  of the amounts  used in the basic and diluted  earnings per
common share computations follow (in millions, except per share amounts):
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                Three months ended June 30,
                                                     -------------------------------------------------------------------------------
                                                                     2005                                     2004
                                                     -------------------------------------     -------------------------------------
                                                       Net         Weighted-     Per Share       Net        Weighted-      Per Share
                                                     Income     Average Shares     Amount      Income    Average Shares     Amount
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                           
Basic earnings per common share                      $   165       1,438          $  0.11      $  108         1,383          $  0.08

Effect of dilutive securities:
   Stock compensation awards                                          38                                         34
   7% mandatory convertible preferred stock                           32                                         35
   3.50% convertible debentures                            1           9                            2            43
- ------------------------------------------------------------------------------------------------------------------------------------

Diluted earnings per common share                    $   166       1,517          $  0.11      $  110         1,495          $  0.07
- ------------------------------------------------------------------------------------------------------------------------------------




                                                                                Six months ended June 30,
                                                     -------------------------------------------------------------------------------
                                                                     2005                                     2004
                                                     -------------------------------------     -------------------------------------
                                                       Net         Weighted-     Per Share       Net        Weighted-      Per Share
                                                     Income     Average Shares     Amount      Income    Average Shares     Amount
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                           
Basic earnings per common share                      $   414       1,422          $  0.29      $  163         1,371          $  0.12

Effect of dilutive securities:
   Stock compensation awards                                          35                                         36
   7% mandatory convertible preferred stock                           32                                         39
   3.50% convertible debentures                            3          19
- ------------------------------------------------------------------------------------------------------------------------------------

Diluted earnings per common share                    $   417       1,508          $  0.28      $  163         1,446          $  0.11
- ------------------------------------------------------------------------------------------------------------------------------------


The following  potential  common shares were  excluded from the  calculation  of
diluted earnings per common share due to their  anti-dilutive  effect or, in the
case of stock options, because their exercise price was greater than the average
market price for the periods presented (in millions):
- --------------------------------------------------------------------------------
                                                  Three months     Six months
                                                 ended June 30,   ended June 30,
                                                 --------------   --------------
                                                   2005   2004      2005   2004
- --------------------------------------------------------------------------------

Potential common shares excluded from the
  calculation of diluted earnings per
  common share:
     3.5% convertible debentures                                            50
     4.875% convertible notes                        6      6         6      6
     Zero coupon convertible debentures              3      3         3      3
                                                 -------------------------------
     Total                                           9      9         9     59
                                                 ===============================
Stock options excluded from the calculation
  of diluted earnings per common share              50     58        57     57
- --------------------------------------------------------------------------------






7.   Inventories

Inventories comprise the following (in millions):
- --------------------------------------------------------------------------------
                                       June 30, 2005       December 31, 2004
- --------------------------------------------------------------------------------
Finished goods                            $   161               $   136
Work in process                               157                   172
Raw materials and accessories                 130                   139
Supplies and packing materials                104                    88
- --------------------------------------------------------------------------------
Total inventories                         $   552               $   535
- --------------------------------------------------------------------------------

8.   Investments



Investments comprise the following (in millions):
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                       Ownership            June 30,          December 31,
                                                                       Interest               2005                2004
                                                                      -----------           --------          ------------
                                                                                                       

Associated companies at equity
     Samsung Corning Precision Glass Co., Ltd.                            50%               $   647             $   572
     Dow Corning                                                          50%                   406                 324
     All other                                                        25%-51% (a)               478                 527
                                                                                            -------             -------
                                                                                              1,531               1,423
Other investments (b)                                                                            15                  61
                                                                                            -------             -------
Total                                                                                       $ 1,546             $ 1,484
- ------------------------------------------------------------------------------------------------------------------------------------


(a)  Amounts  reflect  Corning's  direct  ownership  interests in the respective
     associated companies. Corning does not control any such entities.
(b)  Amounts  reflect $12 million and $53 million at June 30, 2005 and  December
     31, 2004, respectively,  of available-for-sale securities stated at market.
     During 2005,  Corning recorded  impairment charges totaling $25 million for
     other than  temporary  declines in the fair value of shares of Avanex below
     their  cost  basis.  This is in  addition  to the  reversal  of  previously
     unrecognized  gains on Avanex shares of $14 million included in accumulated
     other comprehensive income at December 31, 2004 on the consolidated balance
     sheet.  Refer to Note 2  (Restructuring,  Impairment  and Other Charges and
     (Credits)) for additional information.






Summarized results of operations for our two significant  investments  accounted
for by the equity method follow:



Samsung Corning Precision Glass Co., Ltd. (Samsung Corning Precision)
- ---------------------------------------------------------------------
Samsung Corning Precision is a South Korea-based  manufacturer of liquid crystal
display glass for flat panel displays.  Samsung Corning  Precision's  results of
operations follow (in millions):
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                               Three months                      Six months
                                                                              ended June 30,                   ended June 30,
                                                                         ------------------------         -------------------------
                                                                           2005            2004             2005            2004
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                             
Statement of Operations:
     Net sales                                                           $     383      $     264         $     700      $     499
     Gross profit                                                        $     278      $     205         $     515      $     384
     Net income                                                          $     183      $     145         $     348      $     271
     Corning's equity in earnings of Samsung Corning Precision           $      85      $      71         $     165      $     136
     Dividends received from Samsung Corning Precision                                                    $     108      $      57

Related Party Transactions:
     Corning sales of inventory to Samsung Corning Precision                                                             $       6
     Corning purchases from Samsung Corning Precision                    $       3      $      15         $      12      $      37
     Corning transfers of machinery & equipment to Samsung
       Corning Precision at cost (a)                                     $      26      $       9         $      46      $      32
- ------------------------------------------------------------------------------------------------------------------------------------


(a)  Corning  purchases  machinery  and  equipment on behalf of Samsung  Corning
     Precision to support its capital expansion  initiatives.  The machinery and
     equipment is  transferred to Samsung  Corning  Precision at our cost basis,
     resulting in no revenue or gain being recognized on the transaction.

Balances due to and from Samsung  Corning  Precision were immaterial at June 30,
2005 and December 31, 2004.



Dow Corning
- -----------
Dow Corning is a U.S. based  manufacturer  of silicone  products.  Dow Corning's
results of operations follow (in millions):
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                               Three months                      Six months
                                                                              ended June 30,                   ended June 30,
                                                                         ------------------------         -------------------------
                                                                           2005            2004             2005            2004
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                             
Statement of Operations:
     Net sales                                                           $   1,007      $     852         $   1,990      $   1,666
     Gross profit                                                        $     357      $     278         $     703      $     508
     Net income                                                          $     154      $      36         $     290      $      88
     Corning's equity in earnings of Dow Corning (a)                     $      77      $      17         $     145      $      41
     Dividends received from Dow Corning                                 $      15                        $      15
- ------------------------------------------------------------------------------------------------------------------------------------


(a)  Corning's equity in earnings of Dow Corning includes the following:
     .    During the second quarter of 2005, Dow Corning  recorded a gain on the
          issuance of subsidiary stock. Our equity earnings included $11 million
          related to this gain.
     .    During  the second  quarter  of 2004,  Dow  Corning  recorded  charges
          related  to   restructuring   actions  and   adjustments  to  interest
          liabilities  recorded on its  emergence  from  bankruptcy.  Our equity
          earnings included $21 million related to these charges.






9.   Goodwill and Other Intangible Assets



The changes in the carrying amount of goodwill for the six months ended June 30,
2005 follow (in millions):
- ------------------------------------------------------------------------------------------------------------------------------------
                                                    Telecom-              Display
                                                   munications          Technologies           Other (1)             Total
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       
Balance at January 1, 2005                         $     123              $     9              $     150           $    282
Foreign currency translation & other                      (5)                                                            (5)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at June 30, 2005                           $     118              $     9              $     150           $    277
- ------------------------------------------------------------------------------------------------------------------------------------

(1) This balance relates to our Specialty Materials operating segment.



Other intangible assets follow (in millions):
- ------------------------------------------------------------------------------------------------------------------------------------
                                                           June 30, 2005                             December 31, 2004
                                                 -------------------------------------------------------------------------------
                                                            Accumulated                                Accumulated
                                                  Gross     Amortization      Net             Gross    Amortization      Net
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                     
Amortized intangible assets:
     Patents and trademarks                      $  144       $    83      $    61           $  148       $   79       $    69
     Non-competition agreements                                                                 118          116             2
     Other                                            4             1            3                4            1             3
                                                 -----------------------------------         -----------------------------------
         Total amortized intangible assets          148            84           64              270          196            74
                                                 -----------------------------------         -----------------------------------

Unamortized intangible assets:
     Intangible pension assets                       42                         42               42                         42
                                                 -----------------------------------         -----------------------------------
Total                                            $  190       $    84      $   106           $  312       $  196       $   116
- ------------------------------------------------------------------------------------------------------------------------------------


Amortized  intangible  assets are  primarily  related to the  Telecommunications
segment.

Estimated amortization expense related to these intangible assets is $13 million
in 2006, $12 million in 2007, $11 million in 2008, and insignificant thereafter.

10.  Customer Deposits

In 2005 and 2004,  Corning and several customers entered into long-term purchase
and supply  agreements  in which the Display  Technologies  segment  will supply
large-size glass substrates to the customers over periods of up to six years. As
part of the  agreements,  these  customers  have  agreed  to make  advance  cash
deposits  to Corning  for a portion  of the  contracted  glass to be  purchased.
During the current year, we received a total of $323 million of deposits against
orders,  of which $234  million  was  received  in the first half of 2005.  Upon
receipt of the cash  deposits made by  customers,  we record a customer  deposit
liability,  which will be applied in the form of credits  against future product
purchases over the life of the agreements.  As product is shipped to a customer,
Corning will recognize  revenue at the selling price and issue credit  memoranda
for an agreed amount of the customer  deposit  liability.  The credit  memoranda
will be applied against customer receivables resulting from the sale of product,
thus reducing  operating  cash flows in later periods as credits are applied for
cash deposits received in earlier periods.







Customer deposits will be received in the following periods (in millions):
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                      Six
                                                                 months ended         Remainder       Estimated 2006
                                                   2004          June 30, 2005         of 2005          and Beyond           Total
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                            

Customer deposits received                        $ 204           $   234              $   248            $  295           $  981
- ------------------------------------------------------------------------------------------------------------------------------------


The majority of customer  deposits will be received  through 2006. For the three
and six months  ended June 30, 2005,  we issued $2 million in credit  memoranda,
not  reflected  in the  above  amounts,  which  were  applied  against  customer
receivables.

We had total  customer  deposit  liabilities of $431 million and $215 million at
June 30, 2005 and December 31, 2004, respectively, of which $114 million and $18
million were recorded in the current  liabilities  - other  accrued  liabilities
component of our consolidated balance sheets.

In the event customers do not make all customer deposit installment  payments or
elect not to purchase the agreed upon quantities of product, subject to specific
conditions  outlined in the  agreements,  we may retain  certain  amounts of the
customer deposits. If we do not deliver agreed upon product quantities,  subject
to specific conditions outlined in the agreements,  we may be required to return
certain amounts of customer deposits.

11.  Employee Retirement Plans

Defined Benefit Plans



The following table  summarizes the components of net periodic  benefit cost for
our defined  benefit pension and  postretirement  health care and life insurance
plans (in millions):
- ------------------------------------------------------------------------------------------------------------------------------------
                                                     Pension benefits                              Postretirement benefits
- ------------------------------------------------------------------------------------------------------------------------------------
                                             Three months           Six months               Three months           Six months
                                            ended June 30,        ended June 30,            ended June 30,        ended June 30,
                                         --------------------  --------------------      --------------------  --------------------
                                          2005          2004    2005          2004         2005         2004     2005         2004
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                     

Service cost                             $   14       $    9    $   30      $   20       $    3      $    2    $     5       $   4
Interest cost                                40           28        85          66            9          11         21          24
Expected return on plan assets              (50)         (32)     (102)        (75)
Amortization of net loss                      7            5        18          11            2           2          3           5
Amortization of prior service cost            4            2         4           4                       (1)        (2)         (3)
                                         -------------------------------------------------------------------------------------------
Total expense                            $   15       $   12    $   35      $   26       $   14      $   14    $    27       $  30
- ------------------------------------------------------------------------------------------------------------------------------------


In the  second  half of 2005,  we will  contribute  up to 10  million  shares of
Corning  common stock to our domestic  pension  plan. We do not  anticipate  any
significant contributions to our international pension plans.

Corning and certain of its domestic subsidiaries also offer postretirement plans
that provide health care and life  insurance  benefits for retirees and eligible
dependents.  Certain  employees  may  become  eligible  for such  postretirement
benefits upon reaching  retirement  age. Prior to January 1, 2003, our principal
retiree  medical plans  required  retiree  contributions  each year equal to the
excess of medical cost increases over general  inflation  rates.  In response to
rising health care costs, in 2002, Corning placed a "cap" on the amount it would
contribute  toward  the cost of its  retiree  medical  plans  for  salaried  and
union-free  hourly  employees.  The Medicare  Part D subsidy  gives  Corning the
opportunity to restructure  the cap so that it takes effect at a later date. The
restructured  cap is a way for Corning to share the Medicare Part D subsidy with
retirees and  beneficiaries.  The existing cap trigger is 150% of Corning's 2001
retiree  medical  costs.  Effective  July 1, 2005,  we amended  these  plans and
restructured  the cap to be 120% of  Corning's  expected  2005  retiree  medical
costs.  This  amendment to the plans will increase  2005 periodic  expense by $6
million.






12.  Comprehensive Income



Components of  comprehensive  income,  on an after-tax  basis where  applicable,
follow (in millions):
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                        Three months                          Six months
                                                                       ended June 30,                       ended June 30,
                                                                  -----------------------               ------------------------
                                                                     2005           2004                  2005           2004
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                           

Net income                                                        $    165        $   108               $   414        $    163
Other comprehensive income:
   Change in unrealized gain (loss) on investments, net                                                     (33)              2
   Reclassification adjustment relating to investments
     included in net income, net                                                                             19
   Change in unrealized gain on derivative
     instruments, net                                                   12              9                    38               3
   Reclassification adjustment relating to derivatives, net             (2)            (2)                  (15)              5
   Foreign currency translation adjustment, net (a)                    (80)           (17)                  (92)            (15)
   Change in minimum pension liability                                   1              5                     3               2
- ------------------------------------------------------------------------------------------------------------------------------------
Total comprehensive income                                        $     96        $   103               $   334        $    160
- ------------------------------------------------------------------------------------------------------------------------------------


(a)  The  initial  implementation  of  our  Taiwan  subsidiary's  change  in its
     functional  currency  from  the  new  Taiwan  dollar  to the  Japanese  yen
     effective  January 1, 2005 had the  effect of  increasing  the U.S.  dollar
     value of its net  assets and  increasing  accumulated  other  comprehensive
     income by $23 million. The impact of this change is included in the foreign
     currency translation adjustment, net amount.

