-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GGQzQD4/m0iF1V/BoWliMLs0OsQpY2QEnvimjhYV70rzbMA1ICZjHxKFBV+rWMvT waQVaQWgOJFf699jUO0Z1A== 0000912057-00-003601.txt : 20000204 0000912057-00-003601.hdr.sgml : 20000204 ACCESSION NUMBER: 0000912057-00-003601 CONFORMED SUBMISSION TYPE: 424B5 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20000203 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CORNING INC /NY CENTRAL INDEX KEY: 0000024741 STANDARD INDUSTRIAL CLASSIFICATION: GLASS, GLASSWARE, PRESSED OR BLOWN [3220] IRS NUMBER: 160393470 STATE OF INCORPORATION: NY FISCAL YEAR END: 1228 FILING VALUES: FORM TYPE: 424B5 SEC ACT: SEC FILE NUMBER: 333-81299 FILM NUMBER: 520912 BUSINESS ADDRESS: STREET 1: ONE RIVERFRONT PLAZA CITY: CORNING STATE: NY ZIP: 14831 BUSINESS PHONE: 6079749000 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 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CORNING FINANCE B V CENTRAL INDEX KEY: 0001089354 STANDARD INDUSTRIAL CLASSIFICATION: GLASS, GLASSWARE, PRESSED OR BLOWN [3220] STATE OF INCORPORATION: NY FISCAL YEAR END: 1228 FILING VALUES: FORM TYPE: 424B5 SEC ACT: SEC FILE NUMBER: 333-81299-01 FILM NUMBER: 520913 BUSINESS ADDRESS: STREET 1: ONE RIVERFRONT PLAZA CITY: CORNING STATE: NY ZIP: 14831 BUSINESS PHONE: 6079749000 424B5 1 FORM 424(B)5 PROSPECTUS SUPPLEMENT FILED PURSUANT TO RULE 424 (B)(5) (TO PROSPECTUS DATED JANUARY 11, 2000) REGISTRATION NOS. 333-81299 AND 333-81299-01 13,000,000 SHARES [LOGO] Corning Incorporated Common Stock We are offering all of these shares of common stock and will receive all of the net proceeds of this offering. Our common stock is listed on the New York Stock Exchange under the symbol "GLW". On January 25, 2000, the closing price for our common stock, as reported on the NYSE, was $151 3/8 per share. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus supplement or the accompanying prospectus. Any representation to the contrary is a criminal offense.
Per Share Total Initial public offering price............................... $151.375 $1,967,875,000 Underwriting discount....................................... $ 4.550 $ 59,150,000 Proceeds, before expenses, to Corning....................... $146.825 $1,908,725,000
The underwriters may, under certain circumstances, purchase up to an additional 1,950,000 shares at the initial public offering price less the underwriting discount. The underwriters are severally underwriting the shares being offered. The underwriters expect to deliver the shares against payment in New York, New York on January 28, 2000. The joint lead managers are Goldman, Sachs & Co. and J.P. Morgan & Co. JOINT BOOK-RUNNING MANAGERS Goldman, Sachs & Co. J.P. Morgan & Co. ------------------ Salomon Smith Barney Banc of America Securities LLC Donaldson, Lufkin & Jenrette SoundView Technology Group January 25, 2000 No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this prospectus. You must not rely on any unauthorized information or representations. This prospectus is an offer to sell only the shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date. TABLE OF CONTENTS
Page -------- Prospectus Supplement Forward-Looking Statements............. S-2 Corning Incorporated................... S-3 Recent Developments.................... S-5 Use of Proceeds........................ S-6 Price Range of Common Stock............ S-7 Dividend Policy........................ S-7 Capitalization......................... S-8 Selected Consolidated Financial Data... S-9 Management's Discussion and Analysis of Financial Condition and Results of Operations........................... S-11 Underwriting........................... S-16 Legal Matters.......................... S-17
Prospectus
Page -------- Corning Incorporated................... 2 Corning Finance B.V.................... 2 Use of Proceeds........................ 2 Securities We May Issue................ 3 Description of Debt Securities and Guarantees........................... 4 Description of Warrants................ 19 Description of Preferred Stock......... 23 Description of Depositary Shares....... 27 Description of Common Stock............ 30 Plan of Distribution................... 32 Validity of Securities................. 33 Experts................................ 33 Where You Can Find More Information.... 34
FORWARD-LOOKING STATEMENTS The statements in this prospectus supplement and the accompanying prospectus which are not historical facts are forward-looking statements. These forward- looking statements involve risks and uncertainties that may cause the outcome to be materially different. In addition to risks detailed in this prospectus supplement, the accompanying prospectus and the documents that we incorporate by reference, these risks and uncertainties include the following: - global economic conditions, - currency fluctuations, - product demand and industry capacity, - competitive products and pricing, - manufacturing efficiencies, - cost reductions, - availability and costs of critical materials, - new product development and commercialization, - manufacturing capacity, - facility expansions and new plant start-up costs, - the effect of regulatory and legal developments, - capital resource and cash flow activities, - capital spending, - equity company activities, - interest costs, - acquisition and divestiture activities, - the rate of technology change and - the ability to enforce patents. S-2 CORNING INCORPORATED We trace our origins to a glass business established in 1851. Our present corporation was incorporated in the State of New York in December 1936, and our name was changed from Corning Glass Works to Corning Incorporated on April 28, 1989. Today, we are an international corporation competing in three broadly defined operating segments: Telecommunications, Advanced Materials and Information Display. Our business strategy is to focus on attractive global markets where our leadership in materials and process technology will allow us to achieve and sustain competitive advantage and superior growth over time. TELECOMMUNICATIONS. Our Telecommunications segment produces optical fiber and cable, optical hardware and equipment and photonics components used in the worldwide telecommunications industry. We offer a wide selection of fibers for use in long-haul, utility, submarine, local exchange, cable TV and premises applications. We provide a substantial portion of the world's optical fiber, including LEAF-Registered Trademark- optical fiber, a technologically advanced high speed, high-data-rate fiber. Siecor Corporation, our equity venture with Siemens, and Corning Cables, our European optical fiber cabling division, manufacture fiber-optic cable and network hardware that is deployed throughout the world. See "Recent Developments--The Siemens Acquisition". Our Photonics Technologies Division provides products that maximize the capacity, flexibility, performance and reliability of communications networks worldwide. Our photonics products boost, combine, separate and connect optical signals transmitted over fiber-optic telecommunication networks. We are a leading supplier of optical amplifiers and were among the first to offer an innovative multiplexer module that allows optical signals to be added or dropped as they travel through a communications network. Our photonics products, primarily intended to enable the use of dense wavelength division multiplexing technology, include cutting-edge PureGain-TM- EDFA modules, PureGain DCM-Registered Trademark- modules and PurePass-TM- optical routing modules. We also offer MultiClad-Registered Trademark- couplers, variable optical attenuators, micro-optic filters and PureMode-TM- engineered fibers. Our optical networking products operate in terrestrial and submarine networks worldwide, and are designed to withstand a wide array of mechanical and environmental conditions. We are recognized as an industry leader, providing low-cost, innovative fiber and photonic network solutions. Our test facilities assure the performance and reliability of our photonics products at both the component and system levels. ADVANCED MATERIALS. Our Advanced Materials segment, which manufactures environmental products, science products, semiconductor materials, optical and lighting products and glass ceramic cooktops, has been a mainstay of our growth for decades. Our cellular ceramic products are component parts of catalytic converters on cars, trucks and buses worldwide. Virtually every vehicle manufacturer around the world demands new products that reduce emissions as mandated by global, clean-air legislation. Recently introduced advanced cellular ceramic products are expected to enable vehicle manufacturers to achieve substantially reduced emissions over the next decade. Similar technologies are used to reduce emissions from stationary power plants. New products from our Science Products Division, which include polymer microplates and which stem from our expertise in complex polymers, surface chemistry and molecular biology, are useful in pharmaceutical and genomic research. Our advanced microplates allow for more efficient drug testing. Our fused silica products enable semiconductor manufacturers to use microlithography techniques to achieve miniaturization required for the manufacture and processing of chips for computer applications. INFORMATION DISPLAY. Our Information Display segment manufactures glass panels and funnels for televisions and cathode-ray tubes; projection video lense assemblies; and liquid crystal display glass for flat panel displays. We are a leading supplier of flat glass used in active matrix liquid crystal displays for notebook computer screens, desktop monitors, digital cameras, personal digital assistants and automotive displays. Ultra-thin, precision-surface glass enables customers to create faster, larger and less expensive liquid crystal displays that have higher resolution. Our lenses, which are used widely in projection television systems, are being adapted to meet emerging requirements in digital and high-definition systems for S-3 entertainment as well as commercial applications. Our traditional, more mature television glass business concentrates on glass face plates, panels, and funnels used to make color picture tubes. The following tables set forth financial data for our three operating segments for the years ended December 31, 1998, 1997 and 1996 and the nine months ended September 30, 1999 and 1998. These amounts do not include revenues, expenses and equity earnings not specifically identifiable to the segment.
Year Ended December 31, --------------------------------------------------------------- Net Sales Segment Net Income (Loss) ------------------------------ ------------------------------ Operating Segment Financial Data 1998 1997 1996 1998 1997 1996 - -------------------------------- -------- -------- -------- -------- -------- -------- Telecommunications....................... $1,791.7 $1,795.3 $1,397.7 $205.3 $297.5 $254.4 Advanced Materials....................... 1,020.1 1,030.4 1,031.4 93.8 103.6 75.3 Information Display...................... 644.7 664.2 565.5 56.5 7.1 (4.8) -------- -------- -------- ------ ------ ------ Total Segments......................... $3,456.5 $3,489.9 $2,994.6 $355.6 $408.2 $324.9 ======== ======== ======== ====== ====== ======
Nine Months Ended September 30, ----------------------------------------- Segment Net Net Sales Income ------------------- ------------------- Operating Segment Financial Data 1999 1998 1999 1998 - -------------------------------- -------- -------- -------- -------- Telecommunications........................................ $1,766.0 $1,312.4 $182.2 $150.6 Advanced Materials........................................ 774.5 767.7 85.3 67.2 Information Display....................................... 490.4 459.3 76.8 43.6 -------- -------- ------ ------ Total Segments.......................................... $3,030.9 $2,539.4 $344.3 $261.4 ======== ======== ====== ======
S-4 RECENT DEVELOPMENTS FOURTH QUARTER EARNINGS RELEASE. On January 24, 2000, we reported 1999 fourth-quarter diluted earnings per share from continuing operations before special items of $0.51 per share, an increase of 28%, compared with $0.40 per share before special items in 1998. Income from continuing operations before special items for the fourth quarter of 1999 totaled $126.7 million, an increase of 34%, compared with $94.6 million before special items in 1998. Fourth-quarter sales were $1.2 billion, an increase of 35% compared with 1998 fourth-quarter sales of $927 million. Excluding the impact of acquisitions, sales increased 25%. Sales of optical fiber remained strong, with demand for the company's LEAF-Registered Trademark- optical fiber more than doubling over the same quarter last year. Sales in the Photonic Technologies Division also doubled, once again led by demand for the company's optical amplifiers. And sales of flat-panel display glass used in computer monitors continued to grow at a rate of 50%. Equity earnings were up nearly 50% in the quarter, due primarily to excellent performance at Samsung Corning Precision Glass Company, Ltd, a Korean manufacturer of flat-panel display glass. We also recorded fourth-quarter pre-tax income of $14.1 million ($8.6 million after tax, or $0.03 per share) from a release of restructuring reserves. Including this non-recurring item, our income from continuing operations for the fourth quarter of 1999 totaled $135.3 million, or $0.54 per share. In addition, we recorded net income from discontinued operations of $4.8 million, or $0.02 per share, reporting total net income of $140.1 million, or $0.56 per share in the quarter. Sales for the year were $4.3 billion, an increase of 23% compared with $3.5 billion in 1998. Excluding the impact of acquisitions, 1999 sales increased 17% over 1998. We reported full year 1999 income from continuing operations of $476.9 million, or $1.93 per share, compared to $327.5 million, or $1.39 per share, from the same operations in 1998. Net income and diluted earnings per share in 1999 were $481.7 million, or $1.95 per share, and included $4.8 million or $0.02 per share of income from discontinued operations in the fourth quarter. This compares with 1998 net income of $394 million, or $1.67 per share, which included $66.5 million, or $0.28 per share, from discontinued operations, related primarily to the sale of the consumer products business. See our current report on Form 8-K dated January 24, 2000 for more detailed information regarding our fourth-quarter and year-end financial data. This report is incorporated by reference in this prospectus supplement. THE SIEMENS ACQUISITION. On December 8, 1999, we announced the agreement to acquire the worldwide optical cable and hardware businesses of Siemens AG. The acquisition will include the remaining 50% of our two existing co-investments with Siemens: Siecor Corporation and Siecor GmbH. The purchase price will be $1.13 billion in cash, plus our assumption of approximately $41.4 million of unconsolidated debt and $145 million of contingent performance payments payable, if earned, over a four-year period. Siecor Corporation has historically been accounted for as a consolidated subsidiary and its results have been recorded within our Telecommunications Segment. Siecor Corporation, which is headquartered in Hickory, North Carolina, manufactures and distributes fiber-optic cable and network hardware. Siecor GmbH has historically been accounted for as an equity affiliate shown as an investment on our balance sheet and its results have also been accounted for within our Telecommunications Segment. Siecor GmbH, which is headquartered in Neustadt, Germany, manufactures and distributes optical fiber. We expect that the acquisition will close in early 2000. Consummation of the acquisition is subject to a number of customary conditions, including the receipt of appropriate antitrust clearance in Europe. THE OAK INDUSTRIES MERGER. On November 13, 1999, we agreed to acquire Oak Industries Inc. through the merger of one of our wholly-owned subsidiaries into Oak Industries. Each issued and outstanding share of common stock of Oak Industries will be converted into the right to receive .83 shares of our common stock. As a result of this merger, Oak Industries will become our wholly-owned subsidiary. Oak Industries is a leading manufacturer of highly engineered components that it designs and sells to manufacturers in the communications and selected other industries. The addition of Oak Industries will extend our S-5 opto-electronic product portfolio into important new market segments. Specifically, Oak Industries' Lasertron, Inc. subsidiary, a pioneer in the development of active fiber-optic devices for telecommunications, will enhance our photonic technology product offering and development activities. The products of Oak Industries' Gilbert Engineering Co. subsidiary, a leading manufacturer of coaxial connectors for broadband communications networks, will complement our existing capabilities in optical connectors, optical cable, hardware and related equipment. The Oak Industries' Frequency Control Group designs and manufactures devices that are used as a timing reference in wireless, wireline and fiber-optic applications. In addition, Oak Industries' Controls Group consists of Harper-Wyman and OakGrigsby, Inc., which manufacture control systems for the gas range and gas grill industries and switches and encoders used in a wide variety of applications. We intend that the merger will be accounted for as a pooling of interests and will be tax-free to Oak Industries stockholders. We expect that the acquisition will close in early 2000. However, consummation of the acquisition is subject to a number of customary conditions, including receipt of shareholder approval. Pro forma financial statements showing the effect of this merger on our historical financial statements are included in our current report on Form 8-K dated December 28, 1999, which is incorporated by reference in the prospectus. USE OF PROCEEDS We estimate that the net proceeds from the sale of the shares of common stock offered by this prospectus supplement will be $1,908.2 million, or $2,194.5 million if the underwriters exercise in full their option to purchase additional shares, after deducting the underwriting discounts and commissions and estimated offering expenses we will pay. We intend to use the net proceeds of this offering: - to pay initially the $1.13 billion cash portion of the purchase price for the Siemens acquisition, which is expected to close in early 2000, - to repay all of the bank debt to be assumed in the Oak Industries merger, which approximates $100 million, - to repay all of our outstanding commercial paper, which approximates $250 million and - for general corporate purposes, which include - the funding of other acquisitions, - working capital requirements and - the funding of a portion of our normal, ongoing capital spending program. At December 31, 1999, the Oak Industries bank debt bore interest at the rate of approximately 7.00% per annum and was due in 2000 and 2001. This debt had been incurred for general corporate purposes. At that date, our commercial paper bore interest at rates ranging from 5.95% to 6.65% per annum and was due in less than 90 days. We issued our commercial paper for general corporate purposes. If the Siemens acquisition is not completed, we will add those net proceeds to working capital and use them for general corporate purposes. We will invest the net proceeds in short-term, interest-bearing, investment grade obligations until they are applied as described above. S-6 PRICE RANGE OF COMMON STOCK Our common stock is listed on the New York Stock Exchange under the symbol "GLW". The table below sets forth for the periods indicated the high and low sales prices for our common stock as reported on the NYSE Composite Tape.
