Corning's CEO Hosts 2013 Annual Meeting of Shareholders Conference (Transcript)

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Corning Inc. (NYSE:GLW)

2013 Annual Meeting of Shareholders Conference Transcript

April 25, 2013 11:00 AM ET


Wendell Weeks - Chairman and CEO

Linda Jolly - Secretary

Ginger Lawrence - Inspector, Elections

Dr. David Morse - Chief Technology Officer

Dr. John Seely Brown - Retired Chief Scientist, Xerox

Dr. Stephanie Burns - Retired Chairman and CEO, Dow Corning Corporation

John Canning - Co-Founder and Chairman, Madison Dearborn Partners

Richard Clark - Retired Chairman, President and CEO, Merck

Robert Cummings - Vice Chairman, Investment Banking, JPMorgan Chase

James Flaws - Vice Chairman and CFO, Corning Incorporated

Gordon Gund - Chairman and CEO, Gund Investment Corporation

Kurt Landgraf - President and CEO, Educational Testing Service

Kevin Martin - Partner, Patton Boggs LLP and Former Chairman, Federal Communications Commission

Dr. Deborah Rieman - Executive Chairman, MetaMarkets Group and Retired President and CEO, CheckPoint Software Technologies

Dr. Onno Ruding - Retired Vice Chairman and Director, Citicorp and Citibank

Hansel Tookes - Retired Chairman and CEO, Raytheon Aircraft

Dr. Mark Wrighton - Chancellor and Professor, Chemistry, Washington University, St. Louis

Jamie Houghton - Former Director


Wendell Weeks

Good morning. Thank you all for coming today. I’m delighted to see such a good turnout and I’m glad at this time even the weather seems to be cooperating, although, spring seems to be no hurry to come to Corning this year.

The Annual Meeting of Shareholders of Corning Incorporated will please come to order. I’m Wendell Weeks, Chief Executive Officer and Chairman of the Board of Directors. Seated to my left are Linda Jolly, Secretary of the Corporation; and [Ginger Lawrence], the Inspector of Elections.

Today’s meeting is in three parts, the official business of the meeting, my reflections on the state of the company and some brief concluding remarks. Following the meeting, we’ll have a special presentation from Corning's Chief Technology Officer, Dr. David Morse, about our innovation programs. After his presentation all shareholders are invited to lunch in the tents outside.

Now we do have a printed agenda for this meeting. So let me explain the formal action that we will take. Ms. Jolly will report the number of shares being voted and confirm that the meeting has been properly called. I will introduce the Board of Directors.

I will call for motion for the election of 12 directors, next, I’ll call for motion for the advisory vote on executive compensation and to ratify the appointment of PricewaterhouseCoopers as independent registered public accounting firm for Corning for 2013. Then I'll call for a vote on all three motions. After this formal action is completed, I’ll discuss the state of the company.

Now some of you may have questions not covered in my formal remarks today. We encourage you to ask questions during today's luncheon where you have the opportunity to speak directly to the company's officers. We can give you more complete answers at that time. Also we can point you to exactly the right person to provide you the information that you need.

To help with this process, company’s representatives will be white batches to help you identify them. However, if you cannot stay for the luncheon, you can ask your question following my remarks. Now we’ll start the formal part of the meeting.

Just to note, any valid ballots handed out at today’s meeting, won’t be in this morning’s preliminary vote totals. But they will be included in the official vote tally in the Corning SEC filing early next week.

Madam Secretary, may we have you report on the representation of holders of stock here today.

Linda Jolly

Mr. Chairman, as of February 25, 2013, the record date for this meeting, the Corporation had outstanding 1,474,113,521 shares of common stock representing that same number of votes. They are represented here today in person and by proxy 1,242,130,494 votes or approximately 84% of the total votes. A quorum requires 737,056,761 votes.

Wendell Weeks

As you heard a quorum is present. May we now have a report on the proof of call and notice of this meeting?

Linda Jolly

Mr. Chairman, I have certified list of all record holders of common stock at the close of business on February 25, 2013, and the affidavit of Computershare Trust Company dated March 12, 2013 certifying to the March 11, 2013 mailing of notice of this meeting and proxy materials to each shareholder of record.

Wendell Weeks

Thank you. Please file the documents with the meeting records. Now it is our practice to not have the Secretary read last year’s meeting minutes. However, if anyone wishes to examine last year’s minutes, they should see Ms. Jolly after the meeting.