13.  Operating Segments

Our reportable operating segments follow:

..    Display  Technologies - manufactures  liquid crystal display glass for flat
     panel displays;
..    Telecommunications - manufactures optical fiber and cable, and hardware and
     equipment components for the telecommunications industry;
..    Environmental  Technologies - manufactures  ceramic  substrates and filters
     for automobile and diesel applications; and
..    Life Sciences - manufactures  glass and plastic  consumables for scientific
     applications.

All other  operating  segments that do not meet the  quantitative  threshold for
separate reporting (e.g., Specialty Materials, Ophthalmic and Conventional Video
Components),  certain  corporate  investments  (e.g.,  Dow  Corning  and Steuben
Glass),  discontinued  operations,  and unallocated  expenses  (including  other
corporate  items) have been  grouped as  "Unallocated  and  Other."  Unallocated
expenses include the following: gains or losses on repurchases and retirement of
debt; charges related to the asbestos litigation; restructuring,  impairment and
other charges and (credits) related to the corporate research and development or
staff  organizations;  and charges for increases in our tax valuation allowance.
Unallocated and Other also represents the reconciliation  between the totals for
the reportable segments and our consolidated operating results.







- ------------------------------------------------------------------------------------------------------------------------------------
Operating Segments                              Display       Telecom-       Environmental     Life      Unallocated    Consolidated
(in millions)                                Technologies    munications     Technologies    Sciences     and Other         Total
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       

Three months ended June 30, 2005
Net sales                                      $   415        $    415        $    146        $    75      $     90      $  1,141
Research, development and engineering
  expenses (1)                                 $    27        $     22        $     29        $    12      $     14      $    104
Restructuring, impairment and other charges
  and (credits)                                               $      8                                     $     (9)     $     (1)
Interest expense (2)                           $    12        $      8        $      4        $     1      $      3      $     28
(Provision) benefit for income taxes           $   (47)       $      1        $      2        $     2      $     (2)     $    (44)
Income (loss) before minority interests and
  equity earnings (3)                          $   156        $    (13)       $     (4)       $    (4)     $   (137)     $     (2)
Minority interests (4)                                                                                           (5)           (5)
Equity in earnings of associated companies          87                                                           85           172
                                               -------        --------        --------        -------      --------      --------
Net income (loss)                              $   243        $    (13)       $     (4)       $    (4)     $    (57)     $    165
- ------------------------------------------------------------------------------------------------------------------------------------

Three months ended June 30, 2004
Net sales                                      $   277        $    392        $    141        $    79      $     82      $    971
Research, development and engineering
  expenses (1)                                 $    19        $     23        $     21        $     9      $     13      $     85
Restructuring, impairment and other charges
  and (credits)                                               $     (1)                                    $    (33)     $    (34)
Interest expense (2)                           $    11        $     16        $      5        $     2      $      3      $     37
(Provision) benefit for income taxes           $   (32)       $     11        $     (2)       $    (2)     $      1      $    (24)
Income (loss) before minority interests and
  equity earnings (3)                          $    64        $    (21)       $      4        $     5      $    (40)     $     12
Minority interests (4)                                                                                          (11)          (11)
Equity in earnings of associated companies          71                                                           36           107
                                               -------        --------        --------        -------      --------      --------
Net income (loss)                              $   135        $    (21)       $      4        $     5      $    (15)     $    108
- ------------------------------------------------------------------------------------------------------------------------------------

Six months ended June 30, 2005
Net sales                                      $   735        $    842        $    294        $   149      $    171      $  2,191
Research, development and engineering
  expenses (1)                                 $    52        $     44        $     55        $    23      $     28      $    202
Restructuring, impairment and other charges
  and (credits)                                               $      8                                     $     10      $     18
Interest expense (2)                           $    28        $     19        $     10        $     2      $      6      $     65
(Provision) benefit for income taxes           $   (64)       $     (1)       $      2        $     2      $     (2)     $    (63)
Income (loss) before minority interests and
  equity earnings (3)                          $   236        $     (4)       $     (6)       $    (6)     $   (138)     $     82
Minority interests (4)                                                                                           (6)           (6)
Equity in earnings of associated companies         168                                                          170           338
                                               -------        --------        --------        -------      --------      --------
Net income (loss)                              $   404        $     (4)       $     (6)       $    (6)     $     26      $    414
- ------------------------------------------------------------------------------------------------------------------------------------

Six months ended June 30, 2004
Net sales                                      $   507        $    704        $    282        $   158      $    164      $  1,815
Research, development and engineering
  expenses (1)                                 $    35        $     48        $     41        $    18      $     27      $    169
Restructuring, impairment and other charges
  and (credits)                                               $     (5)                                    $      5
Interest expense (2)                           $    22        $     32        $     10        $     3      $      6      $     73
(Provision) benefit for income taxes           $   (58)       $     34        $     (5)       $    (5)     $     22      $    (12)
Income (loss) before minority interests and
  equity earnings (3)                          $   117        $    (68)       $     10        $    10      $   (109)     $    (40)
Minority interests (4)                                               1                                          (12)          (11)
Equity in earnings of associated companies         136               3                                           75           214
                                               -------        --------        --------        -------      --------      --------
Net income (loss)                              $   253        $    (64)       $     10        $    10      $    (46)     $    163
- ------------------------------------------------------------------------------------------------------------------------------------


(1)  Non-direct  research,  development and  engineering  expenses are allocated
     based upon direct project spending for each segment.
(2)  Interest  expense is allocated to segments based on a percentage of segment
     net operating assets.  Consolidated  subsidiaries with independent  capital
     structures do not receive additional allocations of interest expense.
(3)  Many of Corning's  administrative  and staff  functions  are performed on a
     centralized  basis.  Where  practicable,  Corning charges these expenses to
     segments  based upon the extent to which each  business  uses a centralized
     function. Other staff functions, such as corporate finance, human resources
     and legal are allocated to segments, primarily as a percentage of sales.
(4)  For the  three and six  months  ended  June 30,  2005,  minority  interests
     include gains of $4 million for  adjustments to prior years'  restructuring
     and impairment  reserves  associated with CAV. For the three and six months
     ended  June 30,  2004,  minority  interests  include  gains of $13 and $14,
     respectively,  from the sale of CAV  assets in excess  of  assumed  salvage
     value.







A  reconciliation  of reportable  segment net income to consolidated  net income
follows (in millions):
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                   Three months                        Six months
                                                                  ended June 30,                     ended June 30,
                                                            ------------------------           ------------------------
                                                              2005            2004               2005            2004
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                  
Net income of reportable segments                           $     222      $     123           $     388      $     209
Non-reportable operating segments net income (1)                   13             19                  23              1
Unallocated amounts:
    Non-segment loss and other (2)                                 (1)            (4)                 (3)            (7)
    Non-segment restructuring, impairment and
       other (charges) and credits (3)                             (6)             4                 (25)             4
    Asbestos settlement                                          (137)           (47)               (121)           (66)
    Interest income                                                13              4                  23             10
    Loss on repurchases of debt                                   (12)            (9)                (12)           (32)
    Benefit for income taxes (4)                                   (4)             1                  (4)             3
    Equity in earnings of associated companies (5)                 77             17                 145             41
                                                            ---------      ---------           ---------      ---------
Net income                                                  $     165      $     108           $     414      $     163
- ------------------------------------------------------------------------------------------------------------------------------------


(1)  Non-reportable  operating  segments  net  income  includes  the  results of
     non-reportable operating segments.
(2)  Non-segment  loss and other includes the results of non-segment  operations
     and other corporate activities.
(3)  For  the  three  and  six   months   ended  June  30,   2005,   non-segment
     restructuring,   impairment  and  other  (charges)  and  credits   includes
     impairment charges for the other than temporary decline in the market value
     of Avanex  shares.  Refer to Note 2  (Restructuring,  Impairment  and Other
     Charges and (Credits))
(4)  Benefit  for  income  taxes  includes  taxes  associated  with  non-segment
     restructuring, impairment and other (charges) and credits.
(5)  Equity in earnings of associated  companies  includes  amounts derived from
     Dow Corning.






ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS


OVERVIEW

Our key priorities for 2005 remain unchanged from the previous year: protect our
financial health,  improve our profitability,  and invest in the future.  During
the  second  quarter  of 2005,  we made the  following  progress  against  these
priorities:

Financial Health
Our balance  sheet  remains  strong,  and we continue to generate  positive cash
flows  from  operating  activities.  Significant  activities  during  the second
quarter of 2005 follow:

..    We entered into an additional  multi-year  customer supply agreement in the
     Display  Technologies  segment.  During  the  second  quarter  of 2005,  we
     received $214 million in deposits against orders under all such contracts.
..    We reduced  long-term  debt by calling  $191 million of  convertible  debt,
     which then converted into Corning common stock. Additionally, we refinanced
     $100 million of debt to reduce interest  expense and extend the duration of
     our debt portfolio.
..    We completed a common stock  offering of 20 million shares for net proceeds
     of  approximately  $323 million.  The net proceeds from this stock offering
     are intended to be used  primarily to reduce debt by redeeming for cash the
     remaining zero coupon convertible debentures due on November 8, 2015.
..    The  debt  and  common  stock  transactions  listed  above  resulted  in an
     improvement to our debt to capital ratio, which declined to 31%.
..    We ended  the  second  quarter  of 2005  with $2.1  billion  in cash,  cash
     equivalents  and  short-term  investments.  This  represents an increase of
     approximately  $200 million from  December 31, 2004,  primarily  due to the
     proceeds  from the common  stock  offering  and cash  provided by operating
     activities  more  than  offsetting  the net  debt  repayments  and  capital
     spending.

We have a financial objective to reduce our outstanding debt below $2 billion by
the end of 2005. Upon the anticipated fourth quarter 2005 repurchase of our zero
coupon convertible debentures, we expect to meet this objective. Additionally,
in April 2005 our public debt ratings were raised to BBB- by both Fitch Ratings
and Standard & Poor's.

Profitability
For the three  months  ended  June 30,  2005,  we  generated  net income of $165
million or $0.11 per share.  This  represents an improvement of $57 million over
the same period in 2004. This  improvement in net income was primarily driven by
the following:

..    Growth in our Display Technologies  segment,  which continued to experience
     strong market demand for liquid crystal display (LCD) glass substrates. For
     the  second  quarter  of 2005,  net  income  for the  Display  Technologies
     segment,  including  equity earnings from Samsung  Corning  Precision Glass
     Co., Ltd. (Samsung Corning Precision),  a South Korea-based manufacturer of
     LCD glass substrates, increased $108 million, or 80%.
..    Strong equity earnings from Dow Corning  Corporation (Dow Corning),  a U.S.
     based manufacturer of silicone  products,  which increased $60 million over
     the amount  recognized in the second quarter of 2004. The second quarter of
     2005  equity  earnings  from Dow  Corning  included a one-time  gain of $11
     million compared to a one-time loss of $21 million in the second quarter of
     2004.
..    The above  items were  partially  offset by the second  quarter  pretax and
     after-tax  charge of $137  million to  mark-to-market  the shares of common
     stock that will be contributed to the Pittsburgh Corning  Corporation (PCC)
     asbestos  settlement  agreement if the PCC Plan of Reorganization  receives
     judicial approval.

For the six months ended June 30, 2005,  we generated net income of $414 million
or $0.28 per share. This represents an improvement of $251 million over the same
period in 2004.  This  improvement  in net income was  largely the result of the
same factors identified for the three month period.






Investing in our Future
We continue to invest in a wide array of technologies,  with our focus being LCD
glass  substrates,  diesel  filters and  substrates  in  response to  tightening
emissions  control  standards,  and  optical  fiber and cable and  hardware  and
equipment to enable fiber-to-the-premises.

Our research,  development and  engineering  expenses have increased in both the
three and six month  periods  ended June 30, 2005  compared to their  respective
2004  periods,  but have  remained  relatively  constant as a percentage  of net
sales.  We believe  our  current  spending  levels are  adequate to enable us to
execute our growth strategies.

Our  capital  expenditures  are  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 the three and six month  periods  ended June 30, 2005 were $375  million and
$698 million,  respectively.  Of these  amounts,  $308 million and $591 million,
respectively,  were directed toward our Display  Technologies  segment,  and $40
million and $74 million,  respectively,  were directed toward our  Environmental
Technologies segment.

RESULTS OF OPERATIONS



Selected highlights for the second quarter follow (dollars in millions):
- ------------------------------------------------------------------------------------------------------------------------------------
                                                         Three months                                  Six months
                                                        ended June 30,                               ended June 30,
                                                   ------------------------      % Change         --------------------     % Change
                                                     2005            2004        05 vs. 04         2005          2004      05 vs. 04
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                            

Net sales                                          $  1,141       $    971          18%           $  2,191     $  1,815        21%

Gross margin                                       $    483       $    346          40%           $    912     $    646        41%
     (gross margin %)                                   42%            36%                             42%          36%

Selling, general and administrative
  expenses                                         $    191       $    166          15%           $    375     $    326        15%
     (as a % of net sales)                              17%            17%                             17%          18%

Research, development and engineering
  expenses                                         $    104       $     85          22%           $    202     $    169        20%
     (as a % of net sales)                               9%             9%                              9%           9%

Restructuring, impairment and other
  charges and (credits)                            $    (1)       $   (34)        (97)%           $     18
     (as a % of net sales)                                            (4)%                              1%

Asbestos Settlement                                $    137       $     47         191%           $    121     $     66        83%
     (as a % of net sales)                              12%             5%                              6%           4%

Income (loss) before income taxes                  $     42       $     36          17%           $    145     $    (28)      618%
     (as a % of net sales)                               4%             4%                              7%         (2)%

Provision for income taxes                         $    (44)      $    (24)         83%           $    (63)    $    (12)      425%
     (as a % of net sales)                             (4)%           (2)%                            (3)%         (1)%

Equity in earnings of associated companies         $    172       $    107          61%           $    338     $    214        58%
     (as a % of net sales)                              15%            11%                             15%          12%

Net income                                         $    165       $    108          53%           $    414     $    163       154%
     (as a % of net sales)                              14%            11%                             19%           9%
- ------------------------------------------------------------------------------------------------------------------------------------




Net Sales
For the  three and six  months  ended  June 30,  2005,  the net  sales  increase
compared  to the  respective  2004  periods was the result of  continued  strong
demand for LCD glass substrates in our Display  Technologies  segment and demand
for products in our Telecommunications segment to support  fiber-to-the-premises
projects. The performance in all other segments of the company was comparable to
the  respective  prior  year  periods.  Movements  in  foreign  exchange  rates,
primarily the Japanese yen and Euro, did not significantly impact the comparison
of net sales between 2005 and 2004.

Gross Margin
As a percentage of net sales,  gross margin improved 6 percentage points for the
three and six months ended June 30, 2005,  compared to the respective prior year
periods. The improvement in overall dollars and as a percentage of net sales was
primarily   driven  by  increased   volume  in  our  Display   Technologies  and
Telecommunications segments.

Selling, General and Administrative Expenses
For the three and six months  ended June 30,  2005,  the  increase  in  selling,
general and  administrative  expenses compared to the respective 2004 periods is
primarily  driven by increases in  compensation  costs.  As a percentage  of net
sales, selling,  general and administrative expenses have remained comparable to
the respective prior year periods.