Cash Price Range Dividends ---------------------- Declared Per High Low Share -------- -------- ------------ 1997 First Quarter............................................. $46 3/8 $ 33 3/4 $.18 Second Quarter............................................ 56 1/2 43 .18 Third Quarter............................................. 65 1/8 39 3/4 .18 Fourth Quarter............................................ 49 9/16 35 3/8 .18 1998 First Quarter............................................. 43 15/16 32 .18 Second Quarter............................................ 44 3/8 33 15/16 .18 Third Quarter............................................. 36 22 7/8 .18 Fourth Quarter............................................ 45 11/16 26 15/16 .18 1999 First Quarter............................................. 61 3/4 44 3/4 .18 Second Quarter............................................ 70 3/4 47 11/16 .18 Third Quarter............................................. 75 60 5/16 .18 Fourth Quarter............................................ 129 1/16 64 1/16 .18 2000 First Quarter (through January 25, 2000).................. 175 1/2 103
The last reported sale price of our common stock on the New York Stock Exchange for January 25, 2000 was $151 3/8. At December 31, 1999, there were 245,465,548 shares of our common stock outstanding, held by approximately 16,000 shareholders of record and 110,000 beneficial owners. DIVIDEND POLICY We have regularly paid cash dividends since 1881 and expect to continue to pay cash dividends. Our current quarterly cash dividend is $.18 per share of common stock. Holders of common stock are entitled to share equally in the dividends that may be declared by our board of directors, but only after payment of dividends required to be paid on outstanding shares of preferred stock. The continued declaration of dividends by our board of directors is subject to our current and prospective earnings, financial condition, capital requirements and any other factors that our board of directors deems relevant. See "Description of Common Stock" and "Description of Preferred Stock" in the accompanying prospectus. S-7 CAPITALIZATION The following table sets forth both our actual consolidated capitalization at September 30, 1999 and the combined pro forma capitalization reflecting the merger with Oak Industries as disclosed in our Form 8-K dated December 28, 1999. The Pro Forma as Adjusted numbers reflect (1) the Siemens acquisition and (2) the issuance of the shares of common stock we are selling in this offering and the application of the estimated net proceeds as described under "Use of Proceeds".
September 30, 1999 --------------------------------------- Pro Forma for Oak Industries Pro Forma Actual Merger as Adjusted -------- -------------- ----------- (Dollars in millions) Cash and short-term investments............................. $ 101.5 $ 109.7 $ 537.9 ======== ======== ======== Current maturities of long-term debt and short-term notes payable................................................... $ 297.8 $ 344.7 $ 94.7 ======== ======== ======== Loans payable beyond one year............................... $1,287.6 $1,395.8 $1,295.8 Convertible subordinated notes.............................. -- 100.0 100.0 Unconsolidated debt assumed in Siemens acquisition.......... -- -- 41.4 Minority interest in subsidiary companies................... 361.4 361.4 120.4 Convertible preferred stock................................. 15.2 15.2 15.2 Common shareholders' equity Common stock, including excess over par value and other capital--par value $.50 per share; shares authorized: 500 million; shares issued: 269.7 million Actual, 284.1 Pro Forma and 297.1 million Pro Forma as Adjusted................................... 1,032.5 1,295.5 3,203.7 Retained earnings......................................... 1,730.8 1,639.0 1,639.0 Less cost of 25 million shares of common stock in treasury................................................ (642.9) (642.9) (642.9) Accumulated other comprehensive loss...................... (19.6) (31.3) (31.3) -------- -------- -------- Total common shareholders' equity..................... 2,100.8 2,260.3 4,168.5 -------- -------- -------- Total capitalization........................................ $3,765.0 $4,132.7 $5,741.3 ======== ======== ========
In addition to the common stock offering, which is reflected in the Pro Forma as Adjusted column, we expect to issue approximately $500 million equivalent of euro-denominated debt in the first quarter of 2000. S-8 SELECTED CONSOLIDATED FINANCIAL DATA The following tables contain our consolidated financial data for the periods presented. The financial data at and for each of the five years ended December 31, 1998 have been derived from our audited financial statements. The financial data at and for the nine months ended September 30, 1999 and 1998 have been derived from our unaudited financial statements. You should read the following financial data in conjunction with the financial statements, including the related notes, which are incorporated by reference in the accompanying prospectus.
September 30, December 31, -------------------------- --------------------------------------------------------------- 1999 1998 1998 1997 1996 1995 1994 ----------- -------- -------- -------- -------- -------- -------- (in millions, except per share data) OPERATIONS: Net sales............ $3,048.8 $2,557.2 $3,484.0 $3,516.8 $3,024.0 $2,644.7 $2,367.5 Non-operating gains.............. 30.0(a) 20.5(c) 39.7(c)(f) Gross margin......... 1,187.2 973.8 1,345.9 1,490.5 1,206.6 1,036.0 903.3 Research, development and engineering expenses........... 260.9 213.8 293.9 250.3 189.2 172.2 169.7 Amortization of purchased intangibles........ 15.9 11.8 15.8 16.0 12.7 (h) (h) Provision for impairment and restructuring...... 15.5(b) 84.6(d) 84.6(d) 26.5(i) Income from continuing operations before taxes on income.... 437.5 280.7 439.6 629.2 455.8 389.4 286.3 Minority interest in earnings of subsidiaries....... (46.1) (38.6) (60.9) (76.3) (52.5) (64.3) (48.7) Equity in earnings (losses) of associated companies: Other than Dow Corning Corporation...... 84.9 75.5 95.3 79.2 85.1 66.6 48.5 Dow Corning Corporation...... (348.0)(i) (2.8)(j) Income (loss) from continuing operations......... $ 341.6(a)(b) $ 223.2(c)(d) $ 327.5(c)(d)(f) $ 408.9 $ 323.3 $ (77.3)(i) $ 190.6(j) Income (loss) from discontinued operations, net of income taxes....... 66.5(e) 66.5(e) 30.9 (147.7)(g) 26.5 90.7 -------- -------- -------- -------- -------- -------- -------- Net Income (loss).... $ 341.6 $ 289.7 $ 394.0 $ 439.8 $ 175.6 $ (50.8) $ 281.3 ======== ======== ======== ======== ======== ======== ======== Basic Earnings (Loss) Per Share Continuing operations....... $ 1.42 $ 0.97 $ 1.42 $ 1.79 $ 1.42 $ (0.35) $ 0.89 Discontinued operations....... 0.29 0.29 0.13 (0.66) 0.12 0.43 -------- -------- -------- -------- -------- -------- -------- Net Income (loss)....... $ 1.42 $ 1.26 $ 1.71 $ 1.92 $ 0.76 $ (0.23) $ 1.32 ======== ======== ======== ======== ======== ======== ======== Diluted Earnings (Loss) Per Share Continuing operations....... $ 1.39 $ 0.95 $ 1.39 $ 1.72 $ 1.40 $ (0.35) $ 0.88 Discontinued operations....... 0.28 0.28 0.13 (0.62) 0.12 0.42 -------- -------- -------- -------- -------- -------- -------- Net income (loss)....... $ 1.39 $ 1.23 $ 1.67 $ 1.85 $ 0.78 $ (0.23) $ 1.30 ======== ======== ======== ======== ======== ======== ======== Dividends declared... $ 0.54 $ 0.54 $ 0.72 $ 0.72 $ 0.72 $ 0.72 $ 0.69 FINANCIAL POSITION: Cash and cash equivalents........ $ 101.5 $ 93.0 $ 45.4 $ 97.0 $ 215.1 $ 176.7 $ 131.2 Working capital...... 413.3 423.7 235.6 241.4 445.2 276.5 281.3 Total assets......... 5,673.8 4,760.3 4,981.9 4,691.9 4,183.4 5,334.5 5,365.5 Loans payable beyond one year........... 1,287.6 1,093.3 998.3 1,125.8 1,195.1 1,326.0 1,330.5 Minority interest in subsidiary companies.......... 361.4 362.1 346.1 349.3 309.9 269.2 244.5 Convertible preferred securities of subsidiary(k)...... 365.5 365.2 365.3 365.1 364.7 364.4 Convertible preferred stock.............. 15.2 18.4 17.9 19.8 22.2 23.9 24.9 Common shareholders' equity............. 2,100.8 1,405.2 1,505.6 1,246.5 961.1 2,103.0 2,263.0
(FOOTNOTES ON FOLLOWING PAGE) S-9 (a) In the third quarter of 1999, we sold Republic Wire and Cable, a manufacturer of elevator cables and a subsidiary of Siecor Corporation for approximately $52 million in cash and short-term notes. We recorded a non-operating gain of $30 million ($9.5 million after tax and minority interest), or $0.04 per share, as a result of this transaction. (b) In the third quarter of 1999, we recognized an impairment loss of $15.5 million ($10.0 million after tax), or $0.04 per share, in connection with our decision to sell or dispose of certain assets within the Advanced Materials Segment. (c) In the second quarter of 1998, Molecular Simulations, Inc. merged with Pharmacopeia, Inc., a publicly traded company (NASDAQ:PCOP). We previously owned 35% of Molecular Simulations and own approximately 15% of the combined entity. We realized a gain of $20.5 million ($13.2 million after tax), or $0.06 per share, from this transaction. (d) In the second quarter of 1998, we recorded a restructuring charge of $84.6 million ($49.2 million after tax and minority interest), or $0.21 per share. The charge is comprised of early retirement incentives and severance costs. (e) On April 1, 1998, we completed the recapitalization and sale of a controlling interest in our consumer housewares business to an affiliate of Borden, Inc. We received cash proceeds of $593 million and will continue to retain an eight percent interest in the Corning Consumer Products Company. We recorded an after-tax gain of $67.1 million, or $0.29 per share, in the second quarter of 1998. We used approximately $350 million of the proceeds to repay current borrowings and used the remaining proceeds to fund our restructuring activities and invest in our future operations. The $66.5 million net income from discontinued operations includes a $0.6 million loss from operations of the discontinued business through March 31, 1998. (f) In the fourth quarter of 1998, we recorded a non-operating gain of $19.2 million ($9.7 million after tax), or $0.04 per share, related to the divestiture of several small businesses within our science products division. (g) On December 31, 1996, we distributed all of the shares of Quest Diagnostics Incorporated and Covance Inc., which collectively comprised our Health Care Services segment, to our shareholders on a pro rata basis. We recorded a provision for loss on these distributions of $176.5 million, or $0.74 per share. (h) Prior to the presentation of these costs as a separate caption, they were reflected within costs of goods sold. (i) In 1995, we recognized a restructuring charge from continuing operations totaling $26.5 million ($16.1 million after tax), as a result of severance for workforce reductions in corporate staff groups and the write-off of production equipment caused by the decision to exit the manufacturing facility for glass-ceramic memory-disks. In 1995, we also recorded an after-tax charge of $365.5 million to fully reserve our investment in Dow Corning Corporation (a 50%-owned equity company) as a result of Dow Corning Corporation filing for protection under Chapter 11 of the United States Bankruptcy Code in May 1995. We recognized equity earnings totaling $17.5 million from Dow Corning Corporation in the first quarter of 1995. We discontinued recognition of equity earnings from Dow Corning Corporation beginning in the second quarter of 1995. (j) In 1994, we recognized a loss in equity earnings from Dow Corning Corporation totaling $2.8 million, which included a $75.9 million reduction in equity earnings recorded by us as a result of a charge taken by Dow Corning Corporation related to breast-implant litigation. (k) During the first quarter of 1999, Corning Delaware L.P., a special purpose limited partnership in which we were the sole general partner, redeemed all of its Convertible Monthly Income Preferred Securities (MIPS) for 11.5 million shares of our common stock. S-10 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Our net income from continuing operations increased 53% in the first nine months of 1999 compared with the same period in 1998. Diluted earnings per share from continuing operations increased 46% in the first nine months of 1999 compared with the same period in 1998. The following significant non-recurring items impacted our 1998 and 1999 results: - an impairment charge of $15.5 million ($10.0 million after tax), or $0.04 per share, in the third quarter of 1999, - a non-operating gain of $30.0 million ($9.5 million after tax and minority interest), or $0.04 per share, in the third quarter of 1999, - a restructuring charge of $84.6 million ($49.2 million after tax), or $0.21 per share, in the second quarter of 1998 and - a non-operating gain of $20.5 million ($13.2 million after tax), or $0.06 per share, in the second quarter of 1998. We believe comparing our operating results excluding non-recurring items, a measure that is not in accordance with generally accepted accounting principles and may not be consistent with measures used at other companies, provides a better understanding of the changes in our operating results. Excluding these non-recurring items, net income from continuing operations was up 32% in the first nine months of 1999 compared with the same period in the prior year. Diluted earnings per share from continuing operations, excluding these non-recurring items, increased 26% for the first nine months of 1999, over the same period in 1998. These results reflect the impact of stronger demand for premium fiber, environmental products and liquid crystal display glass. Net sales for the first nine months of 1999 increased 19% to $3.0 billion. Excluding the impact of acquisitions, our sales increased 14% in the first nine months of 1999. Each of our operating segments contributed to the increase in sales. SEGMENT OVERVIEW We group our products into three operating segments: Telecommunications, Advanced Materials and Information Display. We also include the earnings of equity affiliates that are closely associated with our operating segments in segment net income. We have prepared the financial results for our three operating segments on a basis that is consistent with the manner in which our management internally disaggregates financial information to assist in making internal operating decisions. We have allocated some common expenses among segments differently than we would for stand alone financial information prepared in accordance with generally accepted accounting principles. The non-recurring items noted above are excluded from segment net income. S-11 TELECOMMUNICATIONS SEGMENT The following table sets forth financial data for our Telecommunications Segment for the nine months ended September 30, 1999 and 1998:
Nine months ended September 30, ------------------- 1999 1998 -------- -------- Net sales................................................... $1,766.0 $1,312.4 Research, development and engineering expenses.............. $ 175.8 $ 136.5 Income from continuing operations before minority interest and equity earnings....................................... $ 190.3 $ 166.6 Minority interest in earnings of subsidiaries............. (20.4) (30.4) Equity in earnings of associated companies................ 12.3 14.4 -------- -------- Segment net income.......................................... $ 182.2 $ 150.6 ======== ======== Segment net income as a percentage of segment sales......... 10.3% 11.5%
Sales in the Telecommunications Segment increased 35% over the first three quarters of 1998 to $1.77 billion. The sales growth in the segment was led primarily by volume gains in our optical fiber and cable and photonic technologies businesses. Segment net income increased approximately 20% in the first three quarters of 1999, compared to the same period in 1998. The percentage increase in net income is lower than that of sales because of higher research and development spending and an increased volume of lower margin products. Cost reductions experienced within this segment, particularly within the photonic technologies business, mitigated the impact of price declines on segment net income. Sales in the optical fiber and cable business increased 40% over the first three quarters of 1998 to $1.2 billion. This increase resulted primarily from acquisitions and volume gains, which were led by the continued strong demand for our premium fiber products. Approximately $132 million of the increase in optical fiber and cable sales resulted from the following acquisitions: - the acquisition of the optical cable business from BICC, plc and the remaining 50% interest in Optical Waveguides Australia, Pty. Ltd. in the second quarter of 1999 and - the acquisition of Optical Fibres in the fourth quarter of 1998. Excluding the impact of these acquisitions, sales in the optical fiber and cable business increased approximately 25% for the first three quarters of 1999 in comparison to the same period last year due to volume gains of approximately 40%, reflecting continued strong demand for our premium fiber products. Volume of premium fiber and cable products, including our new LEAF-Registered Trademark-optical fiber, tripled over the first nine months of 1998. Price declines ranged between 10% and 25% for our optical fiber and cable products in comparison with the same period last year. However, the weighted average optical fiber and cable price declined approximately 5% compared to the same period last year, due to the higher mix of premium product sales. The rate of price declines slowed during the third quarter commensurate with the worldwide tightening of supply of optical fiber. Net income from the optical fiber and cable business increased more than 25% over the first three quarters of 1998. Sales in the photonics technologies business increased approximately 60% to $275 million led by higher volume of new products. Results of this business continued to be impacted by higher research and development spending, which offset significant improvement in operating performance as a result of cost reductions. Sales in the hardware and equipment business increased approximately 5% to $285 million, primarily due to a higher volume of existing products, partially offset by price declines. Net income decreased in this business, reflecting the impact of lower margins due to price declines. S-12 ADVANCED MATERIALS SEGMENT The following table sets forth financial data for our Advanced Materials Segment for the nine months ended September 30, 1999 and 1998:
Nine months ended September 30, ------------------- 1999 1998 -------- -------- Net sales................................................... $774.5 $767.7 Research, development and engineering expenses.............. $ 68.8 $ 60.3 Income from continuing operations before minority interest and equity earnings....................................... $ 71.6 $ 55.7 Minority interest in earnings of subsidiaries............. -- 0.3 Equity in earnings of associated companies................ 13.7 11.2 ------ ------ Segment net income.......................................... $ 85.3 $ 67.2 ====== ====== Segment net income as a percentage of segment sales......... 11.0% 8.8%
Sales in the Advanced Materials Segment were up slightly for the first three quarters of 1999 in comparison to the same period last year. Softness in the semiconductor materials and optical products businesses offset volume gains in the environmental products business. Sales in the environmental products business, the largest business in the segment, increased approximately 12% over the first three quarters of 1998 to $295 million. The increase resulted primarily from gains in our new thinwall ceramic substrate product and strong sales in North America. Sales in the science products business were flat at $200 million despite divestitures in 1998 and 1999. Sales in the other Advanced Materials businesses declined 7% as the result of the slowdown in the semiconductor manufacturing equipment industry, which impacted demand for our high-purity fused silica products. Sales in these businesses were also impacted by the erosion in the worldwide demand for glass optical products due to the consumers' increasing preference for plastic lenses. Segment net income increased 27% for the first three quarters of 1999 in comparison to the same period in 1998. The significant increase was the result of manufacturing efficiencies and the introduction of new thinwall products in the environmental products business. This improvement helped to offset earnings declines in the science products business caused by higher research and development spending. INFORMATION DISPLAY SEGMENT The following table sets forth financial data for our Information Display Segment for the nine months ended September 30, 1999 and 1998:
Nine months ended September 30, ------------------- 1999 1998 -------- -------- Net sales................................................... $490.4 $459.3 Research, development and engineering expenses.............. $ 16.4 $ 16.9 Income from continuing operations before minority interest and equity earnings....................................... $ 40.1 $ 15.3 Minority interest in earnings of subsidiaries............. (16.2) (12.2) Equity in earnings of associated companies................ 52.9 40.5 ------ ------ Segment net income.......................................... $ 76.8 $ 43.6 ====== ====== Segment net income as a percentage of segment sales......... 15.7% 9.5%
