FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, DC 20549

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

For the quarterly period ended                      June 30, 2002
                                   ---------------------------------------------

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

For the transition period from ___________to____________

                          Commission file number 1-3247



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


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


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


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

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

                        Yes   X                No ____
                            -----

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

951,747,751  shares of Corning's Common Stock, $0.50 Par Value, were outstanding
as of June 30, 2002.







                                      INDEX
                                      -----



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

Item 1.  Financial Statements
                                                                         Page
                                                                         ----

  Consolidated Statements of Income (Unaudited) for the three
     and six months ended June 30, 2002 and 2001                           3

  Consolidated Balance Sheets at June 30, 2002 (Unaudited),
     December 31, 2001 and June 30, 2001 (Unaudited)                       4

  Consolidated Statements of Cash Flows (Unaudited)
     for the six months ended June 30, 2002 and 2001                       5

  Notes to Consolidated Financial Statements (Unaudited)                   6


Item 2. Management's Discussion and Analysis of Financial
        Condition and Results of Operations                               18

Item 3. Quantitative and Qualitative Disclosures About Market Risk        32



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

Item 1. Legal Proceedings                                                 33

Item 6. Exhibits and Reports on Form 8-K                                  37


Signatures                                                                38


Exhibit 10    Agreement and Release between John W. Loose and
              Corning Incorporated dated April 12, 2002.                  39

Exhibit 12    Ratio of earnings to fixed charges for the
              six months ended June 30, 2002, and 2001                    49








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



                                                               For the three months ended          For the six months ended
                                                                        June 30,                           June 30,
                                                               --------------------------          --------------------------
                                                                   2002           2001                2002           2001
                                                                ---------       --------           ---------       --------

                                                                                                       
Net sales                                                       $     896       $  1,868           $   1,794       $  3,789
Cost of sales                                                         682          1,339               1,376          2,444
                                                                ---------       --------           ---------       --------

Gross margin                                                          214            529                 418          1,345

Operating expenses
    Selling, general and administrative expenses                      190            262                 380            532
    Research, development and engineering
      expenses                                                        132            171                 260            331
    Amortization of purchased intangibles                              11             10                  22             23
    Amortization of goodwill                                                         150                                293
    Restructuring, impairment and other charges                       494          4,772                 494          4,772
                                                                ---------       --------           ---------       --------

Operating loss                                                       (613)        (4,836)               (738)        (4,606)

Interest income                                                        10             11                  24             35
Interest expense                                                      (44)           (34)                (92)           (68)
Gain on repurchases of debt                                            68                                 68
Other expense, net                                                                   (12)                 (9)           (21)
                                                                ---------       --------           ---------       --------

Loss before income taxes                                             (579)        (4,871)               (747)        (4,660)
(Benefit) provision for income taxes                                 (178)           (77)               (220)            31
                                                                ---------       --------           ---------       --------

Loss before minority interest and
  equity earnings                                                    (401)        (4,794)               (527)        (4,691)
Minority interest in losses (earnings) of subsidiaries                  6             (7)                 12            (12)
Equity in earnings of associated companies                             25             46                  55             80
                                                                ---------       --------           ---------       --------

Net loss                                                        $    (370)      $ (4,755)          $    (460)      $ (4,623)
                                                                =========       ========           =========       ========

Basic and diluted loss per share                                $   (0.39)      $  (5.13)          $   (0.49)      $  (5.01)
                                                                =========       ========           =========       ========

Net loss adjusted for the impact of
  SFAS No. 142 in 2001                                          $    (370)      $ (4,652)          $    (460)      $ (4,384)
                                                                =========       ========           =========       ========
Basic and diluted loss per share
  adjusted for the impact of SFAS No. 142 in 2001               $   (0.39)      $  (5.02)          $   (0.49)      $  (4.75)
                                                                =========       ========           =========       ========
Dividends declared per common share                             $               $   0.06           $               $   0.12
                                                                =========       ========           =========       ========

Shares used in computing per share amounts for
  basic and diluted loss per share                                    948            926                 947            923
                                                                =========       ========           =========       ========


The accompanying notes are an integral part of these statements.







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

                                                                              Unaudited                                Unaudited
                                                                            June 30, 2002      December 31, 2001     June 30, 2001
                                                                            -------------      -----------------     -------------
                                                                                                              
ASSETS

Current assets:
   Cash and cash equivalents                                                 $     940             $   1,037           $     614
   Short-term investments, at fair value                                           383                 1,182                 697
                                                                             ---------             ---------           ---------
     Total cash and short-term investments                                       1,323                 2,219               1,311
   Trade accounts receivable, net of doubtful accounts and
     allowances - $63, $60 and $42                                                 605                   593               1,246
   Inventories                                                                     671                   725                 977
   Deferred income taxes                                                           400                   347                 308
   Other current assets                                                            333                   223                 236
                                                                             ---------             ---------           ---------

       Total current assets                                                      3,332                 4,107               4,078

Investments:
   Associated companies, at equity                                                 666                   636                 537
   Others, at cost or fair value                                                    74                   142                 190
                                                                             ---------             ---------           ---------
     Total investments                                                             740                   778                 727
Property, plant and equipment, at cost, net of accumulated
  depreciation - $3,302, $3,101 and $2,921                                       4,757                 5,097               5,301
Goodwill, net of accumulated amortization - $661, $661 and $583                  2,000                 1,937               1,874
Other intangible assets, net of accumulated amortization
  - $109, $90 and $75                                                              390                   352                 409
Other assets                                                                       667                   522                 262
                                                                             ---------             ---------           ---------

Total Assets                                                                 $  11,886             $  12,793           $  12,651
                                                                             =========             =========           =========

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
   Loans payable                                                             $      57             $     477           $     473
   Accounts payable                                                                310                   441                 512
   Other accrued liabilities                                                     1,052                 1,076                 910
                                                                             ---------             ---------           ---------

       Total current liabilities                                                 1,419                 1,994               1,895

Long-term debt                                                                   4,285                 4,461               3,855
Postretirement benefits other than pensions                                        614                   608                 600
Other liabilities                                                                  379                   190                 212
Commitments and contingencies (Note 11)
Minority interest in subsidiary companies                                          107                   119                 144
Convertible preferred stock                                                          7                     7                   8
Common shareholders' equity:
   Common stock, including excess over par value and other capital -
     Par value $0.50 per share; Shares authorized: 3.8 billion;
     Shares issued: 1.0 billion                                                 10,028                10,044               9,774
   Accumulated deficit                                                          (4,070)               (3,610)             (2,734)
   Cost of 74 million, 79 million and 77 million
     shares of common stock in treasury                                           (775)                 (827)               (804)
   Accumulated other comprehensive loss                                           (108)                 (193)               (299)
                                                                             ---------             ---------           ---------
       Total common shareholders' equity                                         5,075                 5,414               5,937
                                                                             ---------             ---------           ---------

Total Liabilities and Shareholders' Equity                                   $  11,886             $  12,793           $  12,651
                                                                             =========             =========           =========


The accompanying notes are an integral part of these statements.







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

                                                                                 For the six months ended
                                                                                         June 30,
                                                                                --------------------------
                                                                                   2002           2001
                                                                                 --------       ---------

                                                                                          
Cash flows from operating activities:
   Net loss                                                                      $   (460)      $  (4,623)
   Adjustments to reconcile net loss to net cash
     (used in) provided by operating activities:
      Amortization of purchased intangibles                                            22              23
      Amortization of goodwill                                                                        293
      Depreciation                                                                    329             318
      Restructuring, impairment and other charges                                     494           4,772
      Inventory write-down                                                                            273
      Gain on repurchases of debt                                                     (68)
      Stock compensation charges                                                        2              27
      Equity in earnings of associated companies less than
        (in excess of) dividends received                                              28             (23)
      Minority interest, net of dividends paid                                        (12)              5
      Deferred tax benefit                                                           (107)           (122)
      Tax benefit on stock options                                                                     25
      Interest expense on convertible debentures                                       21              20
      Restructuring payments                                                         (116)             (5)
      Changes in certain working capital items                                       (201)           (306)
      Other, net                                                                      (80)             13
                                                                                 --------       ---------
Net cash (used in) provided by operating activities                                  (148)            690
                                                                                 --------       ---------

Cash flows from investing activities:
   Capital expenditures                                                              (213)         (1,155)
   Acquisitions of businesses, net of cash acquired                                                   (66)
   Net proceeds from sale or disposal of assets                                        36              27
   Net increase in long-term investments and other
     long-term assets                                                                  (9)            (90)
   Short-term investments - acquisitions                                             (847)           (232)
   Short-term investments - liquidations                                            1,648             250
   Other, net                                                                          (2)
                                                                                 --------       ---------
Net cash provided by (used in) investing activities                                   613          (1,266)
                                                                                 --------       ---------

Cash flows from financing activities:
   Net (repayments) borrowings of short-term debt                                    (474)            263
   Proceeds from issuance of long-term debt                                            11              68
   Repayments of long-term debt                                                      (155)            (93)
   Proceeds from issuance of common stock                                              33              19
   Redemption of common stock for income tax withholding                                              (19)
   Dividends paid                                                                                    (112)
                                                                                 --------       ---------
Net cash used in financing activities                                                (585)            126
                                                                                 --------       ---------

Effect of exchange rates on cash                                                       23              (6)
                                                                                 --------       ---------
Cash used in continuing operations                                                    (97)           (456)
                                                                                 --------       ---------
Cash used in discontinued operations                                                                   (9)
                                                                                 --------       ---------
Net decrease in cash and cash equivalents                                             (97)           (465)
Cash and cash equivalents at beginning of year                                      1,037           1,079
                                                                                 --------       ---------

Cash and cash equivalents at end of period                                       $    940       $     614
                                                                                 ========       =========


The accompanying notes are an integral part of these statements.





                  CORNING INCORPORATED AND SUBSIDIARY COMPANIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (Unaudited; in millions except per share amounts)


1.   Basis of Presentation

General
-------
Corning  Incorporated  is a world-leading  provider of optical fiber,  cable and
photonic products for the  telecommunications  industry;  high-performance glass
for computers,  television screens and other information  display  applications;
advanced  optical  materials for the  semiconductor  industry and the scientific
community;  ceramic substrates for the automotive industry;  specialized polymer
products  for  biotechnology  applications;  and other  advanced  materials  and
technologies.

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
Consolidated  Financial  Statements have been prepared pursuant to the rules and
regulations  of the Securities  and Exchange  Commission and in accordance  with
accounting  principles generally accepted in the United States of America (GAAP)
for interim financial information.

GAAP  requires  management  to make certain  estimates  and  judgments  that are
reflected in the reported amounts of assets, liabilities,  revenues and expenses
and also in the  disclosure of contingent  liabilities.  The actual  results may
differ from the estimates. Management exercises judgment and makes estimates for
allowance of bad debts,  inventory  obsolescence,  product warranty,  in-process
research and development, restructuring charges, asset and goodwill impairments,
depreciation, pension and post-retirement benefits, income taxes, litigation and
other  contingencies.  Management  reviews these estimates on a systematic basis
and, if necessary,  any material  adjustments are reflected in the  consolidated
financial statements in the period that they are deemed necessary.

The results for interim periods are not necessarily indicative results which may
be expected for any other interim  period,  or for the full year.  These interim
Consolidated  Financial  Statements should be read in conjunction with Corning's
Annual Report on Form 10-K/A for the year ended December 31, 2001.

Certain amounts for 2001 were reclassified to conform with 2002 classifications.

Goodwill and Other Intangible Assets
------------------------------------
In June 2001, the Financial  Accounting  Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 142, "Goodwill and Other Intangible
Assets." Among other provisions,  goodwill is no longer amortized but is subject
to impairment  tests at least annually.  Corning adopted SFAS No. 142 on January
1, 2002.

Corning  completed  its initial  impairment  review during the first quarter and
concluded a  transitional  impairment  charge from the  adoption of the standard
would not be required.  On a prospective basis,  Corning has selected the fourth
quarter to conduct annual  impairment  tests. The outcome of the impairment test
is primarily  dependent upon the fair value of the reporting  units. The current
business  conditions in the  telecommunications  industry are depressed.  Should
these  conditions  be  prolonged  or  deteriorate,  the fair value of  Corning's
telecommunications  reporting  unit could be lower in future  periods.  As such,
management cannot provide assurance that future impairment tests will not result
in a charge to earnings.






The following table presents a reconciliation  of reported net loss and loss per
share to  adjusted  net loss and loss per share,  as if SFAS No. 142 had been in
effect as follows:



                                                                 For the three months ended            For the six months ended
(In millions, except per share amounts)                                 June 30, 2001                        June 30, 2001
----------------------------------------------------------------------------------------------------------------------------------

                                                                                                        
Reported net loss                                                        $  (4,755)                           $  (4,623)
Addback:  Amortization of goodwill, net of income taxes                        103                                  239
                                                                         ---------                            ---------
Adjusted net loss                                                        $  (4,652)                           $  (4,384)
                                                                         =========                            =========

Reported loss per share - basic                                          $   (5.13)                           $   (5.01)
Addback:  Amortization of goodwill, net of income taxes                       0.11                                 0.26
                                                                         ---------                            ---------
Adjusted loss per share - basic                                          $   (5.02)                           $   (4.75)
                                                                         =========                            =========

Reported loss per share - diluted                                        $   (5.13)                           $   (5.01)
Addback:  Amortization of goodwill, net of income taxes                       0.11                                 0.26
                                                                         ---------                            ---------
Adjusted loss per share - diluted                                        $   (5.02)                           $   (4.75)
                                                                         =========                            =========


The changes in the carrying amount of goodwill for the six months ended June 30,
2002, by segment was as follows (in millions):



                                      Telecom-         Advanced         Information
                                     munications       Materials          Display          Corporate (a)       Total
                                     -----------       ---------          -------          ---------           -----

                                                                                              
Balance at January 1, 2002           $  1,768          $    150           $    15           $    4           $   1,937
Foreign currency translation               54                                                   (1)                 53
Reclassification                           12                                                                       12
Divestitures                               (3)                                                                      (3)
Acquisition                                 1                                                                        1
                                     --------          --------           -------           ------           ---------
Balance at June 30, 2002             $  1,832          $    150           $    15           $    3           $   2,000
                                     ========          ========           =======           ======           =========


(a)  Included in non-segment  assets in SFAS No. 131 reconciliation in Corning's
     2001 Form 10-K/A.

Intangible assets totaled $390 million, net of accumulated  amortization of $109
million at June 30,  2002.  Of this  amount  $55  million  related  to  deferred
financing  costs and $81 million  represented  intangible  pension  assets.  The
remaining   identified   intangible   assets  are   primarily   related  to  the
Telecommunications Segment and were comprised of the following (in millions):

                                                    Accumulated
                                      Gross        Amortization          Net
                                    ---------      ------------      ---------
Amortized intangible assets:
     Patents and trademarks         $     252        $      55       $     197
     Non competition agreements           104               51              53
     Other                                  7                3               4
                                    ---------        ---------       ---------
         Total                      $     363        $     109       $     254
                                    =========        =========       =========

Amortization expense related to these intangible assets is expected to be in the
range of approximately $40 million to $45 million annually from 2002 to 2006.






In August 2001, the FASB issued SFAS No. 144,  "Accounting for the Impairment or
Disposal  of  Long-Lived   Assets."  This  standard  supercedes  SFAS  No.  121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be  Disposed  Of." The  standard  retains  the  previously  existing  accounting
requirements  related to the  recognition  and  measurement of the impairment of
long-lived   assets  to  be  held  and  used  while  expanding  the  measurement
requirements  of  long-lived  assets  to be  disposed  of  by  sale  to  include
discontinued  operations.  It also expands on the previously  existing reporting
requirements  for  discontinued  operations  to include a component of an entity
that either has been  disposed  of or is  classified  as held for sale.  Corning
adopted  SFAS No. 144 on January 1, 2002.  The  adoption of SFAS No. 144 did not
have a material  impact on its  consolidated  financial  position  or results of
operations.

In April  2002,  the FASB  issued  SFAS No.  145,  which  rescinds  SFAS No.  4,
"Reporting  Gains  and  Losses  from  Extinguishment  of  Debt,"  SFAS  No.  44,
"Accounting  for  Intangible   Assets  of  Motor  Carriers"  and  SFAS  No.  64,
"Extinguishments  of Debt Made to Satisfy  Sinking-Fund  Requirements and amends
SFAS No. 13,  "Accounting  for Leases." This  statement  updates,  clarifies and
simplifies  existing accounting  pronouncements.  As a result of rescinding SFAS
No. 4 and SFAS No. 64, the  criteria in  Accounting  Principles  Bulletin No. 30
will be used to classify gains and losses from  extinguishment of debt.  Corning
adopted the reporting  guidance of SFAS No. 145 in the second quarter of 2002 in
its  accounting  for  repurchases  and  retirement  of  debt.  See Note 4 to the
Consolidated Financial Statements. The remaining provisions of SFAS No. 145 will
be adopted by Corning in fiscal year 2003.  Corning does not expect the adoption
of the  remaining  provisions  to have a  material  impact  on its  consolidated
financial position or results of operations.

New Accounting Standards
------------------------
In June 2001,  the FASB issued SFAS No. 143,  "Accounting  for Asset  Retirement
Obligations."  This standard  addresses  financial  accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs. Corning is required to implement SFAS No. 143
on January 1, 2003.  Corning  does not expect  this  standard to have a material
impact on its consolidated financial position or results of operations.

2.   Operating Segments

Corning's reportable operating segments consist of Telecommunications,  Advanced
Materials  and  Information  Display.  Corning  includes  the earnings of equity
affiliates  that are closely  associated  with Corning's  operating  segments in
segment  net  income.  In the  second  quarter  of  2002,  Corning  revised  its
definition of segment net income. Prior to the second quarter, Corning disclosed
restructuring  and  impairment   charges  by  segment  but  excluded  this  from
quantitative  segment  results.  These charges have been included in segment net
income  and  historical  periods  have  been  conformed  to  this  presentation.
Information about the performance of Corning's three operating  segments for the
second quarter and six months of 2002 and 2001 is presented below. These amounts
exclude revenues,  expenses and equity earnings not specifically identifiable to
segments.






