Company experiences substantial LCD volume growth
Q3 glass demand expected to remain strong

CORNING, N.Y., July 27, 2009 – Corning Incorporated (NYSE:GLW) today announced its results for the second quarter of 2009, as well as its expectations for the third quarter.

Second-Quarter Highlights

Sales were $1.4 billion, up 41% sequentially.
Earnings per share were $0.39. Excluding special items, EPS was $0.39,* an increase of 290% sequentially.
Display Technologies combined glass volume, including Corning’s wholly owned business and Samsung Corning Precision Glass Co., Ltd. (SCP), increased 66% sequentially. Volume in the company’s wholly owned business improved by 101% sequentially, while SCP’s volume increased by 50%.
Gross margin was 41%, an increase over first-quarter gross margin of 27%.
Equity earnings increased 85% over the previous quarter.
Quarter Two Financial Comparisons
Q2 2009 Q1 2009 % Change Q2 2008 % Change

Net Sales in millions $1,395 $989 41% $1,692 (18%)

Net Income in millions $611 $14 4264% $3,211 (81%)

Non-GAAP Net Income in millions* $614 $150 309% $782 (21%)

GAAP EPS $0.39 $0.01 3800% $2.01 (81%)

Non-GAAP EPS* $0.39 $0.10 290% $0.49 (20%)
*These are non-GAAP financial measures. The reconciliation between GAAP and non-GAAP measures is provided in the tables following this news release, as well as on the company’s investor relations Web site.

“Global LCD television retail sales continue to be resilient during these challenging economic times,” said Wendell P. Weeks, chairman and chief executive officer. “This gave confidence to the LCD supply chain to rebuild inventory during the second quarter.”

Weeks noted that Corning initially met the increased second-quarter demand by working off its inventory supply, “but as demand continued to rise, we restarted some idled glass melting capacity to help meet the industry’s increased appetite. We saw glass volume increase by 101% at our wholly owned business and by 50% at Samsung Corning Precision quarter-over-quarter,” he said. “Additionally, we saw growth in our other businesses and improvement in equity earnings from Dow Corning Corporation in the second quarter.”

Second-Quarter Segment Results
Sales in the Display Technologies segment were $673 million, an 89% increase sequentially. As expected, price declines in the second quarter were modest. Display sales were negatively impacted by foreign exchange rate movements this quarter.

Telecommunications segment sales were $437 million, an increase of 14% over the previous quarter. Corning again experienced strong demand for optical fiber and cable in China. In North America, the company saw increased demand for its fiber-to-the-home products.

Environmental Technologies segment sales were $132 million, an increase of 20%, driven primarily by improved automotive product sales in Germany, China, and the U.S. The company said that U.S. automotive product demand was likely driven by a necessary replenishment of the supply chain during the quarter, rather than an increase in auto production. Government incentive programs contributed to the sales increases in Germany and China in the second quarter.

Specialty Materials segment sales were $71 million, up $11 million over the first quarter, due primarily to continued adoption of Gorilla™ glass by notebook and portable electronic device makers.

Corning’s equity earnings were $361 million, a considerable increase over first-quarter equity earnings of $195 million. Equity earnings from Dow Corning Corporation were $58 million versus $5 million in the first quarter, which included $29 million for Corning’s share of a restructuring charge at Dow Corning. Equity earnings from Samsung Corning Precision were $294 million in the second quarter, compared to $187 million in the first quarter. Volume increased 50% over the previous quarter and sequential glass price declines were minor.

Looking Forward
“The resurgent demand for LCD glass is propelling us to restore much of our previously idled production capacity as quickly as possible to meet our customers’ needs,” said James B. Flaws, vice chairman and chief financial officer. “Approximately 40% of our second-quarter shipments came from existing inventory. We need to -- and have -- restarted tanks to replace this inventory drawdown to meet third-quarter demand. We believe our third-quarter glass shipments will be flat to up slightly, compared to the very strong second-quarter level.” Flaws reiterated that Corning expects third-quarter glass substrate prices to be even with those of the second quarter.

Flaws said that supply chain inventories at the end of the second quarter have been rebuilt to levels similar to the end of 2008, as the industry prepares for a seasonally stronger second half of the year. “We estimate that current inventory supplies are 16% less than the second quarter last year, compared to retail demand that has been running approximately 15% ahead of a year ago. Retail demand is forecasted to continue growing at double-digit rates in the back half of this year. This comparison gives us some comfort about the outlook for the remainder of the year. However, the pace of economic recovery remains uncertain and we are being cautious about the amount of capacity we are restarting for the fourth quarter and for early 2010. As we receive more clarity from our customers on their fourth-quarter outlook, we will make decisions on our fourth-quarter capacity levels.”