S-13 Sales in the Information Display Segment increased 7% over the first three quarters of 1998 to $490 million primarily due to growth in the advanced display products business. Sales in the advanced display products business increased 60% over the first three quarters of 1998 to approximately $130 million, primarily due to continued volume growth in liquid crystal display glass products. Net income in this business also increased significantly due to manufacturing efficiencies and strong equity earnings from Samsung Corning Precision Glass Co., Ltd., a Korean manufacturer of liquid crystal display glass. Sales in the conventional video components business totaled approximately $250 million for the first three quarters of 1999, a decline of 8% in comparison to the same period last year. Sales in this business were impacted by continued weak volume and price declines. Net income in this business increased significantly compared to the first three quarters of 1998, which were impacted by losses incurred from tank repairs. Sales in the projection video business increased 4% over the first three quarters of 1998 to approximately $110 million, while earnings increased significantly due to strong growth in the entertainment market segment. Segment net income increased almost 80% over the first three quarters of 1998, primarily due to gains in the advanced display products business. Taxes on Income Our effective tax rate for continuing operations, excluding non-recurring items, was 30% for the first nine months of 1999, compared to 31.5% for the same period in 1998. The lower 1999 rate is due to a higher percentage of our earnings resulting from consolidated entities with lower effective tax rates. Liquidity and Capital Resources Our working capital increased from $235.6 million at the end of 1998 to $413.3 million at September 30, 1999. Our ratio of current assets to current liabilities was 1.3 at the end of the third quarter compared to 1.2 at year-end 1998. The increase in working capital and ratio of current assets to current liabilities is due primarily to higher accounts receivable and inventory balances. Our long-term debt as a percentage of total capital increased from 31% at year-end 1998 to 34% at September 30, 1999. The increase is primarily due to the issuance of $300 million in long-term debt securities in the first quarter of 1999. We believe we have sufficient financial flexibility and ready access to funds to meet seasonal working capital requirements and to fund capital expenditures, acquisitions and other long-term growth opportunities. We filed with the Securities and Exchange Commission a $2 billion shelf registration statement in the second quarter of 1999 which became effective in October. With this registration, we can offer and sell up to approximately $2.1 billion in various types of debt and equity securities. We also increased our bank credit line commitments by $400 million in the third quarter of 1999. This raised our available lines of credit to $1.2 billion. Cash and short-term investments increased from year-end 1998 by $56.1 million. Operating activities for the nine months ended September 30, 1999 provided cash of $476.0 million. Financing activities for the nine months ended September 30, 1999 provided cash of $259.6 million. Total cash provided by operating and financing activities exceeded cash used by investing activities of $667.1 million. Net cash provided by operating activities increased for the first nine months of 1999 compared to the same period in 1998 because increases in net income from continuing operations more than offset the increase in cash used for working capital. Net cash used in investing activities for the first nine months of 1999 totaled $667.1 million, versus cash provided by investing activities of $77.1 million for the same period in 1998. The 1998 amount includes the receipt of proceeds from the divestiture of our consumer housewares business. Net cash provided by financing activities totaled $259.6 million for the first nine months of 1999, due primarily to the issuance of long-term debt securities in the first quarter. During the same period in 1998, we used cash in financing activities of $347.5 million, reflecting repayments of long-term debt with a portion of the proceeds from the divestiture of the consumer housewares business. Year 2000 Readiness Disclosure As of the date of this prospectus supplement, all of our mission-critical systems have been successfully tested for Year 2000 compliance and all of our manufacturing locations are fully operational. Although we have not experienced any significant Year 2000 problems to date, we plan to continue to monitor the situation closely. In addition, to date, we have not experienced any S-14 significant Year 2000 problems with any customer, supplier or other third-party provider. However, these external parties may have encountered or may yet encounter Year 2000 problems. We began our Year 2000 compliance process in 1996. The process included an inventory of software, hardware and interfaces, an assessment of potential Year 2000-related failures and their impact, the development of specific modification and replacement plans, and the implementation and testing of planned solutions. In addition, our Year 2000 compliance process included a review of our key business processes, internal systems and external dependencies to determine the need for contingency plans. Where there was sufficient risk, contingency plans were developed accordingly. We also reviewed our significant customers, suppliers and other third-party providers and made an assessment of their Year 2000 readiness. This Year 2000 compliance effort was completed prior to December 31, 1999. In 1995, we initiated a significant project to upgrade and improve access to business information using integrated enterprise-wide corporate applications that were Year 2000 compliant. This initiative mitigated to some extent the amount of Year 2000 costs incurred. Our total cost for Year 2000 compliance was approximately $25 million. This amount included incremental costs of approximately $13 million comprised primarily of contractor costs to modify existing systems. Year 2000 related costs in 2000, if any, are not expected to be material. Additional information regarding our Year 2000 compliance process is included in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our quarterly report on Form 10-Q filed for the period ended September 30, 1999, which is incorporated by reference in this prospectus supplement. S-15 UNDERWRITING Subject to the terms and conditions set forth in an underwriting agreement, the underwriters named below have severally agreed to purchase, and we have agreed to sell each underwriter, the number of shares of common stock set forth opposite their name below. Goldman, Sachs & Co. and J.P. Morgan Securities Inc. are the representatives of the underwriters.
Number of Shares ---------- Goldman, Sachs & Co............... 4,032,000 J.P. Morgan Securities Inc........ 4,032,000 Salomon Smith Barney Inc.......... 1,152,000 Banc of America Securities LLC.... 768,000 Donaldson, Lufkin & Jenrette Securities Corporation.......... 768,000 SoundView Technology Group, Inc............................. 768,000 Bear, Stearns & Co. Inc........... 172,000 Chase Securities Inc.............. 172,000 Credit Suisse First Boston Corporation..................... 172,000 Lehman Brothers Inc............... 172,000 Merrill Lynch, Pierce, Fenner & Smith Incorporated............. 172,000 Warburg Dillon Read LLC........... 172,000 Wasserstein Perella Securities, Inc............................. 172,000 Dain Rauscher Incorporated........ 92,000 Raymond James & Associates, Inc............................. 92,000 Wachovia Securities, Inc.......... 92,000 ---------- Total........................... 13,000,000 ==========
The underwriting agreement provides that the obligations of the underwriters to purchase our common stock included in this offering are subject to the approval of the validity of the shares of common stock by counsel and other conditions. The underwriters are obligated to take and pay for all of the shares of common stock (other than those covered by the overallotment option described below) if any are taken. The underwriters have advised us that they propose initially to offer such shares of common stock to the public at the initial public offering price set forth on the cover page of this prospectus supplement. After the initial public offering, the public offering price may be changed. We have granted to the underwriters an option, exercisable for 30 days from the date hereof, to purchase up to an additional 1,950,000 shares of common stock at the initial public offering price less the underwriting discounts and commissions set forth on the cover page of this prospectus supplement. The underwriters may exercise that option solely for the purpose of covering overallotments, if any, made in connection with the offering. The following table shows the per share and total underwriting discounts and commissions to be paid to the underwriters by us. These amounts are shown assuming both no exercise and full exercise of the underwriters' option to purchase additional shares.
No Exercise Full Exercise ----------- ------------- Per Share............. $ 4.550 $ 4.550 Total................. $59,150,000 $68,022,500
Shares sold by the underwriters to the public will initially be offered at the initial public offering price set forth on the cover of this prospectus supplement. Any shares sold by the underwriters to securities dealers may be sold at a discount of up to $2.73 per share from the initial public offering price. Any such securities dealers may resell any shares purchased from the underwriters to certain other brokers or dealers at a discount of up to $0.10 per share from the initial public offering price. If all the shares are not sold at the initial public offering price, the representatives may change the offering price and the other selling terms. We have agreed with the underwriters not to dispose of or hedge any of our common stock or securities convertible into or exchangeable for shares of common stock during the period from the date of this prospectus continuing through the date 90 days after the date of this prospectus, except with the prior written consent of the representatives. This agreement does not apply to any securities issued: - under employee benefit plans or dividend reinvestment plans, - upon exercise of currently outstanding stock options, S-16 - upon conversion or exchange of currently outstanding convertible or exchangeable securities or - in connection with mergers, acquisitions or similar transactions. We have agreed to indemnify the underwriters against, or contribute to payments that the underwriters may be required to make in respect of, certain liabilities, including liabilities under the Securities Act of 1933, as amended. The underwriters may engage in stabilizing transactions, syndicate covering transactions and penalty bids in accordance with Rule 104 under the Securities Exchange Act of 1934, as amended, in connection with the offering. Stabilizing transactions permit bids to purchase the common stock so long as the stabilizing bids do not exceed a specified maximum. Syndicate covering transactions involve purchases of the common stock in the open market following completion of the offering to cover all or a portion of a syndicate short position created by the underwriters selling more shares of common stock in connection with the offering than they are committed to purchase from us. In addition, the underwriters may impose "penalty bids" under contractual arrangements between the underwriters and dealers participating in the offering whereby they may reclaim from a dealer participating in the offering the selling concession with respect to shares of common stock that are distributed in the offering but subsequently purchased for the account of the underwriters in the open market. Such stabilizing transactions, syndicate covering transactions and penalty bids may result in the maintenance of the price of the common stock at a level above that which might otherwise prevail in the open market. None of the transactions described in this paragraph is required and, if any are undertaken, they may be discontinued at any time. We estimate that our share of the total expenses of the offering, excluding underwriting discounts and commissions, will be approximately $525,000. In the ordinary course of the underwriters' respective businesses, the underwriters and their affiliates have engaged and may engage in commercial and investment banking transactions with us and our affiliates for which they have received customary fees and expenses. LEGAL MATTERS Certain legal matters are being passed upon for us by William D. Eggers, Esq., our Senior Vice President and General Counsel, and Shearman & Sterling, New York, New York. The validity of the shares of common stock we are offering is being passed upon for the underwriters by Sullivan & Cromwell, New York, New York. Mr. Eggers owns substantially less than 1% of the outstanding shares of our common stock. S-17 PROSPECTUS [LOGO] Corning Incorporated and Corning Finance B.V. By this prospectus, we may offer from time to time up to $2,075,000,000 of: - Debt Securities of Corning Incorporated; - Guaranteed Debt Securities of Corning Finance B.V.; - Debt Warrants and Equity Warrants of Corning Incorporated; - Preferred Stock of Corning Incorporated; - Depositary Shares of Corning Incorporated; and - Common Stock of Corning Incorporated. ------------------------ When we offer securities, we will provide you with a prospectus supplement describing the terms of the specific issue of securities including the offering price of the securities. You should read this prospectus and the accompanying prospectus supplement carefully before you invest. The common stock of Corning Incorporated is listed on the New York Stock Exchange under the symbol "GLW". On January 10, 2000, the closing price for the common stock, as reported on the NYSE, was $118 per share. ------------------------ Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. This prospectus is dated January 11, 2000 CORNING INCORPORATED We trace our origins to a glass business established in 1851. The present corporation was incorporated in the State of New York in December 1936, and our name was changed from Corning Glass Works to Corning Incorporated on April 28, 1989. We are a global, technology-based corporation that operates in three broadly based operating business segments: - Telecommunications - Advanced Materials - Information Display The Telecommunications Segment produces optical fiber and cable, optical hardware and equipment and photonic components for the worldwide telecommunications industry. The Advanced Materials Segment manufactures specialized products with unique properties for customer applications utilizing glass, glass ceramic and polymer technologies. Businesses within this segment include environmental products, science products, semiconductor materials and optical and lighting products. The Information Display Segment manufactures glass panels and funnels for televisions and computer displays, projection video lens assemblies and liquid-crystal display glass for flat panel displays. Our principal office is located at One Riverfront Plaza, Corning, New York 14831. Our telephone number is (607) 974-9000. CORNING FINANCE B.V. Corning Finance B.V. is an indirect wholly owned subsidiary of Corning Incorporated, incorporated under the laws of The Netherlands solely for the purpose of raising capital to meet the financing needs of Corning Incorporated and its subsidiaries. Corning Finance B.V. has no independent operations. Its principal executive offices are located at Lange Voorhout 7, 2514EA The Hague; telephone: 31.70.310.83.08. USE OF PROCEEDS Except as may be set forth in the prospectus supplement, we will use the net proceeds from the sale of the securities offered under this prospectus and the prospectus supplement for general corporate purposes. Our general corporate purposes may include: - the repayment or reduction of indebtedness; - working capital requirements; and - the funding of a portion of our normal, ongoing capital spending program. Corning Finance B.V. will lend the net proceeds from the sale of any debt securities offered by it to Corning Incorporated or its subsidiaries to be used for similar purposes. We will determine any specific allocation of the net proceeds of an offering of securities to a specific purpose at the time of the offering and will describe the allocation in the related prospectus supplement. 2 SECURITIES WE MAY ISSUE We may use this prospectus to offer up to $2,075,000,000 of: - debt securities issued by Corning Incorporated; - debt securities issued by Corning Finance B.V. and fully and unconditionally guaranteed by Corning Incorporated; - debt warrants and equity warrants issued by Corning Incorporated; - preferred stock issued by Corning Incorporated; - depositary shares relating to preferred stock; and - common stock issued by Corning Incorporated. A prospectus supplement will describe the specific types, amounts, prices, and detailed terms of any of these securities. 3 DESCRIPTION OF DEBT SECURITIES AND GUARANTEES General THE DEBT SECURITIES WILL BE ISSUED UNDER AN INDENTURE As required by U.S. federal law for all bonds and notes of companies that are publicly offered, the debt securities are governed by a document called the indenture. In the case of debt securities issued by Corning Incorporated, the applicable indenture is a contract between Corning Incorporated and The Chase Manhattan Bank, which acts as trustee. In the case of debt securities issued by Corning Finance B.V., the applicable indenture is a contract among Corning Finance B.V., Corning Incorporated, which acts as guarantor, and The Chase Manhattan Bank, which acts as trustee. The trustee has two main roles: - First, the trustee can enforce your rights against us if we default. There are limitations on the extent to which the trustee acts on your behalf, which we describe later under "--Default, Remedies and Waiver of Default"; and - Second, the trustee performs administrative duties for us, which include sending you interest payments and notices. We may issue as many distinct series of debt securities under each indenture as we wish. This section summarizes terms of the debt securities that are common to all series. Most of the financial terms and other specific terms of your series are described in the prospectus supplement attached to the front of this prospectus. Those terms may vary from the terms described here. The prospectus supplement may also describe special Federal income tax consequences of the debt securities. THIS SECTION IS ONLY A SUMMARY This section and your prospectus supplement summarize all the material terms of each indenture and your debt security. They do not, however, describe every aspect of each indenture and your debt security. Each indenture and its associated documents, including your debt security, contain the full text of the matters described in this section and your prospectus supplement. Each indenture and the debt securities are governed by New York law. A copy of each indenture has been filed with the SEC as part of our registration statement. See "Where You Can Find More Information" below for information on how to obtain a copy. Legal Ownership of Debt Securities We refer to those who have debt securities registered in their own names, on the books that we or the trustee maintain for this purpose, as the "holders" of those debt securities. These persons are the legal holders of the debt securities. We refer to those who, indirectly through others, own beneficial interests in debt securities that are not registered in their own names as indirect holders of those debt securities. As we discuss below, indirect holders are not legal holders, and investors in debt securities issued in book-entry form or in street name will be indirect holders. BOOK-ENTRY HOLDERS We will issue debt securities in book-entry form only, unless we specify otherwise in the applicable prospectus supplement. This means debt securities will be represented by one or more global securities registered in the name of a financial institution that holds them as depositary on behalf of other financial institutions that participate in the depositary's book-entry system. These participating institutions, in turn, hold beneficial interests in the debt securities on behalf of themselves or their customers. Under each indenture, only the person in whose name a debt security is registered is recognized as the holder of that debt security. Consequently, for debt securities issued in global form, we will recognize only the depositary as the holder of the debt securities and we will make all payments on the debt securities to the depositary. The depositary passes along the payments it receives to its participants, which in turn pass the payments along to their customers who are the beneficial owners. The depositary and its participants do so under agreements they have made with one another or with their customers; they are not obligated to do so under the terms of the debt securities. 