FORM 10-Q/A

                       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                September 30, 2005
                                ----------------------------------------------

                                       OR

[ ] 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
                              --------------------
             (Exact name of Registrant as specified in its charter)


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

 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 (or for such  shorter  period that the  registrant  was
required  to file  such  reports)  and  (2)  has  been  subject  to such  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 by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).

                       Yes ___                 No X
                                                 ---

APPLICABLE  ONLY TO  ISSUERS  INVOLVED  IN  BANKRUPTCY  PROCEEDINGS  DURING  THE
PRECEDING FIVE YEARS:
Indicate  by check mark  whether  the  registrant  has filed any  documents  and
reports  required  to be filed by  Sections  12,  13 or 15(d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court.

                       Yes ___                 No ___

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

1,557,553,059   shares  of  Corning's  Common  Stock,   $0.50  Par  Value,  were
outstanding as of May 3, 2006.





                                Explanatory Note

On April 25, 2006, Corning Incorporated (Corning) filed a Current Report on Form
8-K with the  Securities  and Exchange  Commission in which it announced that it
was restating its previously issued consolidated financial statements to correct
errors in its accounting  for Corning's  asbestos  settlement  liability and the
accounting for its investment in Pittsburgh  Corning Europe from March 31, 2003,
through December 31, 2005.  Corning also changed the classification of accretion
on a portion of the  asbestos  settlement  liability  from  interest  expense to
asbestos  settlement  expense in its statement of  operations  for the same time
period.  Corning  is filing  this  Amendment  No. 1 on Form  10-Q/A to amend its
Quarterly  Report on Form 10-Q for the  quarter  ended  September  30, 2005 (the
Original Filing), which was originally filed on October 28, 2005.

As more fully  described in Note 2 (Restatement of Previously  Issued  Financial
Statements) to the consolidated  financial  statements in this Form 10-Q/A,  the
cumulative effect of these  adjustments to Corning's  September 30, 2005 balance
sheet was to increase its  investments  in  affiliate  companies by $30 million,
increase other accrued liabilities by $150 million, increase accumulated deficit
by $122  million,  and increase  accumulated  other  comprehensive  income by $2
million.  The cumulative effect of these  adjustments to Corning's  December 31,
2004 balance  sheet was to increase  investments  in affiliate  companies by $26
million,   increase  other  accrued   liabilities  by  $141  million,   increase
accumulated   deficit  by  $123   million,   and  increase   accumulated   other
comprehensive income by $8 million.

The restatement  adjustments had the following impact on Corning's  reported net
income  and  earnings  per  share as  follows  (in  millions,  except  per share
amounts):



                                              Three months ended September 30,           Nine months ended September 30,
                                              --------------------------------           -------------------------------
                                                  2005              2004                     2005               2004
                                                  ----              ----                     ----               ----
                                                                                                
As reported:
Net income (loss)                               $   203          $  (2,491)               $     617         $  (2,328)
Basic earnings per share                        $  0.14          $  (1.78)                $    0.43         $   (1.69)
Diluted earnings (loss) per share               $  0.13          $  (1.78)                $    0.41         $   (1.69)

As restated:
Net income (loss)                               $   203          $  (2,546)               $     618         $  (2,381)
Basic earnings per share                        $  0.14          $   (1.82)               $    0.43         $   (1.73)
Diluted earnings (loss) per share               $  0.13          $   (1.82)               $    0.41         $   (1.73)

Increase in net (loss) income                                    $     (55)               $       1         $     (53)
Increase in basic earnings per share
Increase in diluted loss per share                               $   (0.04)                                 $   (0.04)


As a result of the restatement,  the Company's  previously  issued  consolidated
financial  statements for the period from March 31, 2003,  through  December 31,
2005,  including those contained in the following  filings,  should no longer be
relied upon:  Annual Report on Form 10-K for the fiscal year ended  December 31,
2005;  Quarterly Reports on Form 10-Q for the quarters ended September 30, 2005,
June 30, 2005 and March 31, 2005.

Refer to Note 2 (Restatement of Previously  Issued Financial  Statements) to the
consolidated   financial   statements   in  this  Form  10-Q/A  for   additional
information.

In connection  with the  restatement,  Corning  concluded that certain  material
weaknesses existed in its internal control over financial reporting.  See Part I
- Item 4 "Controls and Procedures."

This Form 10-Q/A amends and restates only certain information in Items 1, 2, and
4 of Part I and Items 1 and 6 of Part II of the  Original  Filing.  In addition,
Item 6 of Part II of the  Original  Filing has been  amended to include  updated
certifications  executed  as of the date of this  Form  10-Q/A  from  our  Chief
Executive  Officer and Chief  Financial  Officer as required by Sections 302 and
906 of the  Sarbanes-Oxley  Act of 2002 and an updated  Computation  of Ratio of
Earnings to Fixed Charges. The certifications of the Chief Executive Officer and
Chief  Financial  Officer  and our  Computation  of Ratio of  Earnings  to Fixed
Charges are attached to this Form 10-Q/A as exhibits 12, 31.1, 31.2, and 32.






Except for the amended and restated  information,  this Form 10-Q/A includes all
of the  information  contained in the Original  Filing,  and no attempt has been
made in this Form 10-Q/A to modify or update the  disclosures  presented  in the
Original  Filing,  except as required to reflect the effects of the restatement.
This Form 10-Q/A continues to describe conditions as of the date of the Original
Filing,  and the disclosures  contained  herein have not been updated to reflect
events,  results, or developments that occurred after the Original Filing, or to
modify or update  those  disclosures  affected  by  subsequent  events.  Forward
looking  statements made in the Original Filing have not been revised to reflect
events,  results or developments  that have become known to us after the date of
the Original  Filing  (other than the  restatement),  and such  forward  looking
statements should be read in their historical context.







                                      INDEX
                                      -----

PART I - FINANCIAL INFORMATION
------------------------------
                                                                         Page
                                                                         ----
ITEM 1. Financial Statements

    Consolidated Statements of Operations (Unaudited) for the
       three and nine months ended September 30, 2005 and 2004             5

    Consolidated Balance Sheets (Unaudited) at September 30, 2005
       and December 31, 2004                                               6

    Consolidated Statements of Cash Flows (Unaudited) for the
       nine months ended September 30, 2005 and 2004                       7

    Notes to Consolidated Financial Statements (Unaudited)                 8

Item 2. Management's Discussion and Analysis of Financial
           Condition and Results of Operations                            34

Item 3. Quantitative and Qualitative Disclosures About Market Risk        57

Item 4. Controls and Procedures                                           57


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

Item 1. Legal Proceedings                                                 59

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds       63

Item 6. Exhibits                                                          64

Signatures                                                                65








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



                                                                      Three months                   Nine months
                                                                   ended September 30,            ended September 30,
                                                                -------------------------     --------------------------
                                                                   2005            2004          2005            2004
                                                                (Restated)     (Restated)     (Restated)      (Restated)
                                                                ----------     ----------     ----------      ----------
                                                                                                  
Net sales                                                       $   1,188       $  1,006       $   3,379      $   2,821
Cost of sales                                                         643            602           1,922          1,771
                                                                ---------       --------       ---------      ---------

Gross margin                                                          545            404           1,457          1,050

Operating expenses:
   Selling, general and administrative expenses                       178            153             553            479
   Research, development and engineering expenses                     118             88             320            257
   Amortization of purchased intangibles                                3              9              11             28
   Restructuring, impairment and other charges (Note 3)                28          1,794              46          1,794
   Asbestos settlement (Note 4)                                        73            (45)            204             29
                                                                ---------       --------       ---------      ---------

Operating income (loss)                                               145         (1,595)            323         (1,537)

Interest income                                                        17              6              40             16
Interest expense                                                      (23)           (34)            (84)          (103)
Loss on repurchases and retirement
  of debt, net (Note 5)                                                               (4)            (12)           (36)
Other income, net                                                      17              5              28              6
                                                                ---------       --------       ---------      ---------

Income (loss) from continuing operations before
  income taxes                                                        156         (1,622)            295         (1,654)
Provision for income taxes (Note 6)                                   (28)        (1,040)            (91)        (1,050)
                                                                ---------       --------       ---------      ---------

Income (loss) from continuing operations before
  minority interests and equity earnings                              128         (2,662)            204         (2,704)
Minority interests                                                     (2)            (3)             (8)           (14)
Equity in earnings of associated companies, net of
  impairments (Note 10)                                                77             99             422            317
                                                                ---------       --------       ---------      ---------

Income (loss) from continuing operations                              203         (2,566)            618         (2,401)
Income from discontinued operation (Note 8)                                           20                             20
                                                                ---------       --------       ---------      ---------
Net income (loss)                                               $     203       $ (2,546)      $     618      $  (2,381)
                                                                =========       ========       =========      =========

Basic earnings (loss) per common share from (Note 7):
   Continuing operations                                        $    0.14       $  (1.83)      $    0.43      $   (1.74)
   Discontinued operation                                                           0.01                           0.01
                                                                ---------       --------       ---------      ---------
Basic earnings (loss) per common share                          $    0.14       $  (1.82)      $    0.43      $   (1.73)
                                                                =========       ========       =========      =========

Diluted earnings (loss) per common share from (Note 7):
   Continuing operations                                        $    0.13       $  (1.83)      $    0.41      $   (1.74)
   Discontinued operation                                                           0.01                           0.01
                                                                ---------       --------       ---------      ---------
Diluted earnings (loss) per common share                        $    0.13       $  (1.82)      $    0.41      $   (1.73)
                                                                =========       ========       =========      =========


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





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



                                                                                         September 30,       December 31,
                                                                                             2005                2004
                                                                                          (Restated)          (Restated)
                                                                                         -------------       ------------
                                                                                                        
Assets

Current assets:
   Cash and cash equivalents                                                              $   1,395           $   1,009
   Short-term investments, at fair value                                                      1,023                 872
                                                                                          ---------           ---------
     Total cash, cash equivalents and short-term investments                                  2,418               1,881
   Trade accounts receivable, net of doubtful accounts and allowances - $28 and $30             631                 585
   Inventories (Note 9)                                                                         559                 535
   Deferred income taxes (Note 6)                                                                87                  94
   Other current assets                                                                         204                 188
                                                                                          ---------           ---------
       Total current assets                                                                   3,899               3,283

Investments (Note 10)                                                                         1,635               1,510
Property, net of accumulated depreciation - $3,543 and $3,532                                 4,367               3,941
Goodwill and other intangible assets, net (Note 11)                                             380                 398
Deferred income taxes (Note 6)                                                                  487                 472
Other assets                                                                                    145                 166
                                                                                          ---------           ---------

Total Assets                                                                              $  10,913           $   9,770
                                                                                          =========           =========

Liabilities and Shareholders' Equity

Current liabilities:
   Short-term borrowings, including current portion of long-term debt (Note 5)            $     293           $     478
   Accounts payable                                                                             554                 682
   Other accrued liabilities (Notes 4 and 12)                                                 1,534               1,319
                                                                                          ---------           ---------
       Total current liabilities                                                              2,381               2,479

Long-term debt (Note 5)                                                                       1,804               2,214
Postretirement benefits other than pensions                                                     594                 600
Other liabilities (Notes 4 and 12)                                                            1,001                 747
                                                                                          ---------           ---------
       Total liabilities                                                                      5,780               6,040
                                                                                          ---------           ---------

Commitments and contingencies (Note 4)
Minority interests                                                                               27                  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:  0 and 637 thousand                                                                         64
   Common stock - Par value $0.50 per share; Shares authorized: 3.8 billion;
     Shares issued: 1,534 million and 1,424 million                                             767                 712
   Additional paid-in capital                                                                11,280              10,363
   Accumulated deficit                                                                       (6,814)             (7,432)
   Treasury stock, at cost; Shares held: 16 million                                            (164)               (162)
   Accumulated other comprehensive income (Note 14)                                              37                 156
                                                                                          ---------           ---------
       Total shareholders' equity                                                             5,106               3,701
                                                                                          ---------           ---------

Total Liabilities and Shareholders' Equity                                                $  10,913           $   9,770
                                                                                          =========           =========


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)



                                                                                            Nine months ended
                                                                                               September 30,
                                                                                         ------------------------
                                                                                            2005          2004
                                                                                         (Restated)    (Restated)
                                                                                         ----------    ----------
                                                                                                  
Cash Flows from Operating Activities:
   Net income (loss)                                                                      $    618      $(2,381)
   Adjustments to reconcile net income (loss) to net cash
    provided by operating activities:
     Depreciation                                                                              373          359
     Amortization of purchased intangibles                                                      11           28
     Restructuring, impairment and other charges and (credits)                                  46        1,794
     Asbestos settlement                                                                       204           29
     Gain on sale of discontinued operation                                                                 (20)
     Loss on repurchases and retirement of debt, net                                            12           36
     Undistributed earnings of associated companies                                           (206)        (206)
     Minority interests, net of dividends paid                                                   7           14
     Deferred taxes                                                                            (11)         992
     Interest expense on convertible debentures                                                  3            4
     Restructuring payments                                                                    (21)         (75)
     Employee retirement plan payments less than (in excess of) expense                         44          (12)
     Customer deposits, net                                                                    376          100
     Changes in certain working capital items:
        Trade accounts receivable                                                              (78)         (29)
        Inventories                                                                            (46)         (52)
        Other current assets                                                                   (14)         (25)
        Accounts payable and other current liabilities, net of restructuring payments          (91)          29
     Other, net                                                                                 53           58
                                                                                          --------      -------
Net cash provided by operating activities                                                    1,280          643
                                                                                          --------      -------

Cash Flows from Investing Activities:
   Capital expenditures                                                                     (1,076)        (556)
   Net proceeds from sale of businesses                                                                     100
   Net proceeds from sale or disposal of assets                                                 17           46
   Short-term investments - acquisitions                                                    (1,313)      (1,365)
   Short-term investments - liquidations                                                     1,163        1,116
   Restricted investments - liquidations                                                         3            6
   Other, net                                                                                   10
                                                                                          --------      -------
Net cash used in investing activities                                                       (1,196)        (653)
                                                                                          --------      -------

Cash Flows from Financing Activities:
   Net repayments of loans payable                                                            (198)        (111)
   Proceeds from issuance of long-term debt, net                                               147          442
   Repayments of long-term debt                                                               (102)        (154)
   Proceeds from issuance of common stock, net                                                 356           33
   Cash dividends to preferred shareholders                                                     (3)          (6)
   Proceeds from the exercise of stock options                                                 142           34
   Other, net                                                                                   (9)
                                                                                          --------      -------
Net cash provided by financing activities                                                      333          238
                                                                                          --------      -------
Effect of exchange rates on cash                                                               (31)          (4)
                                                                                          --------      -------
Net increase in cash and cash equivalents                                                      386          224
Cash and cash equivalents at beginning of period                                             1,009          688
                                                                                          --------      -------

Cash and cash equivalents at end of period                                                $  1,395      $   912
                                                                                          ========      =======


Certain amounts for 2004 were reclassified to conform with 2005 presentation.

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.

Property, Plant, and Equipment

Included in the subcategory of equipment, as disclosed in Note 8 to the December
31, 2004 Form 10-K, are the following types of assets:
--------------------------------------------------------------------------------
Asset type                                        Range of useful life
--------------------------------------------------------------------------------

Software                                                 3 years
Manufacturing equipment                               3 to 15 years
Furniture and fixtures                                5 to 7 years
Transportation equipment                                20 years
--------------------------------------------------------------------------------

Included  in  manufacturing  equipment  are  certain  components  of  production
equipment that are coated with or constructed of precious  metals.  These metals
have an indefinite useful life as they are returned to their elemental state and
sold at current market value when fixed assets are rebuilt or disposed of.

Foreign Currency Translation and Transactions

The determination of the functional currency for Corning's foreign  subsidiaries
is made based on the appropriate  economic and management  indicators.  For most
foreign  operations,  the local  currencies  are generally  considered to be the
functional currencies.  Prior to 2005, non-U.S.  operations which do not use the
local currency as the functional currency use the U.S. dollar. 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.