I will now introduce the members of the Board of Directors and ask them to stand when I say their name. Please hold your applause until everyone has been introduced. Dr. John Seely Brown, Retired Chief Scientist of Xerox; Dr. Stephanie Burns, Retired Chairman and Chief Executive Officer of Dow Corning Corporation; Mr. John Canning, Co-Founder and Chairman of Madison Dearborn Partners; Mr. Richard Clark, Retired Chairman, President and Chief Executive Officer of Merck; Mr. Robert Cummings, Vice Chairman of Investment Banking of JPMorgan Chase; Mr. James Flaws, Vice Chairman and Chief Financial Officer, Corning Incorporated; Gordon Gund, Chairman and Chief Executive Officer of Gund Investment Corporation; Mr. Kurt Landgraf, President and Chief Executive Officer of Educational Testing Service; Mr. Kevin Martin, Partner of Patton Boggs LLP and Former Chairman of the Federal Communications Commission; Dr. Deborah Rieman, Executive Chairman of MetaMarkets Group and Retired President and Chief Executive Officer of CheckPoint Software Technologies; Dr. Onno Ruding, Retired Vice Chairman and Director of Citicorp and Citibank; Mr. Hansel Tookes, Retired Chairman and Chief Executive Officer of Raytheon Aircraft; Dr. Mark Wrighton, Chancellor and Professor of Chemistry at Washington University in St. Louis; and most of know one of our Former Directors who is here today, Jamie Houghton, who also served as Chairman and CEO.

Although he is retired from active service, he remains a vital part of Corning's family. We value his counsel and we are honored by his ongoing participation. Please join me applause for current and former director.

The first business of the day is to elect 12 directors for one year terms. Ms. Lawrence, please confirm that you signed the oath of Inspector of Election.

Ginger Lawrence

Yeah. Mr. Chairman, I have signed an oath here.

Wendell Weeks

Madam Secretary, please affix this oath of Inspectors of Election to the meeting minutes. I now call for nominations for Directors.

Unidentified Participant

Mr. Chairman, I move that the following the elected directors of the Corporation to serve until their successors have been elected. John Seely Brown; Stephanie Burns; John Canning, Jr.; Richard Clark; Robert Cummings; James Flaws; Kurt Landgraf; Kevin Martin; Deborah Rieman; Hansel Tookes; Wendell Weeks; and Mark Wrighton.

Wendell Weeks

I second that motion. Is there any discussion? The second proposal calls for an advisory vote of shareholders approving the Corporations executive compensation as disclosed in the proxy statement. I will now entertain a motion and resolution for that approval.

Unidentified Participant

Mr. Chairman, I move the adoption of the following resolution, resolved at our advisory nonbinding basis, the total compensation paid to the company’s named executive officers of the CEO, the CFO, and three other most highly compensated executives, have set forth in the proxy statement for this annual meeting and pursuant to disclosure rules of the Securities and Exchange Commission Item 402 of Regulation S-K, which include the compensation discussion and analysis, and the supporting and tabular and related narrative disclosure on executive compensation is hereby approved.

Wendell Weeks

I second the motion. Is there any discussion? The third proposal calls for ratification of the audit committee’s appointment of PricewaterhouseCoopers as Corning’s independent registered public accounting firm for 2013. I will now entertain a motion and resolution for that ratification.

Unidentified Participant

Mr. Chairman, I move adoption of the following resolution, resolve that the shareholders of the Corporation ratify the audit committee’s appointment of PricewaterhouseCoopers as the Corporation’s independent registered public accounting firm for the fiscal year ending December 31, 2013.

Wendell Weeks

I second that motion. Is there any discussion? Now, it’s time to review the voting procedures for the three pending motions. Under the Corporations’ bylaws and SEC rules the election of 12 directors, the advisory vote on executive compensation and the ratification of the independent registered public accounting firm will be voted by ballot.

Most shareholders have already voted. If you have previously voted by proxy, either by returning your proxy card, voting by the Internet or voting by telephone. There is no need for you to again today.

Any shareholders who waited and need to vote now, should use the proxy card or the ballot received at home, then raise your hand and then usher in the red coat will come to collect it. Your can also obtain ballot from an ushers by raising your head.

The ushers will collect any ballots either now or later and give them to the Inspector of Election at the end of the meeting to be included in the final vote count. I now ask Inspector of Election to report the results of the meeting.

