Welcome to the Corning Incorporated Quarter Three 2015 Earnings Results. It is my pleasure to turn the call over to Ann Nicholson, Division Vice President of Investor Relations. Please go ahead.

Thank you, Roxanne. Good morning. Welcome to Corning's Third Quarter Conference Call. With me today is Wendell Weeks, Chairman, Chief Executive Officer; Tony Tripeny, Senior Vice President and Chief Financial Officer; and Jeff Evenson, Senior Vice President and Chief Strategy Officer. Before we begin our formal comments, I'd like to remind you that today's remarks contain forward-looking statements that fall within the meaning of the Private Securities Litigation Reform Act of 1995. These remarks involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially. These factors are detailed in the company's financial reports. You should also note that this presentation contains a number of non-GAAP measures, and our results are presented in core performance measures. A reconciliation can be found on our website. We have slides posting live on her webcast that are accompanying our formal comments, and they will be available on our website later this morning. Now, I will turn the call over to Wendell.

Thank you, Ann. Good morning, everyone. I would like to begin by welcoming Tony Tripeny, our new CFO, and Jeff Evenson, our new Chief Strategy Officer. Welcome, Tony and Jeff. As we reported in this morning's press release, macroeconomic headwinds are affecting our performance in the near term. Our businesses were slowed by the weakening global economy, the unexpected devaluation of the Chinese currency, and the softening in the television and IT retail markets. Consequently, our third quarter results were lower than implied by our first half performance. We expect these headwinds to continue into the fourth quarter. Now despite these temporary challenges, we like our long-term opportunities. Consumers want bigger screens and more bandwidth and touch everywhere. The demand for cleaner air is accelerated, and our innovation portfolio is rich with opportunities. Given that, I would like to use my time with you today to introduce our new strategy and capital allocation framework. We believe that the framework provides clearer guidelines to define our portfolio and our commitment to excellent capital stewardship. Tony will then review our third quarter results and we'll conclude by taking your questions. First, it's useful to review our current position. We have delivered outstanding industrial performance. Over the past decade, we've grown sales, NPAT, EPS and operating cash flow at double-digit rates. We've beaten the competition on growth in each of our segments. We've innovated to achieve the lowest cost position in key businesses, and we've created new-to-the-world product categories such as Gorilla Glass, our heavy-duty diesel substrates and filters, and our customized fiber-to-the-home solutions. And as we look forward, our innovation pipeline is full. Taken as a whole, our performance gives us a foundation for sustained cash flow and a tremendous opportunity set. Our leadership priorities for the next four years are simple.…

Thank you, Wendell, and good morning. I like to begin by highlighting my role in executing our framework over the next four years. As you might expect, my emphasis will be on financial discipline, returns, and ensuring we are good stewards of capital. Specifically, I look for us to deliver strong financial results and investment of returns to manage an efficient balance sheet and to lower our cost of capital over time. Currently, we use several metrics to evaluate investment returns, including net present value, internal rate of return, and payback period as well as return on invested capital measured after commercialization. Our disciplined approach to capital allocation and focused on lowest cost have enabled our businesses to have excellent ROIC metrics against their respective industries and well above their cost of capital. Going forward, I will continue to emphasize returns, and I expect us to improve our corporate ROIC over the next four years. I look forward to keeping you updated on our financial strength and focus. Now let's talk about the quarter. As Wendell said, weakening economies, particularly in China, and the stronger dollar impacted our businesses. For example, TV demand is weaker. TV growth in China has slowed. TV demand in Europe, Latin America, and Middle East Africa is softer due to the effect of the stronger dollar on retail prices and continued economic uncertainty. We expect worldwide TV unit sell-through to be down slightly versus last year. IT and mobile demand is weaker, driven by lack of replacement drivers, the strong dollar, and continued economic uncertainty. We expect the worldwide IT market to be down 10% this year and smartphone sales in China to be flat versus last year. China's auto and heavy-duty truck production has slowed through the year. China's auto production is now expected…

Thank you, Tony. To sum up, economic headwinds are impacting our business, but our strong opportunity set, the more stable LCD pricing environment, and our ability to generate cash even in a challenging economy provide a foundation for continued outstanding industrial performance. As we focus our portfolio and utilize our financial strength, we expect to build on our best-in-the-world capability to deliver growth and significant sustained cash distributions to our shareholders. Our framework, intent to increase the dividend at a double-digit rate and accelerated share repurchase program, are important steps in our four-year plan. Over the next several months, we will be out with investors to share more details, and we really look forward to the dialogue. Ann?