4 As a result, investors will not own debt securities directly. Instead, they will own beneficial interests in a global security, through a bank, broker or other financial institution that participates in the depositary's book-entry system or holds an interest through a participant. As long as the debt securities are issued in global form, investors will be indirect holders, and not holders, of the debt securities. STREET NAME HOLDERS In the future we may terminate a global security or issue debt securities initially in non-global form. In these cases, investors may choose to hold their debt securities in their own names or in "street name". Debt securities held by an investor in street name would be registered in the name of a bank, broker or other financial institution that the investor chooses, and the investor would hold only a beneficial interest in those debt securities through an account he or she maintains at that institution. For debt securities held in street name, we will recognize only the intermediary banks, brokers and other financial institutions in whose names the debt securities are registered as the holders of those debt securities and we will make all payments on those debt securities to them. These institutions pass along the payments they receive to their customers who are the beneficial owners, but only because they agree to do so in their customer agreements or because they are legally required to do so. Investors who hold debt securities in street name will be indirect holders, not holders, of those debt securities. LEGAL HOLDERS Our obligations, as well as the obligations of the trustee and those of any third parties employed by us or the trustee, run only to the legal holders of the debt securities. We do not have obligations to investors who hold beneficial interests in global securities, in street name or by any other indirect means. This will be the case whether an investor chooses to be an indirect holder of a debt security or has no choice because we are issuing the debt securities only in global form. For example, once we make a payment or give a notice to the holder, we have no further responsibility for the payment or notice even if that holder is required, under agreements with depositary participants or customers or by law, to pass it along to the indirect holders but does not do so. Similarly, if we want to obtain the approval of the holders for any purpose--E.G., to amend the applicable indenture or to relieve us of the consequences of a default or of our obligation to comply with a particular provision of the applicable indenture-- we would seek the approval only from the holders, and not the indirect holders, of the debt securities. Whether and how the holders contact the indirect holders is up to the holders. When we refer to you, we mean those who invest in the debt securities being offered by this prospectus, whether they are the holders or only indirect holders of those debt securities. When we refer to your debt securities, we mean the debt securities in which you hold a direct or indirect interest. SPECIAL CONSIDERATIONS FOR INDIRECT HOLDERS If you hold debt securities through a bank, broker or other financial institution, either in book-entry form or in street name, you should check with your own institution to find out: - how it handles securities payments and notices; - whether it imposes fees or charges; - how it would handle a request for the holders' consent, if ever required; - whether and how you can instruct it to send you debt securities registered in your own name so you can be a holder, if that is permitted in the future; - how it would exercise rights under the debt securities if there were a default or other event triggering the need for holders to act to protect their interests; and - if the debt securities are in book-entry form, how the depositary's rules and procedures will affect these matters. What Is a Global Security? We will issue each debt security in book-entry form only, unless we specify otherwise in the applicable prospectus supplement. A global security represents one or any other number of individual debt securities. Generally, all debt securities represented by the same 5 global securities will have the same terms. We may, however, issue a global security that represents multiple debt securities that have different terms and are issued at different times. We call this kind of global security a master global security. Each debt security issued in book-entry form will be represented by a global security that we deposit with and register in the name of a financial institution or its nominee that we select. The financial institution that we select for this purpose is called the depositary. Unless we specify otherwise in the applicable prospectus supplement, The Depository Trust Company, New York, New York, known as DTC, will be the depositary for all debt securities issued in book-entry form. A global security may not be transferred to or registered in the name of anyone other than the depositary or its nominee, unless special termination situations arise. We describe those situations below under "--Special Situations When a Global Security Will Be Terminated". As a result of these arrangements, the depositary, or its nominee, will be the sole registered owner and holder of all debt securities represented by a global security, and investors will be permitted to own only beneficial interests in a global security. Beneficial interests must be held by means of an account with a broker, bank or other financial institution that in turn has an account with the depositary or with another institution that does. Thus, an investor whose security is represented by a global security will not be a holder of the debt security, but only an indirect holder of a beneficial interest in the global security. If the prospectus supplement for a particular debt security indicates that the debt security will be issued in global form only, then the debt security will be represented by a global security at all times unless and until the global security is terminated. We describe the situations in which this can occur below under "--Special Situations When a Global Security Will Be Terminated". The global security may be a master global security, although your prospectus supplement will not indicate whether it is a master global security. If termination occurs, we may issue the debt securities through another book-entry clearing system or decide that the debt securities may no longer be held through any book-entry clearing system. SPECIAL CONSIDERATIONS FOR GLOBAL SECURITIES As an indirect holder, an investor's rights relating to a global security will be governed by the account rules of the investor's financial institution and of the depositary, as well as general laws relating to securities transfers. We do not recognize this type of investor as a holder of debt securities and instead deal only with the depositary that holds the global security. If debt securities are issued only in the form of a global security, an investor should be aware of the following: - An investor cannot cause the debt securities to be registered in his or her name, and cannot obtain non-global certificates for his or her interest in the debt securities, except in the special situations we describe below; - An investor will be an indirect holder and must look to his or her own bank or broker for payments on the debt securities and protection of his or her legal rights relating to the debt securities, as we describe under "--Legal Ownership of Debt Securities" above; - An investor may not be able to sell interests in the debt securities to some insurance companies and to other institutions that are required by law to own their securities in non-book-entry form; - An investor may not be able to pledge his or her interest in a global security in circumstances where certificates representing the debt securities must be delivered to the lender or other beneficiary of the pledge in order for the pledge to be effective; - The depositary's policies, which may change from time to time, will govern payments, transfers, exchanges and other matters relating to an investor's interest in a global security. We and the trustee have no responsibility for any aspect of the depositary's actions or for its records of ownership interests in a global security. We and the trustee also do not supervise the depositary in any way; - The depositary may (and we understand that DTC will) require that those who purchase and sell interests in a global security within its 6 book-entry system use immediately available funds and your broker or bank may require you to do so as well; and - Financial institutions that participate in the depositary's book-entry system, and through which an investor holds its interest in a global security, may also have their own policies affecting payments, notices and other matters relating to the debt securities. There may be more than one financial intermediary in the chain of ownership for an investor. We do not monitor and are not responsible for the actions of any of those intermediaries. SPECIAL SITUATIONS WHEN A GLOBAL SECURITY WILL BE TERMINATED In a few special situations described below, a global security will be terminated and interests in it will be exchanged for certificates in non-global form representing the debt securities it represented. After that exchange, the choice of whether to hold the debt securities directly or in street name will be up to the investor. Investors must consult their own banks or brokers to find out how to have their interests in a global security transferred on termination to their own names, so that they will be holders. We have described the rights of holders and street name investors above under "--Legal Owner of Debt Securities". The special situations for termination of a global security are as follows: - if the depositary notifies us that it is unwilling, unable or no longer qualified to continue as depositary for that global security and we do not appoint another institution to act as depositary within 60 days; - if we notify the trustee that we wish to terminate that global security; or - if an event of default has occurred with regard to debt securities represented by that global security and has not been cured or waived; we discuss defaults later under "--Default, Remedies and Waiver of Default". If a global security is terminated, only the depositary, and not we or the trustee, is responsible for deciding the names of the institutions in whose names the debt securities represented by the global security will be registered and, therefore, who will be the holders of those debt securities. Ranking Each series of debt securities will not be secured by any property or assets of Corning Incorporated or Corning Finance B.V., and will not be subordinated to any other obligations of either Corning Incorporated or Corning Finance B.V., as applicable. Full and Unconditional Guarantee of Debt Securities of Corning Finance B.V. All debt securities issued by Corning Finance B.V. will be fully and unconditionally guaranteed under a guarantee of Corning Incorporated of the payment of principal of, and any premium, interest and "additional amounts" on, these debt securities when due, whether at maturity or otherwise. For a discussion of the payment of "additional amounts", please see "--Payment of Additional Amounts with Respect to the Guaranteed Debt Securities". Under the terms of the full and unconditional guarantee, holders of the guaranteed debt securities will not be required to exercise their remedies against Corning Finance B.V. before they proceed directly against Corning Incorporated. Payment of Additional Amounts With Respect to the Guaranteed Debt Securities Unless otherwise indicated in your prospectus supplement, all amounts of principal of, and any premium and interest on, any guaranteed debt securities will be paid by Corning Finance B.V. without deduction or withholding for any taxes, assessments or other charges imposed by the government of The Netherlands, or the government of a jurisdiction in which a successor to Corning Finance B.V. is organized. If deduction or withholding of any of these charges is required by The Netherlands, or by a jurisdiction in which a successor to Corning Finance B.V. is organized, Corning Finance B.V. will pay as additional interest any additional amounts necessary to make the net amount paid to the affected holders equal the amount the holders would have 7 received in the absence of the deduction or withholding. However, these "additional amounts" do not include: - the amount of any tax, assessment or other governmental charge imposed by any unit of the United States; - the amount of any tax, assessment or other governmental charge which is only payable because either: -- a type of connection exists between the holder and The Netherlands; or -- the holder presented the debt security for payment more than 30 days after the date on which the relevant payment became due or was provided for, whichever is later; - the amount of any tax, assessment or other governmental charge which is payable other than by deduction or withholding from a payment on the debt securities; - the amount of any tax, assessment or other governmental charge that is imposed or withheld due to the beneficial owner of the debt security failing to comply with a request from us to either provide information concerning the beneficial owner's nationality, residence or identity or make any claim to satisfy any information or reporting requirement, if the completion of either would have provided an exemption from the applicable governmental charge; or - any combination of the taxes, assessments or other governmental charges described above. The prospectus supplement will describe any additional circumstances under which additional amounts will not be paid with respect to debt securities. Redemption and Repayment Unless otherwise indicated in your prospectus supplement, your debt security will not be entitled to the benefit of any sinking fund--that is, we will not deposit money on a regular basis into any separate custodial account to repay your debt securities. In addition, we will not be entitled to redeem your debt security before its stated maturity unless your prospectus supplement specifies a redemption commencement date. You will not be entitled to require us to buy your debt security from you, before its stated maturity, unless your prospectus supplement specifies one or more repayment dates. If your prospectus supplement specifies a redemption commencement date or a repayment date, it will also specify one or more redemption prices or repayment prices, which will be expressed as a percentage of the principal amount of your debt security. It may also specify one or more redemption periods during which the redemption prices relating to a redemption of debt securities during those periods will apply. If your prospectus supplement specifies a redemption commencement date, your debt security will be redeemable at our option at any time on or after that date. If we redeem your debt security, we will do so at the specified redemption price, together with interest accrued to the redemption date. If different prices are specified for different redemption periods, the price we pay will be the price that applies to the redemption period during which your debt security is redeemed. If your prospectus supplement specifies a repayment date, your debt security will be repayable at your option on the specified repayment date at the specified repayment price, together with interest accrued to the repayment date. In the event that we exercise an option to redeem any debt security, we will give to the trustee and the holder written notice of the principal amount of the debt security to be redeemed, not less than 30 days nor more than 60 days before the applicable redemption date. We will give the notice in the manner described below in "--Notices". If a debt security represented by a global security is subject to repayment at the holder's option, the depositary or its nominee, as the holder, will be the only person that can exercise the right to repayment. Any indirect holders who own beneficial interests in the global security and wish to exercise a repayment right must give proper and timely instructions to their banks or brokers through which they hold their interests, requesting that they notify the depositary to exercise the repayment right on their behalf. Different firms have different deadlines for accepting instructions from their customers, and you should take care to act promptly enough to ensure that your request is given effect by the depositary before the applicable deadline for exercise. 8 STREET NAME AND OTHER INDIRECT HOLDERS SHOULD CONTACT THEIR BANKS OR BROKERS FOR INFORMATION ABOUT HOW TO EXERCISE A REPAYMENT RIGHT IN A TIMELY MANNER. In the event that the option of the holder to elect repayment as described above is deemed to be a "tender offer" within the meaning of Rule 14e-1 under the Securities Exchange Act of 1934, we will comply with Rule 14e-1 as then in effect to the extent it is applicable to us and the transaction. We or our affiliates may purchase debt securities from investors who are willing to sell from time to time, either in the open market at prevailing prices or in private transactions at negotiated prices. Debt securities that we or they purchase may, at our discretion, be held, resold or canceled. Optional Tax Redemption Unless otherwise indicated in your prospectus supplement, except in the case of debt securities that have a variable rate of interest, which may be redeemed on any interest payment date, Corning Finance B.V. may redeem each series of debt securities at its option in whole but not in part at any time. Except in the case of outstanding original issue discount debt securities which may be redeemed at the redemption price specified by the terms of that series of debt securities, the redemption price will be equal to the principal amount plus accrued interest to the date of redemption, if: - Corning Finance B.V. would be required to pay additional amounts, as a result of any change in the tax laws of The Netherlands which becomes effective on or after the date of issuance of that series, as explained above under "--Payment of Additional Amounts With Respect to the Guaranteed Debt Securities", or - as a result of any change in any treaty affecting taxation to which The Netherlands, or a jurisdiction in which a successor to Corning Finance B.V. is organized, is a party which becomes effective on or after a date on which Corning Incorporated borrows money from Corning Finance B.V., Corning Incorporated would be required to deduct or withhold tax on any payment to Corning Finance B.V. to enable it to make any payment of principal, premium, if any, or interest. In both of these cases, however, we will not be permitted to redeem a series of debt securities if we can avoid either the payment of additional amounts, or deductions or withholding, as the case may be, by using reasonable measures available to us. Conversion Your debt securities may be convertible into or exchangeable for common stock or other securities of Corning Incorporated if your prospectus supplement so provides. If your debt securities are convertible or exchangeable, your prospectus supplement will include provisions as to whether conversion or exchange is mandatory, at your option or at our option. Your prospectus supplement would also include provisions regarding the adjustment of the number of shares of common stock or other securities of Corning Incorporated to be received by you upon conversion or exchange. Mergers and Similar Transactions We are generally permitted to merge or consolidate with another firm. We are also permitted to sell substantially all our assets to another firm. We may not take any of these actions, however, unless all the following conditions are met: - Where we merge out of existence or sell our assets, the successor firm must agree to be legally responsible for the debt securities and must be organized as a corporation, partnership, trust, limited liability company or similar entity. In the case of a merger or consolidation of Corning Incorporated, the successor firm may not be organized under a foreign country's laws, that is, it must be organized under the laws of a State or the District of Columbia or under federal law. In the case of a merger or consolidation of Corning Finance B.V., the successor firm may be organized under the laws of any jurisdiction. - The merger, sale of assets or other transaction must not cause a default on the debt securities, and we must not already be in default, unless the merger or other transaction would cure the default. For purposes of this no-default test, a default would include an event of default that has occurred and not been cured, as described below under "Event of Default". A default for 9 this purpose would also include any event that would be an event of default if the requirements for giving us default notice or our default having to exist for a specific period of time were disregarded. - It is possible that the merger, sale of assets or other transaction would cause some of our property to become subject to a mortgage or other legal mechanism giving lenders preferential rights in that property over other lenders or over our general creditors if we fail to pay them back. We have promised to limit these preferential rights on our property, called "liens." This limitation is discussed below under "Restrictive Covenant and Defeasance--Restrictions on Liens". If a merger or other transaction would create any liens on our property, we must comply with that restrictive covenant. We would do this either by deciding that the liens were permitted, or by following the requirements of the restrictive covenant to grant an equivalent or higher-ranking lien on the same property to you and the other direct holders of the debt securities. - In the case of the guaranteed debt securities, the successor to Corning Finance B.V., if not organized in the United States, must agree to pay the holder of each guaranteed debt security any "additional amounts" or other expenses imposed on the holder as a result of the merger, consolidation or sale, as explained above under "--Payment of Additional Amounts with Respect to the Guaranteed Debt Securities". Restrictive Covenants and Defeasance RESTRICTIONS ON LIENS In each indenture, Corning Incorporated promises that it will not become obligated on any new debt that is secured by a lien on any of its principal domestic manufacturing properties, or on any shares of stock or debt of any of its domestic subsidiaries, unless it grants an equivalent or higher-ranking lien on the same property to you and the other direct holders of the debt securities and, if applicable, the guarantees. Corning Incorporated does not need to comply with this restriction if the amount of all debt that is secured by liens on its principal domestic manufacturing properties is less than 10% of its consolidated net tangible assets. In performing this calculation, debt secured would include the new debt and the securities which it would secure as described in the previous paragraph. This restriction on liens does not apply to debt secured by the following types of liens, and Corning Incorporated can disregard this debt when we calculate the limits imposed by this restriction: - liens on the property of any domestic subsidiaries of Corning Incorporated, or on their shares of stock or debt, if those liens existed at the time the corporation became a domestic subsidiary of Corning Incorporated or as of the date that debt securities are first issued under the applicable indenture; - liens in favor of Corning Incorporated or its domestic subsidiaries; - some mechanics' liens, tax liens, liens in favor of, and to secure payments or the acquisition of property from any governmental body by law or because of a contract Corning Incorporated has entered into, and other liens incidental to construction, conduct of business or ownership of its property or of any domestic subsidiary; - liens on property that existed at the time Corning Incorporated acquired the property, including property it may acquire through a merger or similar transaction, or that it granted in order to purchase, alter or construct the property, sometimes called "purchase money mortgages"; and - liens arising from any judgment, decree or order of a court so long as proceedings to review these judgments have not been terminated or the period in which to initiate proceedings has not expired. Corning Incorporated can also disregard debt secured by liens that extend, renew or replace any of these types of liens. Corning Incorporated and its subsidiaries are permitted to have as much unsecured debt as they may choose, and neither indenture restricts liens on any of the shares of stock of Corning Incorporated or of less than 80%-owned subsidiaries. 