Ginger Lawrence

Mr. Chairman, I report that each of the 12 nominees for the office of director was elected to the company’s Board of Directed by a majority of vote cast. The advisory shareholder vote was is in favor of the total compensation paid to the company’s main executive officers as disclosed in 2013 proxy statement.

I also report that a majority of vote cast were in favor of the ratification of the audit committee’s appointment of PricewaterhouseCoopers LLP as the company’s independent registered public accounting firm for the fiscal year ending December 31, 2013.

Wendell Weeks

Thank you.

Ginger Lawrence

You’re welcome.

Wendell Weeks

I declare that all 12 nominees for director are elected. The shareholder advisory vote approved the company’s executive compensation program and the appointment of PricewaterhouseCoopers LLP as the company’s independent registered public accounting firm for 2013 is ratified. All as indicated by the report of Inspectors of Election.

As I said earlier, today’s vote results are preliminary, final detail numbers will be filed with the SEC in a Form 8-K next week. That concludes the formal part of the meeting.

Now I’d like to talk to you about how your company is doing. Now my remarks will include some forward-looking statements and actual results might differ materially, you can find detail risk factors in our most recent 10-K and also on Corning's website.

You should also be aware that we use certain non-GAAP financial measures and performance indicators to assess how Corning's financial and operating performance is doing. You can find a reconciliation between GAAP and non-GAAP measure on Corning's Investor Relations website.

Now that we have that housekeeping out of the way, it is my pleasure to report and your company Corning Incorporated is strong, is stable and is growing despite a very challenging environment. No question. 2012 was a tough year.

We ended the year with a significant drop in profits driven primarily by large price declines for LCD glass and as the year progressed the weak global economy began negatively impacting all of our businesses.

But in 162 years, Corning has been through recessions, depressions, world wars, industry meltdowns and numerous evolutions driven by changing markets. Corning is no stranger to tough times and the leadership team has worked hard to ensure that the company is stronger than any challenge that we face.

Thanks to a solid foundation and outstanding execution by our 29,000 employees around the globe. We reach key milestones in each of our major businesses and have the highest sales in the company's history. More importantly, we are positioned for growth in 2013.

Today, I will reflect briefly on Corning’s 2012 performance and this year’s first quarter results. Then, I will share our expectations for 2013 and discuss the key trends behind our future growth. But first I will begin what I always do, with a brief overview of who we are and what we do.

Corning is the world leader in specialty glass and ceramics. We invent, manufacture and sell keystone components that enables high-technology systems for consumer electronics, Telecommunications, mobile emissions control and Life Sciences. We succeed through sustained investment in research and development, deep materials and process knowledge in a highly collaborative culture.

We are guided by a clear strategy framework. This framework has three elements. Corning has to grow. We must provide balance, stability to the company and we must preserve the trust of all of our stakeholders. So, how do we do this? We grow primarily through global innovation. We consistently invest in research and development because we understand the Corning future’s growth will come from technologies that are in our labs today.

We pursue diverse opportunity sets, focused on different applications and markets because we know that not very idea will succeed. And we conduct both product and process innovations to create long-term, sustainable competitive advantage. Now because innovation comes with risks, we proactively work to create balance and stability. Balance comes from business and market diversity, which reduces Corning's overall volatility.

Our ongoing investments in Specialty Materials, in Telecommunications, Environmental Technologies and Life Sciences have helped to mitigate the declines in LCD glass pricing. Our geographic diversity provides balance as well. Approximately, 77% of Corning's sales now come from outside of the United States, which helps reduce our vulnerability to regional economic fluctuations.

We create stability by vigorously protecting Corning's balance sheet. We maintain cash in excess of debt and focus on generating strong cash flow. Our strong cash position ensures that we have the liquidity to weather tough economic times and the resources to invest in Corning's future.

Finally, we earn the trust of our stakeholders by always living our corporate values. Our values help us make tough decisions and ensure that we're always taking the long view of what's best for the company and our employees, our customers and our investors and of course communities where we operate.

This strategy framework guides us during growth surges as well as setbacks. However, we also define focused priorities each year based on the existing business environment that we face. In January 2012, we established a clear mandate. We must form bottom and march up. Forming bottom means stopping the decline in net income. Marching up means increasing Corning's profitability through a combination of growth in existing businesses, new innovations and strategic acquisitions.

So, let's look at how we executed in 2012. The first priority in our mandate is to reestablish positive momentum in display technologies. We signed supply agreements with sub-leading display makers, which we believe will stabilize our share in each. Allow us to manage capacity more efficiently and to help maintain more moderate price declines. And we also introduced several new glass compositions for high performance displays to enable the next generation of devices and ensure Corning's ongoing leadership in the industry.

