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Proc-Type: 2001,MIC-CLEAR
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<SEC-DOCUMENT>0000024741-01-000013.txt : 20010226
<SEC-HEADER>0000024741-01-000013.hdr.sgml : 20010226
ACCESSION NUMBER:		0000024741-01-000013
CONFORMED SUBMISSION TYPE:	8-K/A
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20001212
ITEM INFORMATION:		
FILED AS OF DATE:		20010223

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			CORNING INC /NY
		CENTRAL INDEX KEY:			0000024741
		STANDARD INDUSTRIAL CLASSIFICATION:	TELEPHONE & TELEGRAPH APPARATUS [3661]
		IRS NUMBER:				160393470
		STATE OF INCORPORATION:			NY
		FISCAL YEAR END:			1228

	FILING VALUES:
		FORM TYPE:		8-K/A
		SEC ACT:		
		SEC FILE NUMBER:	001-03247
		FILM NUMBER:		1552576

	BUSINESS ADDRESS:	
		STREET 1:		ONE RIVERFRONT PLAZA
		CITY:			CORNING
		STATE:			NY
		ZIP:			14831
		BUSINESS PHONE:		6079749000

	MAIL ADDRESS:	
		STREET 1:		ONE RIVERFRONT PLAZA
		CITY:			CORNING
		STATE:			NY
		ZIP:			14831

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	CORNING INC /NY /   CORNING LAB SERVICES INC
		DATE OF NAME CHANGE:	19930713

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	CORNING GLASS WORKS
		DATE OF NAME CHANGE:	19890512
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K/A
<SEQUENCE>1
<FILENAME>0001.txt
<DESCRIPTION>OTUSA ACQUISITION
<TEXT>



                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549



                                   FORM 8-K/A



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



       Date of Report: (Date of earliest event reported) December 12, 2000



                              CORNING INCORPORATED
             (Exact name of registrant as specified in its charter)



New York                              1-3247              16-0393470
(State or other jurisdiction          (Commission         (I.R.S. Employer
of incorporation)                     File Number)        Identification No.)



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


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



N/A
(Former name or former address, if changed since last report)


<PAGE>


                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  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



Date:  February 23, 2001                 By /s/  JAMES B. FLAWS
                                                 James B. Flaws
                                                 Executive Vice President and
                                                 Chief Financial Officer


<PAGE>


This Form 8-K/A amends Item 2 and Item 7 of the Form 8-K  previously  filed with
the  Securities  and  Exchange  Commission  on December  22, 2000 by including a
description  of the  transaction  and the  financial  statements  and pro  forma
information referred to below.

Item 2.  Acquisition or Disposition of Assets

On December  12,  2000,  Corning  Incorporated  purchased  all the shares of the
capital stock of Optical  Technologies  USA Corp., a Delaware  corporation  (the
Pirelli  transaction).  The acquisition was effected  pursuant to the terms of a
Stock  Purchase  Agreement  dated  as of  September  26,  2000  between  Corning
Incorporated,  a New York  corporation  and  Pirelli  Cavi e  Systemi  S.p.A.  a
corporation  organized  under  the  laws  of  the  Republic  of  Italy,  Optical
Technologies  The Netherlands  B.V., a corporation  organized and existing under
the laws of the Kingdom of the  Netherlands,  and Pirelli S.p.A.,  a corporation
organized  under the laws of the  Republic of Italy  (collectively,  "Pirelli"),
whereby  Corning  acquired a 90% interest in Pirelli's  optical  components  and
devices  businesses  and other  intellectual  property  for  approximately  $3.6
billion in cash.  The Pirelli  acquisition  was funded with cash  proceeds  from
Corning's  public  offering of its common stock and its zero coupon  convertible
debentures in November  2000. In a separate  transaction,  on December 12, 2000,
pursuant  to the terms of a Stock  Purchase  Agreement  dated  December 8, 2000,
between  Corning and Cisco  Systems,  Inc.,  Corning  acquired the remaining 10%
interest in said  businesses  from Cisco for 5,473,684  shares of Corning Common
Stock.

The assets acquired by the registrant pursuant to the transaction  include,  and
are not limited to, accounts receivable,  inventory, fixed and tangible property
(including,  without  limitation,  all machinery,  equipment,  supplies,  tools,
furniture and  fixtures),  intangible  assets  including  patents and contracts.
Corning currently  anticipates that  substantially all of the assets acquired in
the transaction will continue to be used in Corning's ongoing operations.

Item 7.  Financial Statements and Exhibits

Corning  Incorporated has included herein the consolidated  financial statements
of Optical Technologies USA, Corp. for the year ended December 31, 1999, for the
nine  months  ended  September  30,  2000  and  1999  and  pro  forma  financial
information giving effect to the acquisition of Optical Technologies USA for the
year ended December 31, 1999 and nine months ended September 30, 2000.

(a)  Financial Statements of Business Acquired
     (1)  Report of Independent Accountants
     (2)  Consolidated  Statement of Operations  for the year ended December 31,
          1999  (audited)  and for the nine  months  ended  September  30,  2000
          (unaudited) and 1999 (unaudited)
     (3)  Consolidated  Balance  Sheet as of  December  31, 1999  (audited)  and
          September 30, 2000 (unaudited)
     (4)  Consolidated  Statements of Cash Flows for the year ended December 31,
          1999  (audited)  and for the nine  months  ended  September  30,  2000
          (unaudited) and 1999 (unaudited)
     (5)  Consolidated Statement of Changes in Stockholders' Equity for the year
          ended December 31, 1999 (audited) and nine months ended  September 30,
          2000 (unaudited) and 1999 (unaudited)
     (6)  Notes to Consolidated Financial Statements



<PAGE>



(b)  Pro Forma Financial Information (unaudited)
     (1)  Pro Forma Combined Condensed  Consolidated Statement of Income for the
          nine months ended September 30, 2000.
     (2)  Pro  Forma  Combined  Condensed   Consolidated  Balance  Sheet  as  of
          September 30, 2000.
     (3)  Pro Forma Combined Condensed  Consolidated Statement of Income for the
          year ended December 31, 1999.

(c)  Exhibit
     (1)  Consent of PricewaterhouseCoopers SpA



<PAGE>


Item 7(a)


                         Optical Technologies USA, Corp.

                             Consolidated Financial
                                   Statements

                          as of and for the year ended
                                December 31, 1999
                          and for the nine months ended
                           September 30, 2000 and 1999



<PAGE>


                                    CONTENTS



Report of Independent Accountants                                           F-2

Consolidated  Statements of Operations for the year ended December 31,
  1999, for the nine months ended September 30, 2000 (unaudited) and
  1999 (unaudited)                                                          F-3

Consolidated  Balance  Sheets as of  December  31, 1999 and  September
  30, 2000 (unaudited)                                                      F-4

Consolidated  Statements of Cash Flows for the year ended December 31,
  1999, for the nine months ended September 30, 2000 (unaudited)
  and 1999 (unaudited)                                                      F-5

Consolidated  Statements of Changes in  Stockholders'  Equity for the
  year ended December 31, 1999, for the nine months ended September 30,
  2000  (unaudited) and 1999 (unaudited)                                    F-6

Notes to Consolidated Financial Statements                                  F-7






























                                       F-1


<PAGE>


                        Report of Independent Accountants

To the Board of Directors and
Stockholders of Optical Technologies USA, Corp.