Corning  prepared the financial  results for its three  operating  segments on a
basis that is consistent with the manner in which Corning management  internally
disaggregates  financial  information  to assist in  making  internal  operating
decisions. Corning has allocated some common expenses among segments differently
than it would for stand alone financial  information prepared in accordance with
GAAP.  Segment  net income may not be  consistent  with  measures  used by other
companies.



                                                                    Three months ended              Six months ended
                                                                         June 30,                       June 30,
                                                                  ----------------------         ----------------------
                                                                     2002         2001             2002          2001
                                                                  ---------     --------         ---------    ---------
                                                                                                  
Telecommunications
Net sales                                                         $     437     $  1,393         $     902    $   2,826
Research, development and engineering expenses                    $      86     $    134         $     172    $     256
Interest expense                                                  $      25     $     23         $      57    $      48
Segment (loss) earnings before equity (losses)
  earnings and restructuring, impairment
  and other charges                                               $    (139)    $     (7)        $    (277)   $     170
    Equity in (losses) earnings of associated companies                  (3)           8                (7)          11
                                                                  ---------     --------         ---------    ---------
Segment (loss) earnings before restructuring,
  impairment and other charges                                         (142)           1              (284)         181
Restructuring, impairment and other charges, net of tax                (259)      (4,726)             (259)      (4,726)
                                                                  ---------     --------         ---------    ---------
Segment net loss                                                  $    (401)    $ (4,725)        $    (543)   $  (4,545)
                                                                  =========     ========         =========    =========

Advanced Materials
Net sales                                                         $     242     $    251         $     475    $     533
Research, development and engineering expenses                    $      32     $     28         $      63    $      56
Interest expense                                                  $       8     $      5         $      16    $      10
Segment earnings before equity earnings and
  restructuring charges                                           $       9     $     11         $      10    $      37
    Equity in earnings of associated companies                           12            7                20           13
                                                                  ---------     --------         ---------    ---------
Segment earnings before restructuring charges                            21           18                30           50
Restructuring charges, net of tax                                        (1)                            (1)
                                                                  ---------     --------         ---------    ---------
Segment net income                                                $      20     $     18         $      29    $      50
                                                                  =========     ========         =========    =========

Information Display
Net sales                                                         $     212     $    218         $     407    $     419
Research, development and engineering expenses                    $      14     $      9         $      25    $      19
Interest expense                                                  $       9     $      6         $      17    $      10
Segment earnings before minority interest and
  equity earnings                                                 $       8     $     25         $      11    $      46
    Minority interest in (losses) earnings of subsidiaries                5           (7)               11          (12)
    Equity in earnings of associated companies                           29           29                54           54
                                                                  ---------     --------         ---------    ---------
Segment net income                                                $      42     $     47         $      76    $      88
                                                                  =========     ========         =========    =========

Total segments
Net sales                                                         $     891     $  1,862         $   1,784    $   3,778
Research, development and engineering expenses                    $     132     $    171         $     260    $     331
Interest expense                                                  $      42     $     34         $      90    $      68
Segment (loss) earnings before minority interest,
  equity earnings and restructuring, impairment
  and other charges                                               $    (122)    $     29         $    (256)   $     253
    Minority interest in losses (earnings) of subsidiaries                5           (7)               11          (12)
    Equity in earnings of associated companies                           38           44                67           78
                                                                  ---------     --------         ---------    ---------
Segment (loss) earnings before restructuring,
  impairment and other charges                                          (79)          66              (178)         319
Restructuring, impairment and other charges, net of tax                (260)      (4,726)             (260)      (4,726)
                                                                  ---------     --------         ---------    ---------
Segment net loss                                                  $    (339)    $ (4,660)        $    (438)   $  (4,407)
                                                                  =========     ========         =========    =========







A  reconciliation  of the totals  reported  for the  operating  segments  to the
applicable line items in the consolidated financial statements is as follows (in
millions):



                                                                         Three months ended             Six months ended
                                                                              June 30,                      June 30,
                                                                       ----------------------        ----------------------
                                                                         2002         2001              2002         2001
                                                                       ---------    ---------        ---------     --------

                                                                                                       
Net sales
       Total segment net sales                                         $     891    $   1,862        $   1,784     $  3,778
       Non-segment net sales (a)                                               5            6               10           11
                                                                       ---------    ---------        ---------     --------

           Total net sales                                             $     896    $   1,868        $   1,794     $  3,789
                                                                       =========    =========        =========     ========


Net loss
       Total segment net loss (b)                                      $    (339)   $  (4,660)       $    (438)    $ (4,407)
           Unallocated items:
       Non-segment loss and other (a)                                         (1)          (2)              (2)          (3)
       Amortization of goodwill (c)                                                      (150)                         (293)
       Non-segment restructuring, impairment and
         other charges (d)                                                  (127)                         (127)
Interest income (e)                                                           10           11               24           35
       Gain on repurchases of debt                                            68                            68
       Income tax (f)                                                         16           44               11           43
       Minority interest                                                       1                             1
       Equity in earnings of associated companies (a)                          2            2                3            2
                                                                       ---------    ---------        ---------     --------

           Net loss                                                    $    (370)   $  (4,755)       $    (460)    $ (4,623)
                                                                       =========    =========        =========     ========


(a)  Includes amounts derived from corporate investments and activities.
(b)  Includes royalty, interest and dividend income.
(c)  Amortization  of  goodwill  relates  primarily  to  the  Telecommunications
     Segment.
(d)  Amount includes pension termination and postretirement  benefit curtailment
     charges of $30 million  recorded in the second quarter of 2002. The balance
     of the  charge  relates  to  restructuring  and  impairment  charges in the
     corporate research and administrative staff organizations.
(e)  Corporate interest income is not allocated to reportable segments.
(f)  Includes tax associated with unallocated items.

3.   Restructuring, Impairment and Other Charges

2002 Restructuring Actions
--------------------------

During the second quarter,  Corning  undertook  actions to reduce its costs. The
intent to do so was announced in April 2002. At that time, it was estimated that
restructuring,  fixed asset  impairments,  and impairments of investments  could
total approximately $600 million and would be recorded over the second and third
quarters.

Actions approved and initiated in the second quarter include the following:

..    permanent  abandonment  of  certain  construction  projects  that  had been
     stopped   in  2001  in  the   fiber   and   cable   business   within   the
     Telecommunications Segment,
..    closure   of   minor   manufacturing    facilities,    primarily   in   the
     Telecommunications Segment,
..    closure and consolidation of research facilities,
..    elimination  of  positions  worldwide  through  voluntary  and  involuntary
     programs, and
..    divestiture  of a portion of the  controls and  connectors  business in the
     Telecommunications Segment.

In addition,  Corning  impaired  cost based  investments  in a number of private
telecommunications companies.






Certain  of  the  costs   associated   with  these   activities   (estimated  at
approximately  $125  million  to $150  million)  will be  recorded  in the third
quarter as all  conditions  for  recognition  had not been satisfied at June 30,
2002.  These third quarter charges relate primarily to severance and fixed asset
write-offs  pertaining to facility  closures outside the United States and early
retirement programs. Corning expects to pay approximately one-third of the total
charge for the second and third quarter in cash.

The charges recorded in the second quarter are summarized in the following table
and described in greater detail below:

Employee related costs                              $   192
Exit costs                                               12
Adjustment to 2001 program reserves                      (5)
                                                    -------
       Subtotal - restructuring charges                 199
                                                    -------
Fixed asset impairments                                 224
Adjustment to 2001 program reserves                      (5)
                                                    -------
       Subtotal - fixed asset impairments               219
                                                    -------
Cost based investment write-offs                         60
Loss on disposal                                         16
                                                    -------
       Total pre-tax charges                            494
Tax benefit                                             166
                                                    -------
       Total after-tax charges                      $   328
                                                    =======

In  addition,  equity  earnings  include  a $14  million  charge  to  impair  an
investment in an international cabling venture.

The  following  table  illustrates  the charge for  restructuring  actions as it
relates to Corning's operating segments:



------------------------------------------------------------------------------------------------------------------------------------
Charges for restructuring actions
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                              Corporate
                                                                                                              Functions
                                                            Telecom-          Advanced       Information      Including       Total
                                                           munications        Materials        Display        Research       Charges
------------------------------------------------------------------------------------------------------------------------------------

                                                                                                              
Net pre-tax charges for restructuring actions               $  364            $    2           $   1          $   127        $  494
                                                            =======================================================================


     Restructuring Charges
     ---------------------
     The second  quarter  restructuring  charge of $204  million  includes  $192
     million of employee separation costs (including  curtailment losses related
     to pension and  postretirement  health care plans) and $12 million in other
     exit  costs  (principally  lease  termination  and  contract   cancellation
     payments).  The charge  entails  the  elimination  of  approximately  3,600
     positions  in the  Telecommunications  Segment and  corporate  research and
     administrative  staffs  organizations.  Employees have been informed of the
     restructuring  initiatives and benefits  available to them under applicable
     benefit  plans.  These  benefits  include  involuntary  separation,   early
     retirement and social programs.

     The  following  table  illustrates  the  headcount  reduction  amongst U.S.
     Hourly, U.S. Salaried and Non-U.S. positions for 2002 actions:



     -------------------------------------------------------------------------------------------------------------------------------
     Headcount reduction
     -------------------------------------------------------------------------------------------------------------------------------
                                                          U.S. Hourly       U.S. Salaried     Non-U.S.      Total
                                                          -------------------------------------------------------

                                                                                               
     Second quarter charge                                      850            1,800             950         3,600
     Anticipated third quarter charge                           175              225             400           800
                                                            -------          -------         -------       -------
         Total                                                1,025            2,025           1,350         4,400
                                                            =======          =======         =======       =======

     Separated at June 30, 2002                                 150            1,225             225         1,600







     Impairment of Plant and Equipment
     ---------------------------------
     Corning has evaluated the carrying  value of certain  long-lived  assets in
     the  businesses  taking  restructuring  actions.  The  carrying  value of a
     long-lived  asset is considered  impaired when the  anticipated  separately
     identifiable  undiscounted  cash  flows  from that  asset are less than the
     carrying value of the asset.  The impairment  charges were determined based
     on the amount by which the carrying value exceeded the fair market value of
     the asset.  Corning  recorded  $224 million to impair  plant and  equipment
     relating to facilities  to be shutdown or disposed,  primarily in the fiber
     and cable business, the photonic technologies business and certain research
     facilities.  Of this total  charge,  $107  million  pertains  to  abandoned
     construction projects in the fiber and cable business, primarily the latest
     expansion in Concord, NC and Oklahoma City, OK. The impairment charges were
     determined  based on the amount by which the  carrying  value  exceeded the
     fair market value of the asset.

     A  significant  portion of the assets  impaired was recently  acquired,  or
     built in connection  with capacity  expansions  in  anticipation  of future
     demand.  Most of the impaired  facilities are currently available for sale,
     others will be  demolished  or abandoned.  The impaired  equipment  will be
     auctioned, sold, disposed or abandoned during 2002.

     Loss on Divestiture
     -------------------
     In May 2002,  Corning  completed the sale of its appliance  controls  group
     which  was  included  in  the  controls  and  connectors  business  in  the
     Telecommunications Segment. In the second quarter of 2002, Corning received
     cash of $24 million and note  proceeds of $6 million and recorded a loss on
     the sale of approximately $16 million ($10 million after-tax).

     Impairment of Cost Investments
     ------------------------------
     In the second quarter, Corning recorded a $60 million charge for other than
     temporary  declines in certain cost  investments in the  Telecommunications
     Segment. These investments have been written off.

2001 Restructuring Actions
--------------------------

In July and October of 2001, Corning announced a series of restructuring actions
in  response  to  significant  deteriorating  business  conditions  which  began
initially in its Telecommunications  Segment, but eventually spread to its other
businesses  as the year  progressed.  The  following  actions were  approved and
undertaken in 2001:

..    closure of seven major  manufacturing  facilities and the  consolidation of
     several  smaller  facilities,   primarily  in  the  Telecommunications  and
     Advanced Materials Segments,
..    discontinuation  of  its  initiative  in  Corning   Microarray   Technology
     products, part of Corning's life sciences business, and
..    elimination  of  approximately  12,000  positions  affecting  all operating
     segments, but especially impacting the photonic technologies,  hardware and
     equipment and the optical fiber and cable businesses.  This action included
     a selective  voluntary early retirement program for certain employees along
     with involuntary separations.

These actions  resulted in a pre-tax charge  totaling $961 million ($590 million
after-tax  and minority  interest)  for the year ended  December  31, 2001.  The
charge  includes  restructuring  costs of $419  million and $542 million for the
impairment of plant and equipment.  Approximately  one third of the total charge
was expected to be paid in cash.  As of June 30, 2002,  approximately  11,600 of
the 12,000  employees had been separated  under the plans.  Corning  expects the
remaining  400  employees  to  be  separated  by  December  31,  2002.   Certain
obligations of the plans will be paid in 2003 and beyond.






The  following  table  illustrates  the  charges,  credits  and  balances of the
restructuring reserves as of June 30, 2002:



(In millions)
------------------------------------------------------------------------------------------------------------------------------------
                                                                             Net                          Cash
                                                         December 31,     charges/        Non-cash      payments        June 30,
                                                             2001          credits         charges       in 2002          2002
------------------------------------------------------------------------------------------------------------------------------------

                                                                                                        
Restructuring reserve:
Employee related costs                                    $    198       $     187 (a)   $      30      $    105       $     250
Other charges                                                   78              12                            11              79
                                                          ----------------------------------------------------------------------
Total restructuring reserve                               $    276       $     199       $      30      $    116       $     329
                                                          ----------------------------------------------------------------------

Impairment of long-lived assets:
Assets held for disposal                                                 $     235 (b)   $     235
Cost investments                                                                60              60
                                                                         -------------------------
     Total impairment charges                                            $     295       $     295
                                                                         -------------------------

Total restructuring and impairment
  charges and credits                                                    $     494
                                                                         =========


(a)  Amount is net of $5 million adjustment in employee related costs reflecting
     the difference between estimated and actual costs.
(b)  Amount is net of $5 million  adjustment to assumed  salvage values on asset
     disposals.

4.   Gain on Repurchases and Retirement of Debt

During the second  quarter of 2002,  Corning  purchased and retired a portion of
its zero coupon  convertible  debentures due November 8, 2015,  with an accreted
value of $220  million in exchange  for cash of $148 million in a series of open
market purchases.  Corning recorded a gain of $68 million on these transactions,
net of the write-off of the  unamortized  issuance costs.  Corning  recorded the
gain on  repurchases  as a component of income from  continuing  operations,  as
permitted by SFAS No. 145. The debentures may be put back to Corning on November
8, 2005.  Corning has the option of settling  this  obligation  in cash,  common
stock, or a combination of both.

5.   Inventories

Inventories  shown on the  accompanying  balance  sheets were  comprised  of the
following:

                                  June 30,        December 31,        June 30,
                                    2002              2001              2001
                                  ---------       ------------        --------
Finished goods                    $     257        $     251           $  310
Work in process                         134              153              243
Raw materials and accessories           170              210              308
Supplies and packing materials          110              111              116
                                  ---------        ---------           ------
Total inventories                 $     671        $     725           $  977
                                  =========        =========           ======

6.   Income Taxes

Corning's  effective income tax benefit rate for the three and six month periods
ended June 30, 2002, was 30.7% and 29.5%, respectively.  The tax benefit rate in
the second quarter of 2002 was impacted by specific tax benefit calculations for
restructuring, impairment and other charges and the gain on repurchases of debt.
The effective benefit rate without  consideration of these items was 25% in both
2002 periods.  The effective tax benefit rate in the quarter and year to date is
lower  than the U.S.  statutory  income  tax  rate of 35% due to the  impact  of
unusable tax credits and nondeductible expenses and losses.






Federal tax  legislation  passed early in 2002 extended the net  operating  loss
carryback period from two to five years. Corning anticipates incurring a federal
tax net  operating  loss for 2002 and this  change in the tax  legislation  will
allow Corning to carryback the net operating  loss to open tax years and claim a
tax  refund.  Current  assets at June 30,  2002,  include a  receivable  of $135
million as a result of Corning availing itself of this opportunity.

The  effective  tax  (benefit)  rate for the three and six months ended June 30,
2001,  was 1.6% and  (0.7)%.  These  tax  rates  are  much  lower  than the U.S.
statutory  income tax rate  primarily due to non-tax  deductible  impairment and
amortization of acquired intangibles and goodwill.

7.   Comprehensive Loss

Comprehensive  loss,  net of tax, for the second quarter and first six months of
2002 and 2001 is as follows:

                                     For the three months    For the six months
                                        ended June 30,          ended June 30,
                                     --------------------    ------------------
                                       2002      2001         2002       2001
                                     -------  ---------      -------  --------

Net loss                             $ (370)  $ (4,755)      $ (460)  $ (4,623)
Other comprehensive income (loss)       110        (65)          85       (172)
                                     ------   --------       ------   --------

Total comprehensive loss             $ (260)  $ (4,820)      $ (375)  $ (4,795)
                                     ======   ========       ======   ========

8.   Pensions

As a result  of  restructuring  activities  undertaken  in the  second  quarter,
Corning  incurred a curtailment  event requiring a remeasurement  of its pension
obligation  at June  30,  2002.  The  provisions  of  SFAS  No.  87,  "Employers
Accounting  for  Pensions"  require  Corning  to  record an  additional  minimum
liability of $180 million at June 30, 2002. This liability represents the amount
by which the accumulated  benefit  obligation exceeds the sum of the fair market
value of plan assets and accrued  amounts  previously  recorded.  The additional
liability  may be  offset by an  intangible  asset to the  extent of  previously
unrecognized prior service cost. The intangible asset of $81 million at June 30,
2002, is included on the line item  entitled  "Other  intangible  assets" in the
Consolidated Balance Sheet. The remaining amount of $66 million is recorded as a
component  of  stockholders'  equity and is net of related  tax  benefits of $33
million,  on the line item titled  "Accumulated other comprehensive loss" in the
Consolidated  Balance Sheet at June 30, 2002, and in "Other comprehensive income
(loss)."