Thank you, Tony and Wendell. Operator, we will now open the lines for questions.

And our first question comes from the line of Rod Hall with JPMorgan. Please go ahead.

Yeah. Good morning, guys. Thanks for taking my question. I guess I wanted to kick off with a question about the capital program and specifically the $10 billion beyond the capital returns, so the $10 billion that you're going to invest in the business. Wendell, I know you lined out the three core technologies for manufacturing engineering platforms by market access platforms that you're going to be investing in, but can give us any more detail on how that $10 billion or maybe a little less than $10 billion will be deployed against what strategic initiatives? And then any other sort of background on this strategic thinking change and how it developed and so on would be helpful. Thanks. And I have one follow-up.

Great. Thanks for the question, Rod. I will deal with the first one first, second, second. As far as sharing how we'll deploy the $10 billion that we are going to invest in our growth and sustained leadership, we will be sharing more in the future about how we think about that allocation towards which of the various platforms we're going to be leaning. But we'd like to do that as we engage with folks like you and our investors over the coming months. There will be pieces of it which are still in stealth that we won't be able to share, but we will be able to give you a pretty good idea of where you can expect to see us place our emphasis. Now to why now really is your question. So really it's three things that are leading us to discuss this at this point in time. The first is, as you know, we have a pretty strong engineering and scientific culture here. And what that means is that we have hypothesis and we test them with control. So the core of the hypothesis here is that we can increase our return on innovation through focus on our three, four, five plan. We have been running experiments to prove that hypothesis. And that also takes a control. And so we have been looking side by side. We've analyzed the data. And what we are able to conclude is that we do see a much higher return on innovation when we use the portfolio as we just described. That increasing productivity of the portfolio helps get at the next two items. The second reason that we're talking about it today is that we had to be confident that we could sustain our cash flows even in a time when the economy wasn't going our way. And we're really confident that we can do that, Rod. And then, finally and perhaps most importantly, when you focus a portfolio, you have to be really sure that there is enough opportunity sets in that portfolio to generate a lot of growth. And where we are right now is very confident in that. The amount of pull from our customer base that makes use of our three, four, five capability sets is quite high. So really, those are the three reasons you are hearing from us today. We've run the experiments, the data's in, the probability of success goes up, cost of innovation goes down, and our competitive advantages go up when we apply it. We're confident we can sustain our cash flow even in times of economic uncertainty, and our opportunity set is big enough that we can benefit from focusing.

Okay. Thanks, Wendell. And then my follow-up was on Display, I mean, a little more short term. Those numbers were actually better than we expected, maybe we were too pessimistic. But I wanted to just see if internally the Display results in Q3 were better than you guys were anticipating. And also if you could comment on how 4K demand is going at this stage, I would appreciate that. Thanks.

All right. So, Rod, no, these numbers actually were a little bit worse than what we had expected. When we began the quarter, we thought volumes would be up sequentially, and they weren't. Now some of that, of course, was the contract dispute that I talked about. But the rest of it was panel maker utilization went down a little bit more than we expected, and the reason it did was our expectations for the end market came down during the quarter. And those expectations came down as evidence came in that TV demand was going to be lower for the full year than we thought it was going to be, and that was also true from an IT demand standpoint. I think in the call last time we talked about how we could be wrong on this and it could come down further in Q3, and that's actually what happened than what we originally anticipated.

And 4K?