         In our opinion,  the  accompanying  consolidated  balance sheet and the
related statements of operations,  of cash flows and of changes in stockholders'
equity  present  fairly,  in all material  respects,  the financial  position of
Optical  Technologies USA, Corp. and its subsidiary at December 31, 1999 and the
consolidated  results of their operations and their cash flows for the year then
ended, in conformity with accounting principles generally accepted in the United
States of America.  These  financial  statements are the  responsibility  of the
Company's  management;  our  responsibility  is to  express  an opinion on these
financial  statements  based  on our  audit.  We  conducted  our  audit of these
statements  in  accordance  with auditing  standards  generally  accepted in the
United  States of America,  which  require that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatement.  An audit includes examining,  on a test basis, evidence
supporting the amounts and  disclosures in the financial  statements,  assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall  financial  statement  presentation.  We believe that our
audit provides a reasonable basis for the opinion expressed above.


PricewaterhouseCoopers SpA
Milan, Italy
November 15, 2000

























                                       F-2


<PAGE>


                         Optical Technologies USA, Corp.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                            (US dollars in thousands)


<TABLE>
<CAPTION>

                                                                          Nine Months Ended                   Year Ended
                                                                             September 30,                   December 31,
                                                                 ----------------------------------          ------------
                                                                       2000               1999                   1999
                                                                    (unaudited)        (unaudited)

<S>                                                                <C>                 <C>                   <C>
Revenues and intra-group transfers:
    Intra-group transfers pre Separation                           $    1,430          $    8,005            $   11,996
    Third party revenues pre Separation                                     -                 321                   435
    Third party revenues post Separation                               15,453                   -                     -
                                                                   ----------          ----------            ----------
       Total revenues and intra-group transfers                        16,883               8,326                12,431
                                                                   ----------          ----------            ----------

Cost of goods sold and transferred:
    Cost of goods transferred pre Separation (inclusive
      of stock compensation expense of $212 for the
      nine months ended September 30, 2000)                             1,430               8,005                11,996
    Cost of goods sold to third party pre Separation                        -                 221                   300
    Cost of goods sold to third party post Separation                   9,552                   -                     -
                                                                   ----------          ----------            ----------
       Total cost of goods sold and transferred                        10,982               8,226                12,296
                                                                   ----------          ----------            ----------

           Gross profit                                                 5,901                 100                   135
                                                                   ----------          ----------            ----------

Operating expenses:
    Research and development (inclusive of stock
      compensation expense of $1,120 for the nine
      months ended September 30, 2000)                                  8,372               5,718                 7,657
    General and administrative                                          2,190               1,137                 1,530
    Sales and marketing                                                   947                   -                     -
                                                                   ----------          ----------            ----------

           Total operating expenses                                    11,509               6,855                 9,187
                                                                   ----------          ----------            ----------

Operating loss                                                         (5,608)             (6,755)               (9,052)
Interest income, net                                                       71                   -                     -
                                                                   ----------          ----------            ----------

Loss before income taxes                                               (5,537)             (6,755)               (9,052)
Provision for income taxes                                                (30)                  -                     -
                                                                   ----------          ----------            ----------

           Net loss                                                $   (5,567)         $   (6,755)           $   (9,052)
                                                                   ==========          ==========            ==========
</TABLE>


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

                                       F-3


<PAGE>


                         Optical Technologies USA, Corp.
                           CONSOLIDATED BALANCE SHEETS
               (US dollars in thousands, except per share amounts)

<TABLE>
<CAPTION>


                                                                                       September 30,         December 31,
                                                                                           2000                  1999
                                                                                    -----------------     -----------------
                                                                                         unaudited          Pre Separation
<S>                                                                                    <C>                   <C>
                                 Assets
Current assets:
    Cash and cash equivalents                                                          $   25,182            $        -
    Accounts receivable (net of allowance of $77 and $8)                                    1,570                   117
    Inventories                                                                            10,614                 2,723
    Prepaids and other                                                                        109                     -
                                                                                       ----------            ----------
         Total current assets                                                              37,475                 2,840
Property and equipment, net (Note 3)                                                       17,189                 5,616
                                                                                       ----------            ----------
         Total assets                                                                  $   54,664            $    8,456
                                                                                       ==========            ==========
                  Liabilities and Stockholders' Equity
Current liabilities:
    Accounts payable                                                                   $    8,026            $        -
    Accrued payroll                                                                         3,342                     -
    Other liabilities                                                                         643                     -
                                                                                       ----------            ----------
         Total current liabilities                                                         12,011                     -

Leaving indemnity                                                                             907                   766
                                                                                       ----------            ----------

         Total liabilities                                                                 12,918                   766
                                                                                       ----------            ----------

Commitment and contingencies (Note 4)                                                           -                     -

Stockholders' equity:
Preferred stock, $0.01 par value; 5,000,000 shares authorized;
  500,000 shares issued and outstanding                                                         5                     -
Common stock, $0.01 par value; 15,000,000 shares authorized;
  4,500,000 shares issued and outstanding                                                      45                     -
Additional paid-in capital                                                                 47,020                     -
PCS net investment                                                                              -                 8,182
Accumulated other comprehensive loss                                                       (1,035)                 (492)
Accumulated deficit post Separation                                                        (4,289)                    -
                                                                                       ----------            ----------
         Total stockholders' equity                                                        41,746                 7,690
                                                                                       ----------            ----------
         Total liabilities and stockholders' equity                                    $   54,664            $    8,456
                                                                                       ==========            ==========
</TABLE>




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

                                       F-4


<PAGE>


                         Optical Technologies USA, Corp.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (US dollars in thousands)

<TABLE>
<CAPTION>

                                                                          Nine Months Ended                   Year Ended
                                                                             September 30,                   December 31,
                                                                   ------------------------------
                                                                       2000               1999                   1999
                                                                   -----------        -----------           -------------
                                                                    (unaudited)        (unaudited)
<S>                                                                <C>                 <C>                   <C>
Cash flows from operating activities:
    Cash receipts from customers                                   $   15,118          $    8,331            $   12,447
    Cash paid to suppliers and employees                              (15,819)            (12,018)              (17,860)
    Interest received net                                                  71                   -                     -
                                                                   ----------          ----------            ----------

       Net cash used in operating activities                             (630)             (3,687)               (5,413)

Cash flows from investing activities:
    Purchases of property and equipment                                (5,643)             (1,591)               (2,978)
                                                                   ----------          ----------            ----------

       Net cash used in investing activities                           (5,643)             (1,591)               (2,978)
                                                                   ----------          ----------            ----------

Cash flows from financing activities:
    Net transfers from PCS                                              6,455               5,278                 8,391
    Proceeds from issuance of preferred stock                          25,000                   -                     -
                                                                   ----------          ----------            ----------

       Net cash provided by financing activities                       31,455               5,278                 8,391
                                                                   ----------          ----------            ----------

Net increase in cash and cash equivalents                              25,182                   -                     -
Cash and cash equivalents at beginning of period                            -                   -                     -
                                                                   ----------          ----------            ----------

Cash and cash equivalents at end of period                         $   25,182          $        -            $        -
                                                                   ==========          ==========            ==========

Reconciliation of net income to net cash
  provided by operating activities:

Net loss pre Separation                                            $   (1,278)         $   (6,755)           $   (9,052)
Net loss post Separation                                               (4,289)                  -                     -