For foreign subsidiary functional currency financial  statements,  balance sheet
accounts are translated at current  exchange rates, and statements of operations
accounts are  translated  at average  exchange  rates for the year.  Translation
gains and losses are  recorded  as a separate  component  of  accumulated  other
comprehensive income (loss) in shareholders'  equity. The effects of remeasuring
non-functional  currency assets and liabilities into the functional currency are
included in current earnings.

Derivative Instruments

We participate in a variety of foreign  exchange  forward  contracts and foreign
exchange option contracts  entered into in connection with the management of our
exposure to fluctuations in foreign exchange and interest rates.

All derivatives are recorded at fair value on the balance sheet.  Changes in the
fair  value of  derivatives  designated  as cash flow  hedges  and hedges of net
investments   in  foreign   operations   are  recorded  in   accumulated   other
comprehensive   income  (loss).   Amounts   related  to  cash  flow  hedges  are
reclassified  from  accumulated  other  comprehensive  income  (loss)  when  the
underlying hedged item impacts earnings.  This  reclassification  is recorded in
the same line item of the consolidated statement of operations,  primarily sales
or cost of sales, where the effects of the hedged item are recorded.

Changes in the fair value of  derivatives  designated  as fair value  hedges are
recorded  currently  in  earnings  offset,  to the  extent  the  derivative  was
effective, by the change in the fair value of the hedged item. Corning currently
does not have any fair value  hedges.  Changes in the fair value of  derivatives
not designated as hedging  instruments are recorded currently in earnings in the
Other income line of the consolidated statement of operations.

Hedging Activities

We operate and conduct  business in many foreign  countries  and as a result are
exposed to  movements  in foreign  currency  exchange  rates.  Our  exposure  to
exchange rate effects includes:

..    exchange  rate  movements  on  financial   instruments   and   transactions
     denominated in foreign currencies which impact earnings, and
..    exchange  rate  movements   upon   conversion  of  net  assets  in  foreign
     subsidiaries  for which the  functional  currency  is not the U.S.  dollar,
     which impact our net equity.

Our most significant  foreign currency exposures relate to Japan,  Korea, Taiwan
and western  European  countries.  We  selectively  enter into foreign  exchange
forward and option contracts with durations generally 15 months or less to hedge
our exposure to exchange rate risk on foreign source income and  purchases.  The
hedges are  scheduled  to mature  coincident  with the timing of the  underlying
foreign currency commitments and transactions.  The objective of these contracts
is to neutralize the impact of exchange rate movements on our operating results.

We engage in foreign currency hedging activities to reduce the risk that changes
in exchange  rates will adversely  affect the eventual net cash flows  resulting
from the sale of  products  to foreign  customers  and  purchases  from  foreign
suppliers.  The hedge contracts  reduce the exposure to fluctuations in exchange
rate movements  because the gains and losses  associated  with foreign  currency
balances  and  transactions  are  generally  offset with gains and losses of the
hedge  contracts.  Because the impact of movements in foreign  exchange rates on
the value of hedge contracts  offsets the related impact on the underlying items
being hedged,  these  financial  instruments  help alleviate the risk that might
otherwise result from currency exchange rate fluctuations.

The following table  summarizes the notional  amounts and respective fair values
of Corning's derivative financial instruments, which mature at varying dates, at
September 30, 2005 (in millions):
--------------------------------------------------------------------------------
                                            Notional Amount          Fair Value
--------------------------------------------------------------------------------
Foreign exchange forward contracts              $1,139                  $ 20
Foreign exchange option contracts               $1,068                  $  8
--------------------------------------------------------------------------------

The amount of net gains  expected to be  reclassified  into earnings  within the
next 12 months is $27 million.






The  forward  and option  contracts  we use in  managing  our  foreign  currency
exposures contain an element of risk in that the counterparties may be unable to
meet the terms of the agreements. However, we minimize this risk by limiting the
counterparties   to  a  diverse  group  of   highly-rated   major  domestic  and
international   financial  institutions  with  which  we  have  other  financial
relationships.   We  are   exposed   to   potential   losses  in  the  event  of
non-performance by these counterparties; however, we do not expect to record any
losses  as a result  of  counterparty  default.  We do not  require  and are not
required to place collateral for these financial 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 value of undesignated
hedges are recorded in current period results in the other income, net component
on the  income  statement,  along  with the  foreign  currency  gains and losses
arising from the underlying monetary assets or liabilities,  in the consolidated
statement of  operations.  At September  30,  2005,  the notional  amount of the
undesignated derivatives was $444 million.

We have issued foreign  currency  denominated debt that has been designated as a
hedge of the net investment in a foreign operation. The effective portion of the
changes  in fair  value  of the  debt  is  reflected  as a  component  of  other
comprehensive  income  (loss)  as  part  of  the  foreign  currency  translation
adjustment.  At  September  30,  2005 the amount of net losses  included  in the
cumulative translation adjustment is $112 million.

Variable Interest Entities

Corning leases certain transportation equipment from a Trust that qualifies as a
variable  interest  entity  under FIN 46R,  Consolidation  of Variable  Interest
Entities, an Interpretation of Accounting Research Bulletin No. 51, Revised (FIN
46R).  The sole  purpose of this entity is leasing  transportation  equipment to
Corning.  Since Corning is the primary beneficiary of this entity, the financial
statements  of the entity  are  included  in  Corning's  consolidated  financial
statements.  The entity's  assets are primarily  comprised of fixed assets which
are  collateral  for  the  entity's  borrowings.   These  assets,  amounting  to
approximately  $29.8  million  as of  September  30,  2005,  are  classified  as
long-term assets in the consolidated balance sheet.

Corning leases certain transportation  equipment from two additional Trusts that
qualify as variable  interest  entities  under FIN 46R.  The sole purpose of the
entities  is leasing  transportation  equipment  to  Corning.  Corning  has been
involved with these entities as lessee since the inception of the Trusts.  Lease
revenue  generated  by these  Trusts was $1.6 million for each of the nine month
periods  ended  September  30, 2005 and 2004,  and $0.4  million for each of the
quarters ended September 30, 2005 and 2004.  Corning's  maximum exposure to loss
as a result of its  involvement  with the Trusts is estimated  at  approximately
$16.5 million at September 30, 2005.

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                       Nine months
                                                                          ended September 30,               ended September 30,
                                                                       -------------------------        -------------------------
                                                                          2005           2004              2005           2004
                                                                       (Restated)     (Restated)        (Restated)     (Restated)
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                           
Income (loss) from continuing operations - as reported                 $     203      $  (2,566)        $    618       $  (2,401)
Add:  Stock-based employee compensation expense
  determined under APB 25, included in reported
  net income (loss), net of tax                                               12                              28               3
Less:  Stock-based employee compensation expense
  determined under fair value based method, net of tax                       (23)           (20)             (65)            (77)
------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from continuing operations - pro forma                   $     192      $  (2,586)        $    581       $  (2,475)

Earnings (loss) per common share:
    Basic - as reported                                                $    0.14      $   (1.83)        $   0.43       $   (1.74)
    Basic - pro forma                                                  $    0.13      $   (1.85)        $   0.40       $   (1.79)

    Diluted - as reported                                              $    0.13      $   (1.83)        $   0.41       $   (1.74)
    Diluted - pro forma                                                $    0.12      $   (1.85)        $   0.38       $   (1.79)
------------------------------------------------------------------------------------------------------------------------------------


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                  Nine months
                             ended September 30,          ended September 30,
                          ------------------------     ------------------------
                             2005            2004        2005            2004
--------------------------------------------------------------------------------

Expected life in years          4               4           4               4
Risk free interest rate     4.13%           3.62%       3.76%           3.34%
Expected volatility           50%             50%         50%             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                    7,665              $   12.87
Options exercised                            (18,446)             $    8.16
Options terminated                            (3,337)             $   36.24
                                           ---------

Options outstanding September 30, 2005       124,905              $   21.35
                                           =========
Options exercisable September 30, 2005        96,949              $   25.05
--------------------------------------------------------------------------------







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
attribution  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  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.  Effective  January  1,  2006,  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  in  prior   periods,   stock-based
compensation cost would have been $11 million and $5 million higher for the nine
months ended  September 30, 2005 and 2004,  respectively,  for stock options and
restricted share awards.

Our current estimate is that our pretax and after-tax  stock-based  compensation
expense  will  increase  by $60  million to $70  million in 2006 and beyond as a
result of adopting SFAS 123(R).  This amount includes  approximately $15 million
related to the impact of applying the non-substantive vesting period approach.

In November 2004, the FASB issued SFAS No. 151,  "Inventory Costs - An Amendment
of ARB No. 43,  Chapter 4" (SFAS  151).  SFAS 151 amends ARB No. 43,  Chapter 4,
"Inventory  Pricing," to clarify that abnormal amounts of idle facility expense,
freight,  handling costs, and wasted material (spoilage) should be recognized as
current-period charges. Additionally, SFAS 151 requires that allocation of fixed
production  overheads to the costs of conversion be based on the normal capacity
of the  production  facilities.  Corning is required to adopt SFAS 151 effective
January 1, 2006.  Corning  does not  expect the  adoption  of SFAS 151 to have a
material  impact  on  its  consolidated  results  of  operations  and  financial
condition.

In December 2004, the FASB issued SFAS No. 153, "Exchanges in Nonmonetary Assets
- an amendment of APB Opinion No. 29" (SFAS 153) which became  effective in July
2005.   This  Statement   amends  APB  No.  29,   "Accounting   for  Nonmonetary
Transactions," by eliminating an exception for nonmonetary  exchanges of similar
productive  assets and  replacing it with a general  exception  for exchanges of
nonmonetary assets that do not have commercial  substance.  Corning adopted SFAS
153 prospectively,  on July 1, 2005, as required. The impact of SFAS 153 was not
material  to  Corning's   consolidated   results  of  operations  and  financial
condition.





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.   Restatement of Previously Issued Financial Statements

The Company's management and its audit committee  concluded,  on April 21, 2006,
that we would restate previously issued  consolidated  financial  statements for
each of the three years ended  December 31,  2005,  to correct for errors in the
accounting  for the asbestos  settlement  liability  and for our  investment  in
Pittsburgh  Corning Europe N.V. (PCE) from March 31, 2003,  through December 31,
2005.  We also  changed  the  classification  of  accretion  on a portion of the
liability  from  interest  expense  to  asbestos   settlement   expense  in  our
consolidated statements of operations for the same time period.

On  March  28,  2003,  we  announced  that we had  reached  agreement  with  the
representatives  of asbestos  claimants  for the  settlement  of all current and
future asbestos claims against Corning and Pittsburgh Corning Corporation (PCC),
which might arise from PCC products or operations.  The proposed settlement,  if
the plan is approved and becomes  effective,  will require Corning to relinquish
our  equity  interest  in PCC,  contribute  our  equity  interest  in  PCE,  and
contribute 25 million  shares of Corning  common  stock.  We also agreed to make
cash payments with a value of $131 million,  in March 2003,  over six years from
the effective  date of the settlement and to assign  insurance  policy  proceeds
from our primary  insurance and a portion of our excess insurance at the time of
the settlement.

Between March 31, 2003, and December 31, 2005, the following  accounting  errors
occurred:

..    Corning's  asbestos  settlement  charges and the related  liability for the
     asbestos  settlement  did not reflect the  estimated  fair value at initial
     recognition or subsequent  changes in fair value, of certain  components of
     the proposed settlement offer. As a result, asbestos settlement charges for
     the  years  2005,  2004,  and 2003 were  understated  by $13  million,  $24
     million, and $117 million, respectively.
..    Corning  incorrectly  suspended  recording  equity  earnings of PCE between
     March 31, 2003,  and December 31, 2005. As a result,  equity in earnings of
     associated  companies for the years 2005, 2004, and 2003 was understated by
     $13 million, $11 million, and $7 million, respectively.
..    Accretion  on  the  cash  portion  of the  asbestos  settlement  offer  was
     incorrectly recorded as interest expense resulting in both an overstatement
     of interest expense and an  understatement of asbestos  settlement  expense
     for the years  2005,  2004,  and 2003,  by $8 million,  $8 million,  and $5
     million, respectively.

In the restated  financial  statements,  the higher asbestos  settlement charges
have been tax-effected in 2003 and the first half of 2004. As Corning provided a
valuation  allowance on most of its deferred tax assets in the third  quarter of
2004,  that  quarter  reflects  an increase in the  valuation  allowance  of $55
million for the deferred tax assets  related to the higher  asbestos  settlement
charges.

The  cumulative  effect of these  adjustments  to Corning's  balance sheet as of
September  30,  2005,  resulted  in an  increase  in  investments  in  affiliate
companies  of $30  million,  an increase to other  accrued  liabilities  of $150
million, an increase to accumulated deficit of $122 million,  and an increase to
accumulated other comprehensive income of $2 million.

The  cumulative  effect of these  adjustments  to Corning's  balance sheet as of
December 31, 2004, resulted in an increase in investments in affiliate companies
of $26 million,  an increase to other accrued  liabilities  of $141 million,  an
increase to accumulated deficit of $123 million,  and an increase to accumulated
other comprehensive income of $8 million.





The impacts of the restatement adjustments on Corning's financial statements are
provided in the following summaries.

In addition, the consolidated statements of cash flows for the nine months ended
September 30, 2004,  reflect  changes to Investing  Activities and Cash and Cash
Equivalents  at  End of  Period  due to the  reclassification  of  auction  rate
securities  from  cash and cash  equivalents  to  short-term  investments  as of
September 30, 2004. Amounts were reclassified  because the securities had stated
maturities  beyond three months but priced and traded as short-term  investments
due  to the  liquidity  provisions  at  specified  interest  rate  reset  dates,
typically every 7, 28, or 35 days.