Research, Development and Engineering Expenses
Research,  development and engineering expenses have increased in both the three
and six month  periods  ended June 30, 2005  compared to their  respective  2004
periods,  but  have  remained  constant  as  a  percentage  of  net  sales.  Our
expenditures are focused on our Environmental Technologies, Display Technologies
and Telecommunications segments as we strive to capitalize on the current market
opportunities in those segments.

Restructuring, Impairment and Other Charges and (Credits)
For the three and six months  ended June 30,  2005,  the charges  recorded  were
primarily for impairment charges for an other than temporary decline in the fair
value of our investment in Avanex Corporation (Avanex) below its cost basis. Our
investment in Avanex is accounted for as an  available-for-sale  security  under
SFAS  No.  115,   "Accounting  for  Certain   Investments  in  Debt  and  Equity
Securities." We intend to sell our shares of Avanex and, subject to restrictions
and the trading  volume in Avanex stock,  we expect to complete this activity in
early 2006. As we do not expect the market value of the Avanex shares to recover
in this timeframe, the impairments in the first and second quarters of 2005 were
required.

The credit for the three months ended June 30, 2004 was  primarily due to a gain
related to  proceeds in excess of assumed  salvage  values for assets of Corning
Asahi Video Products Company (CAV) that were previously  impaired but later sold
to a third party in China.  The net charge for the three  months  ended June 30,
2004 included the second quarter credit  associated  with the sale of CAV assets
offset by the first quarter of 2004 charge associated with the final shutdown of
our semiconductor manufacturing facility in Charleston, South Carolina.

Refer to Note 2  (Restructuring,  Impairment and Other Charges and (Credits)) to
the consolidated financial statements for additional information.

Asbestos Settlement
For the  three  and six  months  ended  June 30,  2005  and  2004  the  asbestos
settlement activity relates to the quarterly  mark-to-market of our common stock
that will be  contributed  to the PCC asbestos  settlement  agreement if the PCC
Plan of Reorganization receives judicial approval. For additional information on
this matter, refer to Note 3 (Commitments and Contingencies) to the consolidated
financial statements and Part II - Other Information, Item 1. Legal Proceedings.

Income (Loss) Before Income Taxes
In addition to the key drivers  outlined  above,  the  following  had a material
effect on the results of our income (loss) before income taxes:
- --------------------------------------------------------------------------------
                                                   Three months    Six months
                                                  ended June 30,  ended June 30,
                                                  --------------  --------------
                                                   2005    2004    2005   2004
- --------------------------------------------------------------------------------

Loss on repurchases and retirement of debt, net   $ (12)   $ (9)   $ (12) $ (32)
- --------------------------------------------------------------------------------



Also, the  comparability  of income (loss) before income taxes for the three and
six months  ended June 30, 2005 and 2004 was  impacted by  movements  in foreign
exchange rates. In the second quarter of 2005, we incurred an exchange rate gain
of $12 million  compared to a loss of $1 million in the second  quarter of 2004.
For the six months ended June 30, 2005,  we incurred a net exchange rate loss of
$14 million  compared to less than $1 million for the prior year period.  In the
first quarter of 2005,  we incurred an exchange  rate loss of $26 million.  This
exchange  rate loss was due to the  impact of  currency  movements  on  unhedged
balance sheet exposures, most notably at our Taiwan subsidiary which changed its
functional  currency  from the new Taiwan  dollar  (its local  currency)  to the
Japanese  yen in  the  first  quarter  of  2005.  Refer  to  Note  1  (Basis  of
Presentation)   to  the   consolidated   financial   statements  for  additional
information.

Provision for Income Taxes
Our  provision  for income taxes and the related  effective tax rates follow (in
millions):
- --------------------------------------------------------------------------------
                                     Three months                Six months
                                    ended June 30,             ended June 30,
                                 --------------------      ---------------------
                                    2005        2004          2005        2004
- --------------------------------------------------------------------------------

Provision for income taxes       $   (44)    $  (24)       $  (63)    $   (12)
Effective tax rate                (104.8)%    (66.7)%       (43.4)%     (42.9)%
- --------------------------------------------------------------------------------

For the three and six months ended June 30, 2005,  the tax  provision  reflected
the impact of  maintaining  a  valuation  allowance  on the  majority of our net
deferred tax assets. As a result,  U.S.  (federal,  state and local) and certain
foreign income taxes  attributable to pretax income or losses were not provided.
The most  significant item for which a U.S. tax benefit was not provided was the
asbestos settlement charge. Such items increased our effective tax rate from 23%
to 105% and from 21% to 43% for the three and six months  ended  June 30,  2005,
respectively.  For the U.S.  and  certain  foreign  operations,  the  income tax
provision or benefit  attributable to pretax income or losses was recorded as an
adjustment  to the valuation  allowance.  The income tax provision for the three
and six months ended June 30, 2005  included  income  taxes for certain  foreign
operations that were favorably  impacted by tax holiday  benefits and investment
tax credits.

At June 30,  2005,  we had net deferred  tax assets of $529  million,  which are
primarily U.S. net deferred tax assets. We continue to believe it is more likely
than not that we could  realize  these U.S. net  deferred  tax assets  through a
tax-planning strategy involving the sale of a non-strategic appreciated asset.

We expect to  maintain a valuation  allowance  on future tax  benefits  until an
appropriate  level of  profitability,  primarily  in the U.S.  and  Germany,  is
sustained  or we are able to develop tax planning  strategies  that enable us to
conclude  that it is more likely than not that a larger  portion of our deferred
tax assets would be realizable.  Until then, our tax provision will include only
the net tax expense  attributable to certain foreign  operations and the expense
or benefit from current U.S. and certain foreign  operations will be recorded as
an adjustment to the valuation allowance.

The  effective  tax rate for the three and six  months  ended  June 30,  2004 is
higher than the U.S.  statutory  income tax rate of 35%. Our  effective tax rate
was  impacted by  restructuring,  impairment  and other  charges and  (credits),
asbestos settlement charges and loss on repurchases and retirement of debt.

Equity in Earnings of Associated Companies
The following  provides a summary of equity in earnings of associated  companies
(in millions):
- --------------------------------------------------------------------------------
                                  Three months             Six months
                                 ended June 30,           ended June 30,
                               -----------------        -----------------
                                2005        2004        2005         2004
- --------------------------------------------------------------------------------
Samsung Corning Precision      $  85       $  71        $ 165       $ 136
Dow Corning                       77          17          145          41
All other                         10          19           28          37
                               -----       -----        -----       -----
Total equity earnings          $ 172       $ 107        $ 338       $ 214
- --------------------------------------------------------------------------------



The improvement in equity earnings recognized from Samsung Corning Precision for
both the three and six months ended June 30, 2005  compared to their  respective
2004 periods is explained in the  discussion of the  performance  of our Display
Technologies segment.

The improvement in equity earnings recognized from Dow Corning for the three and
six months  ended June 30, 2005  compared to their  respective  2004  periods is
largely attributable to the following:
..    Strong sales volumes and improved pricing for Dow Corning in 2005.
..    During  the  second  quarter of 2005,  Dow  Corning  recorded a gain on the
     issuance of  subsidiary  stock.  Our equity  earnings  included $11 million
     related to this gain.
..    During the second quarter of 2004, Dow Corning  recorded charges related to
     restructuring  actions and adjustments to interest  liabilities recorded on
     its emergence from  bankruptcy.  Our equity  earnings  included $21 million
     related to these charges.

Refer to Note 8  (Investments)  to the  consolidated  financial  statements  for
additional  information  relating to Samsung Corning Precision and Dow Corning's
operating results.

As the  conventional  television  market will be  negatively  impacted by strong
growth in the LCD glass market,  it is reasonably  possible that Samsung Corning
Co., Ltd. (our 50% equity method  investment that makes glass panels and funnels
for conventional  televisions) may incur additional  restructuring or impairment
charges or net operating losses in the future.



Net Income
As a result of the above, our net income and per share data follow (in millions,
except per share amounts):
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                          Three months                          Six months
                                                                         ended June 30,                       ended June 30,
                                                                  ------------------------              -------------------------
                                                                     2005           2004                  2005           2004
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                           

Net income                                                        $      165      $    108              $      414     $      163
Basic earnings per common share                                   $     0.11      $   0.08              $     0.29     $     0.12
Diluted earnings per common share                                 $     0.11      $   0.07              $     0.28     $     0.11
Shares used in computing per share amounts for:
     Basic earnings per common share                                   1,438         1,383                   1,422          1,371
     Diluted earnings per common share                                 1,517         1,495                   1,508          1,446
- ------------------------------------------------------------------------------------------------------------------------------------


OPERATING SEGMENTS

Our reportable operating segments follow:

..    Display Technologies - manufactures LCD glass for flat panel displays;
..    Telecommunications - manufactures optical fiber and cable, and hardware and
     equipment components for the telecommunications industry;
..    Environmental  Technologies - manufactures  ceramic  substrates and filters
     for automobile and diesel applications; and
..    Life Sciences - manufactures  glass and plastic  consumables for scientific
     applications.

All other  operating  segments that do not meet the  quantitative  threshold for
separate reporting (e.g., Specialty Materials, Ophthalmic and Conventional Video
Components),  certain  corporate  investments  (e.g.,  Dow  Corning  and Steuben
Glass),  discontinued  operations,  and unallocated  expenses  (including  other
corporate  items) have been  grouped as  "Unallocated  and  Other."  Unallocated
expenses include the following: gains or losses on repurchases and retirement of
debt; charges related to the asbestos litigation; restructuring,  impairment and
other charges and (credits) related to the corporate research and development or
staff  organizations;  and charges for increases in our tax valuation allowance.
Unallocated and Other also represents the reconciliation  between the totals for
the reportable segments and our consolidated operating results.







Display Technologies
The  following  table  provides  net  sales  and  other  data  for  the  Display
Technologies segment (in millions):
- ------------------------------------------------------------------------------------------------------------------------------------
                                                     Three months                                 Six months
                                                    ended June 30,                               ended June 30,
                                               -----------------------      % Change          -------------------      % Change
                                                 2005           2004        05 vs. 04          2005         2004       05 vs. 04
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                        

Net sales                                      $   415        $    277         50%            $   735     $    507         45%
Income before equity earnings                  $   156        $     64        144%            $   236     $    117        102%
Equity earnings of associated companies        $    87        $     71         23%            $   168     $    136         24%
Net income                                     $   243        $    135         80%            $   404     $    253         60%
- ------------------------------------------------------------------------------------------------------------------------------------


The net sales increase for the second  quarter of 2005 is largely  reflective of
the  overall  LCD  market  growth.  During the  second  quarter  of 2005,  glass
substrate   volumes   (measured   in  square  feet  of  glass  sold)   increased
approximately  47%. Weighted average selling prices increased  modestly compared
to 2004. Included in this weighted average were selling price declines that were
more than  offset  by  increases  in the  market  demand  for  large-size  glass
substrates  (generation  5 and above),  which carry a higher  selling  price per
square  foot.  For the  second  quarter  of 2005,  large-size  glass  substrates
accounted for 67% of total sales volumes, compared to 46% for the second quarter
of 2004.  The sales of the  Display  Technologies  segment  are  denominated  in
Japanese yen and, as such, our revenues are susceptible to movements in the U.S.
dollar - Japanese yen exchange rate.  Sales growth benefited by approximately 3%
from a weakening of the U.S. dollar compared to 2004.

For the six months ended June 30, 2005, the net sales increase is largely driven
by the same factors as those  identified for the second quarter of 2005. For the
comparable six month periods,  glass substrate volumes  increased  approximately
42%,  while  weighted  average  selling  prices  increased  modestly.  Sales  of
large-size glass substrates accounted for 63% of year to date 2005 sales volumes
compared  to 41% for the same  period in 2004.  Movements  in the U.S.  dollar -
Japanese  yen  exchange  rate  benefited  sales  by  approximately  3%  for  the
comparable six month periods.

For the three and six months ended June 30, 2005,  the increase in income before
equity  earnings  was  primarily  the  result  of  higher  volumes  and  ongoing
improvements in manufacturing  efficiencies.  For the three and six months ended
June 30, 2005, income before equity earnings includes  approximately $10 million
of exchange gains and $5 million of exchange  losses,  respectively,  related to
foreign  currency  denominated  transactions.  The impact of these losses on the
comparability  of results was largely  offset by a lower  effective  tax rate in
2005 than in 2004.

The  increases in our equity  earnings  from Samsung  Corning  Precision for the
periods presented were largely driven by the same market factors  identified for
our wholly-owned  business.  During the second quarter of 2005,  Samsung Corning
Precision  recorded  a  number  of  non-recurring   charges  and  earnings  were
negatively  impacted by  approximately 8% from movements in exchange rates. As a
result,  the year over year increase in equity  earnings was less than the sales
volume growth of 55% would have indicated.  Equity earnings from Samsung Corning
Precision denominated in Korean won are susceptible to movements in the exchange
rate between the Korean won and the U.S. dollar.

The Display  Technologies  segment has and will continue to have a  concentrated
customer  base  comprised  of LCD panel  makers  primarily  located in Japan and
Taiwan. The most significant  customers in these markets are AU Optronics Corp.,
Chi Mei  Optoelectronics  Corp.,  Hannstar  Display Corp.,  Quanta Display Inc.,
Sharp Corporation,  and Toppan CFI (Taiwan) Co., Ltd. These customers  accounted
for 71% and 74% of the Display  Technologies segment sales for the three and six
months  ended  June  30,  2005,  respectively.   In  addition,  Samsung  Corning
Precision's sales also continue to be concentrated. For the three and six months
ended  June 30,  2005,  sales to LCD  panel  makers  located  in Korea  (Samsung
Electronics  Co., Ltd., LG Philips LCD Co., and BOE Hydis  Technology Co., Ltd.)
accounted  for  89%  and  87%  of  total  Samsung   Corning   Precision   sales,
respectively.






We expect the LCD market to  continue  to grow  rapidly.  We  anticipate  higher
demand for LCD  televisions,  for which our customers  require  large-size glass
substrates.  During 2005 and 2004,  Corning held discussions with several of its
customers  to  discuss  how to meet  this  demand.  As part of its  discussions,
Corning has sought improved payment terms, including deposits against orders, to
provide a greater degree of assurance that we are effectively  building capacity
to meet the needs of a rapidly growing industry.

In 2005 and 2004,  Corning and several customers entered into long-term purchase
and supply  agreements  in which the Display  Technologies  segment  will supply
large-size glass substrates to the customers over periods of up to six years. As
part of the  agreements,  these  customers  have  agreed  to make  advance  cash
deposits to Corning for a portion of the  contracted  glass to be purchased.  We
now  have  customer  deposit  agreements  with  five  customers  of the  Display
Technologies segment.

In the event the customers do not make all customer deposit installment payments
or elect not to purchase  the agreed  upon  quantities  of  product,  subject to
specific  conditions  outlined in the  agreements,  Corning  may retain  certain
amounts of the  customer  deposits.  If Corning  does not  deliver  agreed  upon
product  quantities,  subject to specific conditions outlined in the agreements,
Corning may be required to return certain amounts of the customer deposits.