10 RESTRICTIONS ON SALES AND LEASEBACKS In each indenture, Corning Incorporated promises that neither it nor any of its domestic subsidiaries will enter into any sale and leaseback transaction involving a principal domestic manufacturing property, unless it complies with this restrictive covenant. A "sale and leaseback transaction" generally is an arrangement between Corning Incorporated or a domestic subsidiary and a bank, insurance company or other lender or investor where Corning Incorporated or the domestic subsidiary lease a principal domestic manufacturing property which was or will be sold by Corning Incorporated or the domestic subsidiary to that lender or investor more than 180 days after the completion of construction of the property and the beginning of its full operation. Corning Incorporated does not need to comply with this restriction if the amount of attributable debt is less than 10% of its consolidated net tangible assets. Corning Incorporated can comply with this restrictive covenant if it retires an amount of funded debt, within 180 days of the transaction, equal to at least the net proceeds of the sale of the principal domestic manufacturing property that it leases in the transaction or the fair value of that property, subject to credits for voluntary retirements of debt securities and funded debt we may make, whichever is greater. This restriction on sales and leasebacks does not apply to any sale and leaseback transaction that is between Corning Incorporated and one of its domestic subsidiaries or between domestic subsidiaries, or that involves a lease for a period of three years or less. DEFINITIONS RELATING TO OUR RESTRICTIVE COVENANTS Following are the meanings of the terms that are important in understanding the restrictive covenants previously described. - "attributable debt" means the total net amount of rent, discounted at a rate of 15% per annum compounded semi-annually, that is required to be paid during the remaining term of any lease. - "consolidated net tangible assets" is the total amount of assets, less reserves and other permitted deductible items, after subtracting all current liabilities and all goodwill, trade names, trademarks, patents, unamortized debt discounts and expenses and similar intangible assets, as these amounts appear on the most recent consolidated balance sheet of Corning Incorporated and computed in accordance with generally accepted accounting principles. - A "domestic subsidiary" means any subsidiary of Corning Incorporated except one which does not transact a substantial portion of its business in the United States or does not regularly keep a substantial portion of its assets, other than intangible assets, in the United States, or one that is used primarily to finance the operations of Corning Incorporated outside of the United States. A "subsidiary" is a corporation in which Corning Incorporated and/or one or more of its other subsidiaries owns at least 80% of the voting stock, which is a kind of stock that ordinarily permits its owners to vote for the election of directors. - "funded debt" means all debt for borrowed money that either has a maturity of 12 months or more from the date on which the calculation of funded debt is made or has a maturity of less than 12 months from that date but is by its terms renewable or extendible beyond 12 months from that date at the option of the borrower. - A "principal domestic manufacturing property" is any building or other structure or facility, and the land on which it sits and its associated fixtures, that Corning Incorporated uses primarily for manufacturing or processing, that has a gross book value in excess of 3% of consolidated net tangible assets and that is located in the United States, other than a building, structure or other facility that is financed by industrial revenue bonds or that the board of directors of Corning Incorporated has determined is not of material importance to the total business that Corning Incorporated and its subsidiaries conduct. DEFEASANCE AND COVENANT DEFEASANCE Unless we say otherwise in the applicable prospectus supplement, the provisions for full defeasance and covenant defeasance described below apply to each series of debt securities. In general, we expect these provisions to apply to each U.S. dollar-denominated debt 11 security that is not a floating rate or indexed debt security. FULL DEFEASANCE. If there is a change in U.S. federal tax law, as described below, we can legally release ourselves from all payment and other obligations on your debt securities. This is called full defeasance. To do so, each of the following must occur: - We must deposit in trust for the benefit of all holders a combination of money and U.S. government or U.S. government agency notes or bonds that will generate enough cash to make interest, principal and any other payments on your debt securities on their various due dates; - There must be a change in current U.S. federal tax law or an Internal Revenue Service ruling that lets us make the above deposit without causing you to be taxed on your debt security any differently than if we did not make the deposit and just repaid the debt security ourselves. Under current federal tax law, the deposit and our legal release from the debt security would be treated as though we took back your debt security and gave you your share of the cash and debt security or bonds deposited in trust. In that event, you could recognize gain or loss on your debt security; and - We must deliver to the trustee a legal opinion of our counsel confirming the tax law change described above. If we ever fully defease your debt security, you will have to rely solely on the trust deposit for payments on your debt security. You could not look to us for payment in the event of any shortfall. COVENANT DEFEASANCE. Under current U.S. federal tax law, we can make the same type of deposit described above and be released from some of the restrictive covenants relating to your debt security. This is called covenant defeasance. In that event, you would lose the protection of those restrictive covenants. In order to achieve covenant defeasance, we must do both of the following: - We must deposit in trust for the benefit of the holders a combination of money and government or U.S. government notes or bonds that will generate enough cash to make interest, principal and other payments on your debt security on their various due dates. - We must deliver to the trustee a legal opinion of our counsel confirming that under current U.S. federal income tax law we may make the above deposit without causing you to be taxed on your debt security any differently than if we did not make the deposit and just repaid the debt security ourselves. If we accomplish covenant defeasance with regard to your debt security, the following provisions of the indenture and the debt securities would no longer apply: - The condition regarding the treatment of liens when we merge or engage in similar transactions, as described above under "--Restriction on Liens" and any other covenants that your prospectus supplement may state are applicable to your debt security. - The events of default resulting from a breach of covenants, described below in the fourth item under "--Default, Remedies and Waiver of Default--Events of Default". If we accomplish covenant defeasance, you can still look to us for repayment of your debt security in the event of any shortfall in the trust deposit. You should note, however, that if one of the remaining events of default occurred, like our bankruptcy, and your debt security became immediately due and payable, there may be a shortfall. Depending on the event causing the default, you may not be able to obtain payment of the shortfall. Default, Remedies and Waiver of Default You will have special rights if an event of default with respect to your debt security occurs and is not cured, as described in this subsection. EVENTS OF DEFAULT With respect to your debt security, when we refer to an event of default, we mean any of the following: - We do not pay interest on a debt security within 30 days of its due date. 12 - We do not pay the principal or any premium on a debt security on its due date. - We do not deposit any sinking fund payment on its due date. - We remain in breach of our covenant described under "--Restrictive Covenants and Defeasance--Restrictions on Liens" above, or any other covenant we make in the indenture for 60 days after we receive a notice of default stating we are in breach. The notice must be sent by either the trustee or holders of 25% of the principal amount of debt security of the affected series. - We file for bankruptcy or other events in bankruptcy, insolvency or reorganization occur. - Any other event of default described in the prospectus supplement occurs. REMEDIES IF AN EVENT OF DEFAULT OCCURS If an event of default has occurred and has not been cured or waived, the trustee or the holders of 25% or more in principal amount of all debt securities of the affected series may declare the entire principal amount of all the debt securities to be due immediately. If an event of default occurs because of events in bankruptcy, insolvency or reorganization relating to Corning Incorporated, the entire principal amount of all the debt securities will be automatically accelerated, without any action by the trustee or any holder. Each of the situations described above is called an acceleration of the maturity of the affected debt securities. If the maturity of any debt securities is accelerated and a judgment for payment has not yet been obtained, the holders of a majority in principal amount of the debt securities affected by the acceleration may cancel the acceleration for all the affected debt securities. If an event of default occurs, the trustee will have special duties. In that situation, the trustee will be obligated to use those of its rights and powers under the applicable indenture, and to use the same degree of care and skill in doing so, that a prudent person would use in that situation in conducting his or her own affairs. Except as described in the prior paragraph, the trustee is not required to take any action under the applicable indenture at the request of any holders unless the holders offer the trustee reasonable protection from expenses and liability. This is called an indemnity. If the trustee is provided with an indemnity reasonably satisfactory to it, the holders of a majority in principal amount of the relevant series of debt securities may direct the time, method and place of conducting any lawsuit or other formal legal action seeking any remedy available to the trustee. These majority holders may also direct the trustee in performing any other action under the applicable indenture with respect to the relevant series of debt securities. Before you bypass the trustee and bring your own lawsuit or other formal legal action or take other steps to enforce your rights or protect your interests relating to the debt securities, the following must occur: - The holder of your debt security must give the trustee written notice that an event of default has occurred, and the event of default must not have been cured or waived. - The holders of 25% or more in principal amount of all of the relevant debt securities must make a written request that the trustee take action because of the default, and they or other holders must offer to the trustee indemnity reasonably satisfactory to the trustee against the cost and other liabilities of taking that action. - The trustee must not have taken action for 60 days after the above steps have been taken. During those 60 days, the holders of a majority in principal amount of the related series of debt securities must not have given the trustee directions that are inconsistent with the written request of the holders of not less than 25% in principal amount of all the relevant series of debt securities. You are, however, entitled at any time to bring a lawsuit for the payment of money due on your debt securities on or after their due date. WAIVER OF DEFAULT The holders of a majority in principal amount of the relevant series of debt securities may waive a default for all of the relevant series of debt securities. If this happens, the default will be treated as if it has not occurred. No one can waive a payment default on a particular debt security, however, without the approval of the holder of that debt security. 13 WE WILL GIVE THE TRUSTEE INFORMATION ABOUT DEFAULTS ANNUALLY We will furnish to the trustee every year a written statement of two of our officers certifying that to their knowledge we are in compliance with the indenture and the debt securities, or else specifying any default. BOOK-ENTRY AND OTHER INDIRECT HOLDERS SHOULD CONSULT THEIR BANKS OR BROKERS FOR INFORMATION ON HOW TO GIVE NOTICE OR DIRECTION TO OR MAKE A REQUEST OF THE TRUSTEE AND HOW TO DECLARE OR CANCEL AN ACCELERATION. Modification and Waiver of Covenants There are three types of changes we can make to the indenture and the debt securities. CHANGES REQUIRING EACH HOLDER'S APPROVAL First, there are changes that we or the trustee cannot make without the approval of each holder of debt security affected by the change. We cannot: - change the stated maturity for any principal or interest payment on a debt security; - reduce the principal amount, the amount payable on acceleration of the maturity after a default, the interest rate or the redemption price for a debt security; - in the case of the guaranteed debt securities, change any obligation to pay additional amounts, as explained above under "--Payment of Additional Amounts With Respect to the Guaranteed Debt Securities"; - permit redemption of a debt security if not previously permitted; - impair any right a holder may have to require repayment of its debt security; - change the currency of any payment on a debt security other than as permitted by the debt security; - change the place of payment on a debt security, if it is in non-global form; - impair a holder's right to sue for payment of any amount due on its debt security; - in the case of the guaranteed debt securities, change any obligation to pay additional amounts, as explained above; - reduce the percentage in principal amount of the debt securities and any other affected series of debt securities, taken together, the approval of whose holders is needed to change the indenture or the debt securities; - reduce the percentage in principal amount of the debt securities and any other affected series of debt securities, taken separately or together, as the case may be, the consent of whose holders is needed to waive our compliance with the applicable indenture or to waive defaults; and - change the provisions of the applicable indenture dealing with modification and waiver in any other respect, except to increase any required percentage referred to above or to add to the provisions that cannot be changed or waived without approval. CHANGES NOT REQUIRING APPROVAL The second type of change does not require any approval by holders of the debt securities. This type is limited to clarifications and changes that would not adversely affect the debt securities in any material respect. Nor do we need any approval to make any change that affects only debt securities to be issued under each indenture after the changes take effect. We may also make changes or obtain waivers that do not adversely affect a particular debt security, even if they affect other debt securities. In those cases, we do not need to obtain the approval of the holder of that debt security; we need only obtain any required approvals from the holders of the affected debt securities or other debt securities. CHANGES REQUIRING MAJORITY APPROVAL Any other change to each indenture and the debt securities would require the following approval: - If the change affects only one series of debt securities, it must be approved by the holders of a majority in principal amount of the relevant series of debt securities. - If the change affects more than one series of debt securities issued under each indenture, it must be 14 approved by the holders of a majority in principal amount of the series affected by the change, with all affected series voting together as one class for this purpose. In each case, the required approval must be given by written consent. The same majority approval would be required for us to obtain a waiver of any of our covenants in each indenture. Our covenants include the promises we make about merging and putting liens on our interests, which we describe above under "--Mergers and Similar Transactions" and "--Restrictive Covenants and Defeasance". If the holders agree to waive a covenant, we will not have to comply with it. BOOK-ENTRY AND OTHER INDIRECT HOLDERS SHOULD CONSULT THEIR BANKS OR BROKERS FOR INFORMATION ON HOW APPROVAL MAY BE GRANTED OR DENIED IF WE SEEK TO CHANGE THE APPLICABLE INDENTURE OR THE DEBT SECURITIES OR REQUEST A WAIVER. Form, Exchange and Transfer If the debt securities cease to be issued in global form, they will be issued: - only in fully registered form; - without interest coupons; and - unless we indicate otherwise in your prospectus supplement, in denominations of $1,000 and amounts that are multiples of $1,000; Holders may exchange their debt securities that are not in global form for debt securities of smaller denominations or combined into fewer debt securities of larger denominations, as long as the total principal amount is not changed. Holders may exchange or transfer their debt securities at the office of the trustee. We have appointed the trustee to act as our agent for registering debt securities in the names of holders transferring debt securities. We may appoint another entity to perform these functions or perform them ourselves. Holders will not be required to pay a service charge to transfer or exchange their debt securities, but they may be required to pay for any tax or other governmental charge associated with the transfer or exchange. The transfer or exchange will be made only if our transfer agent is satisfied with the holder's proof of legal ownership. If we have designated additional transfer agents for your debt security, they will be named in your prospectus supplement. We may appoint additional transfer agents or cancel the appointment of any particular transfer agent. We may also approve a change in the office through which any transfer agent acts. If any debt securities are redeemable and we redeem less than all those debt securities, we may block the transfer or exchange of those debt securities during the period beginning 15 days before the day we mail the notice of redemption and ending on the day of that mailing, in order to freeze the list of holders to prepare the mailing. We may also refuse to register transfers or exchanges of any debt securities selected for redemption, except that we will continue to permit transfers and exchanges of the unredeemed portion of any debt security being partially redeemed. If a debt security is issued as a global security, only the depositary will be entitled to transfer and exchange the debt security as described in this subsection, since it will be the sole holder of the debt security. Payment Mechanics WHO RECEIVES PAYMENT? If interest is due on a debt security on an interest payment date, we will pay the interest to the person or entity in whose name the debt security is registered at the close of business on the regular record date (see below) relating to the interest payment date. If interest is due at maturity but on a day that is not an interest payment date, we will pay the interest to the person or entity entitled to receive the principal of the debt security. If principal or another amount besides interest is due on a debt security at maturity, we will pay the amount to the holder of the debt security against surrender of the debt security at a proper place of payment, or, in the case of a global security, in accordance with the applicable policies of the depositary. HOW WE WILL MAKE PAYMENTS DUE IN U.S. DOLLARS We will follow the practice described in this subsection when paying amounts due in U.S. dollars. Payments of amounts due in other currencies will be made as described in the next subsection. PAYMENTS ON GLOBAL SECURITIES. We will make payments on a global security in accordance with the 15 applicable policies of the depositary as in effect from time to time. Under those policies, we will pay directly to the depositary, or its nominee, and not to any indirect holders who own beneficial interests in the global security. An indirect holder's right to those payments will be governed by the rules and practices of the depositary and its participants, as described under "--What Is a Global Security?". PAYMENTS ON NON-GLOBAL SECURITIES. We will make payments on a debt security in non-global form as follows. We will pay interest that is due on an interest payment date by check mailed on the interest payment date to the holder at his or her address shown on the trustee's records as of the close of business on the record date. We will make all other payments by check at the paying agent described below, against surrender of the debt security. All payments by check will be made in next-day funds--I.E.,funds that become available on the day after the check is cashed. Alternatively, if a non-global security has a face amount of at least $1,000,000 and the holder asks us to do so, we will pay any amount that becomes due on the debt security by wire transfer of immediately available funds to an account at a bank in New York City, on the due date. To request wire payment, the holder must give the paying agent appropriate transfer instructions at least five business days before the requested wire payment is due. In the case of any interest payment due on an interest payment date, the instructions must be given by the person who is the holder on the relevant regular record date. In the case of any other payment, payment will be made only after the debt security is surrendered to the paying agent. Any wire instructions, once properly given, will remain in effect unless and until new instructions are given in the manner described above. BOOK-ENTRY AND OTHER INDIRECT HOLDERS SHOULD CONSULT THEIR BANKS OR BROKERS FOR INFORMATION ON HOW THEY WILL RECEIVE PAYMENTS ON THEIR DEBT SECURITIES. How We Will Make Payments Due in Other Currencies We will follow the practice described in this subsection when paying amounts that are due in a specified currency other than U.S. dollars. PAYMENTS ON GLOBAL SECURITIES. We will make payments on a global security in accordance with the applicable policies of the depositary as in effect from time to time. We understand that these policies, as currently in effect at DTC, are as follows. Unless otherwise indicated in your prospectus supplement, if you are an indirect holder of global notes denominated in a specified currency other than U.S. dollars and if you elect to receive payments in that other currency, you must notify the participant through which your interest in the global security is held of your election: - on or before the applicable regular record date, in the case of a payment of interest, or - on or before the 16th day prior to stated maturity, or any redemption or repayment date, in the case of payment of principal or any premium. You may elect to receive all or only a portion of any interest, principal or premium payment in a specified currency other than U.S. dollars. Your participant must, in turn, notify DTC of your election on or before the third DTC business day after that regular record date, in the case of a payment of interest, and on or before the 12th DTC business day prior to stated maturity, or on the redemption or repayment date if your debt security is redeemed or repaid earlier, in the case of a payment of principal or any premium. DTC, in turn, will notify the paying agent of your election in accordance with DTC's procedures. If complete instructions are received by the participant and forwarded by the participant to DTC, and by DTC to the paying agent, on or before the dates noted above, the paying agent, in accordance with DTC's instructions, will make the payments to you or your participant by wire transfer of immediately available funds to an account maintained by the payee with a bank located in the country issuing the specified currency or in another jurisdiction acceptable to us and the paying agent. If the foregoing steps are not properly completed, we expect DTC to inform the paying agent that payment is to be made in U.S. dollars. In that case, we or our agent will convert the payment to U.S. dollars in the manner described below under "--Conversion to U.S. Dollars". We expect that we or our agent will then make the payment in U.S. dollars to DTC, and that DTC in turn will pass it along to its participants. 