                      Consolidated Statements of Operations
                         Summary of Restatement Impacts
               (Unaudited; in millions, except per share amounts)
------------------------------------------------------------------------------------------------------------------------------------
                                                                                            For the three months ended
                                                                                                September 30, 2005
                                                                                ----------------------------------------------------
                                                                                Previously
                                                                                 Reported          Adjustments        As Restated
                                                                                ----------         -----------        -----------
                                                                                                              
Operating expenses:
  Asbestos settlement                                                            $     68          $       5           $      73

Operating income (loss)                                                               150                 (5)                145

Interest expense                                                                       25                 (2)                 23

Income (loss) before income taxes                                                     159                 (3)                156
Provision for income taxes                                                            (28)                                   (28)
                                                                                 ---------         ---------           ----------
Income (loss) before minority interests and equity earnings                           131                 (3)                128

Equity in earnings of associated companies, net of impairments                         74                  3                  77

Net income                                                                       $    203                              $     203

Basic earnings per common share                                                  $   0.14                              $    0.14
Diluted earnings per common share                                                $   0.13                              $    0.13
------------------------------------------------------------------------------------------------------------------------------------




------------------------------------------------------------------------------------------------------------------------------------
                                                                                            For the three months ended
                                                                                                September 30, 2004
                                                                                ----------------------------------------------------
                                                                                Previously
                                                                                 Reported          Adjustments        As Restated
                                                                                ----------         -----------        -----------
                                                                                                              
Operating expenses:
  Asbestos settlement                                                            $    (50)         $       5           $     (45)

Operating loss                                                                     (1,590)                (5)             (1,595)

Interest expense                                                                       36                 (2)                 34

Loss before income taxes                                                           (1,619)                (3)             (1,622)
Provision for income taxes                                                           (985)               (55)             (1,040)
                                                                                 ---------         ----------          ----------
Loss before minority interests and equity earnings                                 (2,604)               (58)             (2,662)

Equity in earnings of associated companies, net of impairments                         96                  3                  99

Loss from continuing operations                                                  $ (2,511)         $     (55)          $  (2,566)

Net loss                                                                         $ (2,491)         $     (55)          $  (2,546)

Basic loss per common share from continuing operations                           $  (1.79)         $   (0.04)          $   (1.83)
Basic loss per common share                                                      $  (1.78)         $   (0.04)          $   (1.82)
Diluted loss per common share from continuing operations                         $  (1.79)         $   (0.04)          $   (1.83)
Diluted loss per common share                                                    $  (1.78)         $   (0.04)          $   (1.82)
------------------------------------------------------------------------------------------------------------------------------------






------------------------------------------------------------------------------------------------------------------------------------
                                                                                             For the nine months ended
                                                                                                September 30, 2005
                                                                                ----------------------------------------------------
                                                                                Previously
                                                                                 Reported          Adjustments        As Restated
                                                                                ----------         -----------        -----------
                                                                                                              
Operating expenses:
  Asbestos settlement                                                            $    189          $      15           $     204

Operating income (loss)                                                               338                (15)                323

Interest expense                                                                       90                 (6)                 84

Income before income taxes                                                            304                 (9)                295
Provision for income taxes                                                            (91)                                   (91)
                                                                                 ---------         ---------           ----------
Income before minority interests and equity earnings                                  213                 (9)                204

Equity in earnings of associated companies, net of impairments                        412                 10                 422

Net income                                                                       $    617          $       1           $     618

Basic loss per common share                                                      $   0.43                              $    0.43
Diluted loss per common share                                                    $   0.41                              $    0.41
------------------------------------------------------------------------------------------------------------------------------------




------------------------------------------------------------------------------------------------------------------------------------
                                                                                             For the nine months ended
                                                                                                September 30, 2004
                                                                                ----------------------------------------------------
                                                                                Previously
                                                                                 Reported          Adjustments        As Restated
                                                                                ----------         -----------        -----------
                                                                                                              
Operating expenses:
  Asbestos settlement                                                            $     16          $      13           $      29

Operating loss                                                                     (1,524)               (13)             (1,537)

Interest expense                                                                      109                 (6)                103

Loss before income taxes                                                           (1,647)                (7)             (1,654)
Provision for income taxes                                                           (997)               (53)             (1,050)
                                                                                 ---------         ----------          ----------
Loss before minority interests and equity earnings                                 (2,644)               (60)             (2,704)

Equity in earnings of associated companies, net of impairments                        310                  7                 317

Loss from continuing operations                                                  $ (2,348)         $     (53)          $  (2,401)

Net loss                                                                         $ (2,328)         $     (53)          $  (2,381)

Basic loss per common share from continuing operations                           $  (1.70)         $   (0.04)          $   (1.74)
Basic loss per common share                                                      $  (1.69)         $   (0.04)          $   (1.73)
Diluted loss per common share from continuing operations                         $  (1.70)         $   (0.04)          $   (1.74)
Diluted loss per common share                                                    $  (1.69)         $   (0.04)          $   (1.73)
------------------------------------------------------------------------------------------------------------------------------------






                           Consolidated Balance Sheets
                         Summary of Restatement Impacts
                            (Unaudited; in millions)
------------------------------------------------------------------------------------------------------------------------------------
                                                                                             As of September 30, 2005
                                                                                ----------------------------------------------------
                                                                                Previously
                                                                                 Reported          Adjustments        As Restated
                                                                                ----------         -----------        -----------
                                                                                                              

Investments                                                                     $   1,605            $    30          $    1,635

 Total Assets                                                                   $  10,883            $    30          $   10,913

Other accrued liabilities                                                       $   1,384            $   150          $    1,534
  Total current liabilities                                                     $   2,231            $   150          $    2,381
    Total liabilities                                                           $   5,630            $   150          $    5,780

Accumulated deficit                                                             $  (6,692)           $  (122)         $   (6,814)
Accumulated other comprehensive income                                          $      35            $     2          $       37
    Total shareholders' equity                                                  $   5,226            $  (120)         $    5,106

Total Liabilities and Shareholders' Equity                                      $  10,883            $    30          $   10,913
------------------------------------------------------------------------------------------------------------------------------------




------------------------------------------------------------------------------------------------------------------------------------
                                                                                              As of December 31, 2004
                                                                                ----------------------------------------------------
                                                                                Previously
                                                                                 Reported          Adjustments        As Restated
                                                                                ----------         -----------        -----------
                                                                                                              

Investments                                                                     $   1,484            $    26          $    1,510

 Total Assets                                                                   $   9,744            $    26          $    9,770

Other accrued liabilities                                                       $   1,178            $   141          $    1,319
  Total current liabilities                                                     $   2,338            $   141          $    2,479
    Total liabilities                                                           $   5,899            $   141          $    6,040

Accumulated deficit                                                             $  (7,309)           $  (123)         $   (7,432)
Accumulated other comprehensive income                                          $     148            $     8          $      156
    Total shareholders' equity                                                  $   3,816            $  (115)         $    3,701

Total Liabilities and Shareholders' Equity                                      $   9,744            $    26          $    9,770

------------------------------------------------------------------------------------------------------------------------------------








                      Consolidated Statements of Cash Flows
                         Summary of Restatement Impacts
                            (Unaudited; in millions)
------------------------------------------------------------------------------------------------------------------------------------
                                                                                             For the nine months ended
                                                                                                September 30, 2005
                                                                                ----------------------------------------------------
                                                                                Previously
                                                                                 Reported          Adjustments        As Restated
                                                                                ----------         -----------        -----------
                                                                                                              
Cash Flows from Operating Activities:
Net income                                                                       $    617          $       1           $     618
Adjustments to reconcile income from continuing operations to net
  cash provided by operating activities:
      Asbestos settlement charge                                                      189                 15                 204
      Undistributed earnings of associated companies                                 (196)               (10)               (206)
      Other, net                                                                       59                 (6)                 53
Net cash provided by operating activities                                        $  1,280                              $   1,280
------------------------------------------------------------------------------------------------------------------------------------




------------------------------------------------------------------------------------------------------------------------------------
                                                                                             For the nine months ended
                                                                                                September 30, 2004
                                                                                ----------------------------------------------------
                                                                                Previously
                                                                                 Reported          Adjustments        As Restated
                                                                                ----------         -----------        -----------
                                                                                                              
Cash Flows from Operating Activities:
Net loss                                                                         $ (2,328)         $     (53)          $  (2,381)
Adjustments to reconcile loss from continuing operations to net
  cash (used in) provided by operating activities:
      Asbestos settlement charge                                                       16                 13                  29
      Undistributed earnings of associated companies                                 (199)                (7)               (206)
      Deferred taxes                                                                  939                 53                 992
      Other, net                                                                       64                 (6)                 58
Net cash provided by operating activities                                        $    643                              $     643
------------------------------------------------------------------------------------------------------------------------------------


3.   Restructuring, Impairment and Other Charges

2005 Actions

Third Quarter
-------------
In the third  quarter of 2005,  we  approved  a  restructuring  plan  within the
Telecommunications  segment to continue to reduce  costs in this  segment.  As a
result,  we recorded a charge of $30 million  which is  comprised  of  severance
costs.  Additional expenses,  not included in this charge, related to relocating
manufacturing assets, accelerated depreciation,  and shutdown activities are not
expected to be material and will be expensed as incurred in future  periods.  We
also recorded net credits of $2 million  related to  adjustments to prior period
restructuring charges.






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 continue to
     sell our shares of Avanex  and,  subject to  restrictions  and the  trading
     volume in Avanex stock,  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 nine months ended  September  30, 2005
(in millions):
------------------------------------------------------------------------------------------------------------------------------------
                                                              Nine months                                                 Remaining
                                                              ended Sept.     Revisions         Net           Cash       reserve at
                                                January 1,     30, 2005      to existing     charges/       payments      Sept. 30,
                                                   2005         charge          plans       (reversals)      in 2005        2005
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                        
Restructuring:
   Employee related costs                        $   18        $    30        $    (1)       $   29         $   (10)      $    37
   Other charges                                     77                           (14)          (14)            (11)           52
                                                 --------------------------------------------------------------------------------
      Total restructuring charges                $   95        $    30        $   (15)       $   15         $   (21)      $    89
                                                 --------------------------------------------------------------------------------

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)                                  $    55        $    (9)       $   46
------------------------------------------------------------------------------------------------------------------------------------


Charges  recorded  in the third  quarter of 2005  included  severance  costs for
approximately  330 people.  At September 30, 2005,  none of these  employees had
been  severed.  Cash payments for employee  related costs will be  substantially
complete  by  the  end of  2007,  while  payments  for  other  charges  will  be
substantially complete by the end of 2008.






2004 Actions

Third Quarter
-------------
In the third quarter of 2004, we recorded  restructuring,  impairment  and other
charges and  (credits) of $1,794  million.  A summary of the charges and credits
follows:

..    We recorded a charge of $1,420  million to impair a significant  portion of
     our Telecommunications  segment goodwill balance. Pursuant to SFAS No. 142,
     "Goodwill and Other Intangible Assets" (SFAS 142),  goodwill is required to
     be tested for impairment annually at the reporting unit level. In addition,
     goodwill  should be tested for impairment  between annual tests if an event
     occurs or  circumstances  change that would more likely than not reduce the
     fair value of the reporting unit below its related  carrying  value. In the
     third  quarter of 2004,  we  identified  certain  factors that caused us to
     lower our estimates and projections for the long-term revenue growth of the
     Telecommunications  segment,  which  indicated  that the fair  value of the
     Telecommunications segment reporting unit was less than its carrying value.
     As such,  we performed  an interim  impairment  test of  Telecommunications
     segment goodwill in the third quarter of 2004 and, as a result, recorded an
     impairment  charge  of  $1,420  million  to reduce  the  carrying  value of
     goodwill to its implied fair value at September 30, 2004, of $117 million.
..    We recorded a $350  million  charge to impair  certain  fixed assets of our
     Telecommunications segment in accordance with SFAS No. 144, "Accounting for
     the  Impairment or Disposal of Long-Lived  Assets" (SFAS 144).  This charge
     primarily  relates to our  third-quarter  decision to  permanently  abandon
     approximately $332 million of construction in progress at our optical fiber
     manufacturing  facility in Concord, North Carolina that had been stopped in
     2002. As a result of our lowered  outlook,  we have  permanently  abandoned
     this  construction  in  progress  as we no longer  believe  the  demand for
     optical  fiber will  warrant the  investment  necessary  to  complete  this
     facility.
..    We  recorded  an asset  held for use  impairment  charge of $24  million to
     impair  certain fixed assets and  intangible  assets other than goodwill in
     accordance  with SFAS  144.  Due to our  decision  to  permanently  abandon
     certain   fixed   assets   and  lower  our   long-term   outlook   for  the
     Telecommunications  segment, we determined that an event of impairment,  as
     defined by SFAS 144, had occurred in our  Telecommunications  segment which
     required us to test the segment's long-lived assets other than goodwill for
     impairment.  We assess  recoverability  of the carrying value of long-lived
     assets at the lowest level for which  indentifiable  cash flows are largely
     independent of the cash flows of other assets and liabilities. We estimated
     the fair value of the  long-lived  assets  using the  discounted  cash flow
     approach  as a  measure  of  fair  value.  As a  result  of our  impairment
     evaluation,  we recorded an impairment charge to write-down  certain assets
     to their estimated fair values.
..    We  recorded a gain of $8 million  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 Henan Anyang CPT Glass
     Bulb Group,  Electronic  Glass Co., Ltd. (Henan Anyang),  located in China.
     CAV was our 51% owned affiliate that manufactured  glass panels and funnels
     for use in  conventional  televisions  that  was shut  down in  2003.  This
     represents the substantial completion of the sale of CAV's assets.
..    We  recorded a loss of $14  million on the sale of our  frequency  controls
     business  for net cash  proceeds of $80  million.  The  frequency  controls
     business,  which was part of our  Telecommunications  segment,  had  annual
     sales of $76 million.
..    We recorded  net credits of $6 million  comprised of  adjustments  to prior
     years' restructuring and impairment charges.

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 CAV that were  previously  impaired but later
     sold to a third party in China.
..    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  details  the  charges,   credits  and  balances  of  the
restructuring  reserves as of and for the nine months ended  September  30, 2004
(in millions):
------------------------------------------------------------------------------------------------------------------------------------
                                                             Nine months                                                Remaining
                                                             ended Sept.       Revisions        Net          Cash      reserve at
                                                January 1,    30, 2004        to existing    charges/      payments     Sept. 30,
                                                   2004        charge            plans      (reversals)     in 2004       2004
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                     
Restructuring charges:
  Employee related costs                         $      78                   $       4       $      4      $    (55)   $      27
  Other charges                                        108    $       2             (4)            (2)          (20)          86
                                                 -------------------------------------------------------------------------------
     Total restructuring charges                 $     186    $       2      $       0       $      2      $    (75)   $     113
                                                 -------------------------------------------------------------------------------

Impairment of long-lived assets:
  Goodwill                                                    $   1,420                      $  1,420
  Assets to be disposed of by sale
    or abandonment                                                  350      $     (55)           295
  Assets to be held and used                                  $      24                      $     24
                                                              ---------------------------------------

Other:
  Accelerated depreciation                                    $      39                      $     39
  Loss on sale of frequency controls business                 $      14                      $     14
                                                              ---------------------------------------

Total restructuring, impairment and other
  charges and (credits)                                       $   1,849      $     (55)      $  1,794
------------------------------------------------------------------------------------------------------------------------------------


4.   Commitments and Contingencies

Asbestos Settlement

On  March  28,  2003,  we  announced  that we had  reached  agreement  with  the
representatives  of asbestos  claimants  for the  settlement  of all current and
future  asbestos  claims against us and Pittsburgh  Corning  Corporation  (PCC),
which might arise from PCC products or operations.  The proposed settlement,  if
the plan is approved and becomes  effective,  will require Corning to relinquish
its equity interest in PCC, contribute its equity interest in Pittsburgh Corning
Europe N.V.  (PCE), a Belgian  corporation,  and contribute 25 million shares of
Corning common stock.  Corning also agreed to make cash payments with a value of
$131  million,  in March  2003,  over six years from the  effective  date of the
settlement  and to assign  certain  insurance  policy  proceeds from its primary
insurance and a portion of its excess insurance at the time of the settlement.

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.

As discussed in Note 2  (Restatement  of Prior Period  Financial  Statements) we
have  restated  prior  period  financial  statements  to correct the  accounting
related to the asbestos settlement.






In the third quarter of 2005,  we recorded  asbestos  settlement  expense of $73
million, including $68 million reflecting the increase in the value of Corning's
common stock from June 30, 2005 to September 30, 2005,  and $5 million to adjust
the  estimated  fair  value of the other  components  of the  proposed  asbestos
settlement.

In the third quarter of 2004, we recorded a credit of $45 million, including $50
million for the  decrease in the value of  Corning's  common stock from June 30,
2004 to September 30, 2004, and a $5 million charge to adjust the estimated fair
value of the other components of the proposed asbestos settlement.

For the nine months ended  September 30, 2005, we recorded  asbestos  settlement
expense of $204 million,  including $189 million  reflecting the increase in the
value of Corning's  common stock from  December 31, 2004 to September  30, 2005,
and $15 million to adjust the  estimated  fair value of the other  components of
the proposed asbestos settlement.

For the nine months ended  September 30, 2004, we recorded  asbestos  settlement
expense of $29 million,  including  $16 million  reflecting  the increase in the
value of Corning's  common stock from  December 31, 2003 to September  30, 2004,
and $13 million to adjust the  estimated  fair value of the other  components of
the proposed asbestos settlement.

Since March 28,  2003,  we have  recorded  total net charges of $804  million to
reflect the initial  settlement  liability and  subsequent  adjustments  for the
change in the fair value of the components of the liability.