9.   Supplementary Statement of Cash Flows Data

Supplemental disclosure of cash flow information is as follows (in millions):

                                                         For the six months
                                                           ended June 30,
                                                     ------------------------
                                                        2002           2001
                                                     ---------      ---------

Changes in certain working capital items:
   Trade accounts receivable                         $     10       $     10
   Inventories                                             27           (231)
   Other current assets                                   (56)           124
   Accounts payable and other current liabilities,
      net of restructuring payments                      (182)          (209)
                                                     --------       --------
   Total                                             $   (201)      $   (306)
                                                     ========       ========






10.  Loss Per Common Share

Basic and diluted  loss per common share is  calculated  by dividing net loss by
the weighted average number of common shares outstanding during the period.

The potential  common shares  excluded from the  calculation of diluted loss per
share  because  their  effect  would be  anti-dilutive  and the  amount of stock
options  excluded from the  calculation  of diluted loss per share because their
exercise price was greater than the average market price of the common shares of
the periods presented is as follows: (in millions)



                                                                 For the three months                For the six months
                                                                    ended June 30,                      ended June 30
                                                              --------------------------         --------------------------
                                                                 2002            2001                2002           2001
                                                              -----------    -----------         -----------    -----------

                                                                                                    
Potential common shares excluded from the
  calculation of diluted loss per share:
     Stock options                                                                   7                                 10
     Convertible preferred stock                                      1              1                   1              1
     Subordinated notes                                               6              6                   6              6
     Zero coupon convertible debentures                              23             23                  23             23
     3.5% convertible debentures                                     69                                 69
                                                              ---------      ---------           ---------      ---------
     Total                                                           99             37                  99             40
                                                              =========      =========           =========      =========

Stock options excluded from the calculation of diluted
  loss per share because the exercise
  price was greater than the average
  market price of the common shares                                  86             49                  79             43
                                                              =========      =========           =========      =========


Common  dividends of $56 million and $112 million,  or $0.06 and $0.12 per share
were declared in the second quarter and six months of 2001.

11.  Commitments and Contingencies

From time to time, Corning is subject to uncertainties and litigation and is not
always able to predict the outcome of these items with assurance.  Various legal
actions,  claims and proceedings are pending  against  Corning,  including those
arising out of alleged product defects, shareholder matters, product warranties,
patents, asbestos and environmental matters. These issues are discussed fully in
Part II,  Item 1. Legal  Proceedings  of this Form 10-Q.  A  significant  matter
involves  Pittsburgh  Corning  Corporation  (PCC),  a 50% owned joint venture of
Corning and is discussed below.

Pittsburgh Corning Corporation
------------------------------
Background:
Corning and PPG  Industries,  Inc.  (PPG) each own 50% of the  capital  stock of
Pittsburgh  Corning   Corporation  (PCC).  PCC  and  several  other  defendants,
including PPG and Corning, 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 United  States  Bankruptcy  Court for the
Western District of Pennsylvania. As of the bankruptcy filing, PCC had in excess
of 140,000 open claims and now has in excess of 240,000 open claims.

Status of Litigation and Current Events:
In the  bankruptcy  court,  PCC in April 2000 obtained a preliminary  injunction
against the  prosecution of asbestos  actions  against its two  shareholders  to
afford  the  parties  a  period  of time  (the  Injunction  Period)  in which to
negotiate a plan of reorganization for PCC.






On May 14, 2002,  PPG announced  that it had agreed with several other  parties,
including certain of its insurance  carriers and  representatives of current and
future asbestos claimants,  on the terms of a settlement arrangement relating to
asbestos claims against PPG and PCC. This settlement  would be incorporated in a
plan of reorganization  for PCC, and would be subject to a favorable vote by 75%
of the asbestos claimants voting on the PCC reorganization plan, and approval by
the  Bankruptcy   Court.   According  to  its   announcement,   PPG  would  make
contributions to a trust under the reorganization plan consisting of:
..    cash payments by PPG's  participating  insurance  carriers of approximately
     $1.7 billion over a 21 year period;
..    the  assignment  of rights to  certain  proceeds  of  policies  by  certain
     insurance carriers not participating in the settlement;
..    PPG's shares in PCC and Pittsburgh Corning Europe, a Belgian corporation;
..    1,388,889 shares of PPG's common stock; and
..    cash payments from PPG of approximately $998 million over 21 years.
PPG announced on July 18, 2002,  that it recorded a charge in its second quarter
of $495 million after-tax related to this settlement.

The Injunction Period has been extended as to Corning until July 31, 2002. Under
the terms of the Bankruptcy  Court's Order,  Corning will have 90 days following
expiration of the Injunction Period to seek removal and transfer of stayed cases
that have not been resolved  through a plan of  reorganization.  At the time PCC
filed for bankruptcy protection,  there were approximately12,400  claims pending
against  Corning  alleging  various  theories of liability  based on exposure to
PCC's asbestos  products.  Although the outcome of litigation and the bankruptcy
case is uncertain, management believes that the separate corporate status of PCC
will  continue to be upheld and that  Corning has strong  legal  defenses to any
claims of direct liability arising from PCC's asbestos products.

After PPG announced its settlement,  negotiations between representatives of the
asbestos  claimants  and Corning  became more  intensive but failed to produce a
settlement.  In Corning's negotiations with the asbestos claimants, the range of
negotiations  has been framed by demands  translating  into  approximately  $400
million to $500 million in net present value (inclusive of insurance),  which is
significantly   lower  than  that  reflected  in  the  PPG   settlement.   These
negotiations  have been  difficult,  and no  assurances  can be  offered  that a
settlement can be concluded within this range.

Based on negotiations to date, management believes that a settlement (if one can
be reached) would probably include some  combination of the following  elements:
cash  payments  by Corning  over time into a trust;  contribution  of  Corning's
shares in PCC and Pittsburgh  Corning  Europe and common shares of Corning;  and
insurance through cash payments or assignments of certain rights.  However,  the
structure of a settlement  has not been agreed and  management  can not estimate
the  likelihood  that any  settlement  will  emerge from  negotiations  with the
claimants or Corning's insurers, or the probability that Corning will be able to
secure a release through PCC's plan of reorganization  upon terms and conditions
satisfactory to Corning.

At this time,  it appears more likely than not that  Corning  will  litigate the
asbestos cases, but will continue to explore a settlement through the bankruptcy
process.  The exposure for this asbestos litigation (net of insurance) cannot be
estimated at this time due to the wide range of potential  outcomes.  Corning is
also currently named in approximately  14,000 other cases alleging injuries from
asbestos.  Those cases have been covered by insurance without material impact to
Corning to date. Asbestos litigation is inherently difficult, and the outcome of
litigation is uncertain.

Accounting and Range of Outcomes
As a result of PCC's bankruptcy filing,  Corning recorded an after-tax charge of
$36 million in the first quarter of 2000 to impair its entire  investment in PCC
and discontinued  recognition of equity earnings.  At June 30, 2002, Corning has
not  recorded  any  additional  charges  associated  with  the  outcome  of this
litigation.  As noted above, management believes there are strong legal defenses
to the claims against Corning.  Management estimates that the insurance coverage
available to Corning related to these matters exceeds $600 million and depending
on the outcome of potential  coverage  issues may exceed $1 billion.  Management
estimates  that  the  low end of the  range  of loss  resulting  from  continued
litigation is not material.  Due to the inherent uncertainty of asbestos related
litigation,  management  is unable to estimate  the maximum  exposure  from this
litigation.






Alternatively,  in the event that  Corning  and its  insurers  agree to a global
settlement of the  PCC-related  cases through the PCC  bankruptcy  process,  the
outcome may be material  to the  results of  operations  for the period in which
such costs, if any, are recognized. Management expects that any after-tax charge
resulting from Corning's  contributions  as part of a possible  settlement could
approximate  $100  million to $150  million  and will  depend upon the timing of
contributions  and  relative  participation  of insurance  carriers.  Management
cannot provide  assurances  that the ultimate  outcome of a settlement  would be
within this range.

Under either  alternative  management  believes  these  matters will be resolved
without material impact to Corning's overall financial position or its liquidity

12.  Stock Compensation Plans

The following table presents changes in the status of outstanding  options since
December 31, 2001:

                                           Number of Shares    Weighted-Average
                                            (in thousands)      Exercise Price
                                           ----------------    ----------------

Options outstanding December 31, 2001          72,391            $  34.21
Options granted under plans                    14,964                7.62
Options exercised                                 (53)               1.95
Options terminated                               (818)              34.20
                                              -------            --------

Options outstanding June 30, 2002              86,484            $  29.63
                                              =======            ========

13.  Subsequent Event

On July 22, 2002,  Corning  purchased 5.5 million shares of its common stock for
$22 million in a privately negotiated transaction.








ITEM 2.

                     Management's Discussion and Analysis of
                     ---------------------------------------
                  Financial Condition and Results of Operations
                  ---------------------------------------------

Overview

Corning  incurred a net loss in the second quarter and first half of 2002 driven
primarily by  continued  weak  performance  in the  Telecommunications  Segment.
Results  for the quarter  included  charges  that  resulted  from  restructuring
activities and an impairment of an equity investment offset in part by a gain on
repurchases and retirement of debt.  These items are described in more detail in
Results of Operations below.

The  negative  trends  beginning  in 2001  such as  excess  capacity,  increased
intensity  of  competition  and  growing  pressure  on price  and  profits  have
continued  to  hamper  the  telecommunications  market in 2002.  Major  carriers
continue to withhold  capital  spending for a variety of reasons,  some of which
include network over-capacity,  bankruptcy of key  telecommunications  customers
and suppliers and the overall economic  uncertainties in the world economy. As a
result  of  these  uncertainties  and  lack of  capital  spending,  Corning  has
continued to see its revenues decline in its Telecommunications Segment. Corning
does not expect any  meaningful  recovery in the  Telecommunications  Segment in
2002.

The cost reduction  activities  announced in April 2002 are underway.  The total
charges in the second and third quarter  associated with actions approved in the
second quarter will slightly exceed the previously  announced  pre-tax charge of
$600 million.  Corning is reviewing a number of other actions to further  reduce
both the  cost  structure  and  capital  requirements  of the  businesses  going
forward.  These actions could include the potential sale or  discontinuation  of
some non-core businesses.  Additional consolidation of manufacturing capacity in
the  Telecommunications  Segment  is also  under  review.  The  outcome of these
reviews could cause additional charges in 2002.

Results of Operations

Net sales totaled $896 million for the second quarter of 2002, a decrease of 52%
compared with sales of $1.9 billion in the prior year quarter. Net sales for the
six months ended June 30, 2002, were $1.8 billion, a decrease of 53% compared to
the  comparable  prior year period of $3.8  billion.  The sales  decline in both
periods was most pronounced in the Telecommunications  Segment, where the impact
of  significantly  lower demand and price declines for Corning's fiber and cable
and photonic  technologies  products drove a sales decline of approximately  68%
for the quarter and six months.

Corning's  net loss  totaled  $370  million,  or $0.39 per share,  in the second
quarter of 2002,  compared to a net loss of $4,755  million or, $5.13 per share,
in the second quarter of 2001. On a year to date basis,  Corning  incurred a net
loss of $460  million,  or $0.49  per  share,  compared  to a net loss of $4,623
million,  or $5.01 per share, for the six months ended June 30, 2001. The second
quarter 2001 net loss and diluted loss per share, after adjusting for the impact
of  Statement  of  Financial  Accounting  Standards  (SFAS) No. 142,  was $4,652
million,  or $5.02 per share.  Net loss and diluted  loss per share on a year to
date basis, adjusted for SFAS No. 142 was $4,384 million, or $4.75 per share.

Corning's  second  quarter and year to date results  reflect  lower  volumes and
significantly  lower prices in the  Telecommunications  Segment  compared to the
same  periods for the prior year.  The second  quarter 2002 results also include
net  charges  of  $494  million  ($327   million   after-tax)   resulting   from
restructuring  actions and impairment  charges undertaken in the second quarter.
These charges are described in Restructuring,  Impairment and Other Charges.  In
addition,  the second quarter results include a gain of $68 million ($42 million
after-tax)  due to  repurchases  and  retirement of a portion of Corning's  zero
coupon  convertible  debentures.  Equity  earnings for the quarter include a $14
million loss on impairment of an international cabling venture.

The loss for the second  quarter of 2001 included  charges of $4.8 billion ($4.7
billion  after-tax) for the impairment of goodwill and other  intangible  assets
related to the Pirelli and NetOptix acquisitions in 2000, and $273 million ($184
million after-tax) related to the write-down of excess and obsolete inventory in
the photonic technologies business.






Restructuring, Impairment and Other Charges

2002 Restructuring Actions
--------------------------

During the second quarter,  Corning  undertook  actions to reduce its costs. The
intent to do so was announced in April 2002. At that time, it was estimated that
restructuring,  fixed asset  impairments  and  impairments of investments  could
total approximately $600 million and would be recorded over the second and third
quarters.

Actions approved and initiated in the second quarter include the following:

..    permanent  abandonment  of  certain  construction  projects  that  had been
     stopped   in  2001  in  the   fiber   and   cable   business   within   the
     Telecommunications Segment,
..    closure   of   minor   manufacturing    facilities,    primarily   in   the
     Telecommunications Segment,
..    closure and consolidation of research facilities,
..    elimination  of  positions  worldwide  through  voluntary  and  involuntary
     programs, and
..    divestiture  of a portion of the  controls and  connectors  business in the
     Telecommunications Segment.

In addition,  Corning  impaired  cost based  investments  in a number of private
telecommunications companies.

Certain  of  the  costs   associated   with  these   activities   (estimated  at
approximately  $125  million  to $150  million)  will be  recorded  in the third
quarter as all  conditions  for  recognition  had not been satisfied at June 30,
2002.  These third quarter charges relate primarily to severance and fixed asset
write-offs  pertaining to facility  closures outside the United States and early
retirement programs. Corning expects to pay approximately one-third of the total
charge for the second and third quarter in cash.

The charges recorded in the second quarter are summarized in the following table
and described in greater detail below:

Employee related costs                                  $   192
Exit costs                                                   12
Adjustment to 2001 program reserves                          (5)
                                                        -------
       Subtotal - restructuring charges                     199
                                                        -------
Fixed asset impairments                                     224
Adjustment to 2001 program reserves                          (5)
                                                        -------
       Subtotal - fixed asset impairments                   219
                                                        -------
Cost based investment write-offs                             60
Loss on disposal                                             16
                                                        -------
       Total pre-tax charges                                494
Tax benefit                                                 166
                                                        -------
       Total after-tax charges                          $   328
                                                        =======

In  addition,  equity  earnings  include  a $14  million  charge  to  impair  an
investment in an international cabling venture.

The  following  table  illustrates  the charge for  restructuring  actions as it
relates to Corning's operating segments:



------------------------------------------------------------------------------------------------------------------------------------
Charges for restructuring actions
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                              Corporate
                                                                                                              Functions
                                                            Telecom-          Advanced       Information      Including       Total
                                                           munications        Materials        Display        Research       Charges
------------------------------------------------------------------------------------------------------------------------------------

                                                                                                              
Net pre-tax charges for restructuring actions               $  364            $    2           $   1          $   127        $  494
                                                            =======================================================================







     Restructuring Charges
     ---------------------
     The second  quarter  restructuring  charge of $204  million  includes  $192
     million of employee separation costs (including  curtailment losses related
     to pension and  postretirement  health care plans) and $12 million in other
     exit  costs  (principally  lease  termination  and  contract   cancellation
     payments).  The charge  entails  the  elimination  of  approximately  3,600
     salaried positions in the Telecommunications Segment and corporate research
     and administrative  staffs  organizations.  Employees have been informed of
     the  restructuring   initiatives  and  benefits  available  to  them  under
     applicable  benefit plans. These benefits include  involuntary  separation,
     early retirement and social programs.

     The  following  table  illustrates  the  headcount  reduction  amongst U.S.
     Hourly, U.S. Salaried and Non-U.S. positions for 2002 actions:



     -------------------------------------------------------------------------------------------------------------------------------
     Headcount reduction
     -------------------------------------------------------------------------------------------------------------------------------
                                                          U.S. Hourly       U.S. Salaried     Non-U.S.      Total
                                                          -------------------------------------------------------

                                                                                             
     Second quarter charge                                     850             1,800             950         3,600
     Anticipated third quarter charge                          175               225             400           800
                                                          --------         ---------        --------     ---------
         Total                                               1,025             2,025           1,350         4,400
                                                          ========         =========        ========     =========

     Separated at June 30, 2002                                150             1,225             225         1,600


     Impairment of Plant and Equipment
     ---------------------------------
     Corning has evaluated the carrying  value of the  long-lived  assets in the
     businesses taking restructuring actions. The carrying value of a long-lived
     asset is considered impaired when the anticipated  separately  identifiable
     undiscounted cash flows from that asset are less than the carrying value of
     the asset.  The impairment  charges were determined  based on the amount by
     which the  carrying  value  exceeded  the fair  market  value of the asset.
     Corning  recorded  $224 million to impair plant and  equipment  relating to
     facilities  to be shutdown or  disposed,  primarily  in the fiber and cable
     business,   the  photonic   technologies   business  and  certain  research
     facilities.  Of this total  charge,  $107  million  pertains  to  abandoned
     construction projects in the fiber and cable business, primarily the latest
     expansion in Concord, NC and Oklahoma City, OK. The impairment charges were
     determined  based on the amount by which the  carrying  value  exceeded the
     fair market value of the asset.

     A  significant  portion of the assets  impaired was recently  acquired,  or
     built in connection  with capacity  expansions  in  anticipation  of future
     demand.  Most of the impaired  facilities are currently available for sale,
     others will be  demolished  or abandoned.  The impaired  equipment  will be
     auctioned, sold, disposed or abandoned during 2002.

     Loss on Divestiture
     -------------------
     In May 2002,  Corning  completed the sale of its appliance  controls  group
     which  was  included  in  the  controls  and  connectors  business  in  the
     Telecommunications Segment. In the second quarter of 2002, Corning received
     cash of $24 million and note  proceeds of $6 million and recorded a loss on
     the sale of approximately $16 million ($10 million after-tax).

     Impairment of Cost Investments
     ------------------------------
     In the second quarter, Corning recorded a $60 million charge for other than
     temporary  declines in certain cost  investments in the  Telecommunications
     Segment. These investments have been written off.