Outlook:
- --------
We expect to see a  continuation  of the overall  industry  growth and the trend
toward  large-size  substrates.  We  anticipate  adding  capacity to meet volume
growth in the LCD market, which is anticipated to be more than 50% in 2005. This
market growth is expected to occur at varying rates in the principal LCD markets
of Japan,  Taiwan,  China and  Korea.  Sales of our  wholly-owned  business  are
primarily to panel  manufacturers in Japan,  Taiwan, and China with customers in
Korea being serviced by Samsung  Corning  Precision.  The actual growth rates in
these  markets  will impact our sales and  earnings  performance.  For the third
quarter of 2005,  we expect  volumes for our  wholly-owned  business and Samsung
Corning  Precision  may grow between 10% and 20%, both  individually  and in the
aggregate,  compared to the second quarter of 2005. Pricing in the third quarter
is  expected  to be flat to down  slightly.  We  also  expect  continued  strong
manufacturing  performance.  However, in the third quarter of 2005 we will begin
production  at our new  Taichung,  Taiwan  manufacturing  facility.  The ramp of
production  and our  ability  to  efficiently  start up  operations  may  impact
profitability  in the second half of 2005.  There can be no  assurance  that the
end-market rates of growth will continue at the high rates experienced in recent
quarters, that we will be able to pace our capacity expansions to actual demand,
or that the rate of cost  declines  will  offset  price  declines  in any  given
period. While the industry has grown rapidly, consumer preferences for panels of
differing sizes, or price or other factors, may lead to pauses in market growth,
and it is possible that glass manufacturing capacity may exceed demand from time
to time.  In  addition,  changes  in foreign  exchange  rates,  principally  the
Japanese yen, will continue to impact the profitability of this segment.



Telecommunications
The following table provides net sales and other data for the Telecommunications
segment (in millions):
- ------------------------------------------------------------------------------------------------------------------------------------
                                                     Three months                                   Six months
                                                    ended June 30,                                ended June 30,
                                               ------------------------      % Change         ----------------------     % Change
                                                 2005           2004         05 vs. 04         2005          2004         05 vs. 04
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                        

Net sales:
   Optical fiber and cable                     $   213        $    192          11%           $   425      $    341         25%
   Hardware and equipment                          202             200           1%               417           363         15%
                                               -------        --------                        -------      --------
       Total net sales                         $   415        $    392           6%           $   842      $    704         20%
                                               =======        ========                        =======      ========

Net loss                                       $   (13)       $    (21)       (38)%           $    (4)     $    (64)      (94)%
- ------------------------------------------------------------------------------------------------------------------------------------







For the  second  quarter  of 2005,  fiber  volumes  increased  15% while  prices
declined 5% compared to the second  quarter of 2004.  The 2005 increase in fiber
volumes was largely driven by sales in North America and Europe, offset by lower
volumes in China.  The stronger  North  America  volumes were  primarily  due to
increased  sales to Verizon  Communications  Inc.  (Verizon)  to  support  their
fiber-to-the-premises  project. Sales to Verizon also accounted for the majority
of the increase in hardware and  equipment  product  sales.  The lower volume in
China was due to continued weakness in the market as the result of over capacity
and pricing  pressure.  Based on these ongoing market  conditions,  we have been
unable to regain the market share we lost prior to the successful  resolution of
the 2004 anti-dumping preliminary determination.  The comparison of sales of the
Telecommunications  segment  between  the  second  quarter  of 2005 and 2004 was
negatively affected by the 2004 sale of our frequency controls business.  During
the second quarter of 2004, the frequency  controls  business  recorded sales of
$24  million.  Excluding  the  impact  of this  divestiture,  net  sales for the
Telecommunications segment increased 13% for the second quarter of 2005 compared
to the year ago period.  Movements in foreign exchange rates, primarily the Euro
and  Japanese  yen,  did not have a  significant  impact on sales for the second
quarter of 2005 compared to the second quarter of 2004.

For the six months ended June 30, 2005, the net sales increase is largely driven
by the  same  factors  as  those  identified  for the  second  quarter  of 2005.
Excluding the cumulative  impact of the  divestiture  of our frequency  controls
business, net sales for the Telecommunications segment increased 28% for the six
months ended June 30, 2005 compared to the prior year period. For the comparable
six month periods, fiber volumes increased 31% and prices declined 6%. Movements
in exchange  rates did not  significantly  impact sales for the  comparable  six
month periods.

For the three and six months ended June 30, 2005, the net loss recognized in the
Telecommunications  segment represented  significant  reductions from the losses
incurred in the  comparable  2004  periods.  The reduced  losses were  primarily
driven by operational efficiencies from increases in sales volumes. Movements in
exchange rates did not significantly impact net loss for the comparable periods.

The  Telecommunications  segment continues to have a concentrated customer base.
For the three and six months ended June 30, 2005, 10 customers accounted for 51%
and 53% of total segment net sales, respectively.  For the same periods, Verizon
accounted for 14% and 17% of total segment net sales, respectively.

Outlook:
- --------
For the third  quarter of 2005, we expect net sales to be comparable to those of
the second  quarter.  We expect fiber  volumes to be flat to down 5% compared to
those of the second  quarter and pricing  declines of less than 5%.  Segment net
sales continue to be impacted by Verizon's  fiber-to-the-premises project. Third
quarter sales volumes of fiber-to-the-premises  products should be approximately
flat with the  second  quarter.  Fiber-to-the-premises  sales to  Verizon in the
third and fourth  quarters are dependent on Verizon's  planned targets for homes
passed and connected in 2006.  Changes in the expected Verizon  deployment plan,
or additional  reductions  in their  inventory  levels of  fiber-to-the-premises
products, could also affect the sales level. For China, we do not anticipate any
significant recovery of volumes during the third quarter.



Environmental Technologies
The  following  table  provides  net sales and other data for the  Environmental
Technologies segment (in millions):
- ------------------------------------------------------------------------------------------------------------------------------------
                                                     Three months                                  Six months
                                                    ended June 30,                                ended June 30,
                                               -----------------------      % Change          ---------------------    % Change
                                                 2005           2004        05 vs. 04          2005         2004       05 vs. 04
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       

Net sales:
   Automotive                                  $   125        $    121           3%           $   252      $    246          2%
   Diesel                                           21              20           5%                42            36         17%
                                               -------        --------                        -------      --------
       Total net sales                         $   146        $    141           4%           $   294      $    282          4%
                                               =======        ========                        =======      ========

Net (loss) income                              $    (4)       $      4       (200)%           $    (6)     $     10      (160)%
- ------------------------------------------------------------------------------------------------------------------------------------






The increase in net sales for the second quarter of 2005 is primarily the result
of demand for our  ceramic  filters and  substrates  for  automotive  and diesel
emission control  applications.  For automotive  products,  overall volumes were
down modestly from 2004, however, sales continue to benefit from a higher mix of
our thin-wall and ultra thin-wall  substrates,  which allow engine manufacturers
to meet  increasingly  tighter  emissions  control  requirements  in a more cost
effective manner. Strong sales driven by non-U.S. auto manufacturers compensated
for  weaker  demand  from U.S.  auto  manufacturers  due to  slowdowns  in their
production.  Our diesel products sales growth was driven by demand from retrofit
markets,  particularly  in Asia.  During the second quarter of 2005, we received
additional letters of intent from diesel engine  manufacturers to supply filters
for their 2007 model year platforms.  We are actively  negotiating  with several
diesel  engine  manufacturers  to develop  these  letters of intent  into supply
agreements.  Negotiations  are  likely  to  continue  through  the next  several
quarters.  A portion of this segment's sales are susceptible to movements in the
U.S.  dollar-Euro  exchange  rate.  Movements  in exchange  rates did not have a
significant  impact on sales for the  second  quarter  of 2005  compared  to the
second quarter of 2004.

For the six months ended June 30, 2005, the net sales increase is largely driven
by the same factors as those identified for the second quarter of 2005.

For the three and six months  ended  June 30,  2005,  the  decline in net income
compared to the  respective  2004 periods is  primarily  the result of increased
development  costs and plant  start-up  costs to  support  our  emerging  diesel
products.  These costs offset the anticipated gross margin benefits of increased
volumes and the higher mix of premium automotive products. Movements in exchange
rates did not significantly impact net income for the comparable periods.

Outlook:
- --------
For the third  quarter of 2005, we expect net sales to be comparable to those of
the second  quarter.  For  automotive  products,  we expect to see stable demand
based on anticipated worldwide auto production. We do not anticipate any adverse
impact to sales from the recent production  slowdowns by U.S. auto manufacturers
as continued slowdowns should be offset by increases in the production levels of
non-U.S. auto manufacturers. Additionally, we expect a continuation of the shift
to premium products, although at slightly slower rates than 2004. Diesel product
sales are  expected  to grow  slightly  in the third  quarter as demand from the
retrofit  market  is  anticipated  to  remain  stable.  The  retrofit  market is
volatile, and any unanticipated declines in demand could adversely impact sales.



Life Sciences
The  following  table  provides  net sales and net  (loss)  income  for the Life
Sciences segment (in millions):
- ------------------------------------------------------------------------------------------------------------------------------------
                                                     Three months                                  Six months
                                                    ended June 30,                               ended June 30,
                                               -----------------------      % Change         ----------------------      % Change
                                                 2005           2004        05 vs. 04          2005         2004         05 vs. 04
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                         

Net sales                                      $    75        $     79          (5)%         $    149      $    158          (6)%
Net (loss) income                              $    (4)       $      5        (180)%         $     (6)     $     10        (160)%
- ------------------------------------------------------------------------------------------------------------------------------------


The  decrease in net sales for the second  quarter of 2005 is  primarily  due to
volume  decreases  as a  result  of  the  change  in  our  distribution  channel
previously  disclosed  in our 2004  Annual  Report on Form  10-K.  Movements  in
foreign exchange rates, primarily the Euro, did not have a significant impact on
the comparability of sales.

For the six months ended June 30, 2005, the net sales decrease is largely driven
by the same factors as those identified for the second quarter of 2005.

For the three and six months ended June 30, 2005,  the 2005 net loss compared to
income in the  respective  2004  periods  is largely  attributable  to the gross
margin  impact from the lower sales  volumes.  Additionally,  the Life  Sciences
segment  incurred  higher  operating  expenses  for both the three and six month
periods  ended  June 30,  2005  compared  to their  respective  2004  periods to
implement  the  change in  distribution  channels  and to  support  new  product
development efforts.






Outlook:
- --------
For the third  quarter of 2005, we expect net sales to be comparable to those of
the second quarter.  We remain encouraged by the results of our efforts to alter
our  distribution  channel in response to one of our 2004  primary  distributors
changing  its  business  strategy.  However,  it is  unlikely  that  we  will be
successful in migrating all of our 2004 sales made through this  distributor  to
our existing primary distributor and other channels, as end user preferences for
distribution  models,  price or other factors may adversely  impact sales in the
second  half of 2005.  For the full  year,  we expect  sales  may be  negatively
impacted by  approximately  10% as a result of this  change in our  distribution
channel.

LIQUIDITY AND CAPITAL RESOURCES

Customer Deposits
Certain  customers  of  our  Display  Technologies  segment  have  entered  into
long-term  supply  agreements and agreed to make advance cash deposits to secure
supply of large-size glass substrates.  The deposits will be applied in the form
of credits against future product purchases,  thus reducing operating cash flows
in later  periods as credits are applied for cash  deposits  received in earlier
periods.  During  the  current  year,  we  received  a total of $323  million of
deposits against orders, of which $234 million was received in the first half of
2005.



Customer deposits will be received in the following periods (in millions):
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                      Six
                                                                 months ended         Remainder       Estimated 2006
                                                   2004          June 30, 2005         of 2005          and Beyond          Total
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                             

Customer deposits received                        $ 204             $ 234                $ 248             $ 295            $ 981
- ------------------------------------------------------------------------------------------------------------------------------------


The majority of customer  deposits will be received  through 2006. For the three
and six months  ended June 30, 2005,  we issued $2 million in credit  memoranda,
not  reflected  in the  above  amounts,  which  were  applied  against  customer
receivables.

Financing Structure
Second Quarter
- --------------
In the second  quarter of 2005, we completed the following debt and common stock
transactions:
..    We issued $100 million of 6.05% senior  unsecured notes for net proceeds of
     approximately  $99 million.  The notes mature on June 15, 2015. We may call
     the debentures at any time on or after June 15, 2010.
..    We redeemed for cash the $100 million principal amount of our 7% debentures
     due March 15, 2007,  which at the time had a book value of $88 million.  We
     recognized  a loss of $12  million  upon  the  early  redemption  of  these
     debentures.
..    We redeemed the remaining $191 million of our outstanding 3.50% convertible
     debentures.  The bondholders elected to convert  substantially all of their
     debentures  into Corning  common  stock at a  conversion  ratio of 103.3592
     shares  per  $1,000  debenture.  We  issued  20  million  shares  upon  the
     conversion  of the  debentures,  resulting in an increase to equity of $191
     million.
..    We completed a common stock  offering of 20 million shares for net proceeds
     of  approximately  $323 million.  The net proceeds from this stock offering
     are intended to be used primarily to reduce debt by  repurchasing  for cash
     the remaining zero coupon  convertible  debentures due on November 8, 2015.
     We may call the  debentures  at any time on or after  November 8, 2005.  At
     June 30, 2005, the debentures had a carrying value of $275 million.

Both the $100 million of 6.05%  debentures  and the 20 million  shares of common
stock were issued under our  existing $5 billion  universal  shelf  registration
statement. At June 30, 2005, our remaining capacity under the shelf registration
is approximately $2.1 billion.

In the  second  half of 2005,  we will  contribute  up to 10  million  shares of
Corning common stock to our domestic pension plan.






First Quarter
- -------------
In the first quarter of 2005, we completed the following debt transactions:
..    We obtained a loan of approximately $48 million,  bearing interest at 2.1%,
     from a Japanese bank. This loan is part of a 10-year loan agreement entered
     into in 2004 to fund certain capital expansion activities in Japan.
..    We redeemed $100 million of our outstanding 3.50%  convertible  debentures.
     The bondholders  affected by this redemption elected to convert $98 million
     of their  debentures  into Corning  common  stock at a conversion  ratio of
     103.3592 shares per $1,000 debenture,  with the remaining $2 million repaid
     in cash.  Separately,  bondholders  elected  to  convert  approximately  $6
     million of outstanding  debentures  into Corning common stock. In total, we
     issued 11 million shares upon the conversion of the  debentures,  resulting
     in an increase to equity of $105 million.
..    We repaid a total of $192 million of notes in accordance  with their stated
     repayment schedule. This was primarily comprised of our 5.625% Euro notes.

In addition, in the first quarter of 2005 we completed negotiations with a group
of banks on a new revolving credit facility. The new facility provides us access
to a $975 million unsecured  multi-currency revolving line of credit and expires
in March 2010. The facility  includes two financial  covenants,  a leverage test
(debt to capital ratio not greater than 50%) and an interest  coverage  ratio of
no less than 3.5 times (calculated on the most recent four quarters). Concurrent
with the closing of this credit facility,  we terminated our previous $2 billion
revolving  line of credit that was set to expire in August  2005.  As of and for
the period ended June 30, 2005, our interest  coverage ratio was 10.3 times, and
our debt to capital ratio was 31%.