Net cash provided by operating activities:
Depreciation                                                            2,320               3,006                 4,056
Provision for losses on accounts receivable                                75                   1                     1
Leaving indemnity                                                         258                 124                   236
Non cash stock compensation                                             1,332                   -                     -

Change in assets and liabilities:
Decrease (increase) in accounts receivable and prepaids                (1,765)                  5                    16
Decrease (increase) in inventory                                       (8,850)                (68)                 (670)
Increase in accounts payable and accrued expenses                      11,537                   -                     -
Increase in income tax payable                                             30                   -                     -
                                                                   ----------          ----------            ----------

       Total adjustments                                                4,937               3,068                 3,639
                                                                   ----------          ----------            ----------

       Net cash provided by operating activities                   $     (630)         $   (3,687)           $   (5,413)
                                                                   ==========          ==========            ==========

     Non cash financing transactions:
     Contribution of net assets for 3,549,999 shares               $    8,094

     Non cash investing activities:
     Acquisition of property and equipment                         $    6,894

</TABLE>

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

                                       F-5


<PAGE>


                         Optical Technologies USA, Corp.
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
               (US dollars in thousands, except per share amounts)


<TABLE>
<CAPTION>



                                                                                               Accumulated
                               Preferred Stock        Common Stock     Additional                Other
                             -------------------    ----------------     Paid-in   PCS Net    Comprehensive  Accumulated
                             Shares       Amount    Shares     Amount    Capital  Investment      Loss         Deficit       Total
                             ------       ------    ------     ------    -------  ----------      ----         -------       -----

<S>                         <C>            <C>    <C>           <C>     <C>         <C>         <C>           <C>         <C>
Balance at January 1, 1999        -        $  -           -     $  -    $     -     $10,206     $     -        $     -     $ 10,206
Net transfer from PCS             -           -           -        -          -       8,391           -              -        8,391
Foreign currency
  translation adjustment          -           -           -        -          -      (1,855)          -              -       (1,855)
Net loss                          -           -           -        -          -      (9,052)          -              -       (9,052)
                            -------        ----   ---------     ----    -------     -------     -------        -------     --------
Balance at December
  31, 1999                        -        $  -           -     $  -    $     -     $ 7,690     $     -        $     -     $  7,690

Net transfer from PCS             -           -           -        -          -       6,455           -              -        6,455
Net loss pre Separation           -           -           -        -          -      (1,278)          -              -       (1,278)
Foreign currency
  translation adjustment
  pre Separation                  -           -           -        -          -        (223)          -              -         (223)
Incorporation of the
  Company                         -           -           -        -     12,644     (12,644)          -              -            -
Stock compensation                -           -           -        -      1,332           -           -              -        1,332
Issuance of common
  stock                           -           -   4,500,000       45      8,049           -           -              -        8,094
Issuance of preferred
  stock                     500,000           5           -        -     24,995           -           -              -       25,000
Foreign currency
  translation adjustment
  post Separation                 -           -           -        -          -           -      (1,035)             -       (1,035)
Net loss post
  Separation                      -           -           -        -          -           -           -         (4,289)      (4,289)
                            -------        ----   ---------     ----    -------     -------     -------        -------     --------
Comprehensive loss                                                                                                           (5,324)
                                                                                                                           --------
Balance at September
  30, 2000 (unaudited)      500,000        $  5   4,500,000     $ 45    $47,020     $     -     $(1,035)       $(4,289)    $ 41,746
                            =======        ====   =========     ====    =======     =======     =======        =======     ========
</TABLE>




















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

                                       F-6


<PAGE>


                        Optical Technologies, USA, Corp.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            (US dollars in thousands)


1.   Basis of presentation
     The accompanying  consolidated financial statements,  which include Optical
     Technologies USA, Corp.  ("OTUSA") and its wholly owned Italian subsidiary,
     Optical Technology Italia SpA ("OTI", collectively the "Company"),  present
     the  Optical  Components  ("OC")  business  of Pirelli  Cavi e Sistemi  SpA
     ("Pirelli Cables and System" or "PCS").  The Company was previously part of
     PCS' Photonics  Business Unit ("PBU").  PCS is a wholly owned subsidiary of
     Pirelli  SpA  ("Pirelli"),  a publicly  traded,  diversified  manufacturing
     company  domiciled in Italy. The Company  manufactures and supplies optical
     components to the networking and telecommunications industry.

     In February 2000, PCS effected a transaction (the "Transaction") with Cisco
     Systems, Inc. ("Cisco"),  that involved the sale of its terrestrial optical
     line  transmission  systems  ("Teroptic")   business.   Teroptic  was  also
     previously part of PBU. Concurrent with the Transaction,  PCS separated the
     net assets of the Company from PBU by carving out and  contributing the net
     assets to a new legal  entity as of February  11, 2000 (the  "Separation").
     The Separation and subsequent transfer of net assets was done at historical
     cost. Also  transferred was a substantial  amount of intellectual  property
     previously held by PCS. This intellectual  property had nil book value. The
     accompanying   consolidated  financial  statements  report  the  historical
     operations that comprised the optical components  manufacturing business of
     PCS during each reporting period.

     Prior  to the  Separation,  the OC  business  was  treated  as an  internal
     production  process,  transferring its daily production  immediately to the
     larger PBU production process.  This transfer of inventory was done without
     the use of a formal transfer pricing  mechanism or policy and accounted for
     nearly all of the OC business. Third-party sales were minimal.

     Due to the fact that the OC business was highly  integrated  within the PBU
     production process, no cash, raw materials, finished goods, debt, or formal
     equity can be  attributed  to the OC  operation  for  periods  prior to the
     Separation.   Additionally,   transactions   that  give  rise  to  accounts
     receivable,  accounts  payable and accruals  are assumed to be  immediately
     settled through the PCS net investment account.

     Statements  of  operations  including  the period  prior to the  Separation
     present  intra-group  transfers  of  finished  products  at  cost,  with  a
     resulting gross margin of zero. Revenue and the resulting gross margin from
     third party sales have been  reflected in the  statements  of operations at
     the actual amounts transacted.









                                       F-7


<PAGE>


                        Optical Technologies, USA, Corp.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            (US dollars in thousands)


     The consolidated  financial  statements include  allocations of certain PCS
     expenses,  including centralized legal, accounting,  treasury, real estate,
     information technology, purchasing and logistic, controlling and reporting,
     sales and marketing,  and other PCS corporate  services and  infrastructure
     costs.  The  expense   allocations  have  been  determined  on  bases  that
     management  considers to be a reasonable  reflection of the  utilization of
     services provided or the benefit received by OTI. However, the consolidated
     financial  information  included  herein  may  not  be  indicative  of  the
     Company's operating results and cash flows in the future or what they would
     have been had the Company been a separate,  stand-alone  entity  during the
     periods presented.

     Management  has  reviewed  the nature of the shared  costs with PCS for all
     periods and has identified  certain  activities  that are  responsible  for
     generating incremental costs. Therefore, the allocated costs identified and
     reflected in the above categories are generally correlated with these types
     of  activities.  Cost of goods sold  includes  allocations  based on square
     footage  of  production  and  related  support  activities.   Research  and
     development has been allocated  based on the actual projects  identified as
     being part of the OC business.  No selling and marketing expenses have been
     allocated  until after the  Separation,  as the OC business had no material
     sales to  third-party  customers.  General  and  administrative  costs have
     generally  been  allocated  based  on  the  nature  of the  activities  and
     incremental headcount.