The fair value of the liability  expected to be settled by  contribution  of our
investment  in PCE, the fair value of 25 million  shares of our common stock and
assigned insurance proceeds (in aggregate totaling $654 million at September 30,
2005) is recorded  in other  accrued  liabilities  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  (totaling  $150
million at September 30, 2005),  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 7 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 Dow Corning  Bankruptcy Plan. As of September 30, 2005,
we were contingently liable for the items described above totaling $445 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 are not expected to
have a material  adverse effect on Corning's  consolidated  financial  position,
liquidity or results of operations.

5.   Debt

Third Quarter
-------------
In the third  quarter of 2005,  substantially  all  holders  of our $96  million
outstanding  Oak 4 7/8%  convertible  subordinated  notes,  due  March 1,  2008,
elected to convert their notes into Corning common stock.  The conversion  ratio
was 64.41381 shares of Corning common stock for each $1,000  principal amount of
notes.  Upon the conversion of the notes,  we issued 6 million shares of Corning
common stock resulting in an increase to equity of $95 million.






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,  due  November  1,  2008.  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.

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,
     due November 1, 2008. 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.  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.  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). As of September 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 nine months ended  September 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)                      198                  198
   Oak 4 7/8% Subordinated notes, due 2005                              96                                  6
   Debentures, 7%, due 2007                                             88                  100                       $    (12)
------------------------------------------------------------------------------------------------------------------------------------
Total 2005 activity                                               $    679             $    300            37         $    (12)
------------------------------------------------------------------------------------------------------------------------------------

2004 activity:
   Convertible debentures, 3.5%, due 2008                         $    368             $     37            38         $    (36)
   Zero coupon convertible debentures, 2%, due 2015                    119                  117
   Other loans payable                                                 111                  111
------------------------------------------------------------------------------------------------------------------------------------
Total 2004 activity                                               $    598             $    265            38         $    (36)
------------------------------------------------------------------------------------------------------------------------------------


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  repurchase
Corning's remaining zero coupon convertible  debentures due on November 8, 2015.
At September 30, 2005, these debentures had a carrying value of $276 million. On
October 6, 2005, we notified  current  holders of our election to repurchase any
debentures tendered by holders on November 8, 2005.






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

6.   Income Taxes

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

Provision for income taxes     $  (28)     $(1,040)        $  (91)     $(1,050)
Effective tax rate               17.9%       (64.1)%         30.8%       (63.5)%
--------------------------------------------------------------------------------

For the three and nine  months  ended  September  30,  2005,  the tax  provision
reflected the following items:

..    The impact of our inability to record tax benefits on net operating  losses
     generated in the U.S. and certain foreign jurisdictions;
..    The  benefit  of tax  holidays  and  investment  credits  in Taiwan and tax
     holidays in China and South Africa; and,
..    The benefit from the reversal of tax contingency  liabilities following the
     conclusion of Internal Revenue Service (IRS) examinations.

As more fully described in Note 6 (Income Taxes) to the  consolidated  financial
statements  of the 2004 Form  10-K,  significant  events  occurred  in the third
quarter of 2004 requiring us to increase our valuation allowance against certain
U.S. and German  deferred tax assets.  Accordingly,  we increased  our valuation
allowance  by $1.2  billion  in the  third  quarter  of 2004 to  reduce  our net
deferred tax assets to approximately $530 million.

At September 30, 2005, we had net deferred tax assets of $541 million, which are
primarily U.S. net deferred tax assets. We continue to believe it is more likely
than not that these U.S. net deferred  tax assets are  realizable  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 there are tax planning  strategies that would enable us to conclude
that it is more likely than not that a larger portion of the deferred tax assets
would be realizable. Until then, our tax provision will include only the net tax
expense attributable to certain foreign operations.

During  the third  quarter of 2005,  Corning  filed its 2004  consolidated  U.S.
Federal  income tax  return,  which  included  a $3.9  billion  worthless  stock
deduction for the loss on our investment in the photonic  technologies  business
associated  with the Pirelli  acquisition.  This  acquisition  was  completed in
December  2000 and was  substantially  impaired  in the second  quarter of 2001.
Prior to the third  quarter of 2005,  we did not record a deferred tax asset for
this item as the ultimate  realization  of such  deduction  was  uncertain,  and
consistent with the requirements of SFAS No. 5, "Accounting for  Contingencies,"
recognition of an asset prior to the time management  determines the realization
of the asset is probable is  prohibited.  On September 2, 2005,  Corning and the
Commissioner  of the IRS entered into a closing  agreement under section 7121 of
the  Internal  Revenue Code of 1986 which  provides  that Corning is entitled to
this worthless stock  deduction.  We recorded a $1.5 billion  deferred tax asset
for this item in the  quarter,  which  was  concurrently  offset by a  valuation
allowance of an equal amount due to our current inability to record tax benefits
for U.S. net operating losses.

Based on our 2004 consolidated U.S. Federal income tax return as filed,  Corning
has net operating loss carryforwards of $4.9 billion for U.S. Federal income tax
purposes.  These operating losses will expire in 2022 ($0.1 billion), 2023 ($0.6
billion) and 2024 ($4.2 billion).






Certain  foreign  subsidiaries  in China,  South Africa and Taiwan are operating
under tax holiday arrangements. The nature and extent of such arrangements vary,
and the benefits of such  arrangements  phase out in future years (2006 to 2009)
according  to  the  specific   terms  and  schedules  of  the  relevant   taxing
jurisdictions.  The  impact  of the  tax  holidays  on our  effective  rate is a
reduction  in the  rate  of 17% and 14% for the  three  and  nine  months  ended
September 30, 2005, respectively.

We establish tax contingency  liabilities when,  despite our belief that our tax
returns are fully supportable,  it is probable that certain positions may not be
sustained  through the income tax audit process.  These liabilities are analyzed
on a quarterly basis and adjusted based upon changes in facts and circumstances,
such  as  the  progress  of  income  tax  audits,  new  case  law  and  emerging
legislation.  In the third quarter of 2005, in conjunction with our reassessment
process, we recorded a tax benefit of $14 million following the conclusion of an
IRS examination for the years 2001 and 2002.

7.   Earnings (Loss) Per Common Share



The  reconciliation  of the amounts  used in the basic and diluted  earnings per
common share from continuing  operations follows (in millions,  except per share
amounts):
------------------------------------------------------------------------------------------------------------------------------------
                                                                           Three months ended September 30,
                                                   ---------------------------------------------------------------------------------
                                                              2005 (Restated)                          2004 (Restated)
                                                   --------------------------------------    --------------------------------------
                                                                 Weighted-      Per Share                 Weighted-       Per Share
                                                   Income     Average Shares     Amount      (Loss)    Average Shares      Amount
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                         
Basic earnings (loss) per common share             $   203       1,488          $  0.14      $(2,566)       1,399          $ (1.83)

Effect of dilutive securities:
   Stock compensation awards                                        48
   7% mandatory convertible preferred stock (a)                     16
------------------------------------------------------------------------------------------------------------------------------------

Diluted earnings (loss) per common share           $   203       1,552          $  0.13      $(2,566)       1,399          $ (1.83)
------------------------------------------------------------------------------------------------------------------------------------



                                                                            Nine months ended September 30,
                                                   ---------------------------------------------------------------------------------
                                                              2005 (Restated)                          2004 (Restated)
                                                   --------------------------------------    --------------------------------------
                                                                 Weighted-      Per Share                 Weighted-       Per Share
                                                   Income     Average Shares     Amount      (Loss)    Average Shares      Amount
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                         
Basic earnings (loss) per common share             $   618       1,444          $  0.43      $(2,401)       1,380          $ (1.74)

Effect of dilutive securities:
   Stock compensation awards                                        39
   7% mandatory convertible preferred stock (a)                     27
   3.50% convertible debentures                          3          13
------------------------------------------------------------------------------------------------------------------------------------

Diluted earnings (loss) per common share           $   621       1,523          $  0.41      $(2,401)       1,380          $ (1.74)
------------------------------------------------------------------------------------------------------------------------------------


(a)  On the mandatory  conversion date of August 16, 2005, the remaining  shares
     of our 7.00% Series C Mandatory  Convertible Preferred Stock were converted
     into Corning  common stock at a conversion  rate of 50.813 shares of common
     stock for each preferred share. Upon conversion of the preferred shares, we
     issued 31 million shares of Corning  common stock  resulting in an increase
     to equity of $62 million.








The following  potential  common shares were  excluded from the  calculation  of
diluted earnings (loss) 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                          Nine months
                                                                      ended September 30,                   ended September 30,
                                                                      -------------------                   -------------------
                                                                      2005           2004                   2005           2004
--------------------------------------------------------------------------------------------------------------------------------
                                                                                                                
Potential common shares excluded from the calculation
  of diluted earnings per common share:
     Stock options                                                                     32                                    34
     3.5% convertible debentures                                                       39                                    44
     4 7/8% convertible notes (a)                                        4              6                     5               6
     Zero coupon convertible debentures                                  3              3                     3               3
     7% mandatory convertible preferred stock (b)                                      35                                    37
                                                                  -------------------------------------------------------------
     Total                                                               7            115                     8             124
                                                                  =============================================================

Stock options excluded from the calculation of diluted
  earnings (loss) per common share                                      37             61                    50              58
--------------------------------------------------------------------------------------------------------------------------------


(a)  In the third quarter of 2005,  substantially all holders of our $96 million
     outstanding  Oak 4 7/8%  subordinated  notes elected to convert their notes
     into Corning  common stock.  The  conversion  ratio was 64.41381  shares of
     Corning common stock for each $1,000  principal  amount of notes.  Upon the
     conversion  of these notes,  we issued 6 million  shares of Corning  common
     stock resulting in an increase to equity of $95 million.
(b)  On the mandatory  conversion date of August 16, 2005, the remaining  shares
     of our 7.00% Series C Mandatory  Convertible Preferred Stock were converted
     into Corning  common stock at a conversion  rate of 50.813 shares of common
     stock for each preferred share. Upon conversion of the preferred shares, we
     issued 31 million shares of Corning  common stock  resulting in an increase
     to equity of $62 million.

8.   Discontinued Operation

On December 13, 2002, we completed the sale of our precision lens business to 3M
Company  (3M) for cash  proceeds  up to $850  million,  of which $50 million was
deposited  in an escrow  account.  3M notified  Corning  that 3M believed it had
certain claims arising out of the representations and warranties made by Corning
in connection  with the sale of the precision  lens business to 3M. In the third
quarter of 2004,  Corning and 3M reached a final  settlement  agreement  for the
funds held in escrow.  Accordingly,  we  recognized  a gain of $20 million  upon
receipt  of $20  million  of  proceeds.  This gain is  included  in income  from
discontinued operation in the consolidated statements of operations.

9.   Inventories

Inventories comprise the following (in millions):
--------------------------------------------------------------------------------
                                    September 30, 2005        December 31, 2004
--------------------------------------------------------------------------------
Finished goods                            $   148                  $   136
Work in process                               171                      172
Raw materials and accessories                 130                      139
Supplies and packing materials                110                       88
--------------------------------------------------------------------------------
Total inventories                         $   559                  $   535
--------------------------------------------------------------------------------







10.  Investments



Investments comprise the following (in millions):
------------------------------------------------------------------------------------------------------------------------------------
                                                                                          September 30,       December 31,
                                                                       Ownership              2005                2004
                                                                       Interest            (Restated)          (Restated)
                                                                      -----------         -------------       ------------
                                                                                                      
Associated companies at equity
     Samsung Corning Precision Glass Co., Ltd.                            50%               $   757            $    572
     Dow Corning Corporation                                              50%                   462                 324
     Samsung Corning Co., Ltd.                                            50%                   233                 365
     All other                                                        25%-51% (a)               169                 188
                                                                                            -------            --------
                                                                                              1,621               1,449
Other investments (b)                                                                            14                  61
                                                                                            -------            --------
Total                                                                                       $ 1,635            $  1,510
------------------------------------------------------------------------------------------------------------------------------------


(a)  Amounts  reflect  Corning's  direct  ownership  interests in the respective
     associated companies. Corning does not control any such entities.
(b)  Amounts  reflect  $10 million  and $53  million at  September  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 3 (Restructuring,  Impairment and
     Other Charges and (Credits)) for additional information.

Summarized results of operations for our three 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                       Nine months
                                                                           ended September 30,               ended September 30,
                                                                        -----------------------            ---------------------
                                                                          2005            2004               2005         2004
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                             
Statement of Operations
     Net sales                                                          $    466        $   275            $  1,166      $   774
     Gross profit                                                       $    346        $   211            $    861      $   595
     Net income                                                         $    242        $   137            $    590      $   408
     Corning's equity in earnings of Samsung Corning Precision          $    114        $    68            $    279      $   204
     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                   $     18        $    19            $     30      $    56
     Corning transfers of machinery and equipment to Samsung
       Corning Precision at cost (a)                                    $     20                           $     67      $    23
------------------------------------------------------------------------------------------------------------------------------------


(a)  Corning  purchases  machinery  and  equipment on behalf of Samsung  Corning
     Precision to support its capital expansion  initiatives.  The machinery and
     equipment are 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 September
30, 2005 and December 31, 2004.







Dow Corning Corporation (Dow Corning)
Dow Corning is a U.S. based  manufacturer  of silicone  products.  Dow Corning's
results of operations follow (in millions):
------------------------------------------------------------------------------------------------------------------------------------
                                                                              Three months                      Nine months
                                                                           ended September 30,               ended September 30,
                                                                        -----------------------            ----------------------
                                                                           2005           2004               2005           2004
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                             
Statement of Operations:
     Net sales                                                          $    946        $   830            $  2,936      $  2,496
     Gross profit                                                       $    319        $   262            $  1,022      $    770
     Net income                                                         $    117        $    80            $    407      $    168
     Corning's equity in earnings of Dow Corning (a)                    $     58        $    40            $    203      $     81
     Dividends received from Dow Corning                                                                   $     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 a $21 million charge related to these actions.

Other - Samsung Corning Co., Ltd. (Samsung Corning)
Samsung Corning is a South Korea-based  manufacturer of glass panels and funnels
for cathode ray tube (CRT) television and display monitors.

In the third quarter of 2005,  Samsung Corning concluded that there was an event
of impairment triggered by an accelerated decline in its CRT glass business.  In
September 2005, Samsung Corning revised its outlook for the CRT glass market and
reduced  its  projected  operating  results.  Samsung  Corning  management  then
concluded  that  impairment  charges were  necessary  for certain  manufacturing
assets and that  certain  severance  and exit actions  will be  necessary.  As a
result,  Samsung Corning  incurred  impairment and other charges of $212 million
which reduced  Corning's  equity  earnings by $106 million in the third quarter.
None of the charges is expected to result in cash expenditures by Corning.

After the charges described above,  Corning's  investment in Samsung Corning was
$233  million.  Corning  has  determined  that  a  separate  impairment  of  its
investment in Samsung  Corning was not necessary in the third  quarter.  We will
continue to monitor  this  investment  and it is possible an  impairment  may be
required in the future.



Samsung Corning's results of operations follow (in millions):
------------------------------------------------------------------------------------------------------------------------------------
                                                                              Three months                      Nine months
                                                                           ended September 30,               ended September 30,
                                                                        -----------------------            ----------------------
                                                                           2005           2004               2005           2004
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                             
Statement of Operations:
     Net sales                                                          $    205        $   250            $    627      $    781
     Gross profit                                                       $     28        $    70            $    104      $    198
     Net income (loss)                                                  $   (232)       $   (10)           $   (222)     $     58
     Corning's equity in earnings (losses) of Samsung Corning           $   (115)       $    14            $   (108)     $     30
     Dividends received from Samsung Corning                                                               $     22      $     18
------------------------------------------------------------------------------------------------------------------------------------







11.  Goodwill and Other Intangibles Assets



The  changes  in the  carrying  amount of  goodwill  for the nine  months  ended
September 30, 2005 follow (in millions):
------------------------------------------------------------------------------------------------------------------------------------
                                                    Telecom-              Display
                                                   munications          Technologies           Other (1)             Total
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       
Balance at January 1, 2005 (2)                     $     123               $     9             $     150           $    282
Foreign currency translation and other                    (5)                                                            (5)
------------------------------------------------------------------------------------------------------------------------------------
Balance at September 30, 2005                      $     118               $     9             $     150           $    277
------------------------------------------------------------------------------------------------------------------------------------


(1)  This balance relates to our Specialty Materials operating segment.
(2)  In the third quarter of 2004,  we recorded an  impairment  charge of $1,420
     million to reduce the carrying value of goodwill in our  Telecommunications
     segment  to its  implied  fair  value.  Refer  to  Note  3  (Restructuring,
     Impairment and Other Charges and (Credits)) for additional information.