Capital Spending
Capital  spending  totaled $698  million and $302 million  during the six months
ended June 30, 2005 and 2004. Our 2005 forecasted  consolidated capital spending
has increased to about $1.5 billion. Of this amount,  approximately $1.2 billion
will  be  directed  toward  expanding   manufacturing  capacity  for  LCD  glass
substrates in the Display  Technologies  segment and approximately  $150 million
will be directed toward our Environmental Technologies segment.

Key Balance Sheet Data
Balance sheet and working  capital  measures are provided in the following table
(dollars in millions):
- --------------------------------------------------------------------------------
                                      As of June 30,        As of December 31,
                                      --------------        ------------------
                                           2005                    2004
- --------------------------------------------------------------------------------

Working capital                          $  1,517                $    945
Working capital, excluding cash
  and short-term investments             $  (598)                $  (936)
Current ratio                               1.7:1                   1.4:1
Trade accounts receivable,
  net of allowances                      $    645                $    585
Days sales outstanding                         51                      52
Inventories                              $    552                $    535
Inventory turns                               4.8                     4.9
Days payable outstanding                       86                      67
Long-term debt                           $  1,915                $  2,214
Total debt to total capital                   31%                     41%
- --------------------------------------------------------------------------------






Credit Rating
Our credit  ratings were updated from those  disclosed in our 2004 Annual Report
on Form 10-K as follows:
- --------------------------------------------------------------------------------
RATING AGENCY                          Rating                  Outlook
Last Update                        Long-Term Debt            Last Update
- --------------------------------------------------------------------------------

Fitch                                   BBB-                   Stable
    April 27, 2005                                         April 27, 2005

Standard & Poor's                       BBB-                   Stable
    April 27, 2005                                         April 27, 2005

Moody's (a)                              Ba2                  Positive
    July 29, 2002                                         January 14, 2005
- --------------------------------------------------------------------------------

(a)  On July 11, 2005,  Moody's  Investor  Service placed  Corning's debt rating
     under review for a possible upgrade.

Management Assessment of Liquidity
Our major source of funding for 2005 and beyond will be our existing  balance of
cash, cash equivalents and short-term investments.  Beyond our first quarter and
second  quarter 2005 debt and equity  offerings,  from time to time, we may also
issue debt or equity  securities for general corporate  purposes.  We believe we
have  sufficient  liquidity for the next several years to fund  operations,  the
asbestos  settlement,   research  and  development,   capital  expenditures  and
scheduled debt repayments.

Contractual Obligations
Other  than  the  early  debt  repayments  described  in  Note 4  (Debt)  to the
consolidated  financial statements,  there have been no material changes outside
the ordinary course of business in the contractual  obligations disclosed in our
2004 Annual Report on Form 10-K under the caption "Contractual Obligations."

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial  statements  requires  management to make estimates
and  assumptions  that affect  amounts  reported  therein.  The  estimates  that
required  management's  most  difficult,  subjective  or complex  judgments  are
described in our 2004 Annual  Report on Form 10-K and remain  unchanged  through
the second quarter of 2005.

NEW ACCOUNTING STANDARDS

In December  2004,  the FASB issued SFAS No. 123  (revised  2004),  "Share-Based
Payment"  (SFAS  123(R)),  which  replaces SFAS 123 and  supercedes APB 25. SFAS
123(R)  requires all  share-based  payments to  employees,  including  grants of
employee  stock  options,  to be recognized in the financial  statements at fair
value.  On April 14,  2005,  the SEC issued a new rule that amends the  required
adoption  dates of SFAS 123(R).  Under SFAS 123(R),  Corning must  determine the
appropriate fair value model to be used for valuing  share-based  payments,  the
amortization  method for compensation cost, and the transition method to be used
at date of adoption.  We will implement the provisions of SFAS 123(R) on January
1, 2006 following the "prospective  adoption"  transition method.  This adoption
method  requires  Corning  to begin  expensing  share-based  payments  effective
January 1, 2006. Prior periods will not be restated.

Corning grants  restricted shares and stock options that are subject to specific
vesting conditions (e.g., three-year cliff vesting). The awards specify that the
employee will continue to vest in the award after retirement  without  providing
any  additional  service.  Corning  accounts  for this  type of  arrangement  by
recognizing  compensation  cost over the nominal vesting period (i.e.,  over the
three-year  vesting  period) and, if the employee  retires before the end of the
vesting period,  recognizing any remaining unrecognized compensation cost at the
date of retirement (the "nominal vesting period approach").






SFAS 123(R)  specifies that an award is vested when the employee's  retention of
the  award  is  no  longer  contingent  on  providing  subsequent  service  (the
"non-substantive  vesting period approach").  That would be the case for Corning
awards that vest when  employees  retire and are granted to retirement  eligible
employees. Accordingly, related compensation cost must be recognized immediately
for awards granted to retirement  eligible employees or over the period from the
grant date to the date retirement  eligibility is achieved,  if that is expected
to occur during the nominal vesting period.

We will continue to follow the nominal  vesting period  approach for (1) any new
share-based  awards  granted prior to adopting SFAS 123(R) and (2) the remaining
portion of unvested outstanding awards after adopting SFAS 123(R). Upon adoption
of SFAS 123(R), we will apply the non-substantive vesting period approach to new
grants  that  have  retirement  eligibility  provisions.   Had  we  applied  the
non-substantive  vesting  period  approach  versus the  nominal  vesting  period
approach,  stock-based  compensation  cost  would  have been $7  million  and $3
million higher for the six months ended June 30, 2005 and 2004, respectively, to
stock options and restricted share awards.

In summary, we are currently evaluating the impact that SFAS 123(R) will have on
our  consolidated  results of operations  and financial  condition.  Our current
estimate is that our incremental pretax and after-tax  share-based  compensation
expense  will be up to $90  million in 2006 and  beyond.  This  amount  includes
approximately $20 million related to the impact of applying the  non-substantive
vesting period approach.

In  March  2005,  the  FASB  issued   Interpretation  No.  47,  "Accounting  for
Conditional  Asset Retirement  Obligations - an interpretation of FASB Statement
No.  143" (FIN 47),  which  clarifies  the term  "conditional  asset  retirement
obligation" used in SFAS No. 143, "Accounting for Asset Retirement Obligations,"
and specifically when an entity would have sufficient  information to reasonably
estimate the fair value of an asset retirement  obligation.  Corning is required
to adopt FIN 47 no later than  December  31,  2005.  Corning does not expect the
adoption  of FIN 47 to have a  material  impact on its  consolidated  results of
operations and financial condition.

In May  2005,  the FASB  issued  SFAS No.  154,  "Accounting  Changes  and Error
Corrections"  (SFAS  154),  which  replaces  APB  Opinion  No.  20,  "Accounting
Changes,"  (APB 20) and SFAS No. 3,  "Reporting  Accounting  Changes  in Interim
Financial  Statements." SFAS 154 changes the requirements for the accounting for
and reporting of a change in accounting principle. Upon the adoption of SFAS 154
beginning January 1, 2006, Corning will apply the standard's guidance to changes
in  accounting  methods as required.  At this time,  Corning does not expect the
adoption of SFAS 154 will have a material impact on its consolidated  results of
operations and financial condition.

ENVIRONMENT

We have been named by the Environmental Protection Agency (the Agency) under the
Superfund  Act,  or  by  state  governments  under  similar  state  laws,  as  a
potentially  responsible  party for 11 active  hazardous waste sites.  Under the
Superfund  Act,  all parties who may have  contributed  any waste to a hazardous
waste site,  identified by such Agency, are jointly and severally liable for the
cost of cleanup unless the Agency agrees  otherwise.  It is our policy to accrue
for the estimated  liability related to Superfund sites and other  environmental
liabilities  related  to  property  owned  and  operated  by us based on  expert
analysis and continual monitoring by both internal and external consultants.  We
have accrued $13 million for the estimated  liability for environmental  cleanup
and related litigation at June 30, 2005. Based upon the information developed to
date,  we  believe  that the  accrued  amount is a  reasonable  estimate  of our
liability and that the risk of an additional loss in an amount materially higher
than that accrued is remote.






FORWARD-LOOKING STATEMENTS

Many  statements  in this  Quarterly  Report  on Form  10-Q are  forward-looking
statements.  These  typically  contain  words  such  as  "believes,"  "expects,"
"anticipates,"   "estimates,"   "forecasts,"  or  similar   expressions.   These
forward-looking  statements  involve risks and uncertainties  that may cause the
actual outcome to be materially different. Such risks and uncertainties include,
but are not limited to the following:

- -    global economic and political conditions;
- -    tariffs, import duties and currency fluctuations;
- -    product demand and industry capacity;
- -    competitive products and pricing;
- -    sufficiency of manufacturing capacity and efficiencies;
- -    availability and costs of critical components and materials;
- -    new product development and commercialization;
- -    order activity and demand from major customers;
- -    fluctuations in capital spending by customers;
- -    possible  disruption in commercial  activities  due to terrorist  activity,
     armed conflict, political instability or major health concerns;
- -    facility expansions and new plant start-up costs;
- -    effect of regulatory and legal developments;
- -    capital resource and cash flow activities;
- -    ability to pace capital spending to anticipated  levels of customer demand,
     which may fluctuate;
- -    interest costs;
- -    credit rating and ability to obtain  financing and capital on  commercially
     reasonable terms;
- -    adequacy and availability of insurance;
- -    financial risk management;
- -    capital spending;
- -    acquisition and divestiture activities;
- -    rate of technology change;
- -    level of excess or obsolete inventory;
- -    ability to enforce patents;
- -    adverse litigation;
- -    product and components performance issues;
- -    stock price fluctuations;
- -    rate of substitution by end-users  purchasing LCDs for notebook  computers,
     desktop monitors and televisions;
- -    downturn in demand for LCD glass substrates;
- -    customer  ability,  most notably in the Display  Technologies  segment,  to
     maintain   profitable   operations  and  obtain  financing  to  fund  their
     manufacturing expansions;
- -    fluctuations in supply chain inventory levels;
- -    equity  company  activities,  principally  at Dow Corning  Corporation  and
     Samsung Corning Co., Ltd.;
- -    movements in foreign  exchange rates,  primarily the Japanese yen, Euro and
     Korean won; and
- -    other risks  detailed  in  Corning's  Securities  and  Exchange  Commission
     filings.






Risk factors

Set forth below and elsewhere in this Quarterly Report on Form 10-Q and in other
documents we file with the SEC are some of the principal risks and uncertainties
that could  cause our actual  business  results  to differ  materially  from any
forward-looking  statements or other  projections  contained in this Report.  In
addition,  future results could be materially  affected by general  industry and
market  conditions,  changes  in laws or  accounting  rules,  general  U.S.  and
non-U.S.  economic  and  political  conditions,   including  a  global  economic
slowdown,  fluctuation of interest rates or currency exchange rates,  terrorism,
political  unrest or  international  conflicts,  political  instability or major
health concerns, natural disasters or other disruptions of expected economic and
business conditions.  These risk factors should be considered in addition to our
cautionary  comments  concerning  forward-looking  statements in this  Quarterly
Report on Form 10-Q,  including  statements  related to markets for our products
and trends in our business that involve a number of risks and uncertainties. Our
separate  statement labeled  Forward-Looking  Statements should be considered in
addition to the statements below.

Our  sales  could be  negatively  impacted  if one or more of our key  customers
substantially reduce orders for our products

     Our customer base is relatively  concentrated  with 10 or fewer significant
customers  accounting for a high  percentage  (greater than 50%) of net sales in
most of our businesses.  However,  no individual customer accounts for more than
10% of consolidated sales.

     Our Display Technologies,  Telecommunications,  Environmental Technologies,
and Life  Sciences  segments  have  concentrated  customer  bases.  If we lose a
significant  customer in any of these businesses,  or if one or more significant
customers  reduce  orders,  our sales could be  negatively  impacted.  Corning's
Display  Technologies  segment  manufactures  and sells  glass  substrates  to a
concentrated  customer base comprised of LCD panel makers  primarily  located in
Japan  and  Taiwan.  The most  significant  customers  in these  markets  are AU
Optronics Corp., Chi Mei Optoelectronics  Corp.,  Hannstar Display Corp., Quanta
Display Inc., Sharp  Corporation,  and Toppan CFI (Taiwan) Co., Ltd. For the six
months ended June 30, 2005, these LCD customers accounted for 74% of the Display
Technologies segment sales. In addition,  Samsung Corning Precision's sales were
also  concentrated,  with three LCD panel makers in Korea  (Samsung  Electronics
Co., Ltd., LG Philips LCD Co., and BOE Hydis  Technology  Co., Ltd.)  accounting
for 87% of sales for the six months ended June 30, 2005.

     Although the sale of LCD glass  substrates  has  increased  from quarter to
quarter  in 2005,  there can be no  assurance  that  this  positive  trend  will
continue.  Our customers are LCD panel makers, and as they switch to larger size
glass,  the  pace  of  their  orders  may be  uneven  while  they  adjust  their
manufacturing processes and facilities.  Additionally,  consumer preferences for
panels of  differing  sizes,  or price or other  factors,  may lead to pauses in
market  growth from time to time.  There is further risk that our  customers may
not be able to maintain  profitable  operations or access sufficient  capital to
fund ongoing expansions, which may limit their pace of orders to us.

     Our  Telecommunications  segment  customers'  purchases of our products are
affected  by  their  capital  expansion  plans,   general  market  and  economic
uncertainty and regulatory  changes,  including  broadband  policy.  For the six
months  ended  June  30,  2005,   one   customer   accounted   for  17%  of  our
Telecommunications  segment sales,  and 10 customers  accounted for 53% of total
segment sales. Sales in the  Telecommunications  segment continue to be impacted
by  Verizon's  fiber-to-the-premises  project.  Fiber-to-the-premises  sales  to
Verizon  are  dependent  on  Verizon's  planned  targets  for homes  passed  and
connected.  Changes in Verizon's  deployment  plan, or additional  reductions in
their inventory levels of fiber-to-the-premises products, could adversely affect
future sales.

     In the Environmental  Technologies segment,  sales of our ceramic substrate
and filter  products for automotive and diesel  emissions and pollution  control
fluctuate with production and sales of automobiles  and other vehicles,  as well
as changes in  governmental  laws and  regulations  for air quality and emission
controls. Sales in our Environmental  Technologies segment are primarily to four
manufacturers of emission control systems who then sell to automotive and diesel
engine  manufacturers.  A portion of our  automotive  products  are sold to U.S.
engine  manufacturers,  and as a result,  our future  sales  could be  adversely
impacted by slowdowns in automotive production by these manufacturers.






     Sales in our Life Sciences segment in 2004 were primarily through two large
distributors to government entities, pharmaceutical and biotechnology companies,
hospitals,  universities  and other  research  facilities.  One of Life Sciences
primary  distributors  changed its business strategy,  and Corning notified this
distributor that it would not renew its existing distribution  agreement,  which
expired in April 2005. We are actively  working to transition  the sales through
this  distributor to our remaining  primary  distributor  and other existing and
developing  channels.  However,  this change will likely  adversely impact sales
volumes in the short term. For the full year, sales may be adversely impacted by
approximately  10% as a result of this change in our distribution  channel.  For
the six months ended June 30, 2005, our remaining primary distributor  accounted
for 41% of total segment sales.