     The accompanying financial statements contain certain carve-out allocations
     related to stock  based  compensation  plans at the PCS level.  These costs
     have been  identified  on a headcount  basis and reflected in the Company's
     statements of operations.  Stock  compensation  expense for the nine months
     ended September 30, 2000 totaled $1,332 (unaudited).

     Interim financial information (unaudited)
     The financial  information as of September 30, 2000 and for the nine months
     ended  September  30,  2000  and  1999  is  unaudited,   but  includes  all
     adjustments,  consisting  only  of  normal  and  recurring  accruals,  that
     management  considers  necessary for a fair  statement of its  consolidated
     results of operations,  financial position and cash flows.  Results for the
     nine months ended  September  30, 2000 are not  necessarily  indicative  of
     results to be expected  for the full  fiscal year 2000 or any other  future
     period.

2.   Description of operation and significant accounting policies
     The Company's consolidated financial statements are presented in accordance
     with  accounting  principles  generally  accepted  in  the  United  States.
     Significant  accounting  policies  followed  in the  preparation  of  these
     consolidated financial statements are as follows:

     Nature of operations
     The Company designs,  manufactures and markets fiber  optic-based  products
     which are designed to increase the  performance  of optical  networks.  The
     Company  has 100  percent  of its  manufacturing  capacity  and  management
     located in Milan, Italy.


                                       F-8


<PAGE>


                        Optical Technologies, USA, Corp.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            (US dollars in thousands)


     Subsequent to the  Separation,  the Company  entered into an agreement (the
     "Agreement")  with Cisco  whereby for a five-year  period the Company  will
     provide  Cisco with certain  optical  technology  products.  The  Agreement
     stipulates that the Company will provide to Cisco optical components at the
     lower of a specified pricing program or the best industry price provided to
     Cisco by a qualified  buyer.  These prices are to be reviewed  quarterly by
     both the Company and Cisco.

     Use of estimates
     The preparation of consolidated financial statements requires management to
     make estimates and assumptions  that affect the reported  amounts of assets
     and liabilities, the disclosure of contingent assets and liabilities at the
     date of the consolidated  financial  statements and the reported amounts of
     revenues and expenses  during the reporting  period.  Actual  results could
     differ from those estimates.

     Principles of consolidation
     The  consolidated  financial  statements  include the accounts of OTUSA and
     OTI. All significant inter-company balances and transactions are eliminated
     in consolidation.

     Cash and cash equivalents
     The Company  considers all short-term,  highly liquid  investments  with an
     original maturity of less than 90 days as cash.

     Concentration of credit risk and significant customer information
     The Company's  credit risk is limited  principally to accounts  receivable,
     and it currently sells the majority of its products to Cisco.  Revenues and
     receivables   associated  with  Cisco  are  transacted  in  U.S.   dollars.
     Generally, no collateral for accounts receivable is required.

     Third-party revenues from one customer represented approximately 95 percent
     of the total balance at September 30, 2000.

     As of September 30, 2000,  two customers  each  individually  accounted for
     over 10 percent of accounts  receivable,  for an aggregate of approximately
     34 percent of total accounts receivable.

     Inventories
     Inventories  are  stated  at the  lower of cost  (the  first-in,  first-out
     method) or market (estimated net realizable value).









                                       F-9


<PAGE>


                        Optical Technologies, USA, Corp.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            (US dollars in thousands)


     Inventories are as follows:

                                September 30,           December 31,
                                    2000                    1999
                               --------------           ------------
                                (unaudited)

     Raw materials               $  2,046                 $     -
     Work-in-process                4,734                   2,723
     Finished goods                 3,834                       -
                                 --------                 -------

         Total                   $ 10,614                 $ 2,723
                                 ========                 =======


     Property and equipment, net
     Property  and  equipment is stated at cost less  accumulated  depreciation.
     Assets are depreciated  using the  straight-line  method over the estimated
     useful lives, which are between 3 and 5 years.  Maintenance and repairs are
     charged to expense as incurred, expenditures that extend the useful life of
     the asset are capitalized  and  depreciated  over the remaining life of the
     asset.

     When  events or  changes  in  circumstances  indicate  that  assets  may be
     impaired,  an  evaluation  is  performed  comparing  the  estimated  future
     undiscounted  cash flow associated  with the asset to the asset's  carrying
     value. No impairment losses were recorded for any of the periods presented.

     Upon sale or  retirement  of an asset,  the related  costs and  accumulated
     depreciation  are  removed  from  the  accounts  and  any  gain  or loss is
     recognized.

     Leaving indemnity
     Under  Italian  legislation,  deferred  compensation  accrues  in  favor of
     employees who are entitled to collect the compensation  upon termination of
     employment.  The  accumulated  deferred  compensation  is subject to annual
     revaluation  based on increases in the cost of living.  The increase in the
     entitlement, including revaluation, is charged to income in payroll costs.

     PCS net investment
     This amount represents PCS's net investment in and advances to the Company.
     No  inter-company  interest  income or expense  has been  allocated  to, or
     included in, the accompanying consolidated financial statements.

     Revenue recognition
     Revenue is recognized  when earned.  Revenue from product sales is recorded
     upon completion of delivery obligations,  title has passed to the customer,
     and  collection  of the  resulting  receivable  is  reasonably  assured.  A
     provision  for  estimated  warranty cost is recorded at the time revenue is
     recognized.


                                      F-10


<PAGE>


                        Optical Technologies, USA, Corp.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            (US dollars in thousands)


     The  manufacturing  and  supply  agreement  with  Cisco  calls for title to
     transfer and customer acceptance to occur when cash is paid by Cisco to the
     Company. Therefore, in the accompanying financial statements, no revenue or
     receivables  have been recognized for shipments to Cisco for which cash has
     not yet been received.

     Research and development
     Research and development costs are expensed as incurred.

     Advertising and promotion cost
     All advertising, promotion and marketing costs are expensed as incurred.

     Income taxes
     The  Company's   operating  results  have  historically  been  included  in
     Pirelli's  consolidated income tax returns.  The provision for income taxes
     in  the   Company's   financial   statements   has   been   determined   on
     separate-return  basis. The Company uses the liability method of accounting
     for  income  taxes,  as set  forth in  Statement  of  Financial  Accounting
     Standards  ("SFAS")  No. 109,  "Accounting  for Income  Taxes."  Under this
     method, deferred tax assets and liabilities are recognized for the expected
     future tax  consequences  of  temporary  differences  between the  carrying
     amounts and the tax basis of assets and  liabilities and net operating loss
     carry-forwards, all calculated using presently enacted tax rates.

     Foreign currency translation
     Balance sheet accounts of the Company's  non-United  States  operations are
     translated from foreign currencies into U.S. dollars at period-end exchange
     rates while income and expenses are  translated at average  exchange  rates
     during  the  period.  Translation  gains or losses  related  to net  assets
     located  outside the United States are shown as a component of  accumulated
     other  comprehensive  loss in invested  equity.  Gains and losses resulting
     from foreign currency transactions  (transactions denominated in a currency
     other  than  the  entity's   functional   currency)  are  included  in  the
     consolidated statements of operations.