“We have increased our forecast for LCD glass market volume in 2009 due to the vitality of LCD TV sales in the first half of the year. We now estimate that total yearly volume will be around 2.3 billion square feet, or about 15% growth over last year,” he said. Corning originally expected annual glass volume to be 2 billion square feet and early last quarter revised it upward to a range of 2.1 billion to 2.2 billion square feet.

The company expects to see continued improvement in equity earnings from Dow Corning, noting that silicone orders have been improving month by month, and volumes at Hemlock Semiconductor, Dow Corning’s consolidated subsidiary corporation, should remain strong.

“As we enter the second half of the year, we are seeing signs that the impact of the global recession on our businesses may be moderating. That said, questions pertaining to the pace of economic recovery remain. While we do not currently believe another corporate-wide downsizing will be necessary, we are looking at specific business unit restructuring needs,” Flaws said. “We don’t expect the global auto industry and U.S. truck market to rebound quickly. As a result, we are evaluating further cost reductions in our Environmental Technologies segment later this quarter, which may result in restructuring charges in the back half of the year.”

“We are also working to align the level of the company’s research, development, and engineering spending with our future revenue estimates in what may be a relatively slow economic recovery. As a result, restructuring charges in this area are also possible in the fourth quarter,” Flaws noted.

Flaws added that the company expects its 2009 tax rate to be between zero and 3%. “Looking ahead to 2010, we feel that our tax rate could be around 10%. However, given unknowns in the rate of economic recovery and uncertainty regarding potential changes to the U.S. tax code, our 2010 rate could be significantly different,” he said.

The company said 2009 capital expenditures are forecasted to be approximately $1.1 billion. In 2010, capital expenditures are expected to be around $600 million.

Flaws concluded, “LCD TVs have become the product of choice for consumers and the speed at which they are replacing CRT models is accelerating. This technology substitution is expected to fuel the LCD glass market for several years to come. Telecommunications carriers worldwide continue to invest in broadband network expansions, and we are seeing rapid acceptance of our Gorilla™ glass as a cover glass for many handheld and computer applications. These are promising signs that our businesses are poised for future growth.”

Second-Quarter Conference Call Information
The company will host a second-quarter conference call on Monday, July 27 at 8:30 a.m. ET. To access the call, dial (800) 553-0288 or international access call (612) 332-0636 approximately 10-15 minutes prior to the start of the call. The password is ‘QUARTER TWO’. The host is ‘SOFIO’. To listen to a live audio webcast of the call, go to Corning’s Web site at www.corning.com/investor_relations and click Investor Events on the left. A replay will be available beginning at 10:30 a.m. ET and will run through 5:00 p.m. ET, Monday, Aug. 10, 2009. To listen, dial (800) 475-6701 or international access call (320) 365-3844. The access code is 106323. The webcast will be archived for one year following the call.

Presentation of Information in this News Release
Non-GAAP financial measures are not in accordance with, or an alternative to, GAAP. Corning’s non-GAAP net income and EPS measures exclude restructuring, impairment and other charges and adjustments to prior estimates for such charges. Additionally, the company’s non-GAAP measures exclude adjustments to asbestos settlement reserves, gains and losses arising from debt retirements, charges or credits arising from adjustments to the valuation allowance against deferred tax assets, equity method charges resulting from impairments of equity method investments or restructuring, impairment or other charges taken by equity method companies and gains from discontinued operations. The company believes presenting non-GAAP net income and EPS measures is helpful to analyze financial performance without the impact of unusual items that may obscure trends in the company’s underlying performance. Reconciliation of these non-GAAP measures can be found on the company’s Web site by going to www.corning.com/investor_relations and clicking Financial Reports on the left. Reconciliation also accompanies this news release.

Forward-Looking and Cautionary Statements
This press release contains “forward-looking statements” (within the meaning of the Private Securities Litigation Reform Act of 1995), which are based on current expectations and assumptions about Corning’s financial results and business operations, that involve substantial risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties include: the effect of global political, economic and business conditions; conditions in the financial and credit markets; currency fluctuations; tax rates; product demand and industry capacity; competition; reliance on a concentrated customer base; manufacturing efficiencies; cost reductions; availability of critical components and materials; new product commercialization; pricing fluctuations and changes in the mix of sales between premium and non-premium products; new plant start-up or restructuring costs; possible disruption in commercial activities due to terrorist activity, armed conflict, political instability or major health concerns; adequacy of insurance; equity company activities; acquisition and divestiture activities; the level of excess or obsolete inventory; the rate of technology change; the ability to enforce patents; product and components performance issues; stock price fluctuations; and adverse litigation or regulatory developments. These and other risk factors are detailed in Corning’s filings with the Securities and Exchange Commission. Forward-looking statements speak only as of the day that they are made, and Corning undertakes no obligation to update them in light of new information or future events.

About Corning Incorporated
Corning Incorporated (www.corning.com) is the world leader in specialty glass and ceramics.