If we do not  successfully  adjust  our  manufacturing  volumes  and fixed  cost
structure,  or achieve  manufacturing  yields or sufficient product reliability,
our operating results could suffer, and we may not achieve  profitability levels
anticipated

     We are investing  heavily in additional  manufacturing  capacity of certain
businesses,  including  forecasted 2005 capital spending of $1.1 billion to $1.2
billion to expand our liquid  crystal  display  glass  facilities in response to
anticipated  increases  in customer  demand and  approximately  $150  million in
anticipation  of the emerging market for diesel emission  control  systems.  The
speed  of  constructing  the new  facilities  presents  challenges.  We may face
technical and process issues in moving to commercial production capacity.  There
can be no assurance that Corning will be able to pace its capacity  expansion to
the actual demand. While the LCD industry has grown rapidly, it is possible that
glass manufacturing capacity may exceed customer demand during certain periods.

     The  manufacturing  of our  products  involves  highly  complex and precise
processes,  requiring  production in highly  controlled and clean  environments.
Changes  in  our  manufacturing  processes  or  those  of  our  suppliers  could
significantly reduce our manufacturing  yields and product reliability.  In some
cases,  existing  manufacturing  may be  insufficient  to achieve  the volume or
requirements  of our  customers.  We will  need  to  develop  new  manufacturing
processes and  techniques to achieve  targeted  volume,  pricing and cost levels
that will permit  profitable  operations.  While we continue to fund projects to
improve  our  manufacturing   techniques  and  processes,  we  may  not  achieve
satisfactory cost levels in our manufacturing activities that will fully satisfy
our yield and margin targets.

Our future  operating  results  depend on our ability to  purchase a  sufficient
amount of materials, parts and components to meet the demands of our customers.

     Our ability to meet customer  demands  depends,  in part, on our ability to
obtain timely and adequate delivery of materials,  parts and components from our
suppliers and our internal  manufacturing  capacity. We may experience shortages
that could adversely  affect our  operations.  Although we work closely with our
suppliers to avoid these types of shortages,  there can be no assurances that we
will not encounter  these  problems in the future.  Furthermore,  certain of our
components  are available only from a single source or limited  sources.  We may
not be able to find  alternate  sources  in a  timely  manner.  A  reduction  or
interruption  in supplies,  or a  significant  increase in the price of supplies
could have a material adverse effect on our businesses.

We have incurred, and may in the future incur,  restructuring and other charges,
the amounts of which are difficult to predict accurately

     We have recorded several charges for  restructuring,  impairment of assets,
and the  write-off of cost and equity based  investments.  It is possible we may
record  additional  charges  for  restructuring  or other asset  impairments  if
additional actions become necessary to align costs to a reduced level of demand,
or  respond to  increased  competition,  regulatory  actions,  or other  factors
impacting our businesses.






If the  markets for our  products  do not  develop and expand as we  anticipate,
demand for our products may decline,  which would negatively  impact our results
of operations and financial performance

     The  markets  for  our  products  are  characterized  by  rapidly  changing
technologies,  evolving industry  government  standards and frequent new product
introductions.  Our success is expected to depend,  in substantial  part, on the
timely and successful introduction of new products, upgrades of current products
to comply with emerging industry  government  standards,  our ability to acquire
technologies  needed to remain  competitive and our ability to address competing
technologies  and products.  In addition,  the following  factors related to our
products and the markets for them, if not achieved, could have an adverse impact
on our results of operations and financial performance:

     .    our ability to introduce leading products such as glass substrates for
          liquid  crystal  displays,  optical  fiber and cable and  hardware and
          equipment,  and  environmental  substrate  products  that can  command
          competitive prices in the marketplace;
     .    our  ability to  maintain  or achieve a  favorable  sales mix of large
          generation sizes of liquid crystal display glass;
     .    our ability to  continue  to develop new product  lines to address our
          customers'  diverse needs within the several  market  segments that we
          participate in, which requires a high level of innovation,  as well as
          the accurate anticipation of technological and market trends;
     .    our  ability  to  develop  new   products  in  response  to  favorable
          government regulations and laws driving customer demand,  particularly
          environmental  substrate  diesel filter products in the  Environmental
          Technologies   segment   and   Telecommunications   segment   products
          associated with fiber-to-the-premises;
     .    continued strong demand for notebook computers;
     .    the rate of  substitution  by  end-users  purchasing  LCD  monitors to
          replace cathode ray tube monitors;
     .    the rate of growth in purchases of LCD  televisions  to replace  other
          technologies;
     .    fluctuations  in  inventory  levels in the supply  chain of  LCD-based
          consumer electronics and fiber-to-the-premises products;
     .    the ability to reallocate LCD glass to other  customers in response to
          canceled orders; or
     .    the rate of growth  of the  fiber-to-the-premises  build-out  in North
          America.

We face pricing pressures in each of our leading businesses that could adversely
affect our results of operations and financial performance

     We periodically face pricing pressures in each of our leading businesses as
a result of intense  competition,  emerging new technologies,  or over-capacity.
While we will work toward reducing our costs to respond to the pricing pressures
that may  continue,  we may not be able to achieve  proportionate  reductions in
costs.  As a result  of  overcapacity  and the  current  economic  and  industry
downturn in the Telecommunications segment, pricing pressures continued in 2005,
particularly  in our optical fiber and cable  products.  We  anticipate  pricing
pressures  will continue into 2006 and beyond.  Increased  pricing  pressure may
develop in our Display  Technologies  segment as our customers  strive to reduce
their costs and our competitors strive to expand production.

We have  incurred,  and may in the future incur,  goodwill and other  intangible
asset impairment charges

     At June 30, 2005, Corning had goodwill of $277 million and other intangible
assets of $106  million.  While we believe the  estimates  and  judgments  about
future  cash flows used in the  goodwill  impairment  tests are  reasonable,  we
cannot provide assurance that future impairment  charges will not be required if
the expected  cash flow  estimates as  projected by  management  do not occur or
change based on market conditions.






We may be limited in our ability to obtain  additional  capital on  commercially
reasonable terms

     Although we believe  existing cash,  short-term  investments  and borrowing
capacity,  collectively,  provide adequate  resources to fund ongoing  operating
requirements,  we may be  required  to  seek  additional  financing  to  compete
effectively in our markets.  Our public debt ratings affect our ability to raise
capital and the cost of such capital.  Our ratings as of July 29, 2005 were BBB-
from both Fitch,  Inc.  and  Standard & Poor's,  a division  of the  McGraw-Hill
Companies,  Inc. and Ba2 from Moody's Investors Service, a subsidiary of Moody's
Corporation.  Any  downgrades  may increase our  borrowing  costs and affect our
ability to access the debt capital markets.

     We are subject under our revolving  credit facility to financial  covenants
that  require  us to  maintain a ratio of total  debt to  capital  and  interest
coverage ratio, as defined under the revolving credit facility.  These covenants
may limit our ability to borrow  funds.  Future  losses or  significant  charges
could materially  affect these ratios,  which may reduce the amounts we are able
to borrow under our revolving credit facility.

If our products or materials purchased from our suppliers experience performance
issues, our business will suffer

     Our  business   depends  on  the   production  of  excellent   products  of
consistently  high  quality.  To this end,  our  products,  including  materials
purchased  from  our  suppliers,  are  tested  for  quality  both  by us and our
customers.  Nevertheless,  our products are highly  complex,  and our customers'
testing  procedures  are limited to  evaluating  our  products  under likely and
foreseeable failure scenarios. For various reasons (including, among others, the
occurrence of performance problems  unforeseeable in testing),  our products and
materials  purchased  from  our  suppliers  may  fail to  perform  as  expected.
Performance  issues could result from faulty design or problems in manufacturing
or testing.  We have experienced such performance  issues in the past and remain
exposed  to  such  performance  issues.  In some  cases,  product  redesigns  or
additional  capital  equipment may be required to correct a defect. In addition,
any significant or systemic  product failure could result in customer  relations
problems and harm the future sales of our products.

We face intense competition in most of our businesses

     We  expect  that  we  will  face  additional   competition   from  existing
competitors,  low  cost  manufacturers  and new  entrants.  Because  some of the
markets in which we compete have been historically characterized by rapid growth
and are  characterized by rapid technology  changes,  smaller niche and start-up
companies,  or companies  with lower  operating  costs may become our  principal
competitors in the future.  We must invest in research and  development,  expand
our  engineering,  manufacturing  and  marketing  capabilities,  and continue to
improve customer service and support in order to remain  competitive.  We cannot
provide  assurance  that we will be able to maintain or improve our  competitive
position.

We may experience difficulties in enforcing our intellectual property rights and
we may be subject to claims of infringement of the intellectual  property rights
of others

     We may encounter  difficulties  in  protecting  our  intellectual  property
rights or obtaining  rights to  additional  intellectual  property  necessary to
permit us to continue or expand our  businesses.  We cannot  assure you that the
patents that we hold or may obtain will provide  meaningful  protection  against
our  competitors  or  competitive  technologies.  Litigation may be necessary to
enforce our intellectual  property  rights,  to protect our trade secrets and to
determine  the  validity  and scope of our  proprietary  rights.  Litigation  is
inherently  uncertain and the outcome is often  unpredictable.  Other  companies
hold patents on technologies used in our industries and are aggressively seeking
to expand, enforce and license their patent portfolios.

     The  intellectual  property  rights of others could  inhibit our ability to
introduce new products.  We are, and may in the future be,  subject to claims of
intellectual  property  infringement or misappropriation that may result in loss
of revenue or require us to incur substantial  costs. We cannot assure you as to
the outcome of such claims.






Current or future  litigation  may harm our  financial  condition  or results of
operations

     Pending,   threatened   or  future   litigation   is  subject  to  inherent
uncertainties. Our financial condition or results of operations may be adversely
affected by unfavorable outcomes, expenses and costs exceeding amounts estimated
or  insured.  In  particular,  we have been  named as a  defendant  in  numerous
lawsuits  against PCC and several other  defendants  involving  claims  alleging
personal  injury from exposure to asbestos.  As described in Legal  Proceedings,
our negotiations with the  representatives of asbestos claimants have produced a
tentative  settlement,  but certain  cases may still be litigated  and the final
approval of the tentative  settlement  is subject to a number of  uncertainties.
Final approval of a global  settlement  through the PCC  bankruptcy  process may
impact the results of operations for the period in which such costs, if any, are
recognized.  Total charges of $567 million have been  incurred  through June 30,
2005; however,  additional charges are possible due to the potential fluctuation
in the price of our common stock, other adjustments in the proposed  settlement,
and other litigation factors.

We face risks related to our international operations and sales

     We have customers and significant  operations,  including manufacturing and
sales,  located  outside the U.S.  We have large  manufacturing  operations  for
liquid crystal display glass  substrates in the Asia-Pacific  region,  including
equity  investments  in  companies  operating  in South  Korea that make  liquid
crystal display glass and in China that make  telecommunications  products,  and
several  significant  customers are located in this region. As a result of these
and other international operations, we face a number of risks, including:

     .    geographical concentration of our factories and operations;
     .    major  health  concerns  such as  Severe  Acute  Respiratory  Syndrome
          (SARS);
     .    difficulty of effectively managing our diverse global operations;
     .    change in regulatory requirements;
     .    tariffs,  duties  and  other  trade  barriers  including  anti-dumping
          duties;
     .    undeveloped legal systems; and
     .    political and economic instability in foreign markets.

     Any of these  items  could  cause  our  sales  and/or  profitability  to be
significantly reduced.

We face risks through our equity method  investments in companies that we do not
control

     Corning's net income includes  significant equity in earnings of associated
companies.  For the six months  ended June 30,  2005,  we have  recognized  $338
million of equity  earnings,  of which $310  million  came from our two  largest
investments; Dow Corning Corporation (which makes silicone products) and Samsung
Corning  Precision  Glass Co., Ltd.  (which makes liquid crystal display glass).
Samsung Corning Precision is located in the Asia-Pacific region and, as such, is
subject  to  those  geographic  risks  referred  to  above.  With  50% or  lower
ownership,  we do not control such equity  companies  nor their  management  and
operations.  Performance of our equity  investments may not continue at the same
levels in the future. During 2003, we recognized charges associated with Samsung
Corning Co., Ltd. (our 50% equity method  investment that makes glass panels and
funnels for conventional  televisions),  which recorded  significant fixed asset
impairment  charges.  As the conventional  television  market will be negatively
impacted by strong  growth in the LCD glass market,  it is  reasonably  possible
that Samsung Corning Co., Ltd. may incur additional  restructuring or impairment
charges or net operating losses in the future.






We face risks due to foreign currency fluctuations

     Because we have  significant  customers  and  operations  outside the U.S.,
fluctuations in foreign currencies, especially the Japanese yen and Euro, affect
our sales and profit levels.  Foreign  exchange rates may make our products less
competitive in countries where local currencies decline in value relative to the
dollar.  Sales in our Display  Technologies  segment are denominated in Japanese
yen. For the six months ended June 30, 2005,  the Display  Technologies  segment
represented  34% of Corning's  sales.  Based on the expected sales growth of the
Display  Technologies   segment,  our  exposure  to  currency   fluctuations  is
increasing.  Although we hedge significant transaction risk, we do not currently
hedge translation risk.

If the  financial  condition of our customers  declines,  our credit risks could
increase

     We have experienced,  and in the future may experience,  losses as a result
of our inability to collect our accounts receivable, as well as the loss of such
customer's  ongoing  business.  If our  customers  fail  to meet  their  payment
obligations to us,  including  deposits due under long-term  purchase and supply
agreements in our Display Technologies segment, we could experience reduced cash
flows and losses in excess of amounts  reserved.  As of June 30, 2005,  reserves
for trade receivables totaled approximately $27 million.

We may not have adequate insurance coverage for claims against us

     We face the risk of loss resulting from, and adverse  publicity  associated
with, product liability, securities, fiduciary liability, intellectual property,
antitrust, contractual,  warranty, fraud and other lawsuits, whether or not such
claims are valid. In addition, our product liability,  fiduciary,  directors and
officers,  property and  comprehensive  general  liability  insurance may not be
adequate to cover such claims or may not be  available  to the extent we expect.
Our insurance costs have increased and may increase further.  We may not be able
to get  adequate  insurance  coverage  in the  future  at  acceptable  costs.  A
successful claim that exceeds or is not covered by our policies could require us
to pay substantial  sums. Some of the carriers in our excess insurance  programs
are in  liquidation  and may not be able to  respond  if we should  have  claims
reaching  into  excess  layers.  The  financial  health  of other  insurers  may
deteriorate  and these  insurers  may not be able to respond  if we should  have
claims  reaching into excess layers.  In addition,  we may not be able to insure
against  certain risks or obtain some types of  insurance,  such as terrorism or
war insurance.







ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk Disclosures

There have been no  material  changes to our market  risk  exposures  during the
first six months of 2005. For a discussion of our exposure to market risk, refer
to Item  7A,  Quantitative  and  Qualitative  Disclosures  About  Market  Risks,
contained in our 2004 Annual Report on Form 10-K.