So 4K continues to track in a way that we like. And now, actually where we're starting to turn a hunk of our focus is what version of 4K can create the most compelling package for our customers. And that is with the add of quantum dot technology as well. But we're really liking the way these sets are looking, the improvements in them from a performance standpoint. It's still too early to call the bend in the curve, right, where it's going to drive replacement cycles. And we've got an awful lot of noise in the marketplace with the really strong dollar, sort of the economic headwinds. So the data just isn't screaming at us yet that we've got that driving replacement cycle feature. But, gosh, you can't help but look at these things technically and really like what you're seeing.

Okay, great. Thank you, guys.

Our next question is from Mark Sue with RBC Capital Markets. Please go ahead.

Thank you. And thank you for the focus on shareholders being stewards of capital. When I look at the step function jump in cash returns in a tougher macro environment, is part of the framework to get that returns on innovation potentially consolidating cash generating businesses and focusing on higher improved ROIC? For example, if I look at what Corning has done in Display glass, going after both maintaining share and then seeing a lift in industry profits, is that the framework we should see in the other segments such as Telecom and diesel, for example? That will be helpful.

I think the short version is, yes, you're going to see us use that type of tool. Especially in Telecom, we think we have a lot of potential leverage that looks just like that. So that is one of the things we are going to do as we deploy that $10 billion.

That's helpful. And when we consider potential asset sales, how should we frame the tax implications considering the JV, I think, began before most of us were born? Is there a large capital gains tax that we should consider? And would there be major depreciation recapture involved as well? So maybe the framework as you potentially divest some assets that began a long time ago.

So, Mark, first, thank you for not making me feel old today. Usually I feel a little bit old, but you're right, we've got some stuff that we started before I was born, which is like nice. All I do is work with young people these days. So I normally feel old. But anyway, I digress. So as far as Dow Corning goes, we're not going to discuss any further than that we have a potential transaction under discussion with our good friends at Dow. Shifting gears and talking about transactions in general, and what happens to our out-of-focus assets. So our out-of-focus assets, as I said, we're running them pretty well and they're generating higher than their cost of capital in terms of returns, but we think that some of these assets may offer more synergy to others. If we can realize that synergy, including any friction costs that may be involved one way or the other for our shareholders, those are the transactions we're willing to consider. As you take a look at the overall framework of being able to deploy $20 billion, right, and investing in our growth and back to our shareholders, any transactions in any of the areas we're talking about represent upside to that deployment. So thanks, Mark, for making me feel younger.

That's helpful. One last question. If we look at the cost of debt, which is at low levels at the moment, any thoughts on the framework for adding more debt to the balance sheet considering that you'd still want to maintain your credit rating?

So clearly, I think over the next three or four years, we will be adding debt to the balance sheet. We're not prepared now to talk about what the timing of that is in terms of when we need to do it. Right now, we have good cash balances, $5 billion including $2 billion offshore. And so we're currently working to try to determine what that is. But keep in mind that our objective is to have debt balances of 2x our EBITDA, and over the next few years we will be putting debt on to do that.

That's helpful. Thank you and good luck.

Thanks, Mark.

Our next question comes from the line of Vijay Bhagavath with Deutsche Bank. Please go ahead.

Yeah. Hey, thanks. Good morning. A bigger picture question for you, Wendell, which is what gets you impatient about the business? Are there any areas or parts of the business that you'd like to see progress quicker or in a different way than you're seeing now? It would be very helpful to hear your points. And then a quick follow-on for Tony.

Well, the short answer to your first question is, yes, there are many things that make me feel impatient, right, about making progress. But in general, I think the most significant source of frustration these days is that as we use our three, four, five plan, right, and we apply our core technology sets in our manufacturing and engineering platforms and our market access platforms, when we try to introduce a new product to a customer who knows us well in other areas, sometimes we forget that different industries move at different speeds. So not everything moves like tech, not everything moves like consumer electronics and mobile consumer electronics. Matter of fact, few things do. So for instance, it is frustrating how long it's taking us to get widespread adoption of lightweight glazing in automotive. It's a heck of a good idea, good for consumers, it's good for the environment, it's good for safety, it's good for almost everything. But the industry, even when you're a highly-valued supplier, as we are, it just takes time. So I think the degree of speed with which our innovation can make a difference to our top line's a little frustrating.