Cost Savings
------------

Corning expects to realize annualized savings of approximately $265 million as a
result  of  the  2002  restructuring   actions.  This  number  includes  savings
associated  with the actions  recorded in the second quarter and those for which
the charge will be recorded in the third  quarter.  The savings are comprised of
lower wages and benefit costs,  avoided  depreciation  and fixed costs on closed
facilities.  This savings number does not include additional savings the company
could realize from cost  management  activities  that are introduced  concurrent
with  restructuring  activities,   but  not  directly  related  to  the  actions
themselves.






Although  certain of the cost reduction  programs will positively  impact second
half results, management does not expect to realize all of the savings until the
beginning  of 2003.  Approximately  40% of the  savings  from the  restructuring
actions  will be  realized  in cost of sales with the  remainder  split  between
selling,  general and administrative  and research,  development and engineering
expenses.

2001 Restructuring Actions
--------------------------

In July and October of 2001, Corning announced a series of restructuring actions
in  response  to  significant  deteriorating  business  conditions  which  began
initially in its Telecommunications  Segment, but eventually spread to its other
businesses  as the year  progressed.  The  following  actions were  approved and
undertaken in 2001:

..    closure of seven major  manufacturing  facilities and the  consolidation of
     several  smaller  facilities,   primarily  in  the  Telecommunications  and
     Advanced Materials Segments,
..    discontinuation  of  its  initiative  in  Corning   Microarray   Technology
     products, part of Corning's life sciences business, and
..    elimination  of  approximately  12,000  positions  affecting  all operating
     segments, but especially impacting the photonic technologies,  hardware and
     equipment and the optical fiber and cable businesses.  This action included
     a selective  voluntary early retirement program for certain employees along
     with involuntary separations.

These actions  resulted in a pre-tax charge  totaling $961 million ($590 million
after-tax  and minority  interest)  for the year ended  December  31, 2001.  The
charge  includes  restructuring  costs of $419  million and $542 million for the
impairment of plant and equipment.  Approximately  one third of the total charge
was expected to be paid in cash.  As of June 30, 2002,  approximately  11,600 of
the 12,000  employees had been separated  under the plans.  Corning  expects the
remaining  400  employees  to  be  separated  by  December  31,  2002.   Certain
obligations of the plans will be paid in 2003 and beyond.

The  following  table  illustrates  the  charges,  credits  and  balances of the
restructuring reserves as of June 30, 2002:



(In millions)
------------------------------------------------------------------------------------------------------------------------------------
                                                                             Net                          Cash
                                                         December 31,     charges/        Non-cash      payments         June 30,
                                                             2001         credits         charges       in 2002            2002
------------------------------------------------------------------------------------------------------------------------------------

                                                                                                        
Restructuring reserve:
Employee related costs                                    $    198       $     187 (a)  $      30       $    105       $     250
Other charges                                                   78              12                            11              79
                                                          ----------------------------------------------------------------------
     Total restructuring reserve                          $    276       $     199      $      30       $    116       $     329
                                                          ----------------------------------------------------------------------

         Impairment of long-lived assets:
Assets held for disposal                                                 $     235 (b)  $     235
Cost investments                                                                60             60
                                                                         ------------------------
     Total impairment charges                                            $     295      $     295
                                                                         ------------------------

Total restructuring and impairment
  charges and credits                                                    $     494
                                                                         =========


(a)  Amount is net of $5 million adjustment in employee related costs reflecting
     the difference between estimated and actual costs.
(b)  Amount is net of $5 million  adjustment to assumed  salvage values on asset
     disposals.






Goodwill and Other Intangible Assets

In June 2001,  the  Financial  Accounting  Standards  Board issued SFAS No. 142,
"Goodwill and Other Intangible  Assets." Among other provisions,  goodwill is no
longer amortized but is subject to impairment  tests at least annually.  Corning
adopted SFAS No. 142 on January 1, 2002.  See Note 1 to  Consolidated  Financial
Statements.

Corning  completed  its initial  impairment  review during the first quarter and
concluded a transitional  impairment  charge from adoption of the standard would
not be required. On a prospective basis, Corning has selected the fourth quarter
to conduct  annual  impairment  tests.  The  outcome of the  impairment  test is
primarily  dependent  upon the fair value of the  reporting  units.  The current
business  conditions in the  telecommunications  industry are depressed.  Should
these  conditions  be  prolonged  or  deteriorate,  the fair value of  Corning's
telecommunications  reporting  unit could be lower in future  periods.  As such,
management cannot provide assurance that future impairment tests will not result
in a charge to earnings.

Outlook

Management  does not expect any  meaningful  recovery in the  Telecommunications
Segment  in  2002.  As a  result,  management  expects  sales  for  2002  to  be
significantly  below 2001 levels and anticipates  Corning will continue to incur
losses in the short-term as it continues to restructure its operations.

Corning  expects  third  quarter net sales to be in the range of $825 million to
$875 million and also anticipates a loss in a range of $0.07 to $0.10 per share,
excluding  restructuring and impairment charges. The primary driver of the range
will be fiber  and  cable  volume,  which is  expected  to be flat to down  15%.
Continued  price  pressure will also impact  revenues.  Sales in the rest of the
telecommunications  businesses are also expected to remain at depressed  levels.
Corning expects  revenues from its Advanced  Materials and  Information  Display
Segments to remain strong in the third quarter led by its liquid crystal display
business, which continues to operate at full capacity. Third quarter results are
expected to reflect the  positive  impact of cost  reduction  programs;  however
implementation  costs and  continued  weakening of the fiber and cable  business
could largely offset these gains.

Management  continues to believe Corning has ample liquidity to meet its funding
needs for the remainder of 2002.  Corning  finished the second quarter with $1.3
billion  in cash and  short-term  investments  and an  unused  revolving  credit
facility  of  $2.0  billion.  Capital  spending  in the  second  half of 2002 is
expected to approximate $200 million.  In addition,  Corning expects to complete
the previously  announced purchase of Lucent's controlling interest in two joint
ventures,  Lucent  Technologies  Shanghai  Fiber  Optic  Co.,  Ltd.  and  Lucent
Technologies  Beijing Fiber Optic Cable Co., Ltd. for $225 million in the second
half of 2002.

Operating Segments

Corning's reportable operating segments consist of: Telecommunications, Advanced
Materials  and  Information  Display.  Corning  includes  the earnings of equity
affiliates  that are closely  associated  with Corning's  operating  segments in
segment  net  income.  In the  second  quarter  of  2002,  Corning  revised  its
definition of segment net income. Prior to the second quarter, Corning disclosed
restructuring  and  impairment   charges  by  segment  but  excluded  this  from
quantitative  segment  results.  These charges have been included in the segment
net income and  historical  periods have been  conformed  to this  presentation.
Information about the performance of Corning's three operating  segments for the
second quarter and six months of 2002 and 2001 is presented below. These amounts
exclude revenues,  expenses and equity earnings not specifically identifiable to
segments.   Note  2  to  the  Consolidated   Financial   Statements  includes  a
reconciliation of segment results to Corning's net loss.

Corning  prepared the financial  results for its three  operating  segments on a
basis that is consistent with the manner in which Corning management  internally
disaggregates  financial  information  to assist in  making  internal  operating
decisions. Corning has allocated some common expenses among segments differently
than it would for stand alone financial  information prepared in accordance with
accounting principles generally accepted in the U.S. (GAAP).  Segment net income
may not be  consistent  with  measures  used by other  companies.  In the second
quarter of 2002, the  operations of the optical  network  devices  business were
merged  with  the  photonic  technologies  business  in  the  Telecommunications
Segment.   As  a  result,   historical   periods  have  been  combined  in  this
presentation.








------------------------------------------------------------------------------------------------------------------------------------
Telecommunications                                                        Three Months Ended                  Six Months Ended
(In millions)                                                                  June 30,                           June 30,
                                                                         2002              2001             2002              2001
------------------------------------------------------------------------------------------------------------------------------------

                                                                                                              
Net sales:
   Optical fiber and cable                                             $     212      $     939          $     467        $   1,814
   Hardware and equipment                                                    153            231                288              479
   Photonic technologies                                                      39            168                 75              418
   Controls and connectors                                                    33             55                 72              115
                                                                       ---------      ---------          ---------        ---------
     Total net sales                                                   $     437      $   1,393          $     902        $   2,826
                                                                       =========      =========          =========        =========
Research, development and engineering expenses                         $      86      $     134          $     172        $     256
Interest expense                                                       $      25      $      23          $      57        $      48
Segment (loss) earnings before equity (losses) earnings
  and restructuring, impairment and other charges                      $    (139)     $      (7)         $    (277)       $     170
   Equity in (losses) earnings of associated companies                        (3)             8                 (7)              11
                                                                       ---------      ---------          ---------        ---------
Segment (loss) earnings before restructuring,
  impairment and other charges                                              (142)             1               (284)             181
Restructuring, impairment and other charges, net of tax                     (259)        (4,726)              (259)          (4,726)
                                                                       ---------      ---------          ---------        ---------
Segment net loss                                                       $    (401)     $  (4,725)         $    (543)       $  (4,545)
                                                                       =========      =========          =========        =========

Segment (loss) earnings before equity (losses) earnings
  and restructuring, impairment and other charges as a
  percentage of segment sales                                             (31.8)%         (0.5)%            (30.7)%             6.0%
Segment (loss) earnings before restructuring, impairment
  and other charges as a percentage of segment sales                      (32.5)%           0.1%            (31.5)%             6.4%
------------------------------------------------------------------------------------------------------------------------------------


The  Telecommunications  Segment  produces  optical  fiber  and  cable,  optical
hardware and  equipment,  and photonic  modules and components for the worldwide
telecommunications  industry. Sales of each business in the segment are provided
in the table above.

This segment incurred  significant  restructuring and impairment charges in both
years.  The second quarter 2002 charge is described in detail in  Restructuring,
Impairment  and Other  Charges.  The  activities  were  undertaken to reduce the
operating cost structure as a result of lower  revenues.  Approximately  half of
the  charge is  impairment  of fixed  assets,  primarily  in the fiber and cable
business.  The majority of the asset impairments in this business  represent the
permanent  abandonment of certain construction projects that had been stopped in
2001  in the  fiber  and  cable  business.  The  rest of the  charge  represents
impairments of cost based  investments,  primarily in the photonic  technologies
business, and severance and benefits for retirees and separated personnel in all
businesses.

The impairment charge incurred in the second quarter of 2001 relates to goodwill
and  certain  acquired  intangible  assets  from  acquisitions  in the  photonic
technologies business.

The  performance   discussion   below  addresses   losses  and  earnings  before
restructuring, impairment and other charges.

Sales in the  segment  declined  significantly  from the second  quarter and six
months  of  2001 as each  business  in the  segment  experienced  a  significant
decline. The segment incurred a loss before restructuring,  impairment and other
charges in the second quarter and six months of 2002,  compared to income in the
prior year periods,  primarily due to the significant  decrease in sales volume.
Each  business  also  reported  a loss in 2002 for the  second  quarter  and six
months.  The declines from 2001 are caused by  significantly  reduced volumes in
all   businesses   as  a  result  of  the  lack  of  capital   spending  in  the
telecommunications industry.






The optical  fiber and cable  business is the largest  business in the  segment.
Sales in the fiber and cable business declined over 70% for both the quarter and
six months ended June 30, 2002,  compared to the prior year periods.  The volume
of fiber  and cable  products,  including  Corning's  LEAF(R)  and  MetroCor(TM)
optical  fiber,  decreased  more than 50% over the prior year  quarter and prior
year six months.  The overall weighted average price for Corning's optical fiber
and cable  products  decreased  compared  to the second  quarter of 2001 and six
months of 2001 as the mix of premium fiber declined.

The  optical  fiber and cable  business  incurred a loss  before  restructuring,
impairment  and  other  charges  for both the  quarter  and six  months  of 2002
compared to record profits in the prior year periods due to significantly  lower
sales volume, unfavorable product mix and declining prices.

Sales in the hardware and equipment business decreased 34% and 40% for the three
and six months  ended June 30, 2002,  compared to the same periods of 2001.  The
sales decreases were primarily due to the overall lack of spending impacting the
entire  telecommunications  industry.  The business incurred losses for both the
quarter and six months,  compared  to  earnings in 2001  primarily  due to lower
sales volumes.

Sales in the photonic  technologies  business declined 77% and 82% for the three
and six months  ended June 30,  2002,  primarily  due to lower  sales  volume as
network buildouts in the telecommunications  industry have declined resulting in
much lower demand for photonic  products.  The business  incurred a loss for the
quarter  and six  months of 2002  primarily  due to  significantly  lower  sales
volumes.  However,  the loss was improved over those  incurred in the comparable
periods of 2001,  primarily due to the significant  inventory  write-down in the
second  quarter of 2001.  During  the second  quarter,  the  business  favorably
resolved  an open issue from the second  quarter of 2001 with a major  customer,
resulting in the  recognition of revenue of $14 million and pre-tax income of $3
million. This revenue was recognized in part on shipment of inventory previously
reserved.  In addition,  the business  settled an open matter with a significant
vendor  resulting  in the  reversal of a vendor  reserve of $20 million that was
recorded  in the  second  quarter  of  2001.  In  total,  the  impact  of  these
settlements  in the  second  quarter  was  income of $23  million  pre-tax.  The
business  also  recorded  inventory  write-downs  of $20 million  pre-tax in the
second quarter of 2002.

Sales in the  controls and  connectors  business  decreased  40% and 37% for the
three and six  months  ended  June 30,  2002,  due to the sale of the  appliance
controls   group  in  May  2002  and  the  lack  of  capital   spending  in  the
telecommunications  industry.  Earnings  were also  down due to the lower  sales
volumes as the business  incurred  losses for the quarter and six months of 2002
compared to earnings in both  periods in 2001.  The loss on  divestiture  of $16
million ($10 million  after-tax) is included in  restructuring,  impairment  and
other charges.

The  dynamics of the  marketplace  have  changed  dramatically  since the second
quarter  of 2001.  As such,  management  believes  the  operating  trends of the
businesses  in this  segment  are best  understood  by  comparison  to the prior
quarter.

Second  quarter 2002 segment sales  declined 6% from the first quarter while the
loss  before  restructuring,  impairment  and  other  charges  remained  at $142
million.  The decline in sales was caused by price  declines,  primarily  in the
fiber and cable  business  due to flat  volumes  for the quarter and fiber price
decline of 10%-15%,  mitigated in part by $14 million of photonics  technologies
revenue from a settlement noted above.








------------------------------------------------------------------------------------------------------------------------------------
Advanced Materials                                                        Three Months Ended                  Six Months Ended
(In millions)                                                                  June 30,                           June 30,
                                                                         2002              2001             2002              2001
------------------------------------------------------------------------------------------------------------------------------------

                                                                                                              
Net sales:
   Environmental technologies                                          $     102      $      96          $     196        $    204
   Life sciences                                                              74             69                144             139
   Other advanced materials                                                   66             86                135             190
                                                                       ---------      ---------          ---------        --------
     Total net sales                                                   $     242      $     251          $     475        $    533
                                                                       =========      =========          =========        ========
Research, development and engineering expenses                         $      32      $      28          $      63        $     56
Interest expense                                                       $       8      $       5          $      16        $     10
Segment earnings before equity earnings and
  restructuring charges                                                $       9      $      11          $      10        $     37
   Equity in earnings of associated companies                                 12              7                 20              13
                                                                       ---------      ---------          ---------        --------
Segment earnings before restructuring charges                                 21             18                 30              50
Restructuring charges, net of tax                                             (1)                               (1)
                                                                       ---------      ---------          ---------        --------
Segment net income                                                     $      20      $      18          $      29        $     50
                                                                       =========      =========          =========        ========

Segment earnings before equity earnings and
  restructuring charges as a percentage of segment sales                    3.7%           4.4%               2.1%            6.9%
Segment earnings before restructuring charges
  as a percentage of segment sales                                          8.7%           7.2%               6.3%            9.4%
------------------------------------------------------------------------------------------------------------------------------------


The Advanced  Materials Segment  manufactures  specialized  products with unique
applications  utilizing  glass,  glass  ceramic  and polymer  technologies.  The
largest  businesses  in this  segment are  environmental  technologies  and life
sciences. Sales of these businesses are provided in the table above.

The  restructuring  costs recorded in 2002 in this segment  consist  entirely of
severance and benefits for retired and separated employees across all businesses
in the segment.  The  performance  discussion  below compares  segment  earnings
before restructuring charges.

Sales in the Advanced  Materials  Segment  decreased 4% in the second quarter of
2002  compared  to  the  second  quarter  of  2001,  as  decreasing  demand  for
semiconductor materials was partially offset by increased sales in environmental
technologies and life sciences. Sales declined 11% for the six months ended June
30,  2002,  compared  to the prior year  period as the demand for  semiconductor
materials  fell  sharply  in  the  first  quarter.   Segment   earnings   before
restructuring  charges  increased 17% in the second  quarter of 2002 compared to
the  previous  year  quarter  primarily  due to  improved  performance  in  life
sciences. Segment earnings before restructuring charges declined 40% for the six
months  ended June 30,  2002,  compared  to the prior year  period,  as improved
operating performance in the life sciences business and stronger equity earnings
was more than offset by decreased earnings in the environmental technologies and
semiconductor materials businesses.

Sales in the  environmental  technologies  business  increased 6% for the second
quarter of 2002 on higher sales volume.  The sales growth was driven by economic
recovery in North America and sales growth in new products worldwide.  Sales for
the first six months of 2002  decreased 4% compared to the prior year period due
to lower sales volume and downward pricing  pressure.  Earnings in this business
were flat for the second quarter and decreased over 30% for the six months ended
June 30,  2002,  due to price  declines as well as increased  manufacturing  and
development costs related to new products.

Sales in the life sciences  business  increased 7% and 4% for the second quarter
and six months of 2002 compared to the same periods of 2001 due to strong growth
in  microplates.  Earnings  in the  business  for both the quarter and first six
months increased significantly over the comparable periods of 2001 primarily due
to cost savings achieved through the discontinuation of Corning's  investment in
microarray  technology  products  in the  third  quarter  of 2001  and  improved
manufacturing efficiencies.






Sales in Corning's  other Advanced  Materials  businesses  decreased 23% and 29%
from the  second  quarter  and six  months of 2001,  respectively  and  earnings
decreased  significantly over the same periods of 2001. These decreases were led
by lower sales volume of high purity fused silica products in the  semiconductor
materials business due to soft demand in the semiconductor equipment industry as
capital spending continues to lag.