ITEM 4.  CONTROLS AND PROCEDURES

Corning  carried  out  an  evaluation,   under  the  supervision  and  with  the
participation  of Corning's  management,  including  Corning's  chief  executive
officer and its chief financial officer,  of the effectiveness of the design and
operation of Corning's  disclosure  controls and procedures as of June 30, 2005,
the end of the period  covered by this report.  Based upon the  evaluation,  the
chief  executive  officer and chief financial  officer  concluded that Corning's
disclosure  controls and  procedures  are  effective to ensure that  information
required to be disclosed  by Corning in reports  that it files or submits  under
the Exchange Act is recorded, processed, summarized and reported within the time
periods specified in Securities and Exchange Commission rules and forms.

During the fiscal  quarter  covered by this  report,  there was one  significant
change in our system of internal  controls.  On May 1, 2005,  we opened a shared
services  transaction  processing  center (the  "center")  located in  Shanghai,
China. The center began  processing  transactions on behalf of our operations in
Japan.  The  transactions  include  general ledger  processing,  and operational
transactions  primarily  in  the  area  of  the  revenue  and  payables  cycles.
Additional  sites  in  the  Asia  region  will  migrate  similar  processing  of
transactions  to the center in subsequent  quarters.  We have taken  appropriate
action to ensure the design  effectiveness  of internal  control over  financial
reporting  was  implemented  as of the  end of the  current  quarter,  and  will
continue to be  maintained  as  additional  sites  transition  processes  to the
center.








                           Part II - Other Information

ITEM 1.  LEGAL PROCEEDINGS

Environmental Litigation. Corning has been named by the Environmental Protection
Agency (the  Agency)  under the  Superfund  Act, or by state  governments  under
similar state laws, as a potentially  responsible  party at 11 active  hazardous
waste sites.  Under the Superfund Act, all parties who may have  contributed any
waste to a hazardous  waste site,  identified  by such  Agency,  are jointly and
severally liable for the cost of cleanup unless the Agency agrees otherwise.  It
is Corning's policy to accrue for its estimated  liability  related to Superfund
sites and other  environmental  liabilities related to property owned by Corning
based on expert analysis and continual  monitoring by both internal and external
consultants.  Corning has accrued $13 million for its  estimated  liability  for
environmental   cleanup  and  litigation  at  June  30,  2005.  Based  upon  the
information developed to date, management believes that the accrued reserve is a
reasonable  estimate  of  the  Company's  liability  and  that  the  risk  of an
additional loss in an amount materially higher than that accrued is remote.

Schwinger and Stevens  Toxins  Lawsuits.  In April 2002,  Corning was named as a
defendant in two actions,  Schwinger  and  Stevens,  filed in the U.S.  District
Court for the Eastern  District of New York,  which  asserted  various  personal
injury and property  damage  claims  against a number of  corporate  defendants.
These  claims  allegedly  arise  from the  release  of toxic  substances  from a
Sylvania  nuclear  materials  processing  facility  near  Hicksville,  New York.
Amended  complaints  naming 205 plaintiffs  and seeking  damages in excess of $3
billion  were served in  September  2002.  The sole basis of  liability  against
Corning was plaintiffs' claim that Corning was the successor to Sylvania-Corning
Nuclear Corporation  (Sylvania-Corning),  a Delaware  corporation formed in 1957
and  dissolved  in 1960.  Management  intends to  vigorously  contest all claims
against   Corning  for  the  reason  that  Corning  is  not  the   successor  to
Sylvania-Corning.  Management will also defend on the grounds that almost all of
the wrongful  death  claims and personal  injury  claims are  time-barred.  At a
status  conference  in December  2002,  the Court  decided to  "administratively
close" the Schwinger and Stevens cases and ordered  plaintiffs' counsel to bring
new amended complaints with "bellwether" plaintiffs.  In these actions, known as
Schwinger II and Astuto,  the plaintiffs  have not named Corning as a defendant.
Although it appears that plaintiffs may proceed only against the other corporate
defendants,  the original  Schwinger  and Stevens cases remain  pending,  and no
order has been entered dismissing Corning.  Based upon the information developed
to date, and recognizing that the outcome of litigation is uncertain, management
believes  that the  likelihood  of a  materially  adverse  impact  to  Corning's
financial statements is remote.

Dow Corning Bankruptcy. Corning and The Dow Chemical Company (Dow Chemical) each
own 50% of the common stock of Dow Corning Corporation (Dow Corning),  which was
in  reorganization  proceedings  under  Chapter 11 of the U.S.  Bankruptcy  Code
between May 1995 and June 2004. Dow Corning filed for  bankruptcy  protection to
address   pending   and  claimed   liabilities   arising   from  many   thousand
breast-implant  product  lawsuits.  On June 1, 2004,  Dow Corning  emerged  from
Chapter 11 with a Plan of  Reorganization  (the  Plan)  which  provided  for the
settlement  or other  resolution  of implant  claims and  includes  releases for
Corning and Dow Chemical as  shareholders in exchange for  contributions  to the
Plan.

Under  the terms of the Plan,  Dow  Corning  has  established  and is  funding a
Settlement Trust and a Litigation Facility to provide a means for tort claimants
to settle or litigate  their  claims.  Dow Corning has paid  approximately  $1.6
billion (inclusive of insurance) to the Settlement Trust and subject to a number
of conditions, may pay up to an additional $1.6 billion ($710 million after-tax)
over 16 years. Dow Corning has satisfied the claims of its commercial creditors,
except that  certain  commercial  creditors  continue to pursue an appeal to the
U.S.  Court  of  Appeals  of the  Sixth  Circuit  seeking  from Dow  Corning  an
additional  sum of  approximately  $80 million for interest at default rates and
enforcement  costs.  Corning  believes  the risk of loss to Dow Corning  (net of
amounts reserved) is remote.

In addition,  Dow Corning has received a statutory notice of deficiency from the
United States  Internal  Revenue  Service  asserting tax  deficiencies  totaling
approximately  $65 million  relating  to its federal  income tax returns for the
1995 and 1996 calendar  years.  This matter is pending before the U.S.  District
Court in Michigan.  Dow Corning has also received a proposed adjustment from the
IRS (approximately  $117 million) with respect to its federal income tax returns
for the 1997, 1998 and 1999 calendar years. Dow Corning is vigorously contesting
these deficiencies and proposed adjustments which it believes are excessive.






In 1995,  Corning  fully  impaired its  investment in Dow Corning upon its entry
into  bankruptcy  proceedings and did not recognize net equity earnings from the
second quarter of 1995 through the end of 2002. Corning began recognizing equity
earnings  in the  first  quarter  of 2003  when  management  concluded  that its
emergence  from  bankruptcy  protection  was  probable.  Corning  considers  the
difference  between the carrying  value of its investment in Dow Corning and its
50% share of Dow  Corning's  equity to be  permanent.  This  difference  is $249
million. Subject to future rulings by the bankruptcy court and potential changes
in estimated bankruptcy-related liabilities, it is possible that Dow Corning may
record bankruptcy-related charges in the future. Corning received $15 million in
dividends from Dow Corning in the second quarter of 2005.

Federal  Securities  Cases.  From December 2001 through April 2002,  Corning and
three of its officers and directors were named  defendants in lawsuits  alleging
(a) violations of the U.S. securities laws in connection with Corning's November
2000 offering of 30 million  shares of common stock and $2.7 billion zero coupon
convertible  debentures,  due November 2015 and (b) misleading  disclosures  and
non-disclosures  that allegedly  inflated the price of Corning's common stock in
the period from October 2000 through July 9, 2001.  On April 12, 2004,  the U.S.
District Court of the Western  District of New York entered a decision and order
dismissing plaintiffs' complaint.  That dismissal was affirmed by the U.S. Court
of Appeals of the Second  Circuit  by an order  entered on March 30,  2005.  The
dismissal of the complaint is now final.

Pittsburgh Corning Corporation.  Corning and PPG Industries, Inc. (PPG) each own
50% of the capital stock of Pittsburgh Corning  Corporation (PCC). Over a period
of more than two decades,  PCC and several other  defendants  have been named in
numerous  lawsuits  involving  claims alleging  personal injury from exposure to
asbestos. On April 16, 2000, PCC filed for Chapter 11 reorganization in the U.S.
Bankruptcy Court for the Western District of Pennsylvania.  As of the bankruptcy
filing, PCC had in excess of 140,000 open claims and had insufficient  remaining
insurance  and assets to deal with its alleged  current and future  liabilities.
More  than  100,000  additional  claims  have  been  filed  with PCC  after  its
bankruptcy filing. As a result of PCC's bankruptcy  filing,  Corning recorded an
after-tax  charge of $36 million in 2001 to fully impair its  investment  in PCC
and  discontinued  recognition  of  equity  earnings.  At the time PCC filed for
bankruptcy  protection,  there were approximately  12,400 claims pending against
Corning in state court lawsuits  alleging various theories of liability based on
exposure to PCC's asbestos products and typically requesting monetary damages in
excess of one million  dollars per claim.  Corning has defended  those claims on
the basis of the separate  corporate  status of PCC and the absence of any facts
supporting  claims of direct  liability  arising from PCC's  asbestos  products.
Corning  is  also   currently   named  in   approximately   11,500  other  cases
(approximately  44,500  claims)  alleging  injuries  from  asbestos  and similar
amounts  of  monetary  damages  per  claim.  Those  cases  have been  covered by
insurance  without  material impact to Corning to date.  Asbestos  litigation is
inherently  difficult,  and past  trends in  resolving  these  claims may not be
indicators of future outcomes.

In the  bankruptcy  court in April 2000,  PCC obtained a preliminary  injunction
against the prosecution of asbestos  actions arising from PCC's products against
its two  shareholders  to  afford  the  parties  a  period  of time in  which to
negotiate a plan of reorganization for PCC (the PCC Plan).

On May 14, 2002,  PPG announced that it had agreed with certain of its insurance
carriers and  representatives  of current and future  asbestos  claimants on the
terms of a  settlement  arrangement  applicable  to claims  arising  from  PCC's
products.

On March 28, 2003,  Corning  announced  that it had also reached  agreement with
representatives  of  current  and  future  asbestos  claimants  on a  settlement
arrangement that was thereafter  incorporated into the PCC Plan. This settlement
remains  subject  to a  number  of  contingencies,  including  approval  by  the
Bankruptcy Court.  Corning's  settlement will require the  contribution,  if the
Plan is  approved  and becomes  effective,  of its equity  interest in PCC,  its
one-half  equity interest in PCE, and 25 million shares of Corning common stock.
The settlement also requires  Corning to make cash payments of $148 million (net
present value as of June 30, 2005) in six installments  beginning one year after
the Plan is  effective.  In  addition,  Corning  will  assign  policy  rights or
proceeds  under primary  insurance  from 1962 through 1984, as well as rights to
proceeds under certain excess  insurance,  most of which falls within the period
from 1962 through 1973. In return for these  contributions,  Corning  expects to
receive a release and an injunction channeling asbestos claims against it into a
settlement trust under the PCC Plan.






Corning  recorded an initial  charge of $298 million in the period  ending March
31, 2003 to reflect the settlement terms.  However, the amount of the charge for
this  settlement  requires  adjustment  each  quarter  based  upon the change in
Corning's  common stock price prior to  contribution of the shares to the trust.
During the second quarter of 2005,  Corning recorded a charge of $137 million to
reflect the  mark-to-market  of Corning  common stock.  Beginning with the first
quarter of 2003 and through June 30, 2005, Corning recorded total net charges of
$567 million to reflect the initial  settlement  and  subsequent  mark-to-market
adjustments for the change in the value of Corning common stock.

Two of Corning's  primary  insurers and several  excess  insurers have commenced
litigation for a declaration of the rights and  obligations of the parties under
insurance  policies,  including  rights that may be  affected by the  settlement
arrangement  described  above.  Corning is  vigorously  contesting  these cases.
Management is unable to predict the outcome of this insurance litigation.

The PCC Plan received a favorable vote from creditors in March 2004. Hearings to
consider  objections to the Plan were held in the Bankruptcy  Court in May 2004.
The  parties  filed  post-hearing  briefs and made final oral  arguments  to the
Bankruptcy  Court in November 2004.  The Bankruptcy  Court allowed an additional
round of briefing to address current case law  developments and heard additional
oral  arguments on March 16, 2005. In mid-April  2005, the proponents of the PCC
Plan requested that the court rule on the pending objections.  If the Bankruptcy
Court does not approve the PCC Plan in its current form, changes to the Plan are
probable  as it is likely  that the Court  will  allow  the  proponents  time to
propose  amendments.   The  outcome  of  these  proceedings  is  uncertain,  and
confirmation  of the current  Plan or any amended Plan is subject to a number of
contingencies.  However, apart from the quarterly  mark-to-market  adjustment in
the value of the 25 million  shares of Corning stock,  management  believes that
the likelihood of a material adverse impact to Corning's financial statements is
remote.

Astrium. In December of 2000, Astrium,  SAS and Astrium,  Ltd. filed a complaint
for negligence in the U.S. District Court for the Central District of California
against TRW, Inc., Pilkington Optronics Inc., Corning NetOptix, Inc. (NetOptix),
OFC Corporation  and Optical Filter  Corporation  claiming  damages in excess of
$150 million.  The complaint alleges that certain cover glasses for solar arrays
used to generate  electricity  from solar energy on satellites sold by Astrium's
corporate  successor  were  negligently  coated by NetOptix or its  subsidiaries
(prior to  Corning's  acquisition  of NetOptix) in such a way that the amount of
electricity  the satellite can produce and their  effective life were materially
reduced.  NetOptix  has denied  that the  coatings  produced  by NetOptix or its
subsidiaries  caused the damage alleged in the complaint,  or that it is legally
liable for any damages that  Astrium may have  experienced.  In April 2002,  the
Court granted motions for summary  judgment by NetOptix and other  defendants to
dismiss  the  negligence  claims,  but  permitted  plaintiffs  to add  fraud and
negligent  misrepresentation  claims  against  all  defendants  and a breach  of
warranty claim against NetOptix and its subsidiaries. In October 2002, the Court
again  granted  defendants'  motions  for summary  judgment  and  dismissed  the
negligent misrepresentation and breach of warranty claims. The intentional fraud
claims were dismissed against all non-settling  defendants on February 25, 2003.
On March 19, 2003,  Astrium  appealed all of the Court's  rulings  regarding the
various  summary  judgment  motions to the Ninth Circuit  Court of Appeals.  The
period of  briefing  the appeal was  extended,  and oral  argument  has not been
scheduled.  Recognizing that the outcome of litigation is uncertain,  management
believes  that the  likelihood  of a  materially  adverse  impact  to  Corning's
financial statements is remote.

Furukawa  Electric  Company.  On February 3, 2003, The Furukawa Electric Company
(Furukawa) filed suit in the Tokyo District Court in Japan against Corning Cable
Systems International  Corporation (CCS International)  alleging infringement of
Furukawa's Japanese Patent No. 2,023,966 which relates to separable fiber ribbon
units used in optical  cable.  Furukawa's  complaint  requests  slightly  over 6
billion  Japanese yen in damages  (approximately  $56 million) and an injunction
against  further sales in Japan of these fiber ribbon units.  CCS  International
has denied the allegation of infringement,  asserted that the patent is invalid,
and is defending vigorously against this lawsuit. On October 29, 2004, the Tokyo
District  Court  issued  its  ruling  in  favor  of CCS  International  on  both
non-infringement  and patent invalidity.  Furukawa has filed an appeal from this
ruling to the Tokyo Court of Appeals. Management believes that the likelihood of
a materially adverse impact to Corning's financial statements is remote.