Other intangible assets follow (in millions):
------------------------------------------------------------------------------------------------------------------------------------
                                                        September 30, 2005                           December 31, 2004
                                                 -------------------------------------------------------------------------------
                                                           Accumulated                                Accumulated
                                                  Gross    Amortization      Net              Gross   Amortization        Net
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                      
Amortized intangible assets:
     Patents and trademarks                      $  144       $    86      $    58           $  148       $   79        $    69
     Non-competition agreements                                                                 118          116              2
     Other                                            4             1            3                4            1              3
                                                 ----------------------------------          -----------------------------------
         Total amortized intangible assets          148            87           61              270          196             74
                                                 ----------------------------------          -----------------------------------

Unamortized intangible assets:
     Intangible pension assets                       42                         42               42                          42
                                                 ----------------------------------          -----------------------------------
Total                                            $  190       $    87      $   103           $  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.

12.  Customer Deposits

In 2005 and 2004, several of Corning's customers entered into long-term purchase
and supply  agreements  in which  Corning's  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  agreed to make advance cash
deposits  to Corning  for a portion  of the  contracted  glass to be  purchased.
During the first nine  months of 2005,  we  received a total of $389  million of
deposits  against  orders.  Subsequent  to September  30,  2005,  we received an
additional $13 million of deposits.

Upon  receipt  of the cash  deposits  made by  customers,  we record a  customer
deposit  liability.  This liability will be reduced for 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 these credits are applied for
cash deposits received in earlier periods.







Customer deposits have been or will be received in the following periods (in
millions):
-----------------------------------------------------------------------------------------------------------------------------------
                                                                 Nine
                                                             months ended         Remainder       Estimated 2006
                                               2004       September 30, 2005       of 2005          and Beyond           Total
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                                          
Customer deposits received                     $204              $389                $93               $295              $981
-----------------------------------------------------------------------------------------------------------------------------------


The majority of customer  deposits will be received  through 2006. For the three
and nine months ended  September 30, 2005, we issued $11 million and $13 million
in credit memoranda,  respectively. These credit amounts are not included in the
above amounts, and were applied against customer receivables.

Customer deposit liabilities were $560 million and $215 million at September 30,
2005 and December 31, 2004, respectively,  of which $149 million and $18 million
were recorded in the current liabilities - other accrued  liabilities  component
of our consolidated balance sheets, respectively.

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, 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 customer deposits.

13.  Employee Retirement Plans



The following table  summarizes the components of net periodic  benefit cost for
Corning's  defined  benefit  pension  and  postretirement  health  care and life
insurance plans (in millions):
------------------------------------------------------------------------------------------------------------------------------------
                                                     Pension benefits                              Postretirement benefits
------------------------------------------------------------------------------------------------------------------------------------
                                             Three months           Nine months              Three months           Nine months
                                            ended Sept. 30,       ended Sept. 30,           ended Sept. 30,       ended Sept. 30,
                                         --------------------  --------------------      --------------------  --------------------
                                          2005          2004    2005          2004         2005         2004     2005         2004
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                     
Service cost                             $    9       $   10    $   39      $   30       $    2      $    2    $     7       $   7
Interest cost                                26           33       111          99           12          11         33          36
Expected return on plan assets              (30)         (37)     (132)       (111)
Amortization of net loss                      6            5        24          16            3           1          6           5
Amortization of prior service cost            2            2         6           6           (1)         (1)        (3)         (5)
                                         -------------------------------------------------------------------------------------------
Total expense                            $   13       $   13    $   48      $   40       $   16      $   13    $    43       $  43
------------------------------------------------------------------------------------------------------------------------------------


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
non-union  hourly  employees.  Further,  as  more  fully  described  in  Note 12
(Employee Retirement Plans) to the consolidated financial statements included in
our 2004 Form 10-K,  Corning  will  receive a  non-taxable  subsidy  pursuant to
Medicare Part D of the Medicare Prescription Drug, Improvement and Modernization
Act of 2003.  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.

On October 4, 2005, we issued and contributed 5 million shares of Corning common
stock, with a value of approximately $97 million,  to our domestic pension plan.
We plan to contribute an additional 5 million  shares of Corning common stock to
this plan by December 31, 2005.






14.  Comprehensive Income (Loss)



Components  of  comprehensive   income  (loss),  on  an  after-tax  basis  where
applicable, follow (in millions):
------------------------------------------------------------------------------------------------------------------------------------
                                                                        Three months                         Nine months
                                                                     ended September 30,                  ended September 30,
                                                                  -------------------------            -------------------------
                                                                     2005           2004                  2005           2004
                                                                  (Restated)     (Restated)            (Restated)     (Restated)
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                          
Net income (loss)                                                 $    203       $ (2,546)              $   618       $  (2,381)
Other comprehensive income (loss):
   Change in unrealized gain (loss) on investments, net                               (12)                  (33)            (10)
   Reclassification adjustment relating to investments
     included in net income, net                                                                             19
   Change in unrealized gain on derivative
     instruments, net                                                   16             11                    54              14
   Reclassification adjustment relating to derivatives, net             (7)             2                   (22)              7
   Foreign currency translation adjustment, net (a)                    (42)             1                  (140)            (15)
   Change in minimum pension liability                                   1             (5)                    4              (3)
------------------------------------------------------------------------------------------------------------------------------------
Total comprehensive income (loss)                                 $    171       $ (2,549)              $   500       $  (2,388)
------------------------------------------------------------------------------------------------------------------------------------


(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.

15.  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, certain corporate investments,  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 September 30, 2005 (Restated)
Net sales                                      $   489        $    398        $    144        $    70      $     87      $  1,188
Research, development and engineering
  expenses (1)                                 $    32        $     27        $     29        $    15      $     15      $    118
Restructuring, impairment and other charges
  and (credits)                                               $     28                                                   $     28
Interest expense (2)                           $    12        $      6        $      5        $     1      $     (1)     $     23
(Provision) benefit for income taxes           $   (30)       $      2                        $     1      $     (1)     $    (28)
Income (loss) before minority interests and
  equity earnings (losses) (3)                 $   246        $    (37)       $     (5)       $    (7)     $    (69)     $    128
Minority interests (4)                                               1                                           (3)           (2)
Equity in earnings (losses) of associated
  companies, net of impairments (5)                117               6                                          (46)           77
                                               -------        --------        --------        -------      --------      --------
Net income (loss)                              $   363        $    (30)       $     (5)       $    (7)     $   (118)     $    203
------------------------------------------------------------------------------------------------------------------------------------

Three months ended September 30, 2004 (Restated)
Net sales                                      $   295        $    412        $    136        $    75      $     88      $  1,006
Research, development and engineering
  expenses (1)                                 $    22        $     21        $     23        $     9      $     13      $     88
Restructuring, impairment and other charges
  and (credits)                                               $  1,802                                     $     (8)     $  1,794
Interest expense (2)                           $    15        $      9        $      7        $     1      $      2      $     34
(Provision) benefit for income taxes           $   (39)       $     (9)                       $    (1)     $   (991)     $ (1,040)
Income (loss) before minority interests and
  equity earnings (losses) (3)                 $    74        $ (1,785)                       $     2      $   (953)     $ (2,662)
Minority interests (4)                                                                                           (3)           (3)
Equity in earnings (losses) of associated
  companies, net of impairments (5)                 68             (35)                                          66            99
Income from discontinued operations                                                                              20            20
                                               -------        --------        --------        -------      --------      --------
Net income (loss)                              $   142        $ (1,820)       $      0        $     2      $   (870)     $ (2,546)
------------------------------------------------------------------------------------------------------------------------------------

Nine months ended September 30, 2005 (Restated)
Net sales                                      $ 1,224        $  1,240        $    438        $   219      $    258      $  3,379
Research, development and engineering
  expenses (1)                                 $    84        $     71        $     84        $    38      $     43      $    320
Restructuring, impairment and other charges
  and (credits)                                               $     36                                     $     10      $     46
Interest expense (2)                           $    40        $     25        $     15        $     3      $      1      $     84
(Provision) benefit for income taxes           $   (94)       $      1        $      2        $     3      $     (3)     $    (91)
Income (loss) before minority interests
  and equity earnings (losses) (3)             $   482        $    (41)       $    (11)       $   (13)     $   (213)     $    204
Minority interests (4)                                               1                                           (9)           (8)
Equity in earnings of associated companies,
  net of impairments (5)                           285               6                                          131           422
                                               -------        --------        --------        -------      --------      --------
Net income (loss)                              $   767        $    (34)       $    (11)       $   (13)     $    (91)     $    618
------------------------------------------------------------------------------------------------------------------------------------

Nine months ended September 30, 2004 (Restated)
Net sales                                      $   802        $  1,116        $    418        $   233      $    252      $  2,821
Research, development and engineering
  expenses (1)                                 $    57        $     69        $     64        $    27      $     40      $    257
Restructuring, impairment and other charges
  and (credits)                                               $  1,797                                     $     (3)     $  1,794
Interest expense (2)                           $    37        $     41        $     17        $     4      $      4      $    103
(Provision) benefit for income taxes           $   (97)       $     25        $     (5)       $    (6)     $   (967)     $ (1,050)
Income (loss) before minority interests
  and equity earnings (losses) (3)             $   191        $ (1,853)       $     10        $    12      $ (1,064)     $ (2,704)
Minority interests (4)                                               1                                          (15)          (14)
Equity in earnings (losses) of associated
  companies, net of impairments (5)                204             (32)                                         145           317
Income from discontinued operations                                                                              20            20
                                               -------        --------        --------        -------      --------      --------
Net income (loss)                              $   395        $ (1,884)       $     10        $    12      $   (914)     $ (2,381)
------------------------------------------------------------------------------------------------------------------------------------






(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 nine months ended September 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 nine months
     ended September 30, 2004,  minority  interests  include gains of $4 million
     and $17  million,  respectively,  from the sale of CAV  assets in excess of
     assumed salvage value.
(5)  Equity in earnings  (losses) of associated  companies,  net of impairments,
     includes the following:
     .    For the three and nine months  ended  September  30, 2005, a charge of
          $106 million for Corning's  share of Samsung  Corning's  impairment of
          certain manufacturing assets and other charges.
     .    For the three and nine months ended  September 30, 2004, an impairment
          charge of $35 million to write down certain  Telecommunications equity
          method investments to fair value.



A  reconciliation  of reportable  segment net income (loss) to consolidated  net
income (loss) follows:
------------------------------------------------------------------------------------------------------------------------------------
                                                                   Three months                        Nine months
                                                                ended September 30,                ended September 30,
                                                            -------------------------          -------------------------
                                                               2005           2004                2005           2004
                                                            (Restated)     (Restated)          (Restated)     (Restated)
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                  
Net income of reportable segments                           $     321      $  (1,676)          $     709      $  (1,467)
Non-reportable operating segments net income (1)                 (119)             9                 (96)            10
Unallocated amounts:
    Non-segment loss and other (2)                                 (2)            (1)                 (1)            (4)
    Non-segment restructuring, impairment and
       other (charges) and credits (3)                                             1                 (25)             5
    Asbestos settlement                                           (73)            45                (204)           (29)
    Interest income                                                17              6                  40             16
    Loss on repurchases of debt                                                   (4)                (12)           (36)
    Provision for income taxes (4)                                 (3)          (989)                 (7)          (984)
    Equity in earnings of associated companies (5)                 62             43                 214             88
    Income from discontinued operations                                           20                                 20
                                                            ---------      ---------           ---------      ---------
Net (loss) income                                           $     203      $  (2,546)          $     618      $  (2,381)
------------------------------------------------------------------------------------------------------------------------------------


(1)  Non-reportable  operating  segments  net  income  includes  the  results of
     non-reportable  operating  segments.  For the three and nine  months  ended
     September  30, 2005,  we recorded a charge of $106 million for our share of
     Samsung  Corning's  impairment  of certain  manufacturing  assets and other
     charges for severance and exit costs.
(2)  Non-segment  loss and other includes the results of non-segment  operations
     and other corporate activities.
(3)  For the  three  and nine  months  ended  September  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 3  (Restructuring,  Impairment  and Other
     Charges and (Credits)).
(4)  Provision  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.

Each of our reportable  operating  segments is concentrated  across a relatively
small number of customers.  For the nine months ended  September 30, 2005,  four
customers of the Display Technologies  segment, each of which accounted for more
than 10% of segment net sales,  accounted for 62% of total segment sales. In the
Telecommunications segment, two customers, each of which accounted for more than
10% of this segment's net sales, accounted for 26% of total segment sales in the
first nine months of 2005.  In the  Environmental  Technologies  segment,  three
customers,  each  of  which  accounted  for  more  than  10% of  segment  sales,
represented  71% of total segment sales for the nine months ended  September 30,
2005.  In the Life  Sciences  segment,  one customer  accounted  for 50% of this
segment's sales for the nine months ended September 30, 2005.






16.  Subsequent Events

On October 4, 2005, we issued and contributed 5 million shares of Corning common
stock to our domestic pension plan. This non-cash contribution  approximated $97
million.  We plan to contribute an additional 5 million shares of Corning common
stock to this plan by December 31, 2005.

On October 6, 2005, we notified all remaining  holders of our  outstanding  zero
coupon  convertible  debentures  of our election to use cash to  repurchase  any
debentures tendered by holders on the November 8, 2005 optional repurchase date.
At September 30, 2005, these debentures had a carrying value of $276 million.

On  October  7,  2005,  the  assets of O.T.I.  S.r.l.,  a  wholly-owned  foreign
subsidiary were substantially liquidated. As a result, $84 million of cumulative
translation will be realized in income in the fourth quarter.






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  third  quarter  of  2005,  we made the  following  progress  against  these
priorities:

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

..    We reduced long-term debt by calling $96 million of convertible debt, which
     then converted into Corning common stock.
..    We  received  $155  million in  deposits  against  orders  relating  to our
     multi-year customer supply agreements in the Display Technologies segment.
..    Our debt to capital ratio declined to 29%.
..    We ended  the  third  quarter  of 2005  with  $2.4  billion  in cash,  cash
     equivalents  and  short-term  investments.  This  represents an increase of
     approximately  $537 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. In April 2005
our public debt ratings were raised to BBB- by both Fitch Ratings and Standard &
Poor's and most  recently,  in  September  2005,  to Baa3 by  Moody's  Investors
Service.

Profitability
For the three months ended  September  30, 2005, we generated net income of $203
million or $0.13 per share compared to a net loss of $2,546 million or $1.82 per
share for the same period in 2004. For the nine months ended September 30, 2005,
we  generated  net income of $618  million or $0.41 per share  compared to a net
loss of $2,381  million or $1.73 per share for the nine months  ended  September
30, 2004.

We recorded  non-recurring  charges in the three and nine months ended September
30, 2005 and  significant  net charges for the same periods in 2004 which impact
the comparability of both years. Refer to Note 3 (Restructuring,  Impairment and
Other Charges and (Credits)),  Note 6 (Income Taxes),  and Note 10 (Investments)
to the consolidated financial statements for additional information.

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 nine  month  periods  ended  September  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 nine month periods ended  September 30, 2005 were $378 million
and $1,076  million,  respectively.  Of these  amounts,  $304  million  and $895
million,  respectively,  were directed toward our Display Technologies  segment,
and $46  million  and $120  million,  respectively,  were  directed  toward  our
Environmental Technologies segment.