Many of the businesses in this segment are exposed to the general  conditions of
the U.S. economy. As a result, these businesses incurred declines in performance
as the economy weakened at the end of the third quarter of 2001. A comparison of
current  results to the prior  quarter is useful as the economic  conditions  of
these two periods are more comparable.

Sales  increased 4% over the first quarter of 2002 as sales  improved 9% and 6%,
respectively at environmental  technologies and life sciences while declining 4%
in the other  businesses.  Earnings in the segment more than doubled compared to
the  first   quarter  of  2002  as  most   businesses   improved,   particularly
environmental technologies due to increased auto production.



------------------------------------------------------------------------------------------------------------------------------------
Information Display                                                       Three Months Ended                  Six Months Ended
(In millions)                                                                  June 30,                           June 30,
                                                                         2002              2001             2002              2001
------------------------------------------------------------------------------------------------------------------------------------

                                                                                                              
Net sales:
   Display technologies                                                $     102      $      87          $     195        $    149
   Precision lens                                                             69             58                128             111
   Conventional video components                                              41             73                 84             159
                                                                       ---------      ---------          ---------        --------
     Total net sales                                                   $     212      $     218          $     407        $    419
                                                                       =========      =========          =========        ========
Research, development and engineering expenses                         $      14      $       9          $      25        $     19
Interest expense                                                       $       9      $       6          $      17        $     10
Segment earnings before minority interest and
  equity earnings                                                      $       8      $      25          $      11        $     46
   Minority interest in losses (earnings) of subsidiaries                      5             (7)                11             (12)
   Equity in earnings of associated companies                                 29             29                 54              54
                                                                       ---------      ---------          ---------        --------
Segment net income                                                     $      42      $      47          $      76        $     88
                                                                       =========      =========          =========        ========

Segment earnings before minority interest and equity
  earnings as a percentage of segment sales                                 3.8%          11.5%               2.7%           11.0%
Segment net income as a percentage of segment sales                        19.8%          21.6%              18.7%           21.0%
------------------------------------------------------------------------------------------------------------------------------------


The  Information  Display  Segment  manufactures  glass  panels and  funnels for
televisions and CRTs  (conventional  video  components),  liquid crystal display
glass  for  flat  panel  display  (display   technologies)  and  precision  lens
assemblies for projection video systems.

Sales in the Information Display Segment decreased 3% in both the second quarter
and six  months  of 2002,  compared  to the  comparable  periods  of 2001 due to
extremely weak sales in the  conventional  video components  business  partially
offset  by  strong  growth  in  the  display  technologies  and  precision  lens
businesses.  Segment  net  income in the second  quarter  and six months of 2002
declined  11% and 14% as  significantly  lower  earnings at  conventional  video
components   were  only  partially   offset  by   improvements  in  the  display
technologies business and the precision lens business.

Sales in the display  technologies  business increased 17% and 31% in the second
quarter and six months of 2002  compared to 2001,  due to higher sales volume as
penetration in the desktop market  increased.  The prior year's first half sales
were unusually weak due to an inventory correction in the industry. Volume gains
of 29% and 55% for the quarter and six months of 2002 were  partially  offset by
price  declines  and  foreign  currency  exposure  to the yen.  Earnings  in the
business  increased 10% for the quarter and over 25% for six months  compared to
the prior  year  periods  primarily  due to volume  gains  and  improved  equity
earnings from Samsung Corning Precision, a Korean manufacturer of liquid crystal
display glass.






Sales in the precision lens business increased 19% and 15% in the second quarter
and first six months of 2002 compared to the prior year periods,  as a result of
continued strong volume growth for digital projection televisions,  particularly
in North America and Asia,  driven by demand for larger size  televisions in the
entertainment market sector. Earnings in this business for the second quarter of
2002  increased  more than 50% over the prior year  period  due to sales  volume
gains.  Earnings for the six months ended June 30, 2002,  increased 15% over the
prior year period as sales volume gains were partially offset by price declines.

Sales in the conventional video components business decreased 44% and 47% in the
second  quarter  and first six  months of 2002.  A  significant  portion of this
business  is  concentrated  with few  customers.  One  customer  has  exited the
business and sales demand from another key customer is uncertain.  Management is
considering  operational and strategic alternatives should the business continue
to decline.  The loss in this business  increased for the second quarter and six
months compared to 2001 due to decreased  sales volume and a continued  increase
in competitive  pricing pressure.  Samsung Corning,  a 50% owned manufacturer of
glass panels based in South Korea,  also experienced  pricing pressure as equity
earnings were down for the second quarter and six months of 2002 compared to the
prior year periods.

On a sequential basis,  sales in this segment improved 9% over the first quarter
as precision lens and display technologies  increased 17% and 10%,  respectively
while  conventional  video decreased 5%. Earnings  improved over 20% compared to
the first quarter as earnings in precision lens more than doubled  primarily due
to higher sales volumes.

Taxes on Income

Corning's  effective income tax benefit rate for the three and six month periods
ended June 30, 2002, was 30.7% and 29.5%, respectively.  The tax benefit rate in
the second quarter of 2002 was impacted by specific tax benefit calculations for
restructuring, impairment and other charges and the gain on repurchases of debt.
The effective benefit rate without  consideration of these items was 25% in both
2002 periods.  The effective tax benefit rate in the quarter and year to date is
lower  than the U.S.  statutory  income  tax  rate of 35% due to the  impact  of
unusable tax credits and nondeductible expenses and losses.

Federal tax  legislation  passed early in 2002 extended the net  operating  loss
carryback period from two to five years. Corning anticipates incurring a federal
tax net  operating  loss for 2002 and this  change in the tax  legislation  will
allow Corning to carryback the net operating  loss to open tax years and claim a
tax  refund.  Current  assets at June 30,  2002,  include a  receivable  of $135
million  as a result of Corning  availing  itself of this  opportunity.  Corning
expects to receive this refund in the second quarter of 2003.

The  effective  tax  (benefit)  rate for the three and six months ended June 30,
2001,  was 1.6% and  (0.7)%.  These  tax  rates  are  much  lower  than the U.S.
statutory  income tax rate primarily due to non-tax  deductible  amortization of
acquired intangibles and goodwill.

Liquidity and Capital Resources

At June 30, 2002,  Corning had $1.3 billion in cash and  short-term  investments
and an  unused  revolving  credit  facility  of  $2.0  billion.  Cash  and  cash
equivalents  decreased  $97 million from  December 31,  2001,  while  short-term
investments  decreased  $799 million for the same period.  The total decrease in
cash and  short-term  investments  of $896 million  includes $629 million of net
debt repayments and $116 million of restructuring  payments. Cash and short-term
investments  were  essentially  flat  compared to June 30, 2001, as the proceeds
from issuance of  convertible  debt for $665 million in November 2001 was offset
by the debt repayments and restructuring payments.

During  the first six  months of 2002,  Corning  made  payments  of $88  million
related to  employee  costs and $11  million in other exit costs  related to the
2001 restructuring  actions.  Corning expects additional payments related to the
2001 actions to approximate  $45 million in the third quarter and $50 million in
the fourth  quarter with  approximately  $70 million  paid beyond  2002.  In the
second quarter of 2002,  Corning made payments of $17 million for employee costs
related to the 2002 restructuring  actions.  Corning expects additional payments
related to the 2002 actions to approximate  $40 million in the third quarter and
$60 million in the fourth quarter with the remainder  paid beyond 2002.  Corning
expects  approximately  one-third of the 2002 restructuring charge to be paid in
cash.






On July 24, 2001,  Corning  announced that it had reached  agreement with Lucent
Technologies to purchase Lucent's  controlling  interest in two Chinese ventures
for an aggregate  purchase  price of $225  million in cash.  The closing of this
transaction is contingent upon government  regulatory  approval and the approval
of the minority equity  shareholders.  This  transaction is expected to close in
the second  half.  Corning is in  negotiations  with  Lucent  that may result in
payment of a portion of these proceeds in Corning common stock.

Cash requirements for working capital,  research and development,  acquisitions,
capital  expenditures,   debt  repayments,  and  restructuring  liabilities  are
expected to be funded from cash, short-term  investments on hand, capital market
transactions  and  business  dispositions.  Corning is  actively  reviewing  its
alternatives   for  accessing  the  capital  markets  through  the  issuance  of
convertible  securities.  The timing and  particulars  remain  under  review and
depend on market  conditions,  but  Corning  may decide to access the markets as
early as the third quarter.

Cash Flows

For the six  months  ended  June 30,  2002,  cash  used in  operations  was $148
million,  primarily due to lower accounts payable and other current  liabilities
and $116 million of cash payments for restructuring charges. Operations provided
cash of $690 million in the first six months of 2001. The trend between years is
primarily due to the 2002 net loss.

Cash provided by investing  activities  was $613 million  through June 30, 2002,
reflecting net cash of $801 million from short-term  investments and $24 million
from the sale of the appliance  controls group partially  offset by $213 million
of capital expenditures.  This compares to a use of cash totaling $1,266 million
in the same  period  of 2001.  The  trend  between  years  is  primarily  due to
decreased capital spending and acquisition activity.

Cash used in  financing  activities  for the  first six  months of 2002 was $585
million and  reflected  $474  million of  reduction of  short-term  debt,  which
included the repayment of all commercial  paper.  In addition,  $148 million was
used for the repurchase of a portion of the zero coupon convertible  debentures.
This  compares  to cash  provided by  financing  activities  of $126  million in
2001which included dividend payments of $112 million.

During the second  quarter of 2002,  Corning  purchased and retired a portion of
its zero coupon  convertible  debentures due November 8, 2015,  with an accreted
value of $220  million in exchange  for cash of $148 million in a series of open
market purchases.  Corning recorded a gain of $68 million on these transactions,
net of the write-off of the  unamortized  issuance costs.  Corning  recorded the
gain on  repurchases  as a component of income from  continuing  operations,  as
permitted by SFAS No. 145. The debentures may be put back to Corning on November
8, 2005.  Corning has the option of settling  this  obligation  in cash,  common
stock,  or a  combination  of both.  From time to time,  Corning may  repurchase
certain  additional  debt  securities  in open  market or  privately  negotiated
transactions.

Working Capital

Balance sheet and working capital measures are provided in the following table:



                                                                                     As of or for the six months ended
                                                                       -------------------------------------------------------------
                                                                       June 30, 2002         December 31, 2001         June 30, 2001
                                                                       -------------         -----------------         -------------

                                                                                                              
Working capital                                                        $1.9 billion            $2.1 billion            $2.2 billion
Working capital, excluding cash and short-term investments             $590 million           $(106) million           $872 million
Current assets to current liabilities                                      2.3:1                   2.1:1                   2.2:1
Trade accounts receivable, net of allowances                           $605 million            $593 million            $1.3 billion
Days sales outstanding                                                      61                      55                      65
Inventories                                                            $671 million            $725 million            $977 million
Inventory turns                                                             3.9                     4.5                     4.9







The increase in working  capital,  excluding  cash and  short-term  investments,
reflects lower  short-term  borrowings and accounts payable compared to December
31,  2001.  The  decrease  in working  capital,  excluding  cash and  short-term
investments,  compared to June 30, 2001, was primarily due to large decreases in
trade  accounts   receivable  and  inventories.   The  increase  in  days  sales
outstanding,  compared to December 31, 2001,  resulted from lower December sales
due to the scheduled facility shutdowns at year-end. The large decrease in trade
accounts  receivable and inventories,  compared to June 30, 2001, was due to the
significant decline in revenues and demand for telecommunication products.

Financing Matters and Credit Ratings

Corning  repaid all  commercial  paper  borrowings as of June 30, 2002.  Corning
maintains a $2.0 billion  revolving  credit facility with 18 banks,  expiring on
August 17, 2005. As of June 30, 2002,  there were no borrowings under the credit
facility. The facility includes a covenant requiring Corning to maintain a total
debt to capital ratio,  as defined,  not greater than 60%. At June 30, 2002, and
December 31, 2001, this ratio was 46% and 47%, respectively compared with 42% at
June 30, 2001.  The decrease in total debt to capital was due to the  repayments
of a portion of the zero coupon convertible debentures and commercial paper. The
ratio  increase from June 2001 to June 2002 was due to the 2001 net loss and the
issuance of  convertible  debt in November  2001.  As  disclosed in Goodwill and
Other  Intangible  Assets,  further  declines  in  Corning's  Telecommunications
Segment  could cause  further  impairments  of goodwill,  tangible or intangible
assets or restructuring  charges. These items could cause a material increase to
Corning's debt to capital ratio.  Corning does not anticipate issuing commercial
paper for the foreseeable  future. As of June 30, 2002, Corning had not provided
vendor financing to any of its customers.

Corning's credit ratings as of July 24, 2002, were as follows:

RATING AGENCY                     Rating                        Rating
Last Update                   Long-Term Debt               Commercial Paper
------------------            --------------               ----------------
Standard & Poor's                  BBB-                           A-3
    April 25, 2002
Moody's (a)                        Baa3                           P-3
    May 7, 2002
Fitch                              BB                             B
    July 24, 2002

(a)  Maintains a Negative Watch for possible downgrade.

Fitch announced a downgrade on July 24, 2002,  which is reflected in the ratings
above. In April and May 2002, Corning's credit rating was downgraded by Standard
& Poor's and Moody's.  Although the downgrades  preclude Corning's access to the
commercial paper market, Corning's overall financial flexibility continues to be
adequate as a result of its cash position,  short-term  investment  holdings and
committed revolving credit facilities.

A further  downgrade  could  impact  Corning's  ability  to enter  into  foreign
exchange hedge contracts with a duration of greater than a year. Such limitation
would not  significantly  impact  the  company's  current  hedging  program.  In
addition,  a sub-investment  grade credit rating could result in requirements to
deposit  cash with  counterparties  under  performance  bond or letter of credit
arrangements.

Obligations, Commitments and Contingencies

The only material change to Corning's cash obligations,  commercial  commitments
and  contingencies  from those disclosed in Corning's Form 10-K/A filed March 7,
2002, was a decrease of  approximately  $100 million  primarily in contingencies
related to  acquisitions  and  performance  bonds.  See Note 11 to  Consolidated
Financial  Statements for an updated discussion of Corning's litigation exposure
associated with Pittsburgh Corning Corporation.






In-Process Research and Development

Corning  completed  a  number  of  purchase  acquisitions  in  2000.  As part of
analyzing each of these acquisitions,  Corning made a decision to buy technology
that  had not  yet  been  commercialized  rather  than  develop  the  technology
internally.  Corning based this  decision on a number of factors,  including the
amount of time it would take to bring the  technology  to market.  Corning  also
considered  its  internal  research  resource  allocation  and its  progress  on
comparable technology,  if any. Corning expects to use the same decision process
in the future.

NZ Applied Technologies
-----------------------

On May 5, 2000,  Corning  completed the  acquisition of NZ Applied  Technologies
(NZAT).  NZAT was  developing a line of high speed,  solid-state  components for
dense  wavelength  division  multiplexing  systems,  such  as  variable  optical
attenuators,  that will meet  industry  demands for speed and quality.  Of these
projects,  four were  determined to meet the criteria for  purchased  in-process
research and development (IPRD) as of the acquisition date.  Projected debt-free
income  was   initially   discounted   using  a  rate  of  21%  to  reflect  the
weighted-average  cost of capital  (entity risk) for NZAT. Each product was also
discounted  to account for the  research  project's  stage of  development.  The
completion  percentages  ranged  from  10%-80%.  At the  acquisition  date,  the
projected costs to complete the IPRD programs  approximated  $10 million.  A $44
million  non-tax  deductible  IPRD  charge  was  recognized  and  the  value  of
individual projects ranged from $1 million to $29 million.

In  the  second  quarter,   due  to  the  significant  downturn  in  demand  for
telecommunication's products, Corning decided to suspend the research related to
these  projects.  When  the  demand  for  Corning's  telecommunication  products
rebounds, management will reevaluate the market at that time and a decision will
be made as to whether research and development on these projects should resume.

Critical Accounting Policies

The preparation of financial  statements  requires  management to make estimates
and assumptions  that affect amounts  reported  therein.  Corning  described the
items that require management's most difficult,  subjective or complex judgments
in its Form 10-K/A filed March 7, 2002. This disclosure continues to be relevant
to the current year.

The  current  economic  depression  in  the   telecommunications   industry  has
introduced  additional  uncertainty and makes judgments in 2002 about allowances
for bad debts and inventory  realization more complex.  The  creditworthiness of
customers  requires reliance on information  provided by analysts if the company
is  public  and  judgments  about  the  liquidity  of other  companies  based on
incomplete  information.  Inventory  realization  requires  estimates  of market
demand for product on hand and forecasting of future technological developments.
Inventory  reserves are the most judgmental in the photonics  business where the
items are highly  technical  and built to customer  specifications.  At June 30,
2002, the inventory  carrying value  associated with this business  approximated
$40 million.

The telecommunication industry downturn is also adversely impacting many private
companies in which Corning made  investments  at high  valuations  accounted for
under the cost  method.  In the second  quarter of 2002,  Corning  wrote off its
balance in a number of such investments  despite the continued  operation of the
entities.  Certain  events  such  as  completed,  planned  or  failed  financing
activities  at each  company  make it likely that  Corning  will not realize any
proceeds from its investment.

New Accounting Standards

In June 2001,  the FASB issued SFAS No. 143,  "Accounting  for Asset  Retirement
Obligations."  This standard  addresses  financial  accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs. Corning is required to implement SFAS No. 143
on January 1, 2003.  Corning  does not expect  this  standard to have a material
impact on its consolidated financial position or results of operations.