Yeah, excellent. And then a quick follow-on for Tony. Give us kind of your view on where do you see the acquisition strategy trending? Any particular product areas, technologies, market transitions? Thanks.

Sure. Thanks, Vijay. I think Wendell said before that we feel like there's big opportunities in the Optical Communications business, both with our internal growth opportunities and applying our three, four, five strategy, but also from an acquisition standpoint. And I would expect that most of our focus, as we go forward the next couple of years from M&A, would be looking in the Optical Communications area. We think we can generate good synergies there. We've got a big powerhouse machine that's there today with $3 billion of sales. And I think it gives us really good opportunities to bring in companies and make them better. We've done three acquisitions this year. And in those acquisitions, we're really happy with our results. And we've been able to prove out, I think, our ability to really drive value with those acquisitions. So I'd expect more of the same.

Excellent. Thank you.

We have a question from the line of Doug Clark with Goldman Sachs. Please go ahead. Douglas Clark - Goldman Sachs & Co.: Great. Thank you very much. I wanted to touch on LCD glass pricing a little bit. I understand kind of the three key points that you make about why glass prices could remain stable. On the other side of that and what isn't addressed is kind of the panel maker dynamic, especially as their profit margins continue to erode. Do you see that as a possible area of pressure on your glass pricing going forward to the extent that demand doesn't firm up and remain soft?

For sure, we think that that's always a possibility and that that could put pricing pressure on us. But I think what we really expect to see is as those panel makers go closer to cash costs that they will cut back their utilizations. We saw that in the third quarter in the small gen sizes, and we think we'll see that over the next couple quarters in the larger gen sizes. And so the reason that we're confident are the three things that I talked about relative to the financial situation with our competitors, the benefit that has happened with the significant weakening of the Japanese yen, and then our ability to keep glass supply and demand balanced by taking capacity offline.

But it's an excellent question, Doug. I mean, as our display maker customers hit the – they never make a lot of money. But as they hit pain, I mean, they will increase the pressure. And then the question's going to be what do our competitors choose to do and do the factors that Tony's laid out, which is as they're basically approaching breakeven in one of them and the others profit is greatly reduced, how do they react to that pressure given that the display makers are on the opposite side of the yen, too, and have gotten that tremendous benefit. So you're on the right question, how that dynamic plays out in the coming quarters is important. I think the good news is, what you heard from Tony was, in this next quarter, we expect our Display pricing to moderate further than it did in quarter three. And the profitability problem is already upon the display makers. So that's encouraging data, Doug, encouraging data. Douglas Clark - Goldman Sachs & Co.: Right. No, that makes a lot of sense. That's very helpful. Thanks. One follow-up to that, more on the volume side. I think last quarter you talked about inventories coming down by about two weeks by the end of the year. Wondering if you can give us an update on where supply chain inventories are. And to the extent that panel makers cut utilizations between 4Q and 1Q, do you think it will be skewed more towards one or the other quarter?

So, right now, our expectations is that there will be some decline in Q4, but it's – we expect that softness is likely to continue into Q1. Part of that is, is that we do know that some panel makers are bringing on capacity in China and we think that that has an impact. Of course, we don't know for sure. We were wrong in our last quarter conference call on how much was going to be in Q3 versus Q4. And, of course, we could be wrong here. We do think that that is what is going to be necessary to get the supply chain inventories at a healthy level. Clearly, since demand is less than what we thought last quarter, even though inventories are going to go down in the fourth quarter, that inventory level at the end of the fourth quarter is a little bit higher than what we would have projected last quarter. And we expect that to bleed off in the first quarter. Douglas Clark - Goldman Sachs & Co.: Got it. Thank you very much.

We have a question from the line of Joseph Wolf with Barclays. Please go ahead.