16 INDIRECT HOLDERS OF A GLOBAL SECURITY DENOMINATED IN A CURRENCY OTHER THAN U.S. DOLLARS SHOULD CONSULT THEIR BANKS OR BROKERS FOR INFORMATION ON HOW TO REQUEST PAYMENT IN THE SPECIFIED CURRENCY. PAYMENTS ON NON-GLOBAL SECURITIES. Except as described in the last paragraph under this heading, we will make payments on debt securities in non-global form in the applicable specified currency. We will make these payments by wire transfer of immediately available funds to any account that is maintained in the applicable specified currency at a bank designated by the holder and acceptable to us and the trustee. To designate an account for wire payment, the holder must give the paying agent appropriate wire instructions at least five business days before the requested wire payment is due. In the case of any interest payment due on an interest payment date, the instructions must be given by the person or entity who is the holder on the regular record date. In the case of any other payment, the payment will be made only after the debt security is surrendered to the paying agent. Any instructions, once properly given, will remain in effect unless and until new instructions are properly given in the manner described above. If a holder fails to give instructions as described above, we will notify the holder at the address in the trustee's records and will make the payment within five business days after the holder provides appropriate instructions. Any late payment made in these circumstances will be treated under the indenture as if made on the due date, and no interest will accrue on the late payment from the due date to the date paid. Although a payment on a debt security in non-global form may be due in a specified currency other than U.S. dollars, we will make the payment in U.S. dollars if the holder asks us to do so. To request U.S. dollar payment, the holder must provide appropriate written notice to the trustee at least five business days before the next due date for which payment in U.S. dollars is requested. In the case of any interest payment due on an interest payment date, the request must be made by the person or entity who is the holder on the regular record date. Any request, once properly made, will remain in effect unless and until revoked by notice properly given in the manner described above. BOOK-ENTRY AND OTHER INDIRECT HOLDERS OF A DEBT SECURITY WITH A SPECIFIED CURRENCY OTHER THAN U.S. DOLLARS SHOULD CONTACT THEIR BANKS OR BROKERS FOR INFORMATION ABOUT HOW TO RECEIVE PAYMENTS IN THE SPECIFIED CURRENCY OR IN U.S. DOLLARS. CONVERSION TO U.S. DOLLARS. When we are asked by a holder to make payments in U.S. dollars of an amount due in another currency, either on a global security or a non-global security as described above, we will determine the U.S. dollar amount the holder receives as follows. The exchange rate agent described below will request currency bid quotations expressed in U.S. dollars from three or, if three are not available, then two, recognized foreign exchange dealers in New York City, any of which may be the exchange rate agent, as of 11:00 A.M., New York City time, on the second business day before the payment date. Currency bid quotations will be requested on an aggregate basis, for all holders of debt securities, if any, requesting U.S. dollar payments of amounts due on the same date in the same specified currency. The U.S. dollar amount the holder receives will be based on the highest acceptable currency bid quotation received by the exchange rate agent. If the exchange rate agent determines that at least two acceptable currency bid quotations are not available on that second business day, the payment will be made in the specified currency. To be acceptable, a quotation must be given as of 11:00 A.M., New York City time, on the second business day before the due date and the quoting dealer must commit to execute a contract at the quotation. A holder that requests payment in U.S. dollars will bear all associated currency exchange costs, which will be deducted from the payment. WHEN THE SPECIFIED CURRENCY IS NOT AVAILABLE. If we are obligated to make any payment in a specified currency other than U.S. dollars, and the specified currency is not available to us due to circumstances beyond our control--which may include the imposition of exchange controls or a disruption in the currency markets--we will be entitled to satisfy our obligation to make the payment in that specified currency by making the payment in U.S. dollars, on the basis of the most recently available exchange rate. For a specified currency other than U.S. dollars, the exchange rate will be the noon buying rate for cable transfers of the specified currency in New York City as quoted by the Federal Reserve Bank of New York on the then-most recent day to which that Bank has quoted that rate. 17 The foregoing will apply to any debt security, whether in global or non-global form, and to any payment, including a payment at maturity. Any payment made under the circumstances and in a manner described above will not result in a default under any of the indenture. THE EURO. The euro may be a specified currency for some debt securities. On January 1, 1999, the euro became the legal currency for the 11 member states participating in the European Economic and Monetary Union. During a transition period from January 1, 1999 to December 31, 2001 and for a maximum of six months thereafter, the former national currencies of these 11 member states will continue to be legal tender in their country of issue, at rates irrevocably fixed on December 31, 1998. EXCHANGE RATE AGENT. If we issue a debt security in a specified currency other than U.S. dollars, we will appoint a financial institution to act as the exchange rate agent and will name the institution initially appointed when the debt security is originally issued in the applicable prospectus supplement. We may change the exchange rate agent from time to time after the original issue date of the debt security without your consent and without notifying you of the change. All determinations made by the exchange rate agent will be at its sole discretion unless we state in the applicable prospectus supplement that any determination is subject to our approval. In the absence of manifest error, those determinations will be conclusive for all purposes and binding on you and us, without any liability on the part of the exchange rate agent. PAYMENT WHEN OFFICES ARE CLOSED If any payment is due on a debt security on a day that is not a business day, we will make the payment on the next day that is a business day. Payments postponed to the next business day in this situation will be treated under the indenture as if they were made on the original due date. A postponement of this kind will not result in a default under any debt security or the indenture, and no interest will accrue on the postponed amount from the original due date to the next day that is a business day. PAYING AGENT We may appoint one or more financial institutions to act as our paying agents, at whose designated offices debt securities in non-global form may be surrendered for payment at their maturity. We call each of those offices a paying agent. We may add, replace or terminate paying agents from time to time. We may also choose to act as our own paying agent. Initially, we have appointed the trustee, at its corporate trust office in New York City, as the paying agent. We must notify you of changes in the paying agents. UNCLAIMED PAYMENTS Regardless of who acts as paying agent, all money paid by us to a paying agent that remains unclaimed at the end of two years after the amount is due to a holder will be repaid to us. After that two-year period, the holder may look only to us for payment and not to the trustee, any other paying agent or anyone else. Notices Notices to be given to holders of a global debt security will be given only to the depositary, in accordance with its applicable policies as in effect from time to time. Notices to be given to holders of debt securities not in global form will be sent by mail to the respective addresses of the holders as they appear in the trustee's records, and will be deemed given when mailed. Neither the failure to give any notice to a particular holder, nor any defect in a notice given to a particular holder, will affect the sufficiency of any notice given to another holder. BOOK-ENTRY AND OTHER INDIRECT HOLDERS SHOULD CONSULT THEIR BANKS OR BROKERS FOR INFORMATION ON HOW THEY WILL RECEIVE NOTICES. Our Relationship with the Trustee The Chase Manhattan Bank is initially serving as the trustee for the debt securities and all other series of debt securities to be issued under the indenture. The Chase Manhattan Bank acts as the trustee of our investment plans and has provided commercial banking and other services for us and our related companies in the past and may do so in the future. Service of Process Corning Finance B.V. has appointed CT Corporation System acting through its office at 1633 Broadway, New York, New York as its authorized agent for service of process in any legal action or proceeding to which it is a party relating to the indenture, the guaranteed debt securities or the full and unconditional guarantee brought in any federal or state court in New York City and has submitted to the non-exclusive jurisdiction of those courts. 18 DESCRIPTION OF WARRANTS Corning Incorporated may issue warrants to purchase its debt securities, as well as warrants to purchase its preferred or common stock. Warrants may be issued independently or together with any securities and may be attached to or separate from those securities. The warrants will be issued under warrant agreements to be entered into between Corning Incorporated and a bank or trust company, as warrant agent, all as will be set forth in the related prospectus supplement. Debt Warrants The following briefly summarizes the material terms of the debt warrant agreement, other than pricing and related terms disclosed in the accompanying prospectus supplement. You should read the particular terms of any debt warrants that are offered by us and the applicable debt warrant agreement which will be described in more detail in a prospectus supplement. The prospectus supplement will also state whether any of the generalized provisions summarized below do not apply to the debt warrants being offered. GENERAL Corning Incorporated may issue warrants for the purchase of its debt securities. As explained below, each debt warrant will entitle its holder to purchase debt securities at an exercise price set forth in, or to be determinable as set forth in, the related prospectus supplement. Debt warrants may be issued separately or together with debt securities. The debt warrants are to be issued under debt warrant agreements to be entered into between Corning Incorporated and one or more banks or trust companies, as debt warrant agent, all as will be set forth in the prospectus supplement relating to the debt warrants being offered by the prospectus supplement. A form of debt warrant agreement, including a form of debt warrant certificate representing the debt warrants, reflecting the alternative provisions that may be included in the debt warrant agreements to be entered into with respect to particular offerings of debt warrants, is included as an exhibit to the registration statement of which this prospectus forms a part. See "Where You Can Find More Information" below for information on how to obtain a copy of the form of debt warrant agreement. TERMS OF THE DEBT WARRANTS TO BE DESCRIBED IN THE PROSPECTUS SUPPLEMENT The particular terms of each issue of debt warrants, the debt warrant agreement relating to the debt warrants and the debt warrant certificates representing debt warrants will be described in the applicable prospectus supplement. This description will include: - the initial offering price; - the currency or currency unit in which the price for the debt warrants is payable; - the title, aggregate principal amount and terms of the debt securities purchasable upon exercise of the debt warrants; - the title and terms of any related debt securities with which the debt warrants are issued and the number of the debt warrants issued with each debt security; - the date, if any, on and after which the debt warrants and the related debt securities will be separately transferable; - the principal amount of debt securities purchasable upon exercise of each debt warrant and the price at which that principal amount of debt securities may be purchased upon exercise of each debt warrant; - the date on which the right to exercise the debt warrants will commence and the date on which this right will expire; - if applicable, a discussion of United States federal income tax, accounting or other considerations applicable to the debt warrants; - whether the debt warrants represented by the debt warrant certificates will be issued in registered or bearer form, and, if registered, where they may be transferred and registered; and - any other terms of the debt warrants. 19 Debt warrant certificates will be exchangeable for new debt warrant certificates of different denominations and, if in registered form, may be presented for registration of transfer and debt warrants may be exercised at the corporate trust office of the debt warrant agent or any other office indicated in the related prospectus supplement. Before the exercise of debt warrants, holders of debt warrants will not be entitled to payments of principal, premium, if any, or interest, if any, on the debt securities purchasable upon exercise of the debt warrants, or to enforce any of the covenants in the indenture. EXERCISE OF DEBT WARRANTS Unless otherwise provided in the related prospectus supplement, each debt warrant will entitle the holder of debt warrants to purchase for cash the principal amount of debt securities at the exercise price that will in each case be set forth in, or be determinable as set forth in, the related prospectus supplement. Debt warrants may be exercised at any time up to the close of business on the expiration date specified in the prospectus supplement relating to the debt warrants. After the close of business on the expiration date or any later date to which the expiration date may be extended by us, unexercised debt warrants will become void. Debt warrants may be exercised as set forth in the prospectus supplement relating to the debt warrants. Upon receipt of payment and the debt warrant certificate properly completed and duly executed at the corporate trust office of the debt warrant agent or any other office indicated in the prospectus supplement, we will, as soon as practicable, forward the debt securities purchasable upon exercise of the debt warrants to the person entitled to them. If fewer than all of the debt warrants represented by the debt warrant certificate are exercised, a new debt warrant certificate will be issued for the remaining amount of debt warrants. If you hold your interest in a debt warrant indirectly, you should check with the institution through which you hold your interest in the debt warrant to determine how these provisions will apply to you. MODIFICATIONS The debt warrant agreement may be amended by Corning Incorporated and the debt warrant agent, without the consent of the holder of any debt warrant certificate, for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained in the debt warrant agreement, or making any provisions in regard to matters or questions arising under the debt warrant agreement that Corning Incorporated may deem necessary or desirable; PROVIDED that the amendment may not adversely affect the interest of the holders of debt warrant certificates in any material respect. Corning Incorporated and the debt warrant agent also may modify or amend the debt warrant agreement and the terms of the debt warrants, with the consent of the owners of not less than a majority in number of the then outstanding unexercised debt warrants affected. However, modifications or amendments that result in any of the following changes may be made only with the consent of the owners affected by the modification or amendment: - An increase in the exercise price of the debt warrants; - A shortening of the period of time during which the debt warrants may be exercised; - Any material and adverse change that affects the exercise rights of the owners of the debt warrants; or - A reduction in the number of debt warrants whose owners must consent to the modification or amendment of the debt warrant agreement or the terms of the equity warrants. MERGER, CONSOLIDATION, SALE OR OTHER DISPOSITIONS Under the debt warrant agreement, Corning Incorporated may, to the extent permitted in the indenture, consolidate with, or sell or convey all or substantially all of its assets to, or merge with or into, any other corporation. If at any time there is a merger, consolidation, sale, transfer, conveyance or other disposition of substantially all of the assets of Corning Incorporated, the successor or assuming corporation will succeed to and be substituted for Corning Incorporated, with the same effect as if it had been named in the debt warrant agreement and in the debt warrants as Corning Incorporated. Corning Incorporated will then be relieved of any further obligation under the debt warrant agreement or under the debt warrants. 20 ENFORCEABILITY OF RIGHTS, GOVERNING LAW The debt warrant agent will act solely as the agent of Corning Incorporated in connection with the issuance and exercise of debt warrants and will not assume any obligation or relationship of agency or trust for or with any holder of a debt warrant certificate or any owner of a beneficial interest in debt warrants. The holders of debt warrant certificates, without the consent of the debt warrant agent, the trustee, the holder of any debt securities issued upon exercise of debt warrants or the holder of any other debt warrant certificates, may, on their own behalf and for their own benefit, enforce, and may institute and maintain any suit, action or proceeding against Corning Incorporated suitable to enforce, or otherwise in respect of, their rights to exercise debt warrants evidenced by their debt warrant certificates. Except as may otherwise be provided in the related prospectus supplement, each issue of debt warrants and the applicable debt warrant agreement will be governed by the laws of the State of New York. Equity Warrants The following briefly summarizes the material terms and provisions of the equity warrants, other than pricing and related terms disclosed in the accompanying prospectus supplement. You should read the particular terms of the equity warrants that are offered by Corning Incorporated, which will be described in more detail in a prospectus supplement. The prospectus supplement will also state whether any of the general provisions summarized below do not apply to the equity warrants being offered. GENERAL Corning Incorporated may issue warrants for the purchase of its equity securities such as its preferred stock or common stock. As explained below, each equity warrant will entitle its holder to purchase equity securities at an exercise price set forth in, or to be determinable as set forth in, the related prospectus supplement. Equity warrants may be issued separately or together with equity securities. The equity warrants are to be issued under equity warrant agreements to be entered into between Corning Incorporated and one or more banks or trust companies, as equity warrant agent, all as will be set forth in the prospectus supplement relating to the equity warrants being offered by the prospectus supplement. A form of equity warrant agreement, including a form of equity warrant certificate representing the equity warrants, reflecting the alternative provisions that may be included in the equity warrant agreements to be entered into with respect to particular offerings of equity warrants, is included as an exhibit to the registration statement of which this prospectus forms a part. See "Where You Can Find More Information" below for information on how to obtain a copy of the form of equity warrant agreement. TERMS OF THE EQUITY WARRANTS TO BE DESCRIBED IN THE PROSPECTUS SUPPLEMENT The particular terms of each issue of equity warrants, the equity warrant agreement relating to the equity warrants and the equity warrant certificates representing equity warrants will be described in the applicable prospectus supplement. This description will include: - the title of the equity warrants; - the securities for which the equity warrants are exercisable; - the price or prices at which the equity warrants will be issued; - if applicable, the designation and terms of the preferred stock or common stock with which the equity warrants are issued, and the number of equity warrants issued with each share of preferred stock or common stock; - if applicable, the date on and after which the equity warrants and the related preferred stock or common stock will be separately transferable; - if applicable, a discussion of any material federal income tax considerations; and - any other terms of the equity warrants, including terms, procedures and limitations relating to the exchange and exercise of the equity warrants. Holders of equity warrants will not be entitled, solely by virtue of being holders, to vote, to consent, to receive dividends, to receive notice as shareholders with 21 respect to any meeting of shareholders for the election of our directors or any other matter, or to exercise any rights whatsoever as shareholders of Corning Incorporated. The exercise price payable and the number of shares of common stock or preferred stock purchasable upon the exercise of each equity warrant will be subject to adjustment if Corning Incorporated issues a stock dividend to holders of common stock or preferred stock, or if Corning Incorporated declares a stock split, reverse stock split, combination, subdivision or reclassification of common stock or preferred stock. Instead of adjusting the number of shares of common stock or preferred stock purchasable upon exercise of each equity warrant, Corning Incorporated may elect to adjust the number of equity warrants. No adjustments in the number of shares purchasable upon exercise of the equity warrants will be required until cumulative adjustments require an adjustment of at least 1% of those shares. Corning Incorporated may, at its option, reduce the exercise price at any time. Corning Incorporated will not issue fractional shares upon exercise of equity warrants, but Corning Incorporated will pay the cash value of any fractional shares otherwise issuable. Notwithstanding the previous paragraph, if there is a consolidation, merger, or sale or conveyance of substantially all of the property of Corning Incorporated, the holder of each