Forward-Looking Statements

The  statements in this Quarterly  Report on Form 10-Q, in reports  subsequently
filed by Corning  with the SEC on Form 8-K and related  comments  by  management
which  are not  historical  facts  or  information  and  contain  words  such as
"believes,"  "expects,"  "anticipates,"  "estimates,"  "forecasts,"  and similar
expressions are forward-looking  statements.  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:

-    global economic conditions,
-    currency fluctuations,
-    product demand and industry capacity,
-    competitive products and pricing,
-    sufficiency of manufacturing capacity and efficiencies,
-    cost reductions,
-    availability and costs of critical materials,
-    new product development and commercialization,
-    attracting and retaining key personnel,
-    order activity and demand from major customers,
-    fluctuations  in capital  spending by customers  in the  telecommunications
     industry and other business segments,
-    changes in the mix of sales between premium and non-premium products,
-    facility expansions and new plant start-up costs,
-    adverse litigation or regulatory developments,
-    capital resource and cash flow activities,
-    capital spending,
-    equity company activities,
-    interest costs,
-    acquisition and divestiture activity,
-    the rate of technology change,
-    the ability to enforce patents,
-    product performance issues,
-    stock price fluctuations, and
-    other risks detailed in Corning's SEC filings.








ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk Disclosures

There have been no material  changes to  Corning's  market risk  exposure  since
December 31, 2001, except for the following change described below.

Interest Rate Risk Management

In March and April of 2002,  Corning  entered into  interest rate swaps that are
fair  value  hedges  and  economically  exchanged  $275  million  of fixed  rate
long-term  debt to floating rate debt.  Under the terms of the swap  agreements,
Corning  will pay the  counterparty  a  floating  rate  that is  indexed  to the
six-month  LIBOR rate and receive  the fixed rates of 8.3% to 8.875%,  which are
the stated  interest  rates on the long-term  debt  instruments.  As a result of
these  transactions,  Corning is exposed to the impact of interest rate changes.
The interest rate on these instruments is reset every six months and they expire
in 14 to 23 years. It is Corning's policy to conservatively  manage its exposure
to changes in  interest  rates.  Corning's  policy is that  total  floating  and
variable  rate debt will not exceed 35% of the total debt  portfolio at anytime.
At June 30, 2002, Corning's consolidated debt portfolio contained  approximately
6% of variable rate instruments.







                           Part II - Other Information
                           ---------------------------

ITEM 1.  LEGAL PROCEEDINGS

Environmental Litigation. Corning has been named by the Environmental Protection
Agency under the  Superfund  Act, or by state  governments  under  similar state
laws, as a potentially  responsible  party at 12 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  approximately  $23 million for its  estimated
liability for environmental  cleanup and litigation at June 30, 2002. Based upon
the information  developed to date, management believes that the accrued reserve
is a reasonable  estimate of the Company's estimated liability and that the risk
of an  additional  loss in an amount  materially  higher  than that  accrued  is
remote.

Schwinger Toxins Lawsuit.  In April 2002, Corning was served with a complaint by
44 plaintiffs  alleging past and current injuries allegedly arising from release
of hazardous and toxic substances from a Sylvania nuclear  materials  processing
facility  near  Hicksville,  New York.  The  complaint  names more than 20 other
corporate  defendants and is pending in the United States District Court for the
Eastern  District of New York and seeks  damages in excess of $1.6  billion.  On
June 13,  2002,  Corning  submitted  a letter  to the  Eastern  District  Court,
pursuant to the Court's rules,  in  anticipation  of filing a motion to dismiss.
The Court has not  responded to the letter;  however,  the Court has requested a
preliminary conference that will be held on July 22, 2002.

Dow Corning Bankruptcy. Corning and The Dow Chemical Company each own 50% of the
common stock of Dow Corning  Corporation.  On May 15, 1995,  Dow Corning  sought
protection  under the  reorganization  provisions  of  Chapter  11 of the United
States  Bankruptcy  Code and  thereby  obtained a stay of  approximately  19,000
breast-implant  product liability lawsuits. On November 8, 1998, Dow Corning and
the Tort  Claimants  Committee  jointly  filed a revised Plan of  Reorganization
(Joint Plan) which was confirmed by the  Bankruptcy  Court on November 30, 1999.
On December 21, 1999, the  Bankruptcy  Court issued an opinion that approved the
principal  elements  of the  Joint  Plan with  respect  to tort  claimants,  but
construed  the Joint Plan as  providing  releases for third  parties  (including
Corning and Dow Chemical as  shareholders)  only with respect to tort  claimants
who voted in favor of the Joint Plan. On November 13, 2000,  the District  Court
entered an Order reversing the Bankruptcy  Court's December 21, 1999, Opinion on
the release and  injunction  provisions and confirmed the Joint Plan. On January
29,  2002,  the  U.S.  Court of  Appeals  for the  Sixth  Circuit  affirmed  the
determinations made in the District Court with respect to the foreign claimants,
but  remanded to the  District  Court for further  proceedings  with  respect to
certain  lien claims of the U.S.  government  and with  respect to the  findings
supporting  the  non-debtor  releases  in favor of Dow  Corning's  shareholders,
foreign subsidiaries and insurers.  On May 3, 2002, the Sixth Circuit denied the
U.S.  Government's  petition for rehearing en banc. In the District  Court,  the
Plan proponents and opponents filed briefs on the open issues, which include the
issues  surrounding  the  non-debtor  releases,  and the  District  Court  heard
arguments  on the  remanded  issues  on June 14.  The  District  Court  reserved
decision.  Certain tort  claimants  have filed a petition with the U.S.  Supreme
Court  requesting  review of the Sixth Circuit's ruling regarding the power of a
bankruptcy court to grant third party releases.  If the Joint Plan is upheld but
the shareholder  releases are not given their full effect,  Corning would expect
to defend  any  remaining  claims  against  it (and any new  claims) on the same
grounds  that led to a series of orders  and  judgments  dismissing  all  claims
against  Corning in the  federal  courts and in many state  courts as  described
under the  heading  Implant  Tort  Lawsuits  immediately  hereafter.  Management
believes that the claims against  Corning lack merit and that the breast implant
litigation against Corning will be resolved without material impact on Corning's
financial statements.






Under the terms of the Joint Plan,  Dow Corning would be required to establish a
Settlement Trust and a Litigation Facility to provide a means for tort claimants
to settle or litigate  their claims.  Dow Corning  would have the  obligation to
fund the Trust and the Facility,  over a period of up to 16 years,  in an amount
up to  approximately  $3.3  billion,  subject  to  the  limitations,  terms  and
conditions  stated in the Joint Plan.  Corning and Dow Chemical have each agreed
to provide a credit  facility to Dow Corning of up to $150 million ($300 million
in the aggregate), subject to the terms and conditions stated in the Joint Plan.
The Joint Plan also provides for Dow Corning to make full payment,  through cash
and the issuance of senior notes,  to its commercial  creditors.  The commercial
creditors have contested the Bankruptcy Court's disallowance of their claims for
post-petition  interest at default  rates of interest,  and have appealed to the
District  Court.  While the  amounts at issue on this  appeal  are  subject to a
variety of  contingencies,  it is possible that the aggregate  claim against Dow
Corning  exceeds $100 million on a pre-tax  basis.  The District Court held oral
argument on May 2, 2002,  to  consider  the merits of the  commercial  creditors
appeal,  which Dow Corning has vigorously  contested,  and has not yet ruled. If
and when Dow Corning  emerges  from  bankruptcy,  Corning  expects to resume the
recognition  of equity  earnings  from Dow  Corning.  Corning does not expect to
receive dividends from Dow Corning in the foreseeable future.

Implant Tort Lawsuits. Corning and Dow Chemical, the shareholders of Dow Corning
Corporation,  were named in a number of state and federal tort lawsuits alleging
injuries  arising from Dow Corning's  implant  products.  The claims against the
shareholders  alleged a variety of direct or indirect theories of liability.  In
1992, the federal breast implants cases were  coordinated for pretrial  purposes
in the United States District Court,  Northern District of Alabama (Judge Sam C.
Pointer,  Jr.).  In April 1995,  the District  Court  granted  Corning a summary
judgment  dismissing it from over 4,000 federal court cases.  On March 12, 1996,
the U.S.  Court of Appeals for the Eleventh  Circuit  dismissed the  plaintiffs'
appeal  from that  judgment.  In state  court  litigation,  Corning  was awarded
summary  judgment  in  California,  Connecticut,  Illinois,  Indiana,  Michigan,
Mississippi,  New Jersey, New York, Pennsylvania,  Tennessee, and Dallas, Harris
and Travis  Counties  in Texas,  thereby  dismissing  approximately  7,000 state
cases. In Louisiana,  Corning's  summary judgment was vacated by an intermediate
appeals court in Louisiana as premature. The Louisiana cases were transferred to
the United States District Court for the Eastern District of Michigan,  Southern
Division  (Michigan  Federal  Court) to which  substantially  all breast implant
cases were transferred in 1997. In the Michigan Federal Court,  Corning is named
as a defendant in  approximately  70 pending  cases  (including  some cases with
multiple  claimants),  in  addition  to the  transferred  Louisiana  cases.  The
Michigan  Federal Court heard Corning's  motion for summary judgment on February
27, 1998, but has not ruled.  Based upon the  information  developed to date and
recognizing  that the outcome of complex  litigation  is  uncertain,  management
believes that the risk of a materially  adverse result in the implant litigation
against  Corning is remote and believes the implant  litigation  against Corning
will be resolved without material impact on Corning's financial statements.

Federal Securities Cases. A federal securities class action lawsuit was filed in
1992 against Corning and certain individual  defendants by a class of purchasers
of Corning stock who allege  misrepresentations  and omissions of material facts
relative to the silicone gel breast implant  business  conducted by Dow Corning.
This  action is pending in the United  States  District  Court for the  Southern
District of New York. The class consists of those purchasers of Corning stock in
the period from June 14, 1989, to January 13, 1992,  who allegedly  purchased at
inflated   prices  due  to  the   non-disclosure   or  concealment  of  material
information.  No amount of damages is specified in the  complaint.  In 1997, the
Court  dismissed the  individual  defendants  from the case.  In December  1998,
Corning filed a motion for summary  judgment  requesting that all claims against
it be dismissed. Plaintiffs requested the opportunity to take depositions before
responding  to the  motion  for  summary  judgment.  The  discovery  process  is
continuing  and the Court  has set no  schedule  to  address  the still  pending
summary  judgment  motion.  Corning  intends to  continue  to defend this action
vigorously.  Based upon the information  developed to date and recognizing  that
the outcome of litigation is uncertain,  management believes that the likelihood
of a materially adverse verdict is remote.






From  December  2001 through  April 2002,  Corning and three of its officers and
directors were named defendants and served in four different  lawsuits  alleging
violations of the U.S.  securities  laws in connection  with Corning's  November
2000 offering of $2.7 billion zero coupon convertible  debentures,  due November
2015 and 30 million  shares of common stock.  These  lawsuits are pending in the
United States District Court for the Western District of New York and seek class
action  status.  In  addition,  the  Company  and the same  three  officers  and
directors were named and served in ten lawsuits alleging  selective  disclosures
and non-disclosures  that allegedly inflated the price of Corning's Common Stock
in the period from  September  2000 through June 2001.  The  plaintiffs in these
actions seek to represent  classes of  purchasers  of Corning's  stock in all or
part of the period indicated. Another lawsuit has been filed by a participant in
the Company's  Investment  Plan for Salaried  Employees,  purportedly as a class
action on behalf of participants in the Plan who purchased or held Corning stock
in a Plan  account.  Corning has not yet answered  these  lawsuits and there has
been no determination if they will proceed as a class action or who will be lead
counsel  for  plaintiffs.  Management  is  prepared  to  defend  these  lawsuits
vigorously  and,  recognizing  that the  outcome  of  litigation  is  uncertain,
believes it has strong defenses to the claims alleged in the complaints.

Pittsburgh Corning Corporation.  Corning and PPG Industries, Inc. (PPG) each own
50% of the  capital  stock of  Pittsburgh  Corning  Corporation  (PCC).  PCC and
several other defendants, including PPG and Corning, 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 United  States
Bankruptcy Court for the Western District of Pennsylvania.  As of the bankruptcy
filing,  PCC had in  excess  of  140,000  open  claims  and now has in excess of
240,000 open claims.

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

On May 14, 2002,  PPG announced  that it had agreed with several other  parties,
including certain of its insurance  carriers and  representatives of current and
future asbestos claimants,  on the terms of a settlement arrangement relating to
asbestos claims against PPG and PCC. This settlement  would be incorporated in a
plan of reorganization  for PCC, and would be subject to a favorable vote by 75%
of the asbestos claimants voting on the PCC reorganization plan, and approval by
the  Bankruptcy   Court.   According  to  its   announcement,   PPG  would  make
contributions to a trust under the reorganization plan consisting of:
..    cash payments by PPG's  participating  insurance  carriers of approximately
     $1.7 billion over a 21 year period;
..    the  assignment  of rights to  certain  proceeds  of  policies  by  certain
     insurance carriers not participating in the settlement;
..    PPG's shares in PCC and Pittsburgh Corning Europe, a Belgian corporation;
..    1,388,889 shares of PPG's common stock; and
..    cash payments from PPG of approximately $998 million over 21 years.
PPG announced on July 18, 2002,  that it recorded a charge in its second quarter
results of $495 million after-tax related to this settlement.

The Injunction Period has been extended as to Corning until July 31, 2002. Under
the terms of the Bankruptcy  Court's Order,  Corning will have 90 days following
expiration of the Injunction Period to seek removal and transfer of stayed cases
that have not been resolved  through a plan of  reorganization.  At the time PCC
filed for bankruptcy protection,  there were approximately12,400  claims pending
against  Corning  alleging  various  theories of liability  based on exposure to
PCC's asbestos  products.  Although the outcome of litigation and the bankruptcy
case is uncertain, management believes that the separate corporate status of PCC
will  continue to be upheld and that  Corning has strong  legal  defenses to any
claims of direct liability arising from PCC's asbestos products.

After PPG announced its settlement,  negotiations between representatives of the
asbestos  claimants  and Corning  became more  intensive but failed to produce a
settlement.  In Corning's negotiations with the asbestos claimants, the range of
negotiations  has been framed by demands  translating  into  approximately  $400
million to $500 million in net present value (inclusive of insurance),  which is
significantly   lower  than  that  reflected  in  the  PPG   settlement.   These
negotiations  have been  difficult,  and no  assurances  can be  offered  that a
settlement can be concluded within this range.






Based on negotiations to date, management believes that a settlement (if one can
be reached) would probably include some  combination of the following  elements:
cash  payments  by Corning  over time into a trust;  contribution  of  Corning's
shares in PCC and Pittsburgh  Corning  Europe and common shares of Corning;  and
insurance through cash payments or assignments of certain rights.  However,  the
structure of a settlement  has not been agreed and  management  can not estimate
the  likelihood  that any  settlement  will  emerge from  negotiations  with the
claimants or Corning's insurers, or the probability that Corning will be able to
secure a release through PCC's plan of reorganization  upon terms and conditions
satisfactory to Corning.

At this time,  it appears more likely than not that  Corning  will  litigate the
asbestos cases, but will continue to explore a settlement through the bankruptcy
process.  The exposure for this asbestos litigation (net of insurance) cannot be
estimated at this time due to the wide range of potential  outcomes.  Corning is
also currently named in approximately  14,000 other cases alleging injuries from
asbestos.  Those cases have been covered by insurance without material impact to
Corning to date. Asbestos litigation is inherently difficult, and the outcome of
litigation is uncertain.

As a result of PCC's bankruptcy filing,  Corning recorded an after-tax charge of
$36 million in the first quarter of 2000 to impair its entire  investment in PCC
and discontinued  recognition of equity earnings.  At June 30, 2002, Corning has
not  recorded  any  additional  charges  associated  with  the  outcome  of this
litigation.  As noted above, management believes there are strong legal defenses
to the claims against Corning.  Management estimates that the insurance coverage
available to Corning related to these matters exceeds $600 million and depending
on the outcome of potential  coverage  issues may exceed $1 billion.  Management
estimates  that  the  low end of the  range  of loss  resulting  from  continued
litigation is not material.  Due to the inherent uncertainty of asbestos related
litigation,  management  is unable to estimate  the maximum  exposure  from this
litigation.

Alternatively,  in the event that  Corning  and its  insurers  agree to a global
settlement of the  PCC-related  cases through the PCC  bankruptcy  process,  the
outcome may be material  to the  results of  operations  for the period in which
such costs, if any, are recognized. Management expects that any after-tax charge
resulting from Corning's  contributions  as part of a possible  settlement could
approximate  $100  million to $150  million  and will  depend upon the timing of
contributions  and  relative  participation  of insurance  carriers.  Management
cannot provide  assurances  that the ultimate  outcome of a settlement  would be
within this range.

Under either  alternative  management  believes  these  matters will be resolved
without material impact to Corning's overall financial position or its liquidity

Astrium. In December of 2000, Astrium,  SAS and Astrium,  Ltd. filed a complaint
for negligence in the United States  District Court for the Central  District of
California against TRW, Inc., Pilkington Optronics Inc., Corning NetOptix, Inc.,
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.  Corning  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  which  Astrium may have  experienced.  Formal  discovery
through document  production and depositions has begun and will continue through
August 2002. In April 2002,  the Court granted  motions for summary  judgment by
Corning and other  defendants to dismiss the  negligence  claims.  The Court has
permitted plaintiffs to add fraud and negligent misrepresentation claims against
all defendants and a breach of warranty claim against  Corning  NetOptix,  Inc.,
OFC  Corporation  and Optical  Filter  Corporation.  Based upon the current case
management  order, a trial has been scheduled for April 15, 2003. Based upon the
information  developed to date and recognizing that the outcome of litigation is
uncertain,  management  believes that there are strong  defenses to these claims
and  believes  they  will be  resolved  without  material  impact  on  Corning's
financial statements.








ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)   Exhibits

               10.  Agreement  and  Release  between  John W. Loose and  Corning
                    Incorporated dated April 12, 2002.
               12.  Ratio of earnings to fixed  charges for the six months ended
                    June 30, 2002, and 2001.

         (b)   Reports on Form 8-K

               A  report  on Form  8-K  dated  April  15,  2002,  was  filed  in
               connection with expected first quarter results and  restructuring
               actions.

               A  report  on Form  8-K  dated  April  22,  2002,  was  filed  in
               connection with the registrant's first quarter 2002 results.

Other items under Part II are not applicable.