Restatement of Prior Period Financial Statements
The Company's management and its audit committee  concluded,  on April 21, 2006,
that  the  Company  would  restate  previously  issued  consolidated   financial
statements to properly account for the asbestos settlement charges and liability
and for its investment in and equity earnings of Pittsburgh Corning Europe (PCE)
from March 31, 2003,  through  December  31, 2005.  The Company also changed the
classification  of  accretion  on a portion of the  liability to be paid in cash
from interest expense to asbestos settlement charge for the same time period.

The  cumulative  effect of these  adjustments  to Corning's  balance sheet as of
September  30,  2005,  resulted  in an  increase  in  investments  in  affiliate
companies of $30 million,  an increase to other liabilities of $150 million,  an
increase to accumulated deficit of $122 million,  and an increase to accumulated
other comprehensive income of $2 million.

The  cumulative  effect of these  adjustments  to Corning's  balance sheet as of
December 31, 2004, resulted in an increase in investments in affiliate companies
of $26 million, an increase to other liabilities of $141 million, an increase to
accumulated  deficit of $123  million,  and an  increase  to  accumulated  other
comprehensive income of $8 million.

To correct these  errors,  the Company has restated its  consolidated  financial
statements  and, on May 9, 2006,  filed an amended  Annual Report on Form 10-K/A
for the fiscal year ended  December 31, 2005. In addition,  on May 9, 2006,  the
company  filed amended  reports on Form 10-Q/A for the quarters  ended March 31,
2005,  June 30, 2005,  and September 30, 2005, to restate the financial  periods
provided for those quarterly periods.

All  information  in  this  document  reflects  the  impact  of the  restatement
described in Note 2 (Restatement  of Prior Period  Financial  Statements) to the
consolidated financial statements






RESULTS OF OPERATIONS



Selected highlights for the third quarter follow (dollars in millions):
------------------------------------------------------------------------------------------------------------------------------------
                                                      Three months                                  Nine months
                                                   ended September 30,                          ended September 30,
                                                ------------------------                     ------------------------
                                                  2005            2004        % Change          2005          2004       % Change
                                               (Restated)      (Restated)     05 vs. 04      (Restated)    (Restated)    05 vs. 04
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                      
Net sales                                       $  1,188      $   1,006          18%           $  3,379    $   2,821        20%

Gross margin                                    $    545      $     404          35%           $  1,457    $   1,050        39%
     (gross margin %)                                46%            40%                             43%          37%

Selling, general and administrative
  expenses                                      $    178      $     153          16%           $    553    $     479        15%
     (as a % of net sales)                           15%            15%                             16%          17%

Research, development and engineering
  expenses                                      $    118      $      88          34%           $    320    $     257        25%
     (as a % of net sales)                           10%             9%                              9%           9%

Restructuring, impairment and other
  charges                                       $     28      $   1,794        (98)%           $     46    $   1,794      (97)%
     (as a % of net sales)                            2%           178%                              1%          64%

Asbestos settlement                             $     73      $    (45)       (262)%           $    204    $      29       603%
     (as a % of net sales)                            6%           (4)%                              6%           1%

Income (loss) from continuing operations
  before income taxes                           $    156      $ (1,622)       (110)%           $    295    $ (1,654)     (118)%
     (as a % of net sales)                           13%         (161)%                              9%        (59)%

Provision for income taxes                      $    (28)     $ (1,040)        (97)%           $   (91)    $ (1,050)      (91)%
     (as a % of net sales)                          (2)%         (103)%                            (3)%        (37)%

Equity in earnings of associated companies,
  net of impairments                            $     77      $      99        (22)%           $    422    $     317        33%
     (as a % of net sales)                            6%            10%                             12%          11%

Income (loss) from continuing operations        $    203      $ (2,566)       (108)%           $    618    $ (2,401)     (126)%
     (as a % of net sales)                           17%         (255)%                             18%        (85)%
------------------------------------------------------------------------------------------------------------------------------------







Net Sales
For the three months ended  September 30, 2005, the net sales increase  compared
to the same  period in 2004 was the result of  continued  strong  demand for LCD
glass substrates in our Display Technologies  segment. For the nine months ended
September  30, 2005,  the net sales  increase was the result of strong LCD glass
substrate  sales and demand for  products in our  Telecommunications  segment to
support  fiber-to-the-premises  projects.  Net sales for all other  segments 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.

Cost of Sales
The types of expenses included in the cost of sales line item are: raw materials
consumption,  including  direct  and  indirect  materials;  salaries,  wages and
benefits;     depreciation    and    amortization;     production     utilities;
production-related purchasing; warehousing (including receiving and inspection);
repairs and maintenance; inter-location inventory transfer costs; production and
warehousing  facility property insurance;  rent for production  facilities;  and
other production overhead.

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

Selling, General and Administrative Expenses
For the three and nine months ended September 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.

The types of  expenses  included  in the  selling,  general  and  administrative
expenses line item are: salaries, wages and benefits; travel; sales commissions;
professional  fees;  depreciation  and  amortization,  utilities,  and  rent for
administrative facilities.

Research, Development and Engineering Expenses
Research,  development and engineering expenses have increased in both the three
and nine months  ended  September  30, 2005  compared to their  respective  2004
periods,  but have remained  somewhat constant as a percentage of net sales. Our
expenditures are focused on our Display Technologies, Environmental 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  months  ended  September  30,  2005,  we recorded a charge of $30
million  related to continued cost reduction  actions in the  Telecommunications
segment  and  credits  of $2  million  related to  adjustments  to prior  period
restructuring charges.  Charges recorded for the nine months ended September 30,
2005 included the third quarter charge  associated  with the  Telecommunications
segment and  impairment  charges for other than  temporary  declines 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  continue  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 did 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.







We  recorded  significant  net  charges  during the third  quarter of 2004 which
impact the  comparability  of the three and nine months ended September 30, 2005
and 2004. A summary of the net charges and credits  recorded  during the periods
follows (in millions):
------------------------------------------------------------------------------------------------------------------------------------
                                                           Three months                          Nine months
                                                        ended September 30,                   ended September 30,
                                                      -----------------------             -------------------------
                                                        2005           2004                  2005            2004
------------------------------------------------------------------------------------------------------------------------------------
                                                                                              
Impairment of goodwill                                               $  1,420                             $   1,420
Impairment of assets other than goodwill
    Assets to be disposed of by
      sale or abandonment                                                 330             $       6             295
    Assets to be held and used                                             24                                    24
    Impairment of available-for-sale securities                                                  25
Accelerated depreciation                                                                                         39
Loss on sale of businesses                                                 14                                    14
Restructuring charges, net                           $      28              6                    15               2
                                                     ---------       --------             ---------       ---------
Total restructuring, impairment
   other charges                                     $      28       $  1,794             $      46       $   1,794
------------------------------------------------------------------------------------------------------------------------------------


Refer to Note 3  (Restructuring,  Impairment and Other Charges and (Credits)) to
the consolidated financial statements for additional information.

Asbestos Settlement
The asbestos  settlement activity relates to changes in the estimated fair value
of certain  items to be  contributed  by Corning  under the  Pittsburgh  Corning
Corporation   (PCC)   asbestos   settlement   agreement   if  the  PCC  Plan  of
Reorganization  receives judicial approval.  For additional  information on this
matter,  refer to Note 4 (Commitments  and  Contingencies)  to the  consolidated
financial statements and Part II - Other Information, Item 1. Legal Proceedings.

Income (Loss) from Continuing Operations Before Income Taxes
In addition to the key drivers  outlined  above,  the following had an impact on
the results of our income (loss) before income taxes:
--------------------------------------------------------------------------------
                                     Three months              Nine months
                                  ended September 30,       ended September 30,
                                  -------------------       -------------------
                                  2005           2004       2005          2004
--------------------------------------------------------------------------------

(Loss) gain on repurchases
  and retirement of debt, net                    $(4)        $12          $(36)
--------------------------------------------------------------------------------

Also,  the  comparability  of income (loss) from  continuing  operations  before
income taxes for the three and nine months ended September 30, 2005 and 2004 was
impacted by movements in foreign  exchange  rates. In the third quarter of 2005,
we incurred an exchange rate gain of $1 million compared to a loss of $5 million
in the third quarter of 2004.  For the nine months ended  September 30, 2005, we
incurred a net exchange rate loss of $13 million  compared to $6 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 tax rates follow (in millions):
--------------------------------------------------------------------------------
                                   Three months                Nine months
                                ended September 30,         ended September 30,
                             -----------------------     -----------------------
                                2005         2004           2005         2004
                             (Restated)   (Restated)     (Restated)   (Restated)
--------------------------------------------------------------------------------

Provision for income taxes   $  (28)       $(1,040)       $  (91)     $(1,050)
Effective tax rate              17.9%       (64.1)%         30.8%      (63.5)%
--------------------------------------------------------------------------------

For the three and nine  months  ended  September  30,  2005,  the tax  provision
reflected the following items:

..    The impact of our inability to record tax benefits on net operating  losses
     generated in the U.S. and certain foreign jurisdictions;
..    The  benefit  of tax  holidays  and  investment  credits  in Taiwan and tax
     holidays in China and South Africa; and,
..    The benefit from the reversal of tax contingency  liabilities following the
     conclusion of IRS examinations.

As more fully described in Note 6 (Income Taxes) to the  consolidated  financial
statements  of the 2004 Form  10-K,  significant  events  occurred  in the third
quarter of 2004 requiring us to increase our valuation allowance against certain
U.S. and German  deferred tax assets.  Accordingly,  we increased  our valuation
allowance  by $1.2  billion  in the  third  quarter  of 2004 to  reduce  our net
deferred tax assets to approximately $530 million.

At September 30, 2005, we had net deferred tax assets of $541 million, which are
primarily U.S. net deferred tax assets. We continue to believe it is more likely
than not that these U.S. net deferred  tax assets are  realizable  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 there are tax planning  strategies that would enable us to conclude
that it is more likely than not that a larger portion of the deferred tax assets
would be realizable. Until then, our tax provision will include only the net tax
expense attributable to certain foreign operations.

During  the third  quarter of 2005,  Corning  filed its 2004  consolidated  U.S.
Federal  income tax  return,  which  included  a $3.9  billion  worthless  stock
deduction for the loss on our investment in the photonic  technologies  business
associated  with the Pirelli  acquisition.  This  acquisition  was  completed in
December  2000 and was  substantially  impaired  in the second  quarter of 2001.
Prior to the third  quarter of 2005,  we did not record a deferred tax asset for
this item as the ultimate  realization  of such  deduction  was  uncertain,  and
consistent with the requirements of SFAS No. 5, "Accounting for  Contingencies,"
recognition of an asset prior to the time management  determines the realization
of the asset is probable is  prohibited.  On September 2, 2005,  Corning and the
Commissioner of the Internal  Revenue  Service entered into a closing  agreement
under  section 7121 of the Internal  Revenue  Code of 1986 which  provides  that
Corning is  entitled  to this  worthless  stock  deduction.  We  recorded a $1.5
billion deferred tax asset for this item in the quarter,  which was concurrently
offset by a valuation  allowance of an equal amount due to our current inability
to record tax benefits for U.S. net operating losses.

Based on our 2004 consolidated U.S. Federal income tax return as filed,  Corning
has net operating loss carryforwards of $4.9 billion for U.S. Federal income tax
purposes.  These operating losses will expire in 2022 ($0.1 billion), 2023 ($0.6
billion) and 2024 ($4.2 billion).

Certain  foreign  subsidiaries  in China,  South Africa and Taiwan are operating
under tax holiday arrangements. The nature and extent of such arrangements vary,
and the benefits of such  arrangements  phase out in future years (2006 to 2009)
according  to  the  specific   terms  and  schedules  of  the  relevant   taxing
jurisdictions.  The  impact  of the  tax  holidays  on our  effective  rate is a
reduction  in the  rate  of 17% and 14% for the  three  and  nine  months  ended
September 30, 2005, respectively.






We establish tax contingency  liabilities when,  despite our belief that our tax
returns are fully supportable,  it is probable that certain positions may not be
sustained  through the income tax audit process.  These liabilities are analyzed
on a quarterly basis and adjusted based upon changes in facts and circumstances,
such  as  the  progress  of  income  tax  audits,  new  case  law  and  emerging
legislation.  In the third quarter of 2005, in conjunction with our reassessment
process, we recorded a tax benefit of $14 million following the conclusion of an
IRS examination for the years 2001 and 2002.

Equity in Earnings of Associated Companies, Net of Impairments
The following provides a summary of equity in earnings of associated  companies,
net of impairments (in millions):
--------------------------------------------------------------------------------
                                 Three months                 Nine months
                              ended September 30,          ended September 30,
                            ----------------------      ------------------------
                               2005         2004           2005       2004
                            (Restated)   (Restated)     (Restated) (Restated)
--------------------------------------------------------------------------------

Samsung Corning Precision    $   114      $   68          $  279     $   204
Dow Corning Corporation           58          40             203          81
Samsung Corning                 (115)         14            (108)         30
All other                         20         (23)             48           2
                             -------      -------         ------     -------
Total equity earnings        $    77      $   99          $  422     $   317
--------------------------------------------------------------------------------

The improvement in equity earnings recognized from Samsung Corning Precision for
both the three and nine  months  ended  September  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
nine months ended September 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 a $21 million
     charge related to these actions.

In the third quarter of 2005,  Samsung  Corning  incurred  impairment  and other
charges  of $212  million as a result of a decline  in the  projected  operating
results  for  its  CRT  glass  business.  The  charge,  which  included  certain
manufacturing  assets and severance  and exit costs,  reduced  Corning's  equity
earnings by $106 million in the third  quarter.  None of the charges is expected
to result in cash expenditures by Corning.

As  Samsung  Corning  executes  its  restructuring  plan  over the next  several
quarters,  additional severance and shutdown charges may be required.  We expect
our share of these charges to approximate $30 million.

Refer to Note 10  (Investments)  to the  consolidated  financial  statements for
additional  information relating to Samsung Corning Precision,  Dow Corning, and
Samsung Corning's operating results.







Income (loss) from Continuing Operations
As a result of the above, our net income and per share data follow (in millions,
except per share amounts):
------------------------------------------------------------------------------------------------------------------------------------
                                                                           Three months                          Nine months
                                                                        ended September 30,                  ended September 30,
                                                                    ------------------------              ------------------------
                                                                       2005          2004                    2005          2004
                                                                    (Restated)    (Restated)              (Restated)    (Restated)
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                            
Income (loss) from continuing operations                             $   203      $ (2,566)               $    618      $  (2,401)
Basic earnings (loss) per common share                               $  0.14      $  (1.83)               $   0.43      $   (1.74)
Diluted earnings (loss) per common share                             $  0.13      $  (1.83)               $   0.41      $   (1.74)
Shares used in computing per share amounts
     Basic earnings (loss) per common share                            1,488         1,399                   1,444          1,380
     Diluted earnings (loss) per common share                          1,552         1,399                   1,523          1,380
------------------------------------------------------------------------------------------------------------------------------------


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,  which do not meet the quantitative  threshold for
separate reporting, certain corporate investments,  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                                   Nine months
                                                  ended September 30,                          ended September 30,
                                               -----------------------       % Change         ---------------------      % Change
                                                 2005          2004          05 vs. 04         2005         2004         05 vs. 04
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                         
Sales                                           $  489        $  295            66%           $ 1,224      $  802           53%
Income before equity earnings                   $  246        $   74           232%           $   482      $  191          152%
Equity earnings of associated companies         $  117        $   68            72%           $   285      $  204           40%
Net income                                      $  363        $  142           156%           $   767      $  395           94%
------------------------------------------------------------------------------------------------------------------------------------


The net sales  increase for the third  quarter of 2005 is largely  reflective of
the overall LCD market growth. During the third quarter of 2005, glass substrate
volumes  (measured  in square feet of glass sold)  increased  approximately  73%
compared with the same period in 2004. Weighted average selling prices decreased
2% compared to 2004.  Included  in this  weighted  average  were  selling  price
declines that were 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  third  quarter  of  2005,  large-size  glass  substrates
accounted for 70% of total sales volumes,  compared to 48% for the third quarter
of 2004. Because the sales of the Display  Technologies  segment are denominated
in Japanese  yen, our sales are  susceptible  to movements in the U.S.  dollar -
Japanese  yen  exchange   rate.   Sales  growth  was   negatively   impacted  by
approximately $6 million from a weakening of the Japanese yen compared to 2004.