Thanks. I just wanted to start – you've given a lot of detail on the capital deployment, but I'm – and you mentioned investor input. I'm wondering if you're having some sort of internal, I don't know if we call it a contest with the engineers that you mentioned to go after that capital for projects that they're looking at. And also any pace of the deployment that you're thinking about in terms of over the entire four years or could we wake up one morning and that you've decided to spend half of that on one very specific and targeted project with a lot of growth opportunity?

Great questions, Joseph. So I think you should think of the deployment as fitting our culture, which is – and the way our innovation model works. When you do materials science, when you dig stuff out of the ground or take gases and end up converting them into highly engineered components, that takes time. Since that takes time, the bad news is, is that things don't turn overnight your way. The good news is that things tend not to sneak up on you. So I think you can expect some pretty steady behavior on us. And as we go out and talk to investors, we will give clear indications on here's where our tendency is going to be as far as where we're going to invest that $10 billion and we'll give you a good feel for rough ideas of timing and how that plays. The big thing that we're picking up here with this focused portfolio is increased productivity. And that increased productivity is what's behind our ability to give more to shareholders. So if you were to take a look out over the last 10 years, right, about 30% of the funds we had available we were able to give to shareholders either in the form of dividend or share repurchase. As we look forward over this next four years, because of that increased productivity, we're looking at an ability to do about 50% over that time period. And that will be a steady effort, and that's the way you should expect us to behave. Did that answer your question?

Yes. No, that was very helpful. Just a follow-up on the Environmental business. If you think about – if you had a view – maybe if I had a view or one had a view on the trucking business globally, how would you expect the business to go in terms of the way trucks are moving? Could they be more negative than you based on that viewpoint? Or is there growth in the Environmental business independent of growth in trucks, especially the heavy-duty or long haul trucking?

I think growth in the Environmental business in total, of course, is going to be driven by both what happens with trucks and light-duty vehicles. And on a global basis, as long as total production for light-duty vehicles increase, you'll see some growth in the Environmental business. And, of course, pollution regulations make a big impact on that business, too. I think from the heavy-duty diesel standpoint, we've seen strong growth in North America over the last couple of years, some of it economically driven, some of it regulation driven. In Europe, the regulations in particular caused nice growth in 2014. I think what we are faced with right now in 2015 in China is just that the truck production is down significantly compared to what it had run at actually over the last six years, and down about 34% on a year-to-date basis. In that, from a very specific to China impact is – impacting us both from a revenue standpoint but also from a cost standpoint because we obviously put cost in place to be able to manufacture to meet that demand. And until those sales turn around, along with the improving regulatory environment there, I mean, that's really what we're looking for in 2016. We think there'll be some improvement in 2016, but we're still waiting to see. We certainly don't think that'll improve much in Q4.

From the most macro standpoint, it's not the amount of trucks that are bought in the world. That we don't need to grow. What we need is more compliant trucks. And then same thing with cars, even though cars continue to expand and grow very nicely, right? For our automotive – our Environmental business, it is driven by compliance. So the tighter air requirements get, the more of our components get used and as new countries come onboard to clean up their air, that's what adds the big sort of swaths of demand. But it's really excellent question.

Thank you very much.

Operator, we've got time for maybe one or two more calls.

All right. So the next question then is from Steven Fox with Cross Research. Please go ahead.

Thanks. Good morning. Just the first question on the new plan. I guess, when I think about sort of the three, four, five that you laid out, I guess, the three and the four have typically outperformed historically for Corning, but the five has been the one where timing the products to market, et cetera, has been problematic. Under the new focus, can you just discuss how maybe getting products to market or matching your customers or end market needs gets better and timing more predictable? And then I had a quick follow-up.

Yeah. I think in a way, we tend to be – the timing piece for us, by and large, it's possible to miss timing on both ends, right? But where we tend to miss timing is we're ready earlier than our customers which, I guess, beats the heck out of the other (1:01:05), right? So that can lead us to have capacity out ahead of demand. That can lead us to have innovations ready before our customers need to pull them. And it's been one of the lovely things about mobile consumer electronics is it's almost impossible to be faster than those guys. So we continue to work on how do we get better at picking these inflection points, and actually I commented that Jeff Evenson, our new Chief Strategic Officer, is here today. A big part of his new role is to work on exactly that and how do we get a little better at understanding not only the timing basis for our innovation sets, but also when our potential inflection points in our market sets and how should that impact the timing of our capacity decisions. I think you're quite right to note it is an area where we can improve. Hopefully more to come on that topic.