                                   SIGNATURES
                                   ----------



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








                                           CORNING INCORPORATED
                                               (Registrant)






    July 24, 2002                           /s/ JAMES B. FLAWS
---------------------       --------------------------------------------------
        Date                                  James B. Flaws
                                 Vice Chairman and Chief Financial Officer
                                       (Principal Financial Officer)





    July 24, 2002                         /s/ KATHERINE A. ASBECK
---------------------       --------------------------------------------------
        Date                                Katherine A. Asbeck
                                      Senior Vice President and Controller
                                         (Principal Accounting Officer)






                                                                      EXHIBIT 10
                                                                      ----------


                              AGREEMENT AND RELEASE
                              ---------------------

This  Agreement  and Release (the  "Agreement")  is entered into as of April 12,
2002 (the  "Effective  Date") between  Corning  Incorporated  (together with its
successor and assigns,  "Corning") and John W. Loose (the "Executive").  Corning
and Executive (individually,  a "Party" and together, the "Parties") in exchange
for their mutual promises herein set forth, hereby agree to the covenants as set
forth below.

     I.   Effective  April 12, 2002,  Executive  resigned as President and Chief
          Executive  Officer of Corning and effective April 25, 2002,  Executive
          resigned as a director of Corning and its affiliates.  Executive shall
          continue to be an employee and paid his full compensation and benefits
          through  April 30, 2002 ("Last Paid Day").  Effective May 1, 2002 (the
          "Retirement  Date"),  Executive  will  retire and will be  eligible to
          commence  pension  benefits from Corning  retroactive  to such date in
          accordance  with the provisions of Section II-5 below. As of April 12,
          2002,  Executive  shall  have no  responsibility  to act on  behalf of
          Corning  or any  affiliate  and shall not be deemed by Corning to have
          any  management  responsibilities  with  respect  to the  business  or
          operations of Corning or any affiliate.

     II.  The following benefits shall be provided by Corning:

          1.   SALARY AND BONUS AND OTHER DIRECT PAYMENTS
               ------------------------------------------

               Executive  will receive his current base salary  through his Last
               Paid Day. No prorated  cash  payments will be made for 2002 under
               the  Variable   Compensation   or  GoalSharing   programs;   full
               consideration  for these  amounts  has  already  been  considered
               within the lump-sum payment specified below.

               Within  30 days of his Last Paid Day,  Executive  will  receive a
               gross lump-sum  payment of $5,242,500,  less  applicable  payroll
               taxes. This payment represents payment of:

               -    three (3) years of base salary at $850,000 per year,
               -    three (3) years of target  Variable  Compensation at 100% of
                    base salary,
               -    three (3) years of target  GoalSharing at 5% of base salary,
                    and
               -    a payment of $15,000 in lieu of outplacement assistance.

               Within  30 days of his Last Paid Day,  Executive  will  receive a
               gross  lump-sum  payment of  $660,000,  less  applicable  payroll
               taxes.  This  payment is in lieu of  continuing  office  support,
               access  to  aircraft,  payment  of  legal  fees to  review  these
               agreements  or payment  for any  unused  vacation  days.  Through
               December 31, 2002,  Executive shall have reasonable access to the
               services of his current secretary on a mutually acceptable basis.
               Other  than as set forth  herein,  Corning  will have no  ongoing
               commitments   to  Executive  for  office  support  or  access  to
               aircraft.

               None of the payments  referenced  above will be  considered to be
               eligible   earnings   for   purposes  of  any   company-sponsored
               retirement or benefit plan.

          2.   GROUP INSURANCE
               ---------------

               Medical,   dental  and  life  insurance   coverage,   subject  to
               conditions heretofore in effect, will remain in effect though the
               Retirement   Date.   Thereafter,   Executive   and  his  eligible
               dependents  shall be entitled to such  retiree  medical  coverage
               (subject to any applicable cost sharing provisions) and Executive
               shall be entitled to retiree life insurance coverage, both as may
               be  provided by Corning to  employees  of  comparable  status and
               years of service who retired on or after their normal  retirement
               date.

          3.   LONG-TERM DISABILITY
               --------------------

               Under  the terms of the  long-term  disability  plans,  long-term
               disability  coverage is provided only to active  employees.  As a
               result, this coverage ceases on Executive's Last Paid Day.

          4.   INVESTMENT AND DEFERRAL PLANS
               -----------------------------

               All  moneys  in  Executive's  Corning  Investment  Plan  account,
               Management Deferral Plan account and Supplemental Investment Plan
               account are fully vested.  Balances  accrued under the Management
               Deferral Plan and the Corning  Supplemental  Investment Plan will
               be  distributed  to  Executive  after  his  Retirement  Date in a
               lump-sum  within 30 days of the  Retirement  Date,  with earnings
               credited to such account  balances up to and  including  the date
               preceding the date of distribution.  Executive's account balances
               in the Corning Investment Plan shall be subject to the continuing
               terms of the Plan.

          5.   PENSION PLAN
               ------------

               In lieu of the  pension  benefit  to which  he would be  entitled
               pursuant to Corning's  Executive  Supplemental  Pension Plan (the
               "SERP"),  commencing on the Retirement  Date  Executive  shall be
               entitled to a total (qualified and nonqualified) annual unreduced
               single life annuity  gross  taxable  pension  benefit of $925,000
               (Total  Benefit)  for  Executive's  life  (with a  six-year  term
               certain). The nonqualified benefit (Nonqualified Benefit) will be
               the Total Benefit less the annual pension benefit, if any, due to
               him  pursuant to  Corning's  qualified  Pension Plan for Salaried
               Employees. Executive may elect alternative forms of payment (e.g.
               a  joint  and   survivor   annuity   benefit  with  his  spouse);
               alternative  forms of payment will be  actuarially  determined in
               accordance with the provisions of Corning  retirement  plans. Any
               amounts held for the benefit of Executive under the secular trust
               for  the  SERP,  of  which  U.S.  Trust  is  currently   trustee,
               (including  earnings  credited on such  amounts from time to time
               under such trust) shall be factored into  determining how much of
               the Total Benefit will be offset as a result of these prefundings
               by  Corning.  Subject  to this  Section  II-5,  the  Nonqualified
               Benefit  hereunder  (which,  as paid out  pursuant to the annuity
               contract   described   herein,   shall  take  into   account  tax
               considerations  as noted in the next sentence)  shall be provided
               pursuant to a fixed  annuity  contract  acquired from MetLife and
               transferred to Executive as soon as administratively  practicable
               after the execution of this Agreement.  It is understood that the
               annuity  contract will provide an annual payment which takes into
               account tax treatment to the executive of (i) the transfer of the
               annuity  contract to him and (ii) the  subsequent  annual annuity
               payments to him  pursuant to the annuity  contract.  The terms of
               the annuity  contract shall be subject to Executive's  reasonable
               review and Corning  shall seek to provide such terms as Executive
               may  reasonably  request.  In lieu of  having  such  Nonqualified
               Benefit  (which,  as paid out pursuant to the  aforesaid  annuity
               contract, shall take into account tax considerations as set forth
               above)  provided  pursuant  to the  aforesaid  annuity  contract,
               Executive  may  elect on or prior to May 28,  2002 to  receive  a
               taxable  lump-sum  payment  which  after all taxes on that amount
               equals  the price  that  would  have been  charged  to Corning by
               MetLife to acquire the annuity contract from MetLife as set forth
               above. Executive may make such election by giving Corning written
               notice to that effect.  In the event Executive fails to make such
               an election on or prior to May 28, 2002, the Nonqualified Benefit
               (which,  as paid out pursuant to the aforesaid  annuity  contract
               shall take into  account tax  considerations  as set forth above)
               shall be  provided  to him in the form of the  aforesaid  annuity
               contract. For the avoidance of doubt, whether Executive elects to
               receive his  Nonqualified  Benefit (which shall take into account
               tax  considerations as set forth above) in the form of an annuity
               contract  or a lump-sum  payment,  he will be  entitled  to gross
               taxable  income which after taxes will provide him with an amount
               equal to the price of the MetLife annuity  contract  contemplated
               by this  Agreement as set forth above and Corning shall  withhold
               from such gross  taxable  income an  appropriate  estimate of all
               taxes  applicable to Executive,  such  withholding  to be made by
               Corning in accordance with its past practices.

          6.   STOCK OPTIONS
               -------------

               In accordance with IRS rules and regulations, all Incentive Stock
               Options   ("ISOs")   will   automatically   be   converted   into
               nonqualified  stock options 90 days after Executive's  Retirement
               Date.

               Executive  has been  granted  Corning  stock  options  during his
               career  with  Corning.  Except as noted  above,  all other  stock
               option  terms  will  remain  unchanged.  For all  stock  options,
               including  the ISOs,  the stock  options will continue to vest in
               accordance  with their  original  schedules and all stock options
               shall remain exercisable for their originally scheduled terms.

          7.   RESTRICTED STOCK AWARDS
               -----------------------

               Executive  has a total of  60,000  shares  of  restricted  stock,
               subject to restrictions on continued employment until retirement.
               Executive  will  have all  restrictions  on all of  these  shares
               lifted as of the  Retirement  Date,  at which point these  shares
               will become taxable.  All shares  delivered to Executive shall be
               fully  registered and freely  transferable and not subject to any
               restrictions (other than restrictions noted in IV below).

               Corning will  withhold a portion of these shares for required tax
               withholdings  and distribute the net shares to Executive free and
               clear of all restrictions.

          8.   GENERAL
               -------

               A.   Aircraft/Financial Counseling Program/Home Security
                    ---------------------------------------------------

               Executive may request  personal use of the corporate  aircraft up
               through the Retirement  Date and any charges for personal use, if
               any,  shall be determined in accordance  with Corning  policy and
               applied  against  his  annual  perquisite  allowance.  After  the
               Retirement   Date,  any  unused   balance  in  Executive's   2002
               Aircraft/Financial  Counseling perquisite may be used for payment
               of actual financial counseling,  legal and home security invoices
               incurred and submitted in accordance  with Corning's  policies up
               through November 30, 2002.

               B.   Relocation And Support
                    ----------------------

               Up until  December  31,  2004,  within  30  days' of  Executive's
               written  request,   Corning  will  cause  Executive's   principal
               residence  in Corning,  New York to be  purchased  by  Prudential
               Relocation  Services at a value not less than  Executive's  total
               cost for the  residence.  At Corning's  request,  Executive  will
               provide  Corning with the  information  necessary to document his
               total cost for such residence.

               Corning will also pay for the  reasonable  costs of  transporting
               Executive's household goods to a domestic U.S. location (or up to
               two domestic U.S.  locations) of Executive's  choice and will pay
               for the reasonable  costs of storing such household  goods for up
               to 12 months,  provided that Corning will not pay for any monthly
               storage expenses incurred for storage after January 1, 2005.

               As of April 12, 2002 and up until such  residence is purchased in
               accordance with this Section  II-8.B,  Corning agrees to maintain
               the home security system and the monitoring of such system and to
               provide support and servicing for all operating systems including
               the fiber  optic  service and to continue  the  provision  of all
               existing data fees. Corning also agrees to continue to provide IT
               support to Executive, as needed.

               C.   Vacation
                    --------

               All  vacation  allowances  have been  factored  into the payments
               being made under this  Agreement so that no  additional  payments
               for unused vacation will be made.

               D.   Home Security System
                    --------------------

               After the  Retirement  Date,  Corning  agrees  to  install a home
               security  system in a residence of  Executive's  choice,  up to a
               maximum of $35,000.

               E.   Indemnification
                    ---------------

               (a) Corning  agrees  that,  if  Executive  is made a party to, is
               threatened to be made a party to,  receives any legal process in,
               or receives any discovery  request or request for  information in
               connection with, any action,  suit or proceeding,  whether civil,
               criminal,   administrative,   investigative   or   otherwise   (a
               "Proceeding"),  by  reason  of the fact  that he was a  director,
               officer,  employee,   consultant,   representative  or  agent  of
               Corning, one of its subsidiaries, affiliates or equity companies,
               including service with respect to employee benefit plans, whether
               or not the basis of such Proceeding is Executive's alleged action
               in an official  capacity  while  serving as a director,  officer,
               member, employee, trustee, consultant, representative or agent of
               Corning  or  one  of  its  subsidiaries,   affiliates  or  equity
               companies,  including  service with  respect to employee  benefit
               plans,  Executive  shall  be  indemnified  and held  harmless  by
               Corning  to  the  fullest  extent   permitted  or  authorized  by
               Corning's   Certificate  of  Incorporation  and  By-Laws  or,  if
               greater,  by  applicable  law,  including,   without  limitation,
               Sections 721 through 725 of the Business  Corporation  Law of the
               State of New York, as in effect as of the Effective Date, against
               any and all costs,  expenses,  liabilities and losses (including,
               without limitation, reasonable attorneys' fees, judgments, fines,
               ERISA excise taxes or penalties and amounts paid or to be paid in
               settlement)  incurred  or  suffered by  Executive  in  connection
               therewith,   and  such  indemnification   shall  continue  as  to
               Executive  even though he has ceased to be a  director,  officer,
               member, employee, trustee, consultant, representative or agent of
               Corning  or  one  of  its  subsidiaries,   affiliates  or  equity
               companies,  including any employee benefit plans, and shall inure
               to   the   benefit   of   Executive's   heirs,    executors   and
               administrators.   Corning  shall  reimburse   Executive  for  all
               reasonable  costs,  expenses,  liabilities and losses (as defined
               above) incurred by him in connection  with any Proceeding  within
               30 business  days after  receipt by Corning of a written  request
               for such  reimbursement,  with  sufficient  documentation  of the
               amounts  and  details of such costs,  expenses,  liabilities  and
               losses. Such request shall include an undertaking by Executive to
               repay  within 30 business  days after  demand by Corning the full
               amount of such  reimbursements,  or such  portion  thereof  he is
               obligated to repay, as the case may be, if it shall ultimately be
               determined that he is not entitled to be indemnified against such
               costs,  expenses,  liabilities or losses. Nothing in this Section
               II-8.E  shall be  construed  as  reducing or waiving any right to
               indemnification,  or  advancement  of expenses,  Executive  would
               otherwise have under Corning's or any affiliates'  Certificate of
               Incorporation or other governing document,  by-laws, any board of
               directors'  resolution,  any other agreement or under  applicable
               law.

               (b) As of  April  12,  2002 and  thereafter,  Corning  agrees  to
               continue  and  maintain  a  directors'  and  officers'  liability
               insurance policy covering  Executive at a level, and on terms and
               conditions,  no less  favorable to him than the coverage  Corning
               provides its directors and senior-level officers, until such time
               as suits against Executive are no longer permitted by law.

          F.   Reimbursement of Business Expenses
               ----------------------------------

               Executive will be reimbursed for all business  expenses  incurred
               by him up to and including the Retirement Date in accordance with
               Corning's policies, provided that all such expenses and customary
               documentation  are  submitted  to  Corning no later than July 31,
               2002.

          G.   280G Gross-Up
               -------------

               If there is a Change  of  Control  of  Corning  (as that  term is
               defined within the stock option  agreements  between  Corning and
               Executive)  within twelve months  following the Effective Date of
               this Agreement, and in the event that any payment or benefit made
               or provided to or for the benefit of Executive in connection with
               this Agreement or his employment  with Corning or the termination
               thereof (a  "Payment")  is determined to be subject to any excise
               tax  ("Excise  Tax")  imposed  by  Section  4999 of the  Internal
               Revenue Code (or any  successor to such  Section),  Corning shall
               pay to  Executive,  prior to the time any  Excise  Tax is payable
               with respect to such Payment (through  withholding or otherwise),
               an additional  amount which,  after the imposition of all income,
               employment,  excise and other taxes thereon,  is equal to the sum
               of (i) the Excise Tax on such  Payment  plus (ii) any penalty and
               interest  assessments   associated  with  such  Excise  Tax.  The
               determination of whether any Payment is subject to any Excise Tax
               and, if so, the amount to be paid by Corning to Executive and the
               time of payment  pursuant to this Section II-8.G shall be made by
               an independent  auditor jointly  selected by the Parties and paid
               by Corning.  Executive will make all reasonable efforts to assist
               Corning in  rebutting  any  presumption  that such  Payments  are
               subject to the  Excise Tax and  Executive  will  promptly  notify
               Corning  of any IRS notice  (within  30 days of receipt  thereof)
               demanding  such Payment or alleging that  Executive is subject to
               such Excise Tax.

          H.   Charitable Insurance Program
               ----------------------------

               So long as Corning  maintains the  Charitable  Insurance  Program
               (the "CIP") for any former  external  or internal  members of its
               board of directors,  Executive shall continue to be a participant
               in the CIP on terms and  conditions no less  favorable than those
               provided other former internal board participants in the CIP.

          I.   Other Agreements
               ----------------

               Executive agrees and acknowledges that this Agreement  supersedes
               and replaces the letter from Corning to Executive  dated July 27,
               1998 dealing with the Executive  Severance  Policy and the Change
               In Control  Agreement between Executive and Corning dated October
               4, 2000.  Upon  executing this  Agreement,  the July 27, 1998 and
               October 4, 2000 agreements referenced in this section will become
               null and void.

III. Except as otherwise  provided in Sections II-5 and II-8.G,  Executive shall
     be responsible for the payment of any and all required  Federal,  state and
     local taxes  incurred,  or to be incurred,  in connection  with any amounts
     payable  to  Executive  under  this  Agreement.  Notwithstanding  any other
     provision  of this  Agreement,  Corning may withhold  from amounts  payable
     under this  Agreement all Federal,  state and local taxes that are required
     to be withheld by applicable laws and regulations.

IV.  Executive  further  acknowledges and understands that Executive will remain
     subject  to all SEC  insider  rules  and  regulations  in  accordance  with
     applicable law. Both parties agree to provide all of the timely information
     necessary  to assist  Corning  and/or  Executive  to  prepare  and file any
     filings required to be filed by Executive under Federal or state securities
     law.

     Executive  acknowledges  and understands  that Corning will disclose to the
     SEC all of the information  that is legally  required to be disclosed about
     this  Agreement  and  Executive's  retirement  from  Corning  (e.g.,  proxy
     reporting).  Until this Agreement is publicly disclosed, the Parties hereto
     agree  that  the  terms  of  this  Agreement  are  to  be  kept  completely
     confidential  and will not be  revealed  other than to the  Party's  legal,
     financial or tax counsel.  Anything herein to the contrary notwithstanding,
     Executive may disclose all or a portion of this Agreement (a) to his spouse
     or immediate family members, (b) as necessary to assert his legal rights or
     discharge his legal obligations hereunder or under any other agreement with
     Corning or an affiliate or (c) to any prospective  employer but only to the
     extent  necessary to inform such employer  concerning any  restrictions  or
     lack thereof on Executive's ability to perform services for such employer.