outstanding equity warrant will have the right to the kind and amount of shares of stock and other securities and property, including cash, receivable by a holder of the number of shares of common stock or preferred stock into which that equity warrant was exercisable immediately prior to the consolidation, merger, sale or conveyance. EXERCISE OF EQUITY WARRANTS Unless otherwise provided in the related prospectus supplement, each equity warrant will entitle the holder of equity warrants to purchase for cash the principal amount of equity securities at the exercise price that will in each case be set forth in, or be determinable as set forth in, the related prospectus supplement. Equity warrants may be exercised at any time up to the close of business on the expiration date specified in the prospectus supplement relating to the equity warrants. After the close of business on the expiration date or any later date to which the expiration date may be extended by Corning Incorporated, unexercised equity warrants will become void. Equity warrants may be exercised as set forth in the prospectus supplement relating to the equity warrants. Upon receipt of payment and the equity warrant certificate properly completed and duly executed at the corporate trust office of the equity warrant agent or any other office indicated in the prospectus supplement, Corning Incorporated will, as soon as practicable, forward the equity securities purchasable upon exercise of the equity warrants to the person entitled to them. If fewer than all of the equity warrants represented by the equity warrant certificate are exercised, a new equity warrant certificate will be issued for the remaining amount of equity warrants. If you hold your interest in an equity warrant indirectly, you should check with the institution through which you hold your interest in the equity warrant to determine how these provisions will apply to you. MODIFICATIONS The equity warrant agreement may be amended by Corning Incorporated and the equity warrant agent, without the consent of the holder of any equity warrant certificate, for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained in the equity warrant agreement, or making any provisions in regard to matters or questions arising under the equity warrant agreement that Corning Incorporated may deem necessary or desirable; PROVIDED that the amendment may not adversely affect the interest of the holders of equity warrant certificates in any material respect. Corning Incorporated and the equity warrant agent also may modify or amend the equity warrant agreement and the terms of the equity warrants, with the consent of the owners of not less than a majority in number of the then outstanding unexercised equity warrants affected. However, modifications or amendments that result in any of the following changes may be made only with the consent of the owners affected by the modification or amendment: - An increase in the exercise price of the equity warrants; - A shortening of the period of time during which the equity warrants may be exercised; 22 - Any material and adverse change that affects the exercise rights of the owners of the equity warrants; or - A reduction in the number of equity warrants whose owners must consent to the modification or amendment of the equity warrant agreement or the terms of the equity warrants. MERGER, CONSOLIDATION, SALE OR OTHER DISPOSITIONS Under the equity warrant agreement, Corning Incorporated may, to the extent permitted in the indenture, consolidate with, or sell or convey all or substantially all of its assets to, or merge with or into, any other corporation. If at any time there is a merger, consolidation, sale, transfer, conveyance or other disposition of substantially all of the assets of Corning Incorporated, the successor or assuming corporation will succeed to and be substituted for Corning Incorporated, with the same effect as if it had been named in the equity warrant agreement and in the equity warrants as Corning Incorporated. Corning Incorporated will then be relieved of any further obligation under the equity warrant agreement or under the equity warrants. ENFORCEABILITY OF RIGHTS, GOVERNING LAW The equity warrant agent will act solely as the agent of Corning Incorporated in connection with the issuance and exercise of equity warrants and will not assume any obligation or relationship of agency or trust for or with any holder of an equity warrant certificate or any owner of a beneficial interest in equity warrants. The holders of equity warrant certificates, without the consent of the equity warrant agent, the holder of any equity securities issued upon exercise of equity warrants or the holder of any other equity warrant certificates, may, on their own behalf and for their own benefit, enforce, and may institute and maintain any suit, action or proceeding against Corning Incorporated suitable to enforce, or otherwise in respect of, their rights to exercise equity warrants evidenced by their equity warrant certificates. Except as may otherwise be provided in the related prospectus supplement, each issue of equity warrants and the applicable equity warrant agreement will be governed by the laws of the State of New York. DESCRIPTION OF PREFERRED STOCK The following briefly summarizes the material terms of the preferred stock of Corning Incorporated, other than pricing and related terms disclosed in the accompanying prospectus supplement. You should read the particular terms of any series of preferred stock offered by Corning Incorporated which will be described in more detail in any prospectus supplement relating to such series. The prospectus supplement will also state whether any of the terms summarized below do not apply to the series of preferred stock being offered. General Corning Incorporated is authorized to issue up to 10,000,000 shares of preferred stock, par value $100 per share. Under the certificate of incorporation of Corning Incorporated, the board of directors is authorized to issue shares of preferred stock in one or more series, and to establish from time to time a series of preferred stock with the following terms specified: - the number of shares to be included in the series; - the designation, powers, preferences and rights of the shares of the series; and - the qualifications, limitations or restrictions of the series, except as otherwise stated in the certificate of incorporation. Prior to the issuance of any series of preferred stock, the board of directors will adopt resolutions creating and designating the series as a series of preferred stock and will file an amendment to the certificate of incorporation setting forth the terms of the series. Shareholders will not need to approve this amendment. 23 At December 31, 1999, Corning Incorporated had authorized the issuance of: - 2,400,000 shares of Series A junior participating preferred stock, par value $100 per share, upon exercise of preferred share purchase rights associated with each share of common stock outstanding. See "Description of Common Stock--Rights Agreement"; - 316,822 shares of Series B cumulative convertible preferred stock, par value $100 per share; and - 4,683,710 shares of Series C cumulative convertible preferred stock, par value $100 per share, issuable only upon exchange of our 6% convertible subordinated debentures due July 21, 2024, all of which were redeemed as of March 23, 1999 and none of which are currently outstanding. In addition, as described under "Description of Depositary Shares", Corning Incorporated, at its option, instead of offering full shares of any series of preferred stock, may offer depositary shares evidenced by depositary receipts, each representing a fraction of a share of the particular series of preferred stock issued and deposited with a depositary. The fraction of a share of preferred stock which each depositary share represents will be set forth in the prospectus supplement relating to the depositary shares. The rights of holders of the preferred stock offered may be adversely affected by the rights of holders of any shares of preferred stock that may be issued in the future. The board of directors may cause shares of preferred stock to be issued in public or private transactions for any proper corporate purpose. Examples of proper corporate purposes include issuances to obtain additional financing in connection with acquisitions, and issuances to officers, directors and employees pursuant to benefit plans. Shares of preferred stock issued by Corning Incorporated may have the effect of rendering more difficult or discouraging an acquisition of Corning Incorporated deemed undesirable by the board of directors. The preferred stock will be, when issued, fully paid and nonassessable. Holders of preferred stock will not have any preemptive or subscription rights to acquire more stock of Corning Incorporated. The transfer agent, registrar, dividend disbursing agent and redemption agent for shares of each series of preferred stock will be named in the prospectus supplement relating to these series. Rank Unless otherwise specified in the prospectus supplement relating to the shares of any series of preferred stock, shares of one series will rank on an equal basis with each other series of preferred stock and prior to the common stock as to dividends and distributions of assets. Dividends Holders of each series of preferred stock will be entitled to receive cash dividends when, as and if declared by the board of directors out of funds legally available for dividends. The rates and dates of payment of dividends will be set forth in the prospectus supplement relating to each series of preferred stock. Dividends will be payable to holders of record of preferred stock as they appear on the books of Corning Incorporated on the record dates fixed by the board of directors. Dividends on any series of preferred stock may be cumulative or noncumulative. Corning Incorporated may not declare, pay or set apart for payment dividends on the preferred stock unless full dividends on any other series of preferred stock that ranks on an equal or senior basis have been paid or sufficient funds have been set apart for payment for either of the following: - all prior dividend periods of the other series of preferred stock that pay dividends on a cumulative basis; or - the immediately preceding dividend period of the other series of preferred stock that pay dividends on a noncumulative basis. Partial dividends declared on shares of preferred stock and any other series of preferred stock ranking on an equal basis as to dividends will be declared pro rata. A pro rata declaration means that the ratio of dividends declared per share to accrued dividends per share will be the same for both series of preferred stock. Similarly, Corning Incorporated may not declare, pay or set apart for payment non-stock dividends or make other payments on the common stock or any of its other stock ranking junior to the preferred stock 24 until full dividends on the preferred stock have been paid or set apart for payments for: - all prior dividend periods if the other series of preferred stock pays dividends on a cumulative basis; or - the immediately preceding dividend period if the preferred stock pays dividends on a noncumulative basis. Conversion and Exchange The prospectus supplement for any series of preferred stock will state the terms, if any, on which shares of that series are convertible into or exchangeable for shares of common stock of Corning Incorporated. Redemption If so specified in the applicable prospectus supplement, a series of preferred stock may be redeemable at any time, in whole or in part, at our option or the holder's, and may be mandatorily redeemed. Any restriction on the repurchase or redemption by Corning Incorporated of its preferred stock while there is any arrearage in the payment of dividends will be described in the relevant prospectus supplement. Any partial redemptions of preferred stock will be made in a way that the board of directors of Corning Incorporated decides is equitable. Unless Corning Incorporated defaults in the payment of the redemption price, dividends will cease to accrue after the redemption date on shares of preferred stock called for redemption and all rights of holders of these shares will terminate except for the right to receive the redemption price. Anti-takeover Provisions See "Description of Common Stock--Fair Price Amendment" and "Description of Common Stock--Other Anti-takeover Provisions of the Certificate of Incorporation and By-Laws" for a discussion of provisions of the certificate of incorporation and by-laws of Corning Incorporated that would have an effect of delaying, deferring or preventing a change in control of Corning Incorporated. Liquidation Preference Upon any voluntary or involuntary liquidation, dissolution or winding up of Corning, holders of each series of preferred stock will be entitled to receive distributions upon liquidation in the amount described in the prospectus supplement relating to each series of preferred stock, plus an amount equal to any accrued and unpaid dividends. These distributions will be made before any distribution is made on any securities ranking junior relating to liquidation, including common stock. If the liquidation amounts payable relating to the preferred stock of any series and any other securities ranking on a parity regarding liquidation rights are not paid in full, the holders of the preferred stock of these series and the other securities will share in any distribution of available assets of Corning Incorporated on a ratable basis in proportion to the full liquidation preferences. Holders of these series of preferred stock will not be entitled to any other amounts from us after they have received their full liquidation preference. Voting Rights The holders of shares of preferred stock will have no voting rights, except: - as otherwise stated in the prospectus supplement; - as otherwise stated in the certificate of designation establishing the series; or - as required by applicable law. Outstanding Preferred Stock At December 31, 1999, there were 122,938 shares of Series B preferred stock outstanding. Series B Preferred Stock Cumulative cash dividends at the rate of 8% per annum are payable on shares of the Series B preferred stock that have been issued. Corning Incorporated has regularly paid dividends on the Series B preferred stock. No dividends may be paid or declared on the Series A preferred stock or the common stock unless all dividends for all prior dividend periods have been paid or declared on the Series B preferred stock. Holders of Series B preferred stock are entitled to vote, voting together with the common stock and not 25 as a separate class, on all matters submitted to holders of the common stock, each share of Series B preferred stock having four votes, subject to adjustment. Holders of Series B preferred stock have no preemptive rights. In the event of a liquidation, dissolution or winding-up of Corning Incorporated, holders of Series B preferred stock would be entitled to receive a distribution in the amount of $100 per share, plus accrued and unpaid dividends, before any distribution on the common stock or Series A preferred stock. The Series B preferred stock is redeemable, in whole or in part, at the election of Corning Incorporated, at any time, at $100 per share. The Series B preferred stock is subject to redemption, at the option of the holder, at any time upon five business day's notice, at a redemption price equal to $100 plus accrued and unpaid dividends, if the proceeds are necessary: - to make a distribution pursuant to an investment election made under one of the investment plans of Corning Incorporated; or - to satisfy any indebtedness to which the investment plans of Corning Incorporated are subject, provided that this payment is necessary to remedy or prevent a default under the applicable indebtedness. Corning Incorporated, at its option, may make payment of the redemption price required upon redemption of shares of Series B preferred stock in cash or in shares of common stock, or in any combination of shares of common stock and cash. The Series B preferred stock is convertible at the option of the holder, at any time, into common stock at a conversion price of $20.89 per share of common stock, each share of Series B preferred stock being valued at $100 for the purpose of this conversion, producing a conversion ratio equal to 4.79 shares of common stock for each share of Series B preferred stock so converted, subject to adjustments to prevent dilution. 26 DESCRIPTION OF DEPOSITARY SHARES The following briefly summarizes the material provisions of the deposit agreement and of the depositary shares and depositary receipts, other than pricing and related terms disclosed in the accompanying prospectus supplement. You should read the particular terms of any depositary shares and any depositary receipts that are offered by us and any deposit agreement relating to a particular series of preferred stock which will be described in more detail in a prospectus supplement. The prospectus supplement will also state whether any of the generalized provisions summarized below do not apply to the depositary shares or depositary receipts being offered. A form of deposit agreement, including the form of depositary receipt, is included as an exhibit to the registration statement of which this prospectus forms a part. See "Where You Can Find More Information" below for information on how to obtain a copy of the form of deposit agreement. General Corning Incorporated may, at its option, elect to offer fractional shares of preferred stock, rather than full shares of preferred stock. If it decides to do so, Corning Incorporated will issue receipts for depositary shares, each of which will represent a fraction of a share of a particular series of preferred stock. The shares of any series of preferred stock represented by depositary shares will be deposited under a deposit agreement between Corning Incorporated and a bank or trust company selected by Corning Incorporated having its principal office in the United States and having a combined capital and surplus of at least $50,000,000, as preferred stock depositary. Each owner of a depositary share will be entitled to all the rights and preferences of the underlying preferred stock, including dividend, voting, redemption, conversion and liquidation rights, in proportion to the applicable fraction of a share of preferred stock represented by the depositary share. The depositary shares will be evidenced by depositary receipts issued pursuant to the deposit agreement. Depositary receipts will be distributed to those persons purchasing the fractional shares of preferred stock in accordance with the terms of the applicable prospectus supplement. Dividends and Other Distributions The preferred stock depositary will distribute all cash dividends or other cash distributions received in respect of the deposited preferred stock to the record holders of depositary shares relating to the underlying preferred stock in proportion to the number of the depositary shares owned by the holders. The preferred stock depositary will distribute any property received by it other than cash to the record holders of depositary shares entitled to these distributions. If the preferred stock depositary determines that it is not feasible to make a distribution, it may, with the approval of Corning Incorporated, sell the property and distribute the net proceeds from the sale to the holders of the depositary shares. Redemption of Preferred Stock If Corning Incorporated is to redeem a series of preferred stock represented by depositary shares, the depositary shares will be redeemed from the proceeds received by the preferred stock depositary resulting from the redemption, in whole or in part, of the applicable series of preferred stock. The depositary shares will be redeemed by the preferred stock depositary at a price per depositary share equal to the applicable fraction of the redemption price per share payable in respect of the shares of preferred stock so redeemed. Whenever Corning Incorporated redeems shares of preferred stock held by the preferred stock depositary, the preferred stock depositary will redeem as of the same date the number of depositary shares representing shares of preferred stock so redeemed. If fewer than all the depositary shares are to be redeemed, the depositary shares to be redeemed will be selected by the preferred stock depositary by lot or ratably or by any other equitable method as the preferred stock depositary decides. Withdrawal of Preferred Stock Unless the related depositary shares have previously been called for redemption, any holder of depositary shares may receive the number of whole shares of the related series of preferred stock and any money or other property represented by those depositary receipts after surrendering the depositary 27 receipts at the corporate trust office of the preferred stock depositary. Holders of depositary shares making these withdrawals will be entitled to receive whole shares of preferred stock on the basis set forth in the related prospectus supplement for that series of preferred stock. However, holders of whole shares of preferred stock will not be entitled to deposit that preferred stock under the deposit agreement or to receive depositary receipts for that preferred stock after withdrawal. If the depositary shares surrendered by the holder in connection with withdrawal exceed the number of depositary shares that represent the number of whole shares of preferred stock to be withdrawn, the preferred stock depositary will deliver to that holder at the same time a new depositary receipt evidencing the excess number of depositary shares. Voting Deposited Preferred Stock When the preferred stock depository receives notice of any meeting at which the holders of any series of deposited preferred stock are entitled to vote, the preferred stock depositary will mail the information contained in the notice to the record holders of the depositary shares relating to the applicable series of preferred stock. Each record holder of the depositary shares on the record date will be entitled to instruct the preferred stock depositary to vote the amount of the preferred stock represented by the holder's depositary shares. To the extent possible, the preferred stock depositary will vote the amount of the series of preferred stock represented by depositary shares in accordance with the instructions it receives. Corning Incorporated will agree to take all reasonable actions that the preferred stock depositary determines are necessary to enable the preferred stock depositary to vote as instructed. The preferred stock depositary will vote all shares of any series of preferred stock held by it proportionately with instructions received if it does not receive specific instructions from the holders of depositary shares representing that series of preferred stock. Amendment and Termination of the Deposit Agreement The form of depositary receipt evidencing the depositary shares and any provision of the deposit agreement may at any time be amended by agreement between Corning Incorporated and the preferred stock depositary. However, any amendment that imposes additional charges or materially and adversely alters any substantial existing right of the holders of depositary shares will not be effective unless the amendment has been approved by the holders of at least a majority of the affected depositary shares then outstanding. Holders who retain their depositary receipts after the amendment becomes effective will be deemed to agree to the amendment and will be bound by the amended deposit agreement. The deposit agreement automatically terminates if: - all outstanding depositary shares have been redeemed; - each share of preferred stock has been converted into or exchanged for common stock; or - a final distribution in respect of the preferred stock has been made to the holders of depositary shares in connection with any liquidation, dissolution or winding up of Corning Incorporated. Corning Incorporated may terminate the deposit agreement at any time and the preferred stock depositary will give notice of that termination to the record holders of all outstanding depositary receipts not less than 30 days prior to the termination date. In that event, the preferred stock depositary will deliver or make available for delivery to holders of depositary shares, upon surrender of the depositary shares, the number of whole or fractional shares of the related series of preferred stock as are represented by those depositary shares. Charges of Preferred Stock Depositary; Taxes and other Governmental Charges No fees, charges and expenses of the preferred stock depositary or any agent of the preferred stock depositary or of any registrar will be payable by any person other than Corning Incorporated, except for any taxes and other governmental charges and except as provided in the deposit agreement. If the preferred stock depositary incurs fees, charges or expenses for which it is not otherwise liable at the election of a holder of a depositary receipt or other person, that holder or other person will be liable for those fees, charges and expenses. 