For the nine months ended  September 30, 2005, the net sales increase is largely
driven by the same factors as those  identified  for the third  quarter of 2005.
For  the  comparable  nine  month  period,  glass  substrate  volumes  increased
approximately  53%, while weighted  average selling prices  increased  modestly.
Sales of  large-size  glass  substrates  accounted  for 66% of year to date 2005
sales volumes compared to 43% for the same period in 2004. Movements in the U.S.
dollar - Japanese yen  exchange  rate did not have a  significant  impact on the
comparable nine month periods.

For the three and nine months ended  September 30, 2005,  the increase in income
before  equity  earnings was  primarily  the result of higher  volumes,  ongoing
improvements in  manufacturing  efficiencies,  and a lower effective tax rate in
2005.

The increase in our equity  earnings  from  Samsung  Corning  Precision  for the
periods  presented was largely driven by the same market factors  identified for
our  wholly-owned  business.  During the third quarter of 2005,  Samsung Corning
Precision's   earnings  were  negatively  impacted  by  approximately  13%  from
movements in exchange  rates.  As a result,  the 68% year over year  increase in
equity  earnings  was less  than the  sales  volume  growth  of 83%  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 a concentrated  customer base comprised of
LCD panel and color filter  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., Dai Nippon Printing Co., Ltd.,
Sharp Corporation,  and Toppan CFI (Taiwan) Co., Ltd. These customers  accounted
for 72% and 73% of the Display Technologies segment sales for the three and nine
months ended  September 30, 2005,  respectively.  In addition,  Samsung  Corning
Precision's sales are concentrated  across a small number of its customers.  For
the three and nine months ended  September  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 88% of total Samsung Corning
Precision sales, respectively.

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 agreed to make advance cash deposits to
Corning for a portion of the contracted glass to be purchased.  During the first
nine  months of 2005,  we received a total of $389  million of deposits  against
orders.  Subsequent to September 30, 2005, we received an additional $13 million
of deposits.

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.

In  October  2005,  Corning  announced  a $425  million  expansion  of  our  LCD
manufacturing facility in Taichung, Taiwan. This investment will be used to fund
the third phase of the  Taichung  facility  with the  majority  of the  spending
planned for 2006 and 2007. The initial  manufacturing from this phase will begin
in late 2006, with production continuing to come online in 2007.

Outlook:
--------
We expect to see a  continuation  of the overall  industry  growth and the trend
toward  large-size  substrates.  We have added 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 and  color  filter  manufacturers  in Japan,  Taiwan,  and China  while
customers in Korea are serviced by Samsung Corning Precision.  The actual growth
rates in these markets will impact our sales and earnings performance.






For the fourth quarter of 2005, we expect volumes for our wholly-owned  business
and Samsung Corning Precision may be up 3% to 10% in the aggregate,  compared to
the third quarter of 2005.  Pricing in the fourth quarter is expected to be down
slightly. In the third quarter of 2005, we began 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 fourth quarter
of 2005. In addition,  we are beginning to see increased amounts of larger-sized
glass in the marketplace  from  competitors.  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 sales and  profitability  of this
segment.  Current exchange rates in October are unfavorable  compared to average
exchange rates in the third quarter of 2005.



Telecommunications
The following table provides net sales and other data for the Telecommunications
segment (in millions):
------------------------------------------------------------------------------------------------------------------------------------
                                                     Three months                                 Nine months
                                                  ended September 30,                          ended September 30,
                                               -----------------------       % Change         ----------------------     % Change
                                                 2005          2004          05 vs. 04         2005         2004         05 vs. 04
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                        
Net sales:
   Optical fiber and cable                     $   216       $     202           7%           $   641     $     543         18%
   Hardware and equipment                          182             210        (13)%               599           573          5%
                                               -------       ---------                        -------     ---------
       Total net sales                         $   398       $     412         (3)%           $ 1,240     $   1,116         11%
                                               =======       =========                        =======     =========

Net loss                                       $   (30)      $  (1,820)       (98)%           $   (34)    $  (1,884)      (98)%
------------------------------------------------------------------------------------------------------------------------------------


For the third quarter of 2005, fiber volumes  increased 9% while prices declined
5%  compared to the third  quarter of 2004.  The  increase in fiber  volumes was
largely  driven by sales in North  America,  Europe,  and Japan.  The decline in
hardware  and  equipment  sales was driven by lower sales  primarily  to Verizon
Communications  Inc.  (Verizon)  compared to the third quarter of 2004.  Volumes
were negatively  impacted as Verizon continued to reduce inventory levels of its
fiber-to-the-premises    products.    The    comparison    of   sales   of   the
Telecommunications  segment  between  the  third  quarter  of 2005  and 2004 was
affected by the 2004 sale of our frequency controls  business.  During the third
quarter of 2004, the frequency  controls business recorded sales of $12 million.
Excluding the impact of this divestiture,  net sales for the  Telecommunications
segment in the third quarter of 2005 were comparable to the same period in 2004.
Movements in foreign  exchange  rates,  primarily the Euro and Japanese yen, did
not have a significant impact on sales for the third quarter of 2005 compared to
the third quarter of 2004.

For the nine months ended September 30, 2005, the net sales increase was largely
driven by sales in North America and Europe. Stronger North American volumes and
sales of the hardware and equipment business were largely the result of sales to
Verizon to support their fiber-to-the premises project. Excluding the cumulative
impact of the divestiture of our frequency controls business,  net sales for the
Telecommunications segment increased 17% for the nine months ended September 30,
2005 compared to the prior year period.  For the comparable  nine month periods,
fiber volumes  increased 22% and prices declined 6%. Movements in exchange rates
did not significantly impact sales for the comparable nine month periods.

For the Telecommunications segment, losses in both periods of 2005 and 2004 were
impacted by restructuring, impairment, and other charges and (credits). Refer to
Results of Continuing Operations for a detailed discussion of these charges.

The  Telecommunications  segment continues to have a concentrated customer base.
For the three and nine months ended  September 30, 2005, 10 customers  accounted
for 48% and 51% of total segment net sales, respectively.  For the same periods,
Verizon accounted for 11% and 15% of total segment net sales, respectively.






Outlook:
--------
For the fourth quarter of 2005, we expect net sales to be down between 4% and 7%
compared to the third quarter of 2005.  Fiber and cable sales are expected to be
down 10% to 15% from the third  quarter and  hardware  and  equipment  sales are
expected to be even with the third  quarter.  Segment net sales will continue to
benefit from  Verizon's  fiber-to-the-premises  project.  Fourth  quarter  sales
volumes of fiber-to-the-premises products are expected to increase when compared
to the third  quarter.  Fiber-to-the-premises  sales to  Verizon  in the  fourth
quarter  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.



Environmental Technologies
The  following  table  provides  net sales and other data for the  Environmental
Technologies segment (in millions):
------------------------------------------------------------------------------------------------------------------------------------
                                                     Three months                                  Nine months
                                                  ended September 30,                          ended September 30,
                                                ----------------------      % Change          ---------------------     % Change
                                                 2005           2004        05 vs. 04          2005         2004       05 vs. 04
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       
Net sales:
   Automotive                                  $   121        $    120           1%           $   373      $    366          2%
   Diesel                                           23              16          44%                65            52         25%
                                               -------        --------                        -------      --------
       Total net sales                         $   144        $    136           6%           $   438      $    418          5%
                                               =======        ========                        =======      ========

Net (loss) income                              $    (5)       $      0                        $   (11)     $     10      (210)%
------------------------------------------------------------------------------------------------------------------------------------


The  increase in net sales for the three and nine  months  ended  September  30,
2005,  versus the same periods in 2004,  was the result of  continued  growth in
diesel  products sales.  Diesel products sales growth  continues to be driven by
demand from retrofit  markets,  particularly in Asia. In the first half of 2005,
we received letters of intent and other expressions of intent from diesel engine
manufacturers  to supply  filters  for their 2007 model year  platforms.  We are
continuing  to negotiate  with several  diesel engine  manufacturers  to develop
supply agreements.  Negotiations are likely to continue through the next several
quarters. For automotive products,  sales in the third quarter of 2005 were flat
when compared to the same period last year. A portion of this segment's sales is
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 third quarter
of 2005 compared to the third quarter of 2004.

For the three and nine  months  ended  September  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 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 fourth quarter of 2005, we expect net sales to be comparable to those of
the third  quarter.  We expect a seasonal  decline in automotive  products to be
offset by a growth in diesel  product  sales which are expected to grow slightly
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                                Nine months
                                                  ended September 30,                         ended September 30,
                                                 ---------------------       % Change        --------------------      % Change
                                                  2005           2004        05 vs. 04         2005         2004       05 vs. 04
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       
Net sales                                        $   70         $   75          (7)%         $   219      $   233          (7)%
Net (loss) income                                $   (7)        $    2        (450)%         $   (13)     $    12        (208)%
------------------------------------------------------------------------------------------------------------------------------------







The  decrease in net sales for the three and nine  months  ended  September  30,
2005,  when  compared to the same periods in 2004,  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  three and nine  months  ended  September  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 nine
month periods ended September 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 fourth quarter of 2005, we expect net sales to be comparable to those of
the third quarter of 2005. 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. For the full
year, we expect sales may be negatively  impacted between 5% and 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 reduced for future
product  purchases,  thus  reducing  operating  cash  flows in later  periods as
credits are applied for cash deposits  received in earlier  periods.  During the
first  nine  months of 2005,  we  received a total of $389  million of  deposits
against orders.  Subsequent to September 30, 2005, we received an additional $13
million of deposits.



Customer  deposits  have been or will be received in the  following  periods (in
millions):
------------------------------------------------------------------------------------------------------------------------------------
                                                                     Nine
                                                                 months ended         Remainder       Estimated 2006
                                                  2004        September 30, 2005       of 2005          and Beyond           Total
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                              
Customer deposits received                        $204               $389                $93               $295              $981
------------------------------------------------------------------------------------------------------------------------------------


The majority of customer  deposits will be received  through 2006. For the three
and nine months ended  September 30, 2005, we issued $11 million and $13 million
in credit memoranda,  respectively. These credit amounts are not included in the
above amounts, and were applied against customer receivables.

Financing Structure

Third Quarter
-------------
In the third quarter of 2005,  we completed the following  debt and common stock
transactions:

..    Series C Mandatory  Convertible Preferred Stock were converted into Corning
     common stock at a conversion rate of 50.813 shares of common stock for each
     preferred  share.  Upon  conversion of the preferred  shares,  we issued 31
     million shares of Corning  common stock  resulting in an increase to equity
     of $62 million.
..    Prior to the September 6, 2005 redemption date,  substantially  all holders
     of our $96 million  outstanding Oak 4 7/8% convertible  subordinated notes,
     due March 1, 2008,  elected  to convert  their  notes into  Corning  common
     stock.  The conversion ratio was 64.4138 shares of Corning common stock for
     each 1,000 principal amount of notes.  Upon the conversion of the notes, we
     issued 6 million shares of Corning common stock resulting in an increase to
     equity of $95 million.






On October 4, 2005, we issued and contributed 5 million shares of Corning common
stock, with a value of approximately $97 million,  to our domestic pension plan.
We plan to contribute an additional 5 million  shares of Corning common stock to
our domestic pension plan by December 31, 2005.

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  repurchase
Corning's remaining zero coupon convertible  debentures due on November 8, 2015.
At September 30, 2005, these debentures had a carrying value of $276 million. On
October 6, 2005, we notified  current  holders of our election to repurchase any
debentures tendered by holders on November 8, 2005.

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  due  November  1,  2008.  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.

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  September  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
     due November 1, 2008. 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 entered a written agreement 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  and an  interest  coverage  ratio,  both of  which  we are in  compliance.
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.

Capital Spending
Capital  spending totaled $1,076 million and $556 million during the nine months
ended   September  30,  2005  and  2004,   respectively.   Our  2005  forecasted
consolidated   capital  spending  remains  at  $1.5  billion.  Of  this  amount,
approximately  $1.1 billion to $1.2 billion  will be directed  toward  expanding
manufacturing  capacity  for LCD glass  substrates  in the Display  Technologies
segment and approximately $160 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 September 30,     As of December 31,
                                     -------------------     ------------------
                                            2005                   2004
                                         (Restated)             (Restated)
--------------------------------------------------------------------------------

Working capital                           $  1,518              $      804
Working capital, excluding cash
  and short-term investments              $  (900)              $  (1,077)
Current ratio                                1.6:1                   1.3:1
Trade accounts receivable, net
  of allowances                           $    631              $      585
Days sales outstanding                          48                      52
Inventories                               $    559              $      535
Inventory turns                                4.7                     4.9
Days payable outstanding                        77                      67
Long-term debt                            $  1,804              $    2,214
Total debt to total capital                    29%                     42%
--------------------------------------------------------------------------------

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                                  Baa3                   Stable
    September 20, 2005                                    September 20, 2005
--------------------------------------------------------------------------------

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.  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 5  (Debt)  to the
consolidated financial statements,  and mandatory conversion of our 7.00% Series
C Mandatory  Convertible  Preferred  Stock into Common Stock on August 16, 2005,
described  in Note 7, 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 third 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
attribution  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 $11  million  and $5
million  higher  for  the  nine  months  ended  September  30,  2005  and  2004,
respectively, for stock options and restricted share awards.

Our current  estimate is that our incremental  pretax and after-tax  share-based
compensation  expense  will  increase  by $60 million to $70 million in 2006 and
beyond. This amount includes  approximately $15 million related to the impact of
applying the non-substantive vesting period approach.

In November 2004, the FASB issued SFAS No. 151,  "Inventory Costs - An Amendment
of ARB No. 43,  Chapter 4" (SFAS  151).  SFAS 151 amends ARB No. 43,  Chapter 4,
"Inventory  Pricing," to clarify that abnormal amounts of idle facility expense,
freight,  handling costs, and wasted material (spoilage) should be recognized as
current-period charges. Additionally, SFAS 151 requires that allocation of fixed
production  overheads to the costs of conversion be based on the normal capacity
of the  production  facilities.  Corning is required to adopt SFAS 151 effective
January 1, 2006.  Corning  does not  expect the  adoption  of SFAS 151 to have a
material  impact  on  its  consolidated  results  of  operations  and  financial
condition.

In December 2004, the FASB issued SFAS No. 153, "Exchanges in Nonmonetary Assets
- an amendment of APB Opinion No. 29" (SFAS 153) which became  effective in July
2005.   This  Statement   amends  APB  No.  29,   "Accounting   for  Nonmonetary
Transactions," by eliminating an exception for nonmonetary  exchanges of similar
productive  assets and  replacing it with a general  exception  for exchanges of
nonmonetary assets that do not have commercial  substance.  Corning adopted SFAS
153 prospectively,  on July 1, 2005, as required. The impact of SFAS 153 was not
material  to  Corning's   consolidated   results  of  operations  and  financial
condition.