     Derivatives
     Through the end of 1999 the  Company  did not enter  into,  and PCS did not
     enter  into on the  Company's  behalf,  transactions  involving  derivative
     instruments.   Post  Separation,  the  Company  has  entered  into  certain
     transactions to hedge its overall exposure.  The principal exposures of the
     Company are the sales to Cisco, which are denominated in U.S. dollars,  and
     component purchases which are denominated in U.S. dollars and Japanese yen.








                                      F-11


<PAGE>


                        Optical Technologies, USA, Corp.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            (US dollars in thousands)


     Recently issued accounting pronouncements
     In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
     "Accounting for Derivative  Instruments and Hedging Activities" (as amended
     by SFAS  No.  137  with  respect  to the  effective  date),  which  will be
     effective  for the  Company in January  2001.  SFAS No.  133  requires  all
     derivatives  to be recognized as assets or liabilities on the balance sheet
     and measured at fair value on a mark-to-market  basis. This applies whether
     the  derivatives  are  stand-alone  instruments,  such as forward  currency
     exchange  contracts  and  interest  rate  swaps  or  collars,  or  embedded
     derivatives,   such  as  call  options   contained  in   convertible   debt
     investments.  Along with the derivatives,  the underlying  hedged items are
     also to be marked  to  market  on an  ongoing  basis.  These  market  value
     adjustments  are to be included  either in net earnings in the statement of
     operations  or  in  other   comprehensive   income  (and   accumulated   in
     shareholders' equity), depending on the nature of the transaction.

     Currently,  the Company does not expect to be able to meet the requirements
     of SFAS 133 to qualify for hedge accounting.  As of September 30, 2000, the
     net loss position of the open contracts was immaterial.  Upon adoption, the
     Company  does not expect SFAS No. 133 to have a  significant  effect on the
     consolidated  results of operations or consolidated  financial  position of
     the Company.

3.   Property and equipment, net

                                             September 30,    December 31,
                                                  2000            1999
                                             -------------    ------------
                                              (unaudited)

     Machinery and equipment                   $ 20,833         $ 19,516
     Computer equipment and software                998              715
     Furniture and fixtures                         318              334
     Vehicles                                       135               39
     Construction in progress                    10,221               95
                                               --------         --------

         Less: accumulated depreciation         (15,316)         (15,083)
                                               --------         --------
                                               $ 17,189         $  5,616
                                               ========         ========


     Depreciation  expense related to property and equipment was $4,056,  $2,320
     (unaudited) and $3,006 (unaudited) for the year ended December 31, 1999 and
     for the nine months ended September 30, 2000 and 1999, respectively.








                                      F-12


<PAGE>


                        Optical Technologies, USA, Corp.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            (US dollars in thousands)


4.   Commitment and contingencies

     Leases
     The Company leases its office and  manufacturing  facility under  renewable
     operating  leases.  Rent expense under operating  leases was  approximately
     $82, $109  (unaudited)  and $61 (unaudited) for the year ended December 31,
     1999  and  for  the  nine  months  ended   September  30,  2000  and  1999,
     respectively.

     Future minimum lease payments as of December 31, 1999 are as follows:

                                                      Operating
                                                       Leases

              2000                                     $  155
              2001                                         17
              2002                                          -
              2003                                          -
              Thereafter                                    -
                                                       ------
              Total minimum lease payments             $  172
                                                       ======

     In August 2000, the Company  entered into an operating  lease agreement for
     office space in Boston,  Massachusetts.  Annual minimum lease payment under
     this lease are $38  (unaudited) in 2000,  $130  (unaudited)  in 2001,  $129
     (unaudited) in 2002 and $106 (unaudited) in 2003.

     Litigation
     From time to time, the Company is involved in litigation matters and claims
     arising  in the  ordinary  course of its  business.  The  Company  does not
     believe any of the legal  claims or  proceedings  will result in a material
     adverse effect on its business, consolidated financial position and results
     of operations or cash flows.

5.   Transactions with Pirelli and Cisco

     For the periods  presented,  the Company was  dependent  upon PCS and other
     Pirelli  affiliates for certain operating  support.  This support includes,
     but is not limited to, accounting, tax, treasury, research and development,
     marketing and administration.

     In December 1999, the Company  entered into a five-year  Manufacturing  and
     Component  Supply  Agreement  with Cisco,  a preferred  shareholder  of the
     Company (see Note 6). Total  revenue  generated by this  Agreement  through
     September 30, 2000 was approximately $14,681 (unaudited).




                                      F-13


<PAGE>


                        Optical Technologies, USA, Corp.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            (US dollars in thousands)


6.   Stockholders' equity

     Capital stock transactions
     In March  2000,  the  Company  issued 1 share of  common  stock to  Optical
     Technologies  the  Netherlands,  a  wholly  owned  company  of PCS  for net
     proceeds of $0.1.

     In June  2000,  the  Company  issued  3,549,999  shares of common  stock to
     Optical  Technologies the  Netherlands,  a wholly owned company of PCS. The
     issuance of shares was made in connection with the  contribution of the net
     assets of OTI to the Company.  The  contribution  was  accounted for at the
     historical book value of OTI.

     In June 2000,  the Company issued 950,000 shares of common stock to PCS for
     the  contribution-in-kind  of certain intellectual  property. The potential
     tax benefits  associated with this  contribution were accounted for as part
     of the PCS investment. However, as the tax asset has been fully reserved in
     equity, no net increase in the PCS investment account occurred.

     In July 2000,  the Company  issued  500,000  shares of  convertible  voting
     preferred stock, designated as Series A Preferred Stock, at $0.05 per share
     for net proceeds of $25,000 to Cisco.  These  shares may be converted  into
     500,000  shares of common  stock,  representing  a per share price of $0.05
     upon the successful  completion of an initial public offering. In addition,
     the preferred stock has individual put and call options,  giving the holder
     of the  preferred  stock  the  right to force  PCS to  purchase  all of the
     outstanding  preferred stock at the issuance price.  The put option feature
     is active  from  three  years from the date of the  issuance,  and the call
     feature is active six months after the put feature.

7.   Income Taxes

     The Company is subject to the corporate tax rate ("IRPEG") of 37 percent in
     Italy.  Additionally,  the  Company  is  subject  to a  tax  on  productive
     activities ("IRAP") of 4.25 percent. The IRAP tax is calculated by applying
     the standard  rate to the "net  productive  value,"  which does not include
     deductions  for  personnel  costs,   directors  fees,  bad  debt,  interest
     income/expense,  gains/losses on foreign currency transactions and dividend
     income. The accompanying  financial  statements have no tax amounts payable
     in 1999 for either IRAP or IRPEG. For the nine-month period ended September
     30, 2000,  no amounts have been accrued for IRPEG  because of the operating
     losses.  However,  for  purposes  of  the  IRAP  tax,  an  accrual  of  $30
     (unaudited) has been made.