28 Resignation and Removal of Depositary The preferred stock depositary may resign at any time by delivering to Corning Incorporated notice of its intent to do so, and Corning Incorporated may at any time remove the preferred stock depositary. Any resignation or removal will take effect upon the appointment of a successor preferred stock depositary and its acceptance of the appointment. A successor preferred stock depositary must be appointed within 60 days after delivery of the notice of resignation or removal and must be a bank or trust company having its principal office in the United States and having a combined capital and surplus of at least $50,000,000. Miscellaneous The preferred stock depositary will forward all reports and communications from Corning Incorporated which are delivered to the preferred stock depositary and which Corning Incorporated is required to furnish to the holders of the deposited preferred stock. Neither the preferred stock depositary nor Corning Incorporated will be liable if it is prevented or delayed by law or any circumstances beyond its control in performing its obligations under the deposit agreement. The obligations of Corning Incorporated and the preferred stock depositary under the deposit agreement will be limited to performance with honest intentions of their duties under the agreement and they will not be obligated to prosecute or defend any legal proceeding in respect of any depositary shares, depositary receipts or shares of preferred stock unless satisfactory indemnity is furnished. Corning Incorporated and the preferred stock depositary may rely upon written advice of counsel or accountants, or upon information provided by holders of depositary receipts or other persons believed to be competent and on documents believed to be genuine. 29 DESCRIPTION OF COMMON STOCK Corning Incorporated has authorized the issuance of 500,000,000 shares of common stock, par value $.50 per share. As of December 31, 1999, Corning Incorporated had 245,465,548 shares outstanding. Each holder of common stock is entitled to one vote per share for all matters to be voted on by shareholders of Corning Incorporated. Holders of common stock may not cumulate their votes in the election of directors, and are entitled to share equally in the dividends that may be declared by the board of directors, but only after payment of dividends required to be paid on outstanding shares of preferred stock. The current quarterly cash dividend of Corning Incorporated is $.18 per share of common stock. The continued declaration of dividends by the board of directors is subject to the current and prospective earnings, financial condition and capital requirements of Corning Incorporated and any other factors that the board of directors deems relevant. Upon voluntary or involuntary liquidation, dissolution or winding up of Corning Incorporated, the holders of the common stock share ratably in the assets remaining after payments to creditors and provision for the preference of any preferred stock. There are no preemptive or other subscription rights, conversion rights or redemption or scheduled installment payment provisions relating to shares of common stock. All of the outstanding shares of common stock are fully paid and nonassessable. The transfer agent and registrar for the common stock is Harris Trust and Savings Bank. The common stock is listed on The New York Stock Exchange, Inc. Rights Agreement Attached to each share of common stock is one preferred share purchase right. Each right entitles the registered holder to purchase from Corning Incorporated one one-hundredth of a share of Series A preferred stock at a price of $125.00 per one one-hundredth of a share of Series A preferred stock, subject to adjustment. The rights expire on July 15, 2006, unless the final expiration date is extended or unless the rights are earlier redeemed by Corning Incorporated. The rights represented by the certificates for common stock are not exercisable, and are not transferable apart from the common stock, until the earlier of: - ten days after a person or group, called an "acquiring person", acquires beneficial ownership of 20% or more of the common stock of Corning Incorporated; or - ten business days, or a later date determined by the board of directors, after the commencement or first public announcement of a tender or exchange offer that would result in a person or group beneficially owning 20% or more of the outstanding common stock of Corning Incorporated. The earlier of these two dates is called the "distribution date". Separate certificates for the rights will be mailed to holders of record of the common stock as of the distribution date. The rights could then begin trading separately from the common stock. Generally, in the event that a person or group becomes an acquiring person, each right, other than the rights owned by the acquiring person, will entitle the holder to receive, upon exercise of the right, common stock having a value equal to two times the exercise price of the right. In the event that Corning Incorporated is acquired in a merger, consolidation, or other business combination transaction or more than 50% of its assets, cash flow or earning power is sold or transferred, each right, other than the rights owned by an acquiring person, will entitle the holder to receive, upon the exercise of the right, common stock of the surviving corporation having a value equal to two times the exercise price of the right. At any time after the acquisition by the acquiring person of beneficial ownership of 20% or more of the outstanding shares of the common stock of Corning Incorporated and before the acquisition by the acquiring person of 50% or more of the voting power of the outstanding shares of the common stock of Corning Incorporated, the board of directors may exchange the rights, other than rights owned by the acquiring person, which would have become void, in whole or in part, at an exchange ratio of one share of our common stock per right, subject to adjustment. The rights are redeemable in whole, but not in part, at $.01 per right until any person or group becomes an acquiring person. The ability to exercise the rights terminates at the time that the board of 30 directors elects to redeem the rights. Notice of redemption will be given by mail to the registered holders of the rights. At no time will the rights have any voting rights. The rights agent is Harris Trust and Savings Bank. The exercise price payable, and the number of shares of Series A preferred stock or other securities or property issuable, upon exercise of the rights are subject to adjustment from time to time to prevent dilution: - in the event of a stock dividend on, or a subdivision, combination or reclassification of, the shares of Series A preferred stock; - upon the grant to holders of the shares of Series A preferred stock of rights or warrants to subscribe for or purchase shares of Series A preferred stock at a price, or securities convertible into shares of Series A preferred stock with a conversion price, less than the then current market price of the shares of Series A preferred stock; or - upon the distribution to holders of the shares of Series A preferred stock of evidences of indebtedness or assets, excluding regular periodic cash dividends paid out of earnings or retained earnings or dividends payable in shares of Series A preferred stock, or of subscription rights or warrants, other than those referred to above. The number of outstanding rights and the number of one one-hundredths of a share of Series A preferred stock issuable upon exercise of each right are also subject to adjustment in the event of a stock split of, or stock dividend on, or subdivision, consolidation or combination of, the common stock prior to the distribution date. With some exceptions, no adjustment in the exercise price will be required until cumulative adjustments require an adjustment of at least 1% in the exercise price. Upon the exercise of the rights, no fractional shares of Series A preferred stock will be issued and instead an adjustment in cash will be made. However, fractional shares of Series A preferred stock may be issued where these fractions are integral multiples of one-hundredth of a share which may, at the election of Corning Incorporated, be evidenced by depositary receipts. The rights have certain anti-takeover effects. The rights may cause substantial dilution to a person or group that attempts to acquire us on terms not approved by the board of directors of Corning Incorporated, except in the case of an offer conditioned on a substantial number of rights being acquired. The rights should not interfere with any merger or other business combination approved by the board of directors since, subject to exceptions, the rights may be redeemed by us at $.01 per right at any time prior to the acquisition by a person or group of beneficial ownership of 20% or more of the common stock. The redemption of the rights may be made effective at any time, on any basis, and with any conditions that the board of directors in its sole discretion may establish. The shares of Series A preferred stock purchasable upon exercise of the right will rank junior to all other series of preferred stock of Corning Incorporated, including the Series B preferred stock, or any similar stock that specifically provides that it ranks prior to the shares of Series A preferred stock. The shares of Series A preferred stock will be nonredeemable. Each share of Series A preferred stock will be entitled to a minimum preferential quarterly dividend of $1.00 per share, but will be entitled to an aggregate dividend of 100 times the dividend declared per share of common stock. In the event of liquidation, the holders of the shares of Series A preferred stock will be entitled to a minimum preferential liquidation payment of $100 per share, but will be entitled to an aggregate payment of 100 times the payment made per share of common stock. Each share of Series A preferred stock will have 100 votes, voting together with the common stock. In the event of any merger, consolidation or other transaction in which common stock is exchanged, each share of Series A preferred stock will be entitled to receive 100 times the amount and type of consideration received per share of common stock. These rights are protected by customary antidilution provisions. Because of the nature of the Series A preferred stock's dividend, liquidation and voting rights, the value of the interest in a share of Series A preferred stock purchasable upon the exercise of each right should approximate the value of one share of common stock. The description of the rights contained in this section does not describe every aspect of the rights. The rights agreement dated as of June 5, 1996, between Corning Incorporated and the rights agent, contains the full legal text of the matters described in this section. A copy of the rights agreement has been 31 incorporated by reference in the Registration Statement of which this prospectus forms a part. See "Where You Can Find More Information" below for information on how to obtain a copy. Fair Price Amendment In 1985, shareholders of Corning Incorporated adopted a "fair price amendment" to the certificate of incorporation of Corning Incorporated that, in general, requires the approval by the holders of at least 80% of the voting power of the outstanding capital stock of Corning Incorporated entitled to vote generally in the election of directors as a condition for mergers and other forms of business combinations with any beneficial owner of more than 10% of this voting power unless: - the transaction is approved by at least a majority of the "continuing directors", as defined in the certificate of incorporation; or - minimum price, form of consideration and procedural requirements are met. Amendment or repeal of this provision or the adoption of any inconsistent provision requires the affirmative vote of at least 80% of the voting stock unless the proposed amendment or repeal or the adoption of the inconsistent provisions were approved by two-thirds of the entire board of directors and a majority of the continuing directors. Other Anti-takeover Provisions of the Certificate of Incorporation and By-Laws In addition to the preferred share purchase rights and the fair price amendment, the certificate of incorporation and by-laws of Corning Incorporated contain other provisions that may discourage a third party from seeking to acquire Corning Incorporated or to commence a proxy contest or other takeover-related action. Corning Incorporated has classified its board of directors so that one-third of the board is elected each year to three-year terms of office. In addition, holders of common stock may remove a director from office at any time prior to the expiration of his or her term only with cause and by vote of a majority of holders of common stock outstanding. These provisions, together with provisions concerning the size of the board and requiring that premature vacancies on the board be filled only by a majority of the entire board, may not be amended, altered or repealed, nor may we adopt any inconsistent provisions without the affirmative vote of at least 80% of the voting stock of Corning Incorporated or the approval of two-thirds of the entire board of directors. The by-laws of Corning Incorporated contain procedural requirements with respect to the nomination of directors by shareholders that require, among other things, delivery of notice by nominating shareholders to its Secretary not later than 90 days nor more than 120 days prior to the date of the shareholders meeting at which the nomination is to be considered. The by-laws do not provide that a meeting of the board of directors may be called by shareholders. The certificate of incorporation of Corning Incorporated provides that no director will be liable to Corning Incorporated or its shareholders for a breach of duty as a director except as provided by the New York Business Corporation Law. The effect of these provisions may be to deter attempts either to obtain control of Corning Incorporated or to acquire a substantial amount of its stock, even if a proposed acquisition transaction were at a significant premium over the then-prevailing market value of the common stock, or to deter attempts to remove the board of directors and management of Corning Incorporated, even though some or a majority of the holders of common stock may believe these actions to be beneficial. PLAN OF DISTRIBUTION We may sell securities to or through underwriters, and also may sell securities directly to other purchasers or through agents. Unless otherwise set forth in the prospectus supplement, the obligations of any underwriters to purchase the securities will be subject to conditions precedent and these underwriters will be obligated to purchase all the securities if any are purchased. The distribution of the securities may be effected from time to time in one or more transactions at a fixed price or prices which may be changed, at market prices prevailing at the time of sale, at prices related to these prevailing market prices or at negotiated prices. 32 The applicable prospectus supplement will describe the method of distribution of the securities. In connection with the sale of securities, underwriters may receive compensation from us or from purchasers of securities for whom they may act as agents, in the form of discounts, concessions or commissions. Underwriters, dealers and agents that participate in the distribution of securities may be deemed to be underwriters, and any discounts or commissions received by them and any profit on the resale of securities by them may be deemed to be underwriting discounts and commissions, under the Securities Act of 1933. Any underwriter, dealer or agent that will participate in the distribution of the securities will be identified, and any compensation it will receive will be described, in the prospectus supplement. Under agreements which may be entered into by us, underwriters, dealers and agents who participate in the distribution of securities may be entitled to indemnification by us against some liabilities, including liabilities under the Act, or to contribution with respect to payments which the underwriters, dealers or agents may be required to make relating to these liabilities. Any agreement in which we agree to idemnify underwriters, dealers and agents against civil liabilities will be described in the relevant prospectus supplement. If so indicated in the prospectus supplement, we will authorize dealers or other persons acting as our agent to solicit offers by some institutions to purchase securities from us pursuant to contracts providing for payment and delivery on a future date. Institutions with which these contracts may be made include commercial and savings banks, insurance companies, pension funds, investment companies, educational and charitable institutions and others. VALIDITY OF SECURITIES The validity of the securities is being passed on for us by William D. Eggers, Esq., Senior Vice President and General Counsel of Corning Incorporated, and for any underwriters, dealers or agents by Sullivan & Cromwell, 125 Broad Street, New York, New York. Mr. Eggers owns substantially less than 1% of the outstanding shares of Corning Incorporated common stock. EXPERTS The consolidated financial statements of Corning Incorporated incorporated in this prospectus by reference to Corning Incorporated's 1998 Annual Report on Form 10-K for the year ended December 31, 1998, have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of that firm as experts in auditing and accounting. 33 WHERE YOU CAN FIND MORE INFORMATION As required by the Securities Act of 1933, we filed a registration statement (Nos. 333-81299 and 333-81299-01) relating to the securities offered by this prospectus with the Securities and Exchange Commission. This prospectus is a part of that registration statement, which includes additional information. Corning Incorporated files annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy this information at the SEC's public reference rooms in Washington, D.C., New York, New York and Chicago, Illinois. You can also request copies of the documents, upon payment of a duplicating fee, by writing the Public Reference Section of the SEC. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. These SEC filings are also available to the public from the SEC's web site at http://www.sec.gov. The SEC allows us to "incorporate by reference" the information we file with the SEC. This means that we can disclose important information to you by referring you to another document filed separately with the SEC. The information incorporated by reference is considered to be part of this prospectus. Information that we file later with the SEC will automatically update information in this prospectus. In all cases, you should rely on the later information over different information included in this prospectus or the prospectus supplement. This prospectus includes by reference the documents listed below that Corning Incorporated has previously filed with the SEC and that are not included in or delivered with the documents. They contain important information about our company and its financial condition. - Annual Report on Form 10-K for the year ended December 31, 1998. - Quarterly reports on Form 10-Q for the quarters ended March 31, 1999, June 30, 1999 and September 30, 1999. - Current reports on Form 8-K dated January 19, 1999; January 25, 1999; February 4, 1999; March 1, 1999; March 11, 1999, April 14, 1999, July 8, 1999, July 19, 1999, October 13, 1999, November 18, 1999, December 28, 1999, December 29, 1999 and January 11, 2000. - Current report on Form 8-K/A dated January 26, 1999. - Registration Statement on Form 8-A containing a description of our preferred share rights plan filed on July 11, 1996. We incorporate by reference additional documents that we may file with the SEC after the date of this prospectus and before the completion of this offering. The documents include periodic reports, like Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as proxy statements. You may request a copy of these filings, at no cost, by writing or telephoning us at the following address: Corning Incorporated One Riverfront Plaza Corning, New York 14831 Attention: Secretary (607) 974-9000 Information in this prospectus may add to, update or change information in a previously filed document incorporated by reference in this prospectus. In that case, you should rely on the information in this prospectus. Information in a document filed after the date of this prospectus may add to, update or change information in this prospectus or in a previously filed document incorporated by reference in this prospectus. In that case, you should rely on the information in the later filed document. 34 [LOGO] -----END PRIVACY-ENHANCED MESSAGE-----