PicVue  Electronics  Ltd.,  PicVue  OptoElectronics  International,   Inc.,  and
Eglasstrek  Gmbh. In June 2002,  Corning brought an action in the U.S.  District
Court for the  Western  District  of New York to  restrain  the use of its trade
secrets  relating to certain  machinery  used for liquid  crystal  display glass
melting.  In July 2003, the District  Court granted a preliminary  injunction in
favor of  Corning,  subject to  Corning's  posting a bond.  PicVue,  a Taiwanese
company,  filed a  counterclaim  alleging  violations of the antitrust  laws and
appealed  from the granting of the  preliminary  injunction.  The U.S.  Court of
Appeals  affirmed and  remanded  the case to the  District  Court to clarify its
injunction and to determine the amount of the bond. In early July 2005,  Corning
reached a settlement  with the two PicVue  entities  resolving  Corning's  trade
secret claim and dismissing  PicVue's  counterclaim,  through an agreed judgment
expected to be entered by the District  Court within 30 days.  Corning's  claims
against  Eglasstrek  remain  for  further  proceedings  in the  District  Court,
although the parties have initiated settlement discussions.

Tyco Electronics  Corporation and Tyco Technology Resources,  Inc. On August 13,
2003, CCS Holdings Inc. (CCS), a Corning subsidiary, filed an action in the U.S.
District  Court  for  the  Middle  District  of  North  Carolina   against  Tyco
Electronics  Corporation and Tyco Technology Resources,  Inc. (Tyco), asking the
court to declare a Tyco patent invalid,  unenforceable and not infringed by CCS.
The patent  generally  relates to a type of connector  for optical fiber cables.
Tyco filed an answer and  counterclaims  alleging patent  infringement by CCS of
the same patent and is seeking  unspecified  monetary damages and an injunction.
The Court has entered a stipulated  discovery plan and discovery is ongoing. The
Court also ordered that the parties  conduct  mediation  before October 1, 2005.
Recognizing  that the outcome of litigation is  uncertain,  management  believes
that the risk of a material impact on Corning's financial statements is remote.

Grand Jury Investigation of Conventional  Cathode Ray Television Glass Business.
In August 2003,  Corning  Asahi Video  Products  Company (CAV) was served with a
federal grand jury document  subpoena  related to pricing,  bidding and customer
practices  involving  conventional  cathode ray  television  glass  picture tube
components.  A number of employees or former  employees  have received a related
subpoena.  CAV is a general  partnership,  51% owned by Corning and 49% owned by
Asahi Glass America,  Inc. CAV's only  manufacturing  facility in State College,
Pennsylvania  closed in the first half of 2003 due to  declining  sales.  CAV is
cooperating  with  the  government  investigation.  Management  is not  able  to
estimate  the  likelihood  that any  charges  will be  filed as a result  of the
investigation.








ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

This table provides  information  about our purchases of our common stock during
the fiscal second quarter of 2005:

Issuer Purchases of Equity Securities (a)



- ------------------------------------------------------------------------------------------------------------------------------------
                                          Total              Average             Total Number of              Approximate Dollar
                                         Number               Price            Shares Purchased as           Value of Shares that
                                        of Shares           Paid per            Part of Publicly             May Yet Be Purchased
Period                                Purchased (b)         Share (b)          Announced Plan (a)             Under the Plan (a)
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                          
April 1-30, 2005                          55,011             $13.45                    0                              $0
May 1-31, 2005                           235,792             $14.70                    0                              $0
June 1-30, 2005                           66,802             $16.25                    0                              $0
- ------------------------------------------------------------------------------------------------------------------------------------
Total                                    357,605             $14.80                    0                              $0
- ------------------------------------------------------------------------------------------------------------------------------------


(a)  During the period ended June 30, 2005, we did not have a publicly announced
     program for repurchase of shares of our common stock and did not repurchase
     our common stock in open-market transactions outside of such a program.
(b)  This column  reflects the following  transactions  during the fiscal second
     quarter of 2005: (i) the deemed surrender to us of 336,973 shares of common
     stock to pay the exercise price and to satisfy tax withholding  obligations
     in connection  with the exercise of employee  stock  options,  and (ii) the
     surrender to us of 20,632 shares of common stock to satisfy tax withholding
     obligations  in connection  with the vesting of restricted  stock issued to
     employees.







ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

(a) - (c) Our annual meeting of shareholders was held on April 28, 2005. At that
meeting,  shareholders  elected John Seely Brown,  Gordon Gund, John M. Hennessy
and H. Onno Ruding as  directors  for terms  expiring  at our annual  meeting of
shareholders in 2008. In addition,  shareholders voted to ratify the appointment
of  PricewaterhouseCoopers  LLP as our independent  registered public accounting
firm  for  fiscal  year  2005  and  also  approved  the  2005  Employee   Equity
Participation Program. Those elected and the results of voting are as follows:


Nomination and Election of Directors

Name                                  Votes For            Votes Withheld
John Seely Brown                     1,149,786,336            133,256,051
Gordon Gund                          1,138,772,764            144,269,623
John M. Hennessy                     1,231,377,503             51,664,884
H. Onno Ruding                       1,242,792,837             40,249,550

James B. Flaws,  James R.  Houghton,  James J.  O'Connor,  Deborah D. Rieman and
Peter F.  Volanakis  continued  as  directors  for terms  expiring at the annual
meeting of shareholders in 2006 and Jeremy R. Knowles, Eugene C. Sit, William D.
Smithburg,  Hansel E. Tookes II and Wendell P. Weeks  continued as directors for
terms expiring at the annual meeting of shareholders in 2007.



                                      Votes For             Votes Against              Abstain              Broker Non-Votes
                                                                                                   

Approve 2005                         724,875,246             268,780,577             10,985,200                278,401,364
Employee Equity
Participation
Program




                                      Votes For             Votes Against              Abstain
                                                                             
Ratify                              1,251,194,649            23,100,931               8,746,807
appointment of
PricewaterhouseCoopers
LLP as our independent
registered public
accounting firm
for fiscal year ending
December 31, 2005








ITEM 6.  EXHIBITS


    Exhibit Number      Exhibit Name
    --------------      ------------

            12          Computation of Ratio of Earnings to Fixed Charges.

           31.1         Certification Pursuant to Rule 13a-15(e) and 15d-15(e),
                        As Adopted Pursuant to Section 302 of the Sarbanes-Oxley
                        Act of 2002.

           31.2         Certification Pursuant to Rule 13a-15(e) and 15d-15(e),
                        As Adopted Pursuant to Section 302 of the Sarbanes-Oxley
                        Act of 2002.

            32          Certification Pursuant to 18 U.S.C. Section 1350, As
                        Adopted Pursuant to Section 906 of the Sarbanes-Oxley
                        Act of 2002.







                                   SIGNATURES
                                   ----------


Pursuant to the  requirements  of the  Securities  and Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.








                                    CORNING INCORPORATED
                                        (Registrant)






 July 29, 2005                       /s/ JAMES B. FLAWS
- ---------------           -----------------------------------------
     Date                              James B. Flaws
                          Vice Chairman and Chief Financial Officer
                                (Principal Financial Officer)




 July 29, 2005                     /s/ KATHERINE A. ASBECK
- ---------------           -----------------------------------------
     Date                            Katherine A. Asbeck
                            Senior Vice President and Controller
                               (Principal Accounting Officer)






                                  EXHIBIT INDEX
                                  -------------


Exhibit Number         Exhibit Name
- --------------         ------------
      12               Computation of Ratio of Earnings to Fixed Charges.

     31.1              Certification Pursuant to Rule 13a-15(e) and 15d-15(e),
                       As Adopted Pursuant to Section 302 of the Sarbanes-Oxley
                       Act of 2002.

     31.2              Certification Pursuant to Rule 13a-15(e) and 15d-15(e),
                       As Adopted Pursuant to Section 302 of the Sarbanes-Oxley
                       Act of 2002.

      32               Certification Pursuant to 18 U.S.C. Section 1350, As
                       Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
                       of 2002.






                                                                     Exhibit 12
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(In millions, except ratios)

                                                                Six months ended
                                                                  June 30, 2005
                                                                ----------------

Income before income taxes                                         $    145
Adjustments:
    Distributed income of equity investees                              212
    Fixed charges net of capitalized interest                            78
                                                                   --------

Income before taxes and fixed charges, as adjusted                 $    435
                                                                   ========

Fixed charges:
   Interest expense (a)                                            $     65
   Portion of rent expense which represents an
     appropriate interest factor (b)                                     13
   Capitalized interest                                                  11
                                                                   --------

Total fixed charges                                                      89
Capitalized interest                                                    (11)
                                                                   --------

Total fixed charges, net of capitalized interest                   $     78
                                                                   ========

Ratio of earnings to fixed charges                                     4.9x
                                                                   ========

(a)  Interest expense includes amortization expense for capitalized interest and
     debt costs.
(b)  One-third of net rent expense is the portion deemed  representative  of the
     interest factor.





                                                                    Exhibit 31.1

                      CHIEF EXECUTIVE OFFICER CERTIFICATION

I,  Wendell  P.  Weeks,   President  and  Chief  Executive  Officer  of  Corning
Incorporated, certify that:

1.   I have reviewed this Quarterly Report on Form 10-Q of Corning  Incorporated
     (the registrant);

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material  fact or omit to state a  material  fact  necessary  to make the
     statements made, in light of the circumstances  under which such statements
     were made,  not  misleading  with  respect  to the  period  covered by this
     report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in  this  report,  fairly  present  in all  material
     respects the financial  condition,  results of operations and cash flows of
     the registrant as of, and for, the periods presented in this report;

4.   The  registrant's  other  certifying  officer  and  I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules  13a-15(e) and 15d-15(e))  and internal  control over
     financial  reporting  (as  defined  in  Exchange  Act Rules  13a-15(f)  and
     15d-15(f)) for the registrant and have:

     a)   designed  such  disclosure  controls  and  procedures,  or caused such
          disclosure   controls  and   procedures  to  be  designed   under  our
          supervision,  to ensure  that  material  information  relating  to the
          registrant,  including its consolidated subsidiaries, is made known to
          us by others within those entities,  particularly during the period in
          which this report is being prepared;

     b)   designed such internal  control over  financial  reporting,  or caused
          such internal  control over  financial  reporting to be designed under
          our  supervision,   to  provide  reasonable  assurance  regarding  the
          reliability  of financial  reporting and the  preparation of financial
          statements for external purposes in accordance with generally accepted
          accounting principles;

     c)   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures and presented in this report our conclusions  about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this report based on such evaluation; and

     d)   disclosed  in this  report  any  change in the  registrant's  internal
          control over financial reporting that occurred during the registrant's
          most recent fiscal quarter (the registrant's  fourth fiscal quarter in
          the case of an annual  report)  that has  materially  affected,  or is
          reasonably  likely to materially  affect,  the  registrant's  internal
          control over financial reporting;

5.   The registrant's  other certifying  officer and I have disclosed,  based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's auditors and the audit committee of the registrant's board
     of directors (or persons performing the equivalent function):

     a)   all significant  deficiencies and material weaknesses in the design or
          operation  of internal  control  over  financial  reporting  which are
          reasonably  likely to  adversely  affect the  registrant's  ability to
          record, process, summarize and report financial information; and

     b)   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls over financial reporting.

July 29, 2005

/s/             Wendell P. Weeks
     -------------------------------------
     Wendell P. Weeks
     President and Chief Executive Officer
     (Principal Executive Officer)





                                                                    Exhibit 31.2

                      CHIEF FINANCIAL OFFICER CERTIFICATION

I, James B. Flaws, Vice Chairman and Chief Financial Officer, certify that:

1.   I have reviewed this Quarterly Report on Form 10-Q of Corning  Incorporated
     (the registrant);

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material  fact or omit to state a  material  fact  necessary  to make the
     statements made, in light of the circumstances  under which such statements
     were made,  not  misleading  with  respect  to the  period  covered by this
     report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in  this  report,  fairly  present  in all  material
     respects the financial  condition,  results of operations and cash flows of
     the registrant as of, and for, the periods presented in this report;

4.   The  registrant's  other  certifying  officer  and  I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules  13a-15(e) and 15d-15(e))  and internal  control over
     financial  reporting  (as  defined  in  Exchange  Act Rules  13a-15(f)  and
     15d-15(f)) for the registrant and have:

     a)   designed  such  disclosure  controls  and  procedures,  or caused such
          disclosure   controls  and   procedures  to  be  designed   under  our
          supervision,  to ensure  that  material  information  relating  to the
          registrant,  including its consolidated subsidiaries, is made known to
          us by others within those entities,  particularly during the period in
          which this report is being prepared;

     b)   designed such internal  control over  financial  reporting,  or caused
          such internal  control over  financial  reporting to be designed under
          our  supervision,   to  provide  reasonable  assurance  regarding  the
          reliability  of financial  reporting and the  preparation of financial
          statements for external purposes in accordance with generally accepted
          accounting principles;

     c)   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures and presented in this report our conclusions  about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this report based on such evaluation; and

     d)   disclosed  in this  report  any  change in the  registrant's  internal
          control over financial reporting that occurred during the registrant's
          most recent fiscal quarter (the registrant's  fourth fiscal quarter in
          the case of an annual  report)  that has  materially  affected,  or is
          reasonably  likely to materially  affect,  the  registrant's  internal
          control over financial reporting;

5.   The registrant's  other certifying  officer and I have disclosed,  based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's auditors and the audit committee of the registrant's board
     of directors (or persons performing the equivalent function):

     a)   all significant  deficiencies and material weaknesses in the design or
          operation  of internal  control  over  financial  reporting  which are
          reasonably  likely to  adversely  affect the  registrant's  ability to
          record, process, summarize and report financial information; and

     b)   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls over financial reporting.

July 29, 2005

/s/             James B. Flaws
     -----------------------------------------
     James B. Flaws
     Vice Chairman and Chief Financial Officer
     (Principal Financial Officer)






                                                                      Exhibit 32



CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002



In connection with the Quarterly Report of Corning Incorporated (the Company) on
Form 10-Q for the period  ended June 30, 2005 as filed with the  Securities  and
Exchange  Commission  on the date hereof  (the  Report),  we,  Wendell P. Weeks,
President and Chief  Executive  Officer,  and James B. Flaws,  Vice Chairman and
Chief Financial Officer, of the Company, certify, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

(1)  The Report fully complies with the  requirements  of section 13(a) or 15(d)
     of the Securities Exchange Act of 1934, as amended; and

(2)  The information  contained in the Report fairly  presents,  in all material
     respects, the financial condition and results of operations of the Company.


Dated:  July 29, 2005


/s/  Wendell P. Weeks
     -----------------------------------------
     Wendell P. Weeks
     President and Chief Executive Officer


/s/  James B. Flaws
     -----------------------------------------
     James B. Flaws
     Vice Chairman and Chief Financial Officer