                                      F-14


<PAGE>


                        Optical Technologies, USA, Corp.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            (US dollars in thousands)


     The  Company  has  approximately  $26,645 in  accumulated  tax losses as of
     December 31, 1999 on a stand-alone  basis. In Italy, the carryforward  life
     of a tax loss is five years.  The Company had a net tax asset at the end of
     1999  of  approximately  $8,636,  which  was  mainly  composed  of the  net
     operating  losses  carryforward.  At the end of September 30, 2000, the net
     tax asset was  approximately  $63,356  (unaudited),  primarily  composed of
     $8,821  (unaudited)  of net  operating  losses  carryforward,  and  $55,167
     (unaudited)   of  tax   deductible   amortization   from  the   contributed
     intellectual property.  Because of the uncertainty of utilisation,  the tax
     assets have been fully reserved for in all periods.  The Company  accounted
     for the  contribution  of the  intellectual  property at the existing  book
     value of the asset at the PCS level, which was zero, and the asset and full
     valuation allowance have been recorded in equity.

8.   Business Segment Information

     The Company  operates in one segment,  optical  networking.  The  Company's
     headquarters is located in the United States,  while most of its operations
     and a research and  development  facility are located in Italy.  Geographic
     revenue  information is based on the location of the end customer.  Revenue
     from unaffiliated customers by geographic region is as follows:

                                    Period ended        Year ended
                                    September 30,      December 31,
                                        2000               1999
                                    -------------      ------------
                                    (unaudited)
     Revenues:
         Italy                       $   14,481         $       -
         United States                      972               435
                                     ----------         ---------
              Total                  $   15,453         $     435
                                     ==========         =========


     As of September 30, 2000, all long-lived assets were located in Italy.

9.   Subsequent Events (unaudited)

     On December  12,  2000,  Pirelli  sold the share  capital of the Company to
     Corning,  Inc.  ("Corning"),  a US  company,  for  $3,510,000.  The sale to
     Corning  requires  that the  Company  will,  for a period of time,  rely on
     certain general and administrative processes of PCS as a full transition to
     Corning is made.  Additionally,  the Company was made party to an operating
     lease agreement  between  Corning and PCS,  whereby the Company will lease,
     based on a pre-determined  formula, a building currently under construction
     by PCS.





                                      F-15


<PAGE>



Item 7(b) Pro Forma Financial Information

The following unaudited pro forma combined condensed consolidated  statements of
income and unaudited pro forma  combined  condensed  consolidated  balance sheet
give effect to the merger of Corning  Incorporated with Optical Technologies USA
Corp. (OTUSA),  NetOptix Corporation  (NetOptix) and the worldwide optical cable
and hardware  business of Siemens,  which  included  Siemens'  optical cable and
equipment businesses and the remaining 50% of Siecor Corporation and Siecor GmbH
(Siemens   transaction)   using  the  purchase  method  of  accounting  for  all
acquisitions.  The following unaudited pro forma combined financial  information
and the  accompanying  notes should be read in  conjunction  with the historical
financial  statements  and related  notes of Corning and OTUSA and the pro forma
information  included in the Form 8-K filed October 13, 2000  combining  Corning
with NetOptix and Siemens.

The unaudited pro forma combined condensed consolidated statements of income and
unaudited pro forma combined condensed consolidated balance sheet information is
provided for informational  purposes only and does not purport to represent what
the combined  financial  position and results of operations  would actually have
been had the transactions in fact occurred at the dates indicated. The following
unaudited pro forma  combined  condensed  consolidated  statements of income and
unaudited pro forma combined condensed consolidated balance sheet illustrate the
estimated  effects of the  transactions as if they had occurred at the beginning
of the earliest period presented for the statements of income and at the balance
sheet date.

There are no adjustments to the pro forma financial  statements for the NetOptix
and Siemens  transactions  from those  presented  in Form 8-K filed  October 13,
2000.  The  unaudited pro forma  combined  condensed  consolidated  statement of
income for the year ended  December 31, 1999 is based on the unaudited pro forma
combined condensed  consolidated statement of income of Corning included in Form
8-K filed October 13, 2000.

The following unaudited pro forma information was derived using the following:

- -    Corning's September 2000 nine month financial  information and December 31,
     1999 fiscal year-end financial statements
- -    OTUSA financial  information as of and for the year ended December 31, 1999
     and as of and for the period January 1, 2000 to September 30, 2000
- -    NetOptix  financial  information as of and for the year ended September 30,
     1999 and for the  period  January  1, 2000 to the date of Merger on May 12,
     2000
- -    Siecor GmbH's financial  information as of and for the year ended September
     30, 1999 and the financial  information for the period from January 1, 2000
     to the date of acquisition on February 2, 2000 as contained in the acquired
     entity's books and records
- -    Siemens' worldwide optical fiber, cable and equipment businesses' financial
     information  as of and  for the  year  ended  September  30,  1999  and the
     financial  information  for the period from  January 1, 2000 to the date of
     acquisition  on February 2, 2000 as  contained  in the  acquired  entities'
     books and records



<PAGE>


Unaudited Pro Forma Combined Condensed Consolidated Statement of Income
For the nine months  ended  September  30, 2000 (In  millions,  except per share
amounts)

<TABLE>
<CAPTION>
                                                                  Siemens                                 Pro Forma     Combined
                                                     Corning    Transaction     NetOptix       OTUSA     Adjustments    Pro Forma
                                                    --------    -----------     --------    ---------    -----------    ---------
<S>                                                 <C>          <C>            <C>         <C>           <C>           <C>
Revenues
  Net sales                                         $5,042.8     $   169.7      $     6.6   $    16.9                   $5,236.0
  Royalty, interest and dividend income                 78.6                                      0.1                       78.7
  Nonoperating gain                                      6.8                                                                 6.8
                                                    --------     ---------      ---------   ---------     --------      --------
                                                     5,128.2         169.7            6.6        17.0                    5,321.5
Deductions
  Cost of sales                                      2,930.4         159.2            2.5        11.0          1.9 (A)   3,105.0
  Selling, general and administrative expenses         713.6                          1.8         3.2                      718.6
  Research, development and engineering expenses       371.3                                      8.4                      379.7
  Acquisition-related charges                          139.7                                                               139.7
  Amortization of purchased intangibles including
    goodwill                                           144.2                                                   8.6 (A)     437.6
                                                                                                              75.7 (E)
                                                                                                             209.1 (G)
  Interest expense                                      77.9                          0.3                      3.8 (B)     114.4
                                                                                                              32.4 (H)
  Other, net                                            39.7                         (1.4)                                  38.3
                                                    --------     ---------      ---------   ---------     --------      --------

  Income from continuing operations before
    taxes on income                                    711.4          10.5            3.4        (5.6)      (331.5)        388.2
  Taxes on income from continuing operations           303.5                          0.1                    (22.6)(I)     281.0


  Income before minority interest and equity
    earnings                                           407.9          10.5            3.3        (5.6)      (308.9)        107.2
  Minority interest in earnings of subsidiaries        (17.4)                                                 (3.0)(D)     (20.4)
  Equity in earnings of associated companies           125.5                                                  (0.7)(C)     124.8
  Impairment of equity investment                      (36.3)                                                              (36.3)
                                                    --------     ---------      ---------   ---------     --------      --------

Income from continuing operations                   $  479.7     $    10.5      $     3.3   $    (5.6)    $ (312.6)     $  175.3
                                                    ========     =========      =========   =========     ========      ========


Basic earnings per share from continuing
  operations                                        $   0.57                                                            $   0.19
Diluted earnings per share from continuing
  operations                                        $   0.55                                                            $   0.19
Weighted average shares outstanding-basic              844.2           2.0 (B)       18.3 (F)    40.0 (H)                  904.5
Weighted average shares outstanding-diluted            873.0                                                               925.5 (J)
</TABLE>