Thanks. And then just a very quick follow-up. So if we think about the out-of-focus portfolio, is it safe to assume, then, that it is roughly maybe 20% of your profits today? Or is that a level of detail?

I wouldn't make assumptions or speculate today on that matter, though I do understand why you are trying to.

Thanks. Thanks for your understanding.

Yeah.

Okay. One last question, Roxanne.

And that last question comes from Patrick Newton with Stifel. Please go ahead. Patrick Newton - Stifel, Nicolaus & Co., Inc.: Yeah. Thank you. Good morning, Wendell, Tony, Jeff and Ann. Thanks for sneaking me in here. I guess, on the shareholder return or capital allocation framework that you've talked about, one clarification and one question. On the clarification and I think, Wendell, you alluded to this, but is any potential transaction with Dow Corning baked into this current outlook through 2019 or would it be additive to the current outlook? And then, I guess, for Tony, on the global cash use being reduced to about $2 billion, is that going to be focused on acquisition efforts for international targets? Or is it a repatriation part of your strategy? And then I have a follow-up.

No. I think on the first question, any potential transactions, we're not going to talk any more about Dow Corning, but any potential transactions are additive to that number. I mean, what we have very clearly stated is, is that we believe we can deliver more than $10 billion back to shareholders based on our current plans. And anything on top of that from a transaction standpoint would be additive to that. And our bias right now based on what we know would be to have those transactions be additive. But the bottom line is it's additive. In terms of the cash amount on the $2 billion, I mean, I think, clearly, it's our belief that $2 billion is an adequate amount to have from a company standpoint given our cash flow generations. And as a reminder, our goal is to have 2x EBITDA in debt. And our plan is to have that $2 billion reduce that cash over the next couple of years. In terms of where that cash is actually located, it will depend a lot depending on where our taxing policy is in the United States as we can always add the debt in the United States and keep the cash offshore, if that makes sense. Patrick Newton - Stifel, Nicolaus & Co., Inc.: No, that's helpful. I guess, as a follow-up, I really want to dive into gross margin given some of your commentary. I think in the near term, you're talking about fixed cost absorption as what is pressuring the metric in the September quarter results and then in the December quarter guidance. But if I step back and I look at your gross profit since 2010 and arguably when Display started to mature, it's been on a negative trajectory. It increased in 2014 due to the consolidation of SCP. And now as you're lapping that on a – it seems to be redecelerating. I guess, is this – structurally, how should we think about your gross margin profile perhaps over the next five years or during your capital allocation framework time period, from this 42% level, do you anticipate it will have positive trajectory or will it be sustainable or further pressure?

Yes. We do think we're going to have a positive trajectory. I mean, where we are right now, as I explained before, is driven really by a few things. The first item is in our Display business. In the third quarter, our volume was a little bit less than what we expected, and that negatively impacted our cost. But we can take cost out and reduce capacity to meet market demand. We are doing that. And in the fourth quarter, our gross margins are actually consistent in the fourth quarter of 2015 as they were in the fourth quarter of 2014. So the real issues are in Environmental and Optical Communications. And in both those businesses, we put capacity in place for new businesses that isn't showing up today. We expect those businesses to show up in 2016. For some reason they don't show up, we certainly will take the cost down. But the whole purpose of this framework and the integration of this is partly to drive us to the lowest cost producer, and that definitely helps us from a gross margin standpoint. So I think over time, right now, we're certainly having seen some gross margin compression as our sales are going down. But as our sales return, we'd expect gross margins to expand. Patrick Newton - Stifel, Nicolaus & Co., Inc.: Great. Thank you for taking my questions. Good luck.