V.   Anything herein to the contrary notwithstanding,  nothing in this Section V
     shall  preclude  Executive from owning up to one percent (1%) of the voting
     stock or other equity  securities of any publicly traded entity and nothing
     in this  Agreement  is intended to prevent  Executive  from  serving on the
     Board,  or on any  executive  committee,  of Polaroid.  In order to prevent
     improper  disclosure  or use of  confidential  information  and other trade
     secrets,  and to protect Corning from unfair competition,  Executive agrees
     that, absent the prior express written consent of Corning, through December
     31, 2002 (the "Restricted  Period"),  he shall not, directly or indirectly,
     by himself or through or on behalf of any other person, firm,  partnership,
     company,  corporation,  representative  or  agent  within  the  "Restricted
     Territory" set forth below:

     (i) Engage in or be employed by any business in competition with Corning by
     soliciting,  selling,  manufacturing,  developing,  or  providing  goods or
     services  similar to those  manufactured,  developed or provided by Corning
     during  Executive's  tenure as an executive officer with Corning in the two
     years prior to the Effective Date; or

     (ii) Solicit or attempt to solicit or induce any person employed by Corning
     or any parent,  subsidiary  or affiliated  corporation  of Corning to leave
     such  employment by improper means or to break his or her  non-compete  and
     non-disclosure  agreement, or any other employment agreement, with Corning.
     Notwithstanding anything to the contrary in this subsection,  Executive may
     provide,  from time to time,  individual  personal  references (that do not
     indicate a pattern of making such personal  references) to individuals  who
     request such references from Executive.

     For the  purposes  of this  Section  V, in view of  Executive's  roles  and
     responsibilities  as President and Chief Executive Officer of Corning,  the
     "Restricted  Territory"  shall  consist  of the  NAFTA  countries,  and any
     country,  region or state in which Executive or other  executives or senior
     managers of Corning actively solicited,  sold,  manufactured,  developed or
     provided goods or services on behalf of Corning.

VI.  Except as otherwise provided in Section II-8.B above, Executive agrees that
     he will return to Corning all  company-owned  property in his possession as
     of the  Retirement  Date,  including keys to the premises owned by Corning,
     and all papers,  work papers,  files,  documents,  blueprints,  microfilms,
     data-disks and diskettes,  booklets, manuals, customer lists, credit cards,
     and other material and property  Executive has received in connection  with
     Executive's  employment with Corning without  retaining any copies thereof.
     Anything herein to the contrary notwithstanding, Executive will be entitled
     to retain (a) any computers and other office equipment at his home offices,
     (b) personal awards and recognition  gifts,  (c) papers and other materials
     of a personal nature, including, but not limited to, photographs,  personal
     diaries,  calendars,   Rolodexes,  personal  files  and  phone  books,  (d)
     information  showing  his  compensation  or relating  to  reimbursement  of
     expenses, (e) information that he reasonably believes may be needed for tax
     purposes and (f) copies of plans,  programs and agreements  relating to his
     employment,  or  termination  thereof,  with  Corning.  Corning  agrees  to
     maintain Executive's email address at Corning and to provide Executive with
     access thereto through December 31, 2002.

VII. Executive  shall  not  intentionally  disclose  or make  accessible  to any
     business,  person  or  entity,  or  intentionally  make use of,  any  trade
     secrets,   confidential   proprietary   knowledge  or  other   confidential
     information of Corning,  which he shall have obtained during his employment
     by  Corning.   "Confidential   Information"   means  all  confidential  and
     proprietary  information  regarding  or relating to any aspect of Corning's
     business,  including,  but not  limited  to,  that  relating to existing or
     contemplated   business  plans,   activities  or  procedures,   current  or
     prospective  customers,  current or prospective contracts or other business
     arrangements  which information  Executive  acquired in connection with his
     employment with Corning;  provided however,  that Confidential  Information
     shall not  include  any  information  publicly  known or known  within  the
     relevant  trade  or  industry  (other  than  as a  result  on  unauthorized
     disclosure  by  Executive in violation of this Section VII) or any specific
     information  or type of information  generally not considered  Confidential
     Information or any information  disclosed by Corning or any officer thereof
     to a third party without  restriction  on the use or further  disclosure of
     such  information.  Anything  herein to the contrary  notwithstanding,  the
     provision  of this  Section  VII will not  apply  (a)  when  disclosure  is
     required by law or by any court, arbitrator,  mediator or administrative or
     legislative   body   (including   any  committee   thereof)  with  apparent
     jurisdiction  to  order  Executive  to  disclose  or  make  accessible  any
     information  or (b) with respect to any other  litigation,  arbitration  or
     mediation  involving  this  Agreement,  including,  but not limited to, the
     enforcement of this Agreement.

VIII.Until the second  anniversary  of the  Retirement  Date,  Executive  hereby
     agrees to assist Corning, upon reasonable request by Corning, in connection
     with any pending or future dispute, litigation or investigation ("Dispute")
     involving  Corning,  provided  such  Dispute  relates  to a matter of which
     Executive has such knowledge as to reasonably  warrant such request for his
     assistance or for which he had direct or close supervisory responsibilities
     prior to the Effective Date. Corning shall promptly reimburse Executive for
     reasonable  costs and expenses  incurred by Executive  in  connection  with
     rendering  assistance to Corning in connection with any such Dispute.  Such
     expenses  shall  be  reimbursed  or  advanced  promptly  after  Executive's
     submission to Corning of statements  in such  reasonable  detail as Corning
     may require. For assistance provided pursuant to this Section VIII, Corning
     shall  pay  Executive  a per diem of  $4,000.  Unless  Executive  otherwise
     consents,  time devoted by Executive in assisting  Corning pursuant to this
     Section VIII shall not exceed 10 days for each  12-month  period  ending on
     the  anniversary of the Retirement  Date.  Nothing in this paragraph  shall
     require  Corning  to  provide a per diem  payment  when the  appearance  of
     Executive is required pursuant to legal process.

IX.  Executive  irrevocably and unconditionally  releases and forever discharges
     any claims, demands, obligations, liabilities and causes of action, whether
     known or unknown  (including,  but not  limited to,  claims for  attorneys'
     fees, expenses and/or costs),  arising out of or relating to his employment
     with Corning, or the termination  thereof,  that he has or may have against
     Corning, its past or present affiliates or subsidiaries and/or any of their
     predecessors  or  successors  (cumulatively  referred to as  "Corning"  for
     purposes of this Section IX and Section X below) and/or the past or present
     officers and  directors  of Corning  (collectively,  the "Company  Released
     Parties"),  up to and  including  the Effective  Date,  including,  without
     limitation, any claim, demand, obligation, liability or cause of action for
     discrimination  under the Age  Discrimination in Employment Act (ADEA), the
     Civil Rights Act of 1964,  the Civil Rights Act of 1991, the Americans With
     Disabilities  Act  of  1990,  other  federal,  state  and  local  statutes,
     ordinances, executive orders and regulations prohibiting age, race, sex and
     other types of discrimination,  the Employee Retirement Income Security Act
     (ERISA)  (other than any claim which cannot be waived by law), the New York
     Executive Law 290 et. seq. and any other federal or state law.  Anything to
     the  contrary  notwithstanding  in this  Agreement,  nothing  herein  shall
     release any Company  Release  Party from any claims or damages based on (i)
     any right Executive may have to enforce this  Agreement,  (ii) any right or
     claim that arises after the Effective  Date,  (iii) any right Executive may
     have to vested  benefits or entitlements  under any applicable  retirement,
     medical,  life  insurance  or  equity  plan or  program  of  Corning,  (iv)
     Executive's  eligibility for  indemnification in accordance with applicable
     laws,  the  certificate of  incorporation  and/or by-laws of Corning or any
     affiliate, under any other agreement or otherwise, (v) Executive's coverage
     under any applicable  insurance policy or (vi) any right Executive may have
     to  obtain  contribution  as  permitted  by law in the  event  of  entry of
     judgment  against  him as a result of any act or  failure  to act for which
     Executive and Corning are jointly liable.

X.   Corning,  on behalf  of itself  and all  other  Company  Released  Parties,
     irrevocably and unconditionally releases and forever discharges any claims,
     demands,  obligations,  liabilities and causes of action,  whether known or
     unknown  (including,  but not  limited  to,  claims  for  attorneys'  fees,
     expenses  and/or  costs),   arising  out  of  or  relating  to  Executive's
     employment  with Corning,  or the termination  thereof,  that it has or may
     have against  Executive,  his dependents,  heirs,  administrators,  agents,
     executors,  successors and assigns  (collectively,  the "Executive Released
     Parties"),  up to and  including  the Effective  Date,  including,  without
     limitation,  any claim,  demand,  obligation,  liability or cause of action
     arising under Federal,  state or local  employment law or ordinance,  tort,
     contract,  breach of public policy theory or alleged violation of any other
     legal  or   fiduciary   obligation.   Anything   herein  to  the   contrary
     notwithstanding  in  this  Agreement,  nothing  herein  shall  release  the
     Executive  Released  Parties  from any claims or  damages  based on (i) any
     right Corning may have to enforce this  Agreement,  (ii) any right or claim
     that arises after the Effective Date or (iii) any right Corning may have to
     obtain  contribution  as permitted by law in the event of entry of judgment
     against it as a result of any act or failure to act for which  Corning  and
     Executive are jointly liable.

XI.  Executive  acknowledges  that he has been given the opportunity to consider
     this Agreement for at least 21 days, which is a reasonable  period of time,
     that he has been  advised to consult  with an attorney in relation  thereto
     prior to  executing  this  Agreement,  and that he has  consulted  with and
     engaged an attorney to represent him in connection with the negotiation and
     drafting of this Agreement.

XII. For a period of seven days  following  the  Effective  Date,  Executive may
     revoke this  Agreement by delivery of a written  notice  revoking the same,
     within  that  seven-day  period,  to the office of John P.  MacMahon,  Vice
     President,  Worldwide  Compensation.  Upon such revocation,  this Agreement
     shall become null and void.

XIII.This  Agreement  shall be governed by and construed in accordance  with New
     York  statutory  and  decisional  law,  without  reference to principles of
     conflicts of law. Further,  this Agreement and all the terms and provisions
     thereof  shall be binding  upon and/or  shall inure to, as the case may be,
     the  Parties  and also  upon or to their  respective  heirs (in the case of
     Executive), personal representatives,  successors and assigns. No rights or
     obligations  of Corning under this Agreement may be assigned or transferred
     by Corning  without  Executive's  prior written  consent,  except that such
     rights and obligations may be assigned or transferred  pursuant to a merger
     or consolidation in which Corning is not the continuing  entity, or a sale,
     liquidation  or  other  disposition  of  all  or  substantially  all of the
     business or assets of Corning,  provided that the assignee or transferee is
     the  successor  to all or  substantially  all of the  business or assets of
     Corning  and  assumes the  liabilities,  obligations  and duties of Corning
     under this  Agreement.  Corning  further  agrees that,  in the event of any
     disposition of its business or assets described in the preceding  sentence,
     it shall take  whatever  action it can to cause such assignee or transferee
     expressly  to assume  the  liabilities,  obligations  and duties of Corning
     hereunder.  No  rights or  obligations  of  Executive  may be  assigned  or
     transferred by Executive,  without  Corning's prior written consent,  other
     than his rights to compensation and benefits, which may be transferred only
     by will or operation of law,  provided,  however,  that Executive  shall be
     entitled,  to the extent permitted by applicable law or the relevant plans,
     to  select  and  change a  beneficiary  or  beneficiaries  to  receive  any
     compensation  or benefit  hereunder  following his death by giving  Corning
     written notice  thereof.  In the event of  Executive's  death or a judicial
     determination  of  his  incompetence,   references  in  this  Agreement  to
     Executive shall be deemed, where appropriate,  to refer to his beneficiary,
     estate or other legal representative.

XIV. Executive  intends  to be  legally  bound by this  Agreement  and has read,
     signed,  sealed and  delivered it  voluntarily,  without  coercion and with
     knowledge of the nature and consequences  thereof, and acknowledges receipt
     of good consideration in addition to the provisions of this Agreement.

XV.  Corning  represents  and  warrants  that (i) the  execution,  delivery  and
     performance  of this  Agreement  by  Corning  has been  fully  and  validly
     authorized  by  all  necessary   corporate   action   (including,   without
     limitation,  any action  required to be taken by the Board of  Directors of
     Corning or any committee thereof),  (ii) the officer signing this Agreement
     is duly  authorized and empowered to do so, (iii) the  execution,  delivery
     and  performance of this  Agreement  does not violate any  applicable  law,
     regulation,  order, judgment or decree or any agreement,  plan or corporate
     governance document to which Corning is a party or by which it is bound and
     (iv) upon execution and delivery of this Agreement by the Parties, it shall
     be a valid and  binding  obligation  of Corning  enforceable  against it in
     accordance with its terms,  except to the extent that enforceability may be
     limited by applicable bankruptcy,  insolvency or similar laws affecting the
     enforcement of creditors' rights generally.

XVI. Any  controversy,  dispute  or claim  arising  out of or  relating  to this
     Agreement,  any  other  agreement  or  arrangement  between  Executive  and
     Corning,  Executive's  employment with Corning,  or the termination thereof
     (collectively,  "Covered Claims") shall be resolved by binding arbitration,
     to be held in the Borough of Manhattan in New York City, in accordance with
     the  Commercial  Arbitration  Rules  (and not the  National  Rules  for the
     Resolution of Employment Disputes) of the American Arbitration  Association
     and this Section XVI. Judgment upon the award rendered by the arbitrator(s)
     may be entered in any court having  jurisdiction  thereof.  Each party will
     pay its own costs and expenses  (including  without  limitation  attorney's
     fees and other  charges of counsel)  incurred in resolving any such Covered
     Claim.

XVII.Executive  shall be under no obligation to seek other  employment and there
     shall  be  no  offset  against  amounts  due  to  him  on  account  of  any
     remuneration  or benefits  provided  by any  subsequent  employment  he may
     obtain. Corning's obligation to make any payment pursuant to, and otherwise
     to perform its obligations  under,  this Agreement shall not be affected by
     any offset,  counterclaim  or other right that the Corning may have against
     Executive for any reason.

XVIII. This  Agreement  may be  modified  only by a written  document  signed by
     Executive  and a duly  authorized  officer  of  Corning.  Any waiver by any
     person of any  provision of this  Agreement  shall be effective  only if in
     writing and signed by the person against whom  enforcement of the waiver is
     sought.   For  any  waiver  or  modification  to  be  effective,   it  must
     specifically  refer to this Agreement and to the terms or provisions  being
     modified or waived.  No waiver of any provision of this Agreement  shall be
     effective as to any other provision of this Agreement  except to the extent
     specifically  provided in an effective  written waiver. In the event of any
     inconsistency  between  the  terms of this  Agreement  and the terms of any
     other Corning agreement,  arrangement, plan or policy (including that of an
     affiliate),  the terms of this  Agreement  shall control to the extent more
     favorable to Executive.

XIX. In the event  that any  provision  or portion  of this  Agreement  shall be
     determined  to be invalid or  unenforceable  for any reason,  the remaining
     provisions or portions of this  Agreement  shall be unaffected  thereby and
     shall  remain in full force and effect to the fullest  extent  permitted by
     law.

XX.  Any notice,  request or other  communication  given in connection with this
     Agreement  shall be in  writing  and shall be deemed to have been given (i)
     when personally  delivered to the recipient or (ii) provided that a written
     acknowledgement  of receipt  is  obtained,  three days after  being sent by
     prepaid  certified or  registered  mail,  or two days after being sent by a
     nationally  recognized  overnight courier, to the address specified in this
     Section XX (or such other address as the recipient  shall have specified by
     ten (10) days' advance written notice given in accordance with this Section
     XX). Such  communication  should be addressed to Executive at his principal
     residence  and to Corning at its  corporate  headquarters.  Executive  will
     promptly notify John MacMahon,  Vice President,  Worldwide  Compensation at
     Corning Incorporated of any change of home address.



IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective
Date.


On Behalf of Executive:                   On Behalf of Corning:


/s/  John W. Loose                        /s/  John P. MacMahon
--------------------------                ------------------------------------
John W. Loose                             John P. MacMahon
                                          VP, Worldwide Compensation






                                                                      EXHIBIT 12
                                                                      ----------
CORNING INCORPORATED AND SUBSIDIARY COMPANIES
COMPUTATION  OF RATIO OF  EARNINGS  TO  COMBINED  FIXED  CHARGES  AND  PREFERRED
DIVIDENDS
(In millions, except ratios)

                                                     For the six months ended
                                                     ------------------------
                                                      June 30,      June 30,
                                                       2002           2001
                                                     --------      ----------

Loss before taxes on income                          $  (747)      $  (4,660)
Adjustments:
    Distributed income of equity investees                75               64
    Amortization of capitalized interest                   4                5
    Fixed charges net of capitalized interest            113               85
                                                     -------       ----------

Loss before taxes and fixed charges as adjusted         (555)          (4,506)
                                                     =======       ==========

Fixed charges:
   Interest incurred                                      96               96
   Portion of rent expense which represents
     interest factor                                      21               15
   Amortization of debt costs                              3                2
                                                     -------       ----------

Total fixed charges                                      120              113
Capitalized interest                                      (7)             (28)
                                                     -------       ----------

Total fixed charges net of capitalized interest          113               85
                                                     =======       ==========

Preferred dividends:
   Preferred dividend requirement
   Ratio of pre-tax income to income before
     minority interest and equity earnings               1.4              1.0
   Pre-tax preferred dividend requirement
                                                     -------       ----------

Total fixed charges                                      120              113
                                                     -------       ----------

Fixed charges and pre-tax preferred dividend
  requirement                                            120              113
                                                     =======       ==========

Ratio of earnings to combined fixed charges
  and preferred dividends                                *                *
                                                     =======       ==========

Ratio of earnings to fixed charges                       *                *
                                                     =======       ==========


*    Loss before taxes and fixed  charges as adjusted  were  inadequate to cover
     total fixed charges by approximately  $675 million and $4.6 billion at June
     30, 2002 and 2001, respectively.