<PAGE>


Unaudited Pro Forma Combined Condensed Consolidated Balance Sheet
September 30, 2000
(In millions)

<TABLE>
<CAPTION>

                                                                                              Pro Forma        Combined
                                                           Corning            OTUSA          Adjustments       Pro Forma
                                                          ---------        ----------       --------------    -----------
<S>                                                       <C>              <C>               <C>              <C>
                        Assets
Current assets
  Cash                                                  $     104.5        $     25.2        $ 4,402.2 (H)    $     921.5
                                                                                              (3,610.4)(G)
  Short-term investments, at cost which
    approximates market value                               1,133.0                                               1,133.0
  Accounts receivable, net of doubtful accounts
    and allowances                                          1,295.4               1.6                             1,297.0
  Inventories                                                 943.2              10.6                               953.8
  Deferred taxes on income and other current assets           239.6               0.1                               239.7
                                                        -----------        ----------        ---------        -----------

    Total current assets                                    3,715.7              37.5            791.8            4,545.0
                                                        -----------        ----------        ---------        -----------

Investments
  Associated companies, at equity                             441.0                                                 441.0
  Others, at cost or fair value                               108.1                                                 108.1
                                                        -----------        ----------        ---------        -----------

                                                              549.1                                                 549.1
                                                        -----------        ----------        ---------        -----------

Plant and equipment net of accumulated depreciation         4,092.3              17.2                             4,109.5

Goodwill and intangible assets
  net of accumulated amortization                           3,582.1                            3,624.6 (G)        7,247.6
                                                                                                  40.9 (H)

Other assets                                                  248.9                                                 248.9
                                                        -----------        ----------        ---------        -----------

                                                        $  12,188.1        $     54.7        $ 4,457.3        $  16,700.1
                                                        ===========        ==========        =========        ===========

         Liabilities and Shareholders' Equity

Current liabilities
  Loans payable                                         $     111.4                                           $     111.4
  Accounts payable                                            506.8               8.0                               514.8
  Other accrued liabilities                                   850.9               4.0                               854.9
                                                        -----------        ----------        ---------        -----------

    Total current liabilities                               1,469.1              12.0                             1,481.1
                                                        -----------        ----------        ---------        -----------

Other liabilities                                             772.9               0.9                               773.8
Long-term debt                                              1,946.3                            2,012.5 (H)        3,958.8

Minority interest in subsidiary companies                     138.7                                                 138.7
Convertible preferred stock                                     8.9                                                   8.9
Common shareholders' equity
  Common stock, including excess
     over par value and other capital                       6,600.0              47.1          2,486.6 (H)        9,086.6
                                                                                                 (47.1)
  Retained earnings                                         2,113.7              (4.3)             4.3            2,113.7
  Less cost of common stock in treasury                      (746.9)                                               (746.9)
  Accumulated other comprehensive income                     (114.6)             (1.0)             1.0             (114.6)
                                                        -----------        ----------        ---------        -----------
Common shareholders' equity                                 7,852.2              41.8          2,444.8           10,338.8
                                                        -----------        ----------        ---------        -----------

                                                        $  12,188.1        $     54.7        $ 4,457.3        $  16,700.1
                                                        ===========        ==========        =========        ===========
</TABLE>


<PAGE>


Unaudited Pro Forma Combined Condensed Consolidated Statement of Income
For the year ended December 31, 1999
(In millions, except per share amounts)
<TABLE>
<CAPTION>

                                                          Combined
                                                          Corning,
                                                          Siemens &                          Pro Forma         Combined
                                                          NetOptix            OTUSA         Adjustments        Pro Forma
                                                          ---------        ----------       -----------       ----------
<S>                                                       <C>              <C>              <C>               <C>
Revenues
  Net sales                                               $ 5,514.1        $     12.4                         $  5,526.5
  Royalty, interest and dividend income                        42.6                                                 42.6
  Nonoperating gain                                            30.0                                                 30.0
                                                          ---------        ----------       ---------         ----------
                                                            5,586.7              12.4                            5,599.1
Deductions
  Cost of sales                                             3,535.5              12.3                            3,547.8
  Selling, general and administrative expenses                791.2               1.5                              792.7
  Research, development and engineering expenses              408.2               7.7                              415.9
  Provision for restructuring and impairment                    7.8                                                  7.8
  Amortization of purchased intangibles
    including goodwill                                        294.5                             278.8 (G)          573.3
  Interest expense                                            126.1                              43.2 (H)          169.3
  Other, net                                                   38.9                                                 38.9
                                                          ---------        ----------       ---------         ----------

  Income from continuing operations before
    taxes on income                                           384.5              (9.1)         (322.0)              53.4
  Taxes on income from continuing operations                  180.0                             (20.9) (I)         159.1
                                                          ---------        ----------       ---------         ----------

  Income before minority interest and equity earnings         204.5              (9.1)         (301.1)            (105.7)
  Minority interest in earnings of subsidiaries               (21.8)                                               (21.8)
  Dividends on convertible preferred securities
    of subsidiary                                              (2.3)                                                (2.3)
  Equity in earnings of associated companies                   97.7                                                 97.7
                                                          ---------        ----------       ---------         ----------

Income from continuing operations                         $   278.1        $     (9.1)      $  (301.1)        $    (32.1)
                                                          =========        ==========       =========         ==========


Basic earnings per share from continuing
  operations                                              $    0.34                                           $    (0.04)
Diluted earnings per share from continuing
  operations                                              $    0.33                                           $    (0.04)
Weighted average shares outstanding-basic                     816.9                              40.0 (H)          856.9
Weighted average shares outstanding-diluted                   834.0                                                856.9 (J)
</TABLE>




<PAGE>


                              CORNING INCORPORATED
                Notes to Unaudited Pro Forma Combined Condensed
                       Consolidated Financial Information


(A)  On February 2, 2000,  Corning  acquired  the  worldwide  optical  cable and
     hardware business of Siemens AG and the remaining 50% in Siecor Corporation
     and Siecor  GmbH.  The  transaction  was  accounted  for under the purchase
     method of accounting.  The total purchase price of the Siemens  transaction
     approximates $1.4 billion,  which includes $120 million of assumed debt and
     $145 million in contingent  performance  payments.  Portions of the Siemens
     transaction  are expected to close at future dates into 2001. The pro forma
     presentation  assumes all portions of the transaction have been closed. The
     excess of the purchase price over the fair value of net assets acquired was
     allocated as follows (amounts in millions):

                                                       Annual
                                                   Depreciation or     Useful
                                         Amount     Amortization        Lives
                                         ------    ---------------   ----------

       Property, plant and equipment     $107.3        $ 8.8         5-20 years
       Goodwill and other intangibles    $723.9        $56.2         5-20 years

     Based  on  the  annual   requirements,   the  pro  forma  depreciation  and
     amortization  expense  allocation was $1.9 million and $8.6 million for the
     period from January 1, 2000 to the date of acquisition.