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  September  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/A 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/A 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/A,  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. Corning's twelve largest customers account for about 50%
of our sales.  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 and  color  filter  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., Dai Nippon Printing Co., Ltd., Sharp Corporation, and Toppan CFI (Taiwan)
Co.,  Ltd. For the nine months ended  September  30, 2005,  these LCD  customers
accounted  for 73% 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 88% of sales for the nine months
ended September 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 and color  filter  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 nine
months  ended  September  30,  2005,  one  customer  accounted  for  15%  of our
Telecommunications  segment sales,  and 10 customers  accounted for 51% 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 nine months ended  September  30, 2005,  our remaining  primary  distributor
accounted for 50% 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  $160  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. 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  demand  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.

     During the third quarter of 2005,  certain suppliers  suffered  disruptions
from hurricanes in the southern United States.  Although we have not encountered
any significant supply shortages, we cannot guarantee we will not in the future.

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,  and our  ability to
compete with new technologies and products of other suppliers.  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:

     .    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 anticipate technological and market trends;
     .    our  ability  to  develop  new   products  in  response  to  favorable
          government regulations and laws, particularly  environmental substrate
          diesel filter products in the Environmental Technologies segment;
     .    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;
     .    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  September  30,  2005,  Corning had  goodwill of $277  million and other
intangible assets of $103 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 October 28, 2005 were
BBB- from both Fitch,  Inc. and Standard & Poor's, a division of the McGraw-Hill
Companies, Inc. and Baa3 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.  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, lost sales, and financial damages.

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 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 $804 million have been incurred through  September
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)
          or avian flu;
     .    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 nine months ended September 30, 2005, we have recognized $422
million of equity  earnings,  of which $482  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.  In the third  quarter  of 2005,  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 nine months ended  September  30,  2005,  the Display  Technologies
segment  represented 36% 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  September  30,  2005,
reserves for trade receivables totaled approximately $28 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  political
risks, 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 nine 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

(a)  Restatement

As  discussed  in  Note 2 to the  consolidated  financial  statements  contained
herein, the Company has restated its consolidated  financial  statements for the
years 2003 through 2005 and its quarterly  consolidated financial statements for
each of the  quarterly  periods in the years ended  December  31, 2005 and 2004.
Specifically,  between  March 31, 2003,  and December  31, 2005,  the  following
accounting errors occurred:

..    Corning's  asbestos  settlement  charges and the related  liability for the
     asbestos  settlement  did not reflect the  estimated  fair value at initial
     recognition or subsequent  changes in fair value, of certain  components of
     the proposed settlement offer. As a result, asbestos settlement charges for
     the  years  2005,  2004,  and 2003 were  understated  by $13  million,  $24
     million, and $117 million, respectively.
..    Corning  incorrectly  suspended  recording  equity  earnings of  Pittsburgh
     Corning  Europe,  N.V.  between March 31, 2003, and December 31, 2005. As a
     result,  equity in earnings  of  affiliated  companies  for the years 2005,
     2004, and 2003 was understated by $13 million, $11 million, and $7 million,
     respectively.
..    Accretion  on  the  cash  portion  of the  asbestos  settlement  offer  was
     incorrectly recorded as interest expense resulting in both an overstatement
     of interest expense and an  understatement of asbestos  settlement  expense
     for the years  2005,  2004,  and 2003,  by $8 million,  $8 million,  and $5
     million, respectively.

In  the  restated  consolidated   financial  statements,   the  higher  asbestos
settlement  charges  are  tax-effected  in 2003 and the first  half of 2004.  As
Corning provided a valuation allowance on most of its deferred tax assets in the
third  quarter of 2004,  that  quarter  reflects an  increase  in the  valuation
allowance  of $55  million  for the  deferred  tax assets  related to the higher
asbestos settlement charges.

(b)  Evaluation of disclosure controls and procedures

The Company  maintains  disclosure  controls and procedures that are designed to
ensure that  information  required to be disclosed by the Company in the reports
that it files or submits under the Securities Exchange Act of 1934 (the Exchange
Act) is accumulated and communicated to our management,  including our principal
executive and principal financial officers,  or other persons performing similar
functions,   as  appropriate  to  allow  timely  decisions   regarding  required
disclosure.

In the first quarter of 2006,  management identified errors in the accounting of
its  Pittsburgh  Corning  Corporation  (PCC) Asbestos  Litigation  liability and
investments  in  affiliates  and as noted  above,  has  recorded  the  necessary
adjustments in the unaudited interim  consolidated  financial statements for the
quarter ended March 31, 2006 to correct these errors and has restated previously
issued financial statements. In its Form 8-K filed on April 25, 2006, management
indicated  that the  evaluation  of internal  control over  financial  reporting
related to the above mentioned errors was still in process.

The evaluation has been completed,  and  management,  under the direction of its
principal  executive and principal  financial  officers,  has  re-evaluated  the
effectiveness  of our  disclosure  controls and  procedures (as defined in Rules
13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2005.  Based
upon this  re-evaluation  and as a result of the material  weaknesses  discussed
below, the Company's principal executive and principal financial officers,  have
concluded that its disclosure  controls and procedures  were not effective as of
September 30, 2005.






A  material  weakness  is a control  deficiency,  or a  combination  of  control
deficiencies,  that  results  in more than a remote  likelihood  that a material
misstatement of the annual or interim financial statements will not be prevented
or detected.  Management  determined  that the  following  control  deficiencies
constitute  material  weaknesses in internal control over financial reporting at
September 30, 2005:

     (i)  The Company did not maintain  effective controls over the valuation of
          its asbestos  settlement  charges and the valuation and reconciliation
          of the related  liability  pertaining to the 2003  Pittsburgh  Corning
          Corporation Asbestos Litigation Bankruptcy  Settlement.  Specifically,
          the Company did not maintain effective controls to ensure that certain
          components of the liability,  which may be settled by contributing the
          Company's  equity  interest of  Pittsburgh  Corning  Europe,  N.V. and
          assignment  of  rights  to  insurance  proceeds,   were  appropriately
          recorded at fair value rather than book value as required by generally
          accepted  accounting  principles.  This control deficiency resulted in
          the restatement of our annual  consolidated  financial  statements for
          the years ended  December 31, 2005,  2004,  and 2003 and the quarterly
          consolidated  financial  statements  for each of the  three  quarterly
          periods in the years ended  December 31, 2005 and 2004.  Additionally,
          this control deficiency could result in a misstatement of our asbestos
          settlement  charges  and  related  liability  that  would  result in a
          material misstatement to the annual or interim consolidated  financial
          statements that would not be prevented or detected.

     (ii) The Company did not maintain  effective controls over the completeness
          and accuracy of its equity investments.  Specifically, the Company did
          not maintain  effective controls to ensure that earnings of its equity
          investments  were  accurately  and completely  recorded.  This control
          deficiency  resulted  in  the  restatement  of  the  Company's  annual
          consolidated  financial  statements  for the years ended  December 31,
          2005,  2004,  and  2003  and  the  quarterly   consolidated  financial
          statements for each of the three quarterly  periods in the years ended
          December  31, 2005 and 2004.  Additionally,  this  control  deficiency
          could  result  in a  misstatement  of our  investments  and  equity in
          earnings  of  affiliated  companies  that  would  result in a material
          misstatement   to  the  annual  or  interim   consolidated   financial
          statements that would not be prevented or detected.

Plan for  Remediation  of Material  Weaknesses - We believe the steps  described
below,  some of which have  already  been taken,  will  remediate  the  material
weaknesses described above.

..    We have  enhanced the  procedures  and  documentation  associated  with the
     reconciliation of our PCC Asbestos Litigation  liability in order to ensure
     that  all  components  are  included  in the  evaluation  process  and  are
     accounted for in accordance with generally accepted accounting principles.
..    We have augmented the resources in our Accounting  Services department that
     will enable us to have a stronger segregation of duties associated with the
     reconciliation of the PCC Asbestos  Litigation  liability account to ensure
     1) the analysis and  preparation  of the  reconciliation  and 2) a detailed
     review of this work is done by separate  individuals who have the requisite
     skill set and training.
..    We are in the process of updating our key controls  within the  Investments
     in Affiliates cycle to specifically  address 1) our ability to achieve full
     inclusion of all less than 100% owned entities in our  accounting  analysis
     of  Investments  in  Affiliates  and 2) to  ensure  proper  monitoring  and
     accounting for these entities.
..    We  are  in  the  process  of  improving  our   investments  in  affiliates
     reconciliation  procedures  and  documentation  in order to  ensure  1) the
     analysis and preparation of the  reconciliation and 2) a detailed review of
     the  reconciliation is done by separate  individuals who have the requisite
     skill set and training.

As  discussed  above,  since  March 31,  2006,  we are in the  process of making
improvements  to our  internal  control  over  financial  reporting  that have a
material effect,  or are reasonably  likely to materially  affect,  our internal
control  over  financial  reporting  and  anticipate  the  control  deficiencies
described above can be remediated on or before September 30, 2006.

(c) Changes in internal control over financial reporting

No changes in the Company's  internal control over financial  reporting occurred
during the quarter ending September 30, 2005 that have materially  affected,  or
are reasonably likely to materially  affect, the Company's internal control over
financial reporting.







                           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 September  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.  All Schwinger and Stevens related cases
have been resolved without monetary  contribution by Corning.  The complaints in
these matters were dismissed with prejudice by a court order dated January 2005.

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. The appeal was argued on July 27, 2005. 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.






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  44,000  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 reached  agreement  with the
representatives  of asbestos  claimants  for the  settlement  of all current and
future  asbestos  claims against us and Pittsburgh  Corning  Corporation  (PCC),
which might arise from PCC products or operations.  The proposed settlement,  if
the plan is approved and becomes  effective,  will require Corning to relinquish
its equity interest in PCC, contribute its equity interest in Pittsburgh Corning
Europe N.V.  (PCE), a Belgian  corporation,  and contribute 25 million shares of
Corning common stock.  Corning also agreed to make cash payments with a value of
$131  million,  in March  2003,  over six years from the  effective  date of the
settlement.  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 $392 million in the period  ending March
31,  2003 to reflect the  settlement  terms.  However,  the  asbestos  liability
requires adjustment to fair value based upon movements in Corning's common stock
price  prior to the  contribution  of the shares to the trust and changes in the
estimated fair value of the other components of the settlement offer.  Beginning
with the first quarter of 2003 and through September 30, 2005,  Corning recorded
total net  charges of $804  million  to  reflect  the  initial  settlement,  the
movement in Corning's  common  stock price since March 31, 2003,  and changes in
the estimated fair value of the other components of the settlement offer.






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. Briefing
will be  completed in the fourth  quarter of 2005.  A hearing for oral  argument
should set in the first half of 2006. 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  requested  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
denied the allegation of  infringement  and asserted that the patent is invalid.
On October 29, 2004,  the Tokyo District Court issued its ruling in favor of CCS
International on both non-infringement and patent invalidity.  Furukawa appealed
from this ruling to the Tokyo Court of  Appeals.  In the third  quarter of 2005,
Furukawa and CCS  International  reached a settlement  upon mutually  acceptable
terms,  including  cross licenses of certain  patents  relating to optical fiber
cable  products.  This  settlement  will  have no  material  adverse  impact  to
Corning's financial results.






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.  Corning and Eglasstrek have
also reached a settlement.  As a result,  agreed  judgments with respect to both
PicVue and Eglasstrek  have been entered by the District Court. In October 2005,
PicVue  and  Corning  announced  they had  amicably  resolved  and  settled  the
litigation, and the U.S. Attorney's Office announced arrest of a suspect accused
of misappropriating Corning proprietary  information.  This settlement will have
no material adverse impact to Corning's financial results.

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 counterclaim alleging patent infringement by CCS of the
same patent and seeking  unspecified  monetary  damages  and an  injunction.  In
September 2005, the parties amicably resolved the matter by signing a settlement
agreement, without material impact on Corning's financial statements.

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 third quarter of 2005:

Issuer Purchases of Equity Securities


------------------------------------------------------------------------------------------------------------------------------------
                                          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 (a)         Share (a)          Announced Plan (b)             Under the Plan (b)
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                          
July 1-31, 2005                           29,872             $17.99                    0                              $0
August 1-31, 2005                        305,210             $19.46                    0                              $0
September 1-30, 2005                       7,132             $20.76                    0                              $0
------------------------------------------------------------------------------------------------------------------------------------
Total                                    342,214             $19.36                    0                              $0
------------------------------------------------------------------------------------------------------------------------------------


(a)  This column  reflects the  following  transactions  during the fiscal third
     quarter of 2005: (i) the deemed surrender to us of 339,758 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 2,456 shares of common stock to satisfy tax  withholding
     obligations  in connection  with the vesting of restricted  stock issued to
     employees.

(b)  During the period  ended  September  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.








ITEM 6.  EXHIBITS

(a)  Exhibits

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

         12         Computation of Ratio of Earnings to Fixed Charges

        31.1        Certification  of Chief Executive  Officer  Pursuant to Rule
                    13a-14(a) under the Exchange Act

        31.2        Certification  of Chief Financial  Officer  Pursuant to Rule
                    13a-14(a) under the Exchange Act

         32         Certification Pursuant to 18 U.S.C. Section 1350










                                   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)






  May 9, 2006                            /s/ JAMES B. FLAWS
---------------               -----------------------------------------
     Date                                  James B. Flaws
                              Vice Chairman and Chief Financial Officer
                                    (Principal Financial Officer)




  May 9, 2006                          /s/ KATHERINE A. ASBECK
---------------               -----------------------------------------
     Date                                Katherine A. Asbeck
                                   Senior Vice President - Finance
                                    (Principal Accounting Officer)








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


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

     12             Computation of Ratio of Earnings to Fixed Charges

    31.1            Certification  of Chief Executive  Officer  Pursuant to Rule
                    13a-14(a) under the Exchange Act

    31.2            Certification  of Chief Financial  Officer  Pursuant to Rule
                    13a-14(a) under the Exchange Act

     32             Certification Pursuant to 18 U.S.C. Section 1350





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

                                                            Nine months ended
                                                           September 30, 2005
                                                               (Restated)
                                                           ------------------

Income before income taxes                                     $    295
Adjustments:
    Distributed income of equity investees                          216
    Fixed charges net of capitalized interest                       104
                                                               --------

Income before taxes and fixed charges, as adjusted             $    615
                                                               ========

Fixed charges:
   Interest expense (a)                                        $     84
   Portion of rent expense which represents an
     appropriate interest factor (b)                                 20
   Capitalized interest                                              21
                                                               --------

Total fixed charges                                                 125
Capitalized interest                                                (21)
                                                               --------

Total fixed charges, net of capitalized interest               $    104
                                                               ========

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

     CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302(A) OF

                         THE SARBANES-OXLEY ACT OF 2002

I, Wendell P. Weeks, certify that:

1.   I have  reviewed  this  amendment  to  quarterly  report on Form  10-Q/A of
     Corning Incorporated;

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 Securities  Exchange Act of 1934 Rules  13a-15(e) and 15d-15(e)) 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)   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

     c)   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; and

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 registrant's board of
     directors (or persons performing the equivalent functions):

     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
          control over financial reporting.


Date: May 9, 2006


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





                                                                    EXHIBIT 31.2

     CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302(A) OF

                         THE SARBANES-OXLEY ACT OF 2002

I, James B. Flaws, certify that:

1.   I have  reviewed  this  amendment  to  quarterly  report on Form  10-Q/A of
     Corning Incorporated;

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 Securities  Exchange Act of 1934 Rules  13a-15(e) and 15d-15(e)) 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)   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

     c)   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; and

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 registrant's board of
     directors (or persons performing the equivalent functions):

     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
          control over financial reporting.


Date: May 9, 2006


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





                                                                      EXHIBIT 32

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


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
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:

(1)  the amendment to Quarterly  Report of Corning  Incorporated  on Form 10-Q/A
     for the three-month period ended September 30, 2005 fully complies with the
     requirements  of Section 13(a) or 15(d) of the  Securities  Exchange Act of
     1934; and

(2)  that  information  contained  in such Form  10-Q/A  fairly  presents in all
     material  respects the  financial  condition  and results of  operations of
     Corning Incorporated.


Date: May 9, 2006



/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