(B)  Corning   financed  the  Siemens   transaction   with  a   combination   of
     Euro-denominated  debt and  common  equity.  In the first  quarter of 2000,
     Corning completed a debt offering generating net proceeds of $488.7 million
     and  consisting  of 200 million  EURO bonds with an interest  rate of 4.25%
     maturing  in 5 years and 300 million  EURO bonds with an  interest  rate of
     5.375% maturing in 10 years.  The pro forma  incremental  interest  expense
     adjustment  is  equivalent  to  approximately  $3.8  million.  In addition,
     Corning completed an equity offering of approximately  44.85 million shares
     of common stock which generated net proceeds of approximately $2.2 billion.
     This pro forma presentation reflects a portion of this offering (18 million
     shares with  proceeds of $911.3  million)  being used to fund the remaining
     portion of the $1.4 billion acquisition.  The proceeds from these financing
     transactions  will also be used to repay  assumed debt and fund  contingent
     performance  payments.  A share adjustment of 2 million shares was required
     to reflect the equity offering retroactive to January 1, 2000.

(C)  Reflects the elimination of Corning's 50% investment in and equity earnings
     from  Siecor  GmbH  which was  previously  accounted  for under the  equity
     method.

(D)  Reflects  the  elimination  of minority  interest  related to Siemens'  50%
     ownership  of  Siecor  Corporation,  which  is  consolidated  in  Corning's
     historical financial statements.


<PAGE>



(E)  On May 12, 2000, Corning completed the acquisition of NetOptix  Corporation
     in a  merger  transaction  accounted  for  under  the  purchase  method  of
     accounting.  The merger was effected by Corning  issuing shares and options
     at an exchange  ratio of 0.90 for each share or right to acquire  shares of
     NetOptix  common stock on the closing  date.  Based on the average  closing
     price of Corning stock for a range of days surrounding the announcement and
     a Black Scholes  valuation of options issued,  the recorded  purchase price
     approximated $2.1 billion.  NetOptix manufactures thin film filters for use
     in dense wavelength  division  multiplexing  components.  The excess of the
     purchase  price over the estimated fair value of tangible  assets  acquired
     was allocated to goodwill.  Goodwill of approximately  $2.1 billion will be
     amortized on a straight-line  basis over ten years. Pro forma  amortization
     of goodwill for 4.5 months  equals  approximately  $75.7  million.  The pro
     forma  adjustment to revenues for the nine months ended  September 30, 2000
     reflects sales for the period January 1, 2000 through May 11, 2000.

(F)  Adjustments  reflect the issuance of  33,719,067  shares of Corning  common
     stock to effect the exchange of NetOptix common stock and the assumption of
     stock options convertible into 2,487,240 Corning shares to acquire NetOptix
     common stock at the exchange ratio of 0.90 a share.

     The pro forma combined per share amounts and weighted average common shares
     outstanding  reflect the combined  weighted average of Corning and NetOptix
     common shares  outstanding for the periods  presented,  after adjusting the
     number of NetOptix common shares to reflect the exchange ratio of 0.90 of a
     share of Corning common stock for each share of NetOptix common stock.  The
     diluted  unaudited pro forma per share  information for Corning is based on
     the weighted  average number of outstanding  shares of Corning common stock
     adjusted  to include  (1) the  dilutive  effect of Corning  employee  stock
     options and (2) the number of shares of Corning  common stock issued in the
     merger.  The effect of NetOptix employee stock options was not dilutive.  A
     share  adjustment  of 18.3  million  shares was  required  to  reflect  the
     acquisition retroactive to January 1, 2000.

(G)  On December 12,  2000,  Corning  completed  the  acquisition  of OTUSA from
     Pirelli S.p.A.  (90%) and Cisco Systems Inc. (10%) for  approximately  $3.6
     billion  in  cash   consideration   to  Pirelli  and  5,473,684  shares  of
     unregistered  Corning stock to Cisco.  Based upon the average closing price
     of  Corning  common  stock for a range of days  surrounding  the  agreement
     adjusted for a discount  commensurate  with  restrictions on the shares the
     total  purchase  price was $4.0 billion.  The excess of the purchase  price
     over the  estimated  fair value of tangible  assets  acquired was allocated
     primarily  to  goodwill,  other  intangibles  and  in-process  research and
     development (IPRD).  Goodwill and other intangibles of approximately $3,625
     million are being amortized on a  straight-line  basis over thirteen years.
     Pro forma  amortization of purchased  intangibles and goodwill for the nine
     months ended  September  30, 2000 and  December  31, 1999 is  approximately
     $209.1  million  and $278.8  million,  respectively.  A non-tax  deductible
     charge of $322.9  million for IPRD was excluded for the combined  condensed
     consolidated statement of income.


<PAGE>



(H)  Corning  financed  the OTUSA  acquisition  with a  combination  of debt and
     common equity. In the fourth quarter of 2000, Corning completed an offering
     of  $2.7  billion  (amount  due at  maturity)  of zero  coupon  convertible
     debentures which generated net proceeds of approximately $2.0 billion.  The
     initial  price of the  debentures  was  $741.92  with a 2% yield  annually.
     Interest is compounded  semi-annually  with a 25%  conversion  factor.  The
     debentures   mature  on  November  8,  2015,  and  are   convertible   into
     approximately  22.6 million  shares of Corning  common stock at the rate of
     8.3304 per $1,000 principal amount.  Corning may call the debentures at any
     time on or after  November 8, 2005.  The  debentures  may be  redeemed  for
     $819.54 on November 8, 2005 and $905.29 on November 8, 2010. The holder can
     convert  the  debenture  into  Corning  common  stock at any time  prior to
     maturity or redemption.  These debentures are antidilutive when calculating
     earnings  per share for the periods  presented.  Deferred  financing  costs
     totaled  approximately  $40.9 million and are being amortized  ratably over
     the term of the debentures.  Annual  interest and  amortization of deferred
     financing costs are $43.1 million with the nine month charge  approximating
     $32.4 million.  In addition,  Corning  completed an equity  offering in the
     fourth quarter of 2000 of approximately 34.5 million shares of common stock
     which generated net proceeds of approximately  $2.4 billion.  The pro forma
     combined per share amounts and weighted  average common shares  outstanding
     reflect this  offering of 34.5 million  shares plus the 5.5 million  shares
     issued to Cisco.

(I)  Reduction of income taxes based on the foregoing adjustments.

(J)  Pro forma  diluted  earnings  per share  excludes  the  effect of  dilutive
     securities totaling 30.4 million and 53.8 million equivalent shares for the
     nine months ended  September 30, 2000 and the year ended December 31, 1999,
     respectively, as they are antidilutive.



<PAGE>


Item 7(c) Exhibit Consent of PricewaterhouseCoopers SpA




                         Consent of Independent Auditors



We  hereby  consent  to the  incorporation  by  reference  in  the  Registration
Statements on Form S-8 (Nos. 2-77248, 33-30575,  33-30815,  33-47133,  33-50201,
33-55345,   33-58193,   33-63887,   33-18329,  33-3036,  333-24337,   333-26049,
333-26151,  333-41246, 333-61975, 333-61979, 333-61983, 333-91879 and 333-95693)
and Form S-3 (Nos. 33-40956, 33-44295, 33-49903, 33-53821, 33-56887,  333-81299,
333-95385,   333-36938,   333-41244,   333-44328   and   333-48168)  of  Corning
Incorporated of our report dated November 15, 2000 appearing in this Form 8-K/A.




                                      By /s/   PRICEWATERHOUSECOOPERS SPA
                                               PricewaterhouseCoopers SpA


Milan, Italy
February 22, 2001


</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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