The second step is to grow our other businesses. Despite significant economic headwinds, all our segments achieved key milestones in 2012. Sales in Specialty Materials were up 25% year-over-year, driven by record demand for Corning Gorilla Glass, which is now featured on more than one and a half billion devices worldwide. Telecommunications grew sales in China and began shipping products for a large fiber-to-the-home build out in Australia.

Our Environmental Technology segment improved gross margins and secured new business at key customers. And in Life Sciences, we completed a strategic acquisition that positions the segment to reach $1 billion in sales within the next few years. Each of these businesses has the potential to generate double-digit earnings growth in the coming years, which means we will have many horses pulling the wagon.

Third, we must create new revenue and earnings streams. In the past four years, we’ve completed six acquisitions in Telecommunication and Life Sciences that have expanded our technology portfolio and extended our market reach. And we continue to innovate to create entirely new businesses. We’ve had several key initiatives in the past year. Our mobile access technology is growing at double-digit rates, and helped ensure reliable wireless coverage at key locations for the presidential conventions as well as the last two Super Bowls.

We launched ultra-slim Corning Willow Glass, which has the potential for a broad range of applications from conformable displays to solar energy devices. And we introduced new optical cables based on ClearCurve fiber to create more robust connections between consumer devices. Now, you will hear more about our innovation programs from David Morse in today's special presentation.

The final step in our mandate is to deliver cost and functional excellence. Everyone in the company did their part by making careful program choices, controlling spending and increasing efficiencies. Thanks for strong execution on these four fronts, Corning generated record sales of $8 billion in 2012.

Our net income was down year-over-year as we expected. But core earnings per share were up in the fourth quarter for the first time in two years, and we had our ninth consecutive year of positive free cash flow. Although, it's still very early in the year, we are building on that momentum in 2013. Yesterday, we announced first quarter results that were ahead of analyst expectations.

Core earnings-per-share were up 15% from 2012. LCD price declines were more moderate than last quarter and most of our businesses posted improved profits. These results are a strong indication that we have successfully formed bottom and are beginning to march up. As our performance improves, we are honoring our promise to returning cash to our shareholders.

Yesterday, we announced plans to increase the quarterly dividend from $0.09 to $0.10 per share, which is the third dividend increase in 18 month. We also announced the share repurchase of $2 billion, which follows a $1.5 billion buyback that we completed in December. These actions underscore the Board’s confidence in Corning's financial health and our ability to continue generating strong operating cash flow.

So, before I move on, I would like to introduce the members of the management committee who are leading Corning's march up. Please stand when I say your name. James Flaws, Vice Chairman and Chief Financial Officer, Dr. David Morse, Executive Vice President and Chief Technology Officer, Kirk Gregg, Executive Vice President and Chief Administrative Officer, Larry McRae, Executive Vice President, Strategy and Corporate Development and Dr. Jeffrey Evenson, Senior Vice President and Operations Chief of Staff. I feel blessed to work with such talented leaders who are so dedicated to Corning's long-term success. Thank you.

So, what’s ahead for Corning? This year, we expect to grow revenue, improve profits and generate strong cash flow. We have exciting new products on the horizon, including our first antimicrobial glass and an all optical distributed antenna system to improve wireless communication. And we will continue to make strategic capital investments. This morning, we announced the plan to invest close to $250 million at our Erwin plant right down the road to increase manufacturing capacity for diesel products. This allows us to capture anticipated market growth, while creating new jobs in our community.

As we look further into the future, we are excited about Corning's growth prospects, major trends of playing the Corning strengths and creating new opportunities for our core capabilities in specialty glass and fiber optics. I hope you all had the opportunity to view the slideshow before the meeting started. Did you?

Now, it included highlights from Corning's long history, along with some facts about the amazing properties of glass. Now, it’s not a big secret that we are huge fans of glass of Corning. We are amazed by its strengths, its stability, its versatility and also the complex engineering opportunities that it presents. We enjoy its beauty, its cool and noble feel, its ability to take on color, the way that it handles light and we are constantly learning more about the capabilities of this remarkable material.

For more than 160 years, our scientists have taken advantage of the technical and artistic properties of glass to drive new innovations. And we’ve consistently challenged people's ideas about what glass can do. We’ve made glass tough enough to survive, drops, scrapes straights and the impact of a four pound steel bar. We’ve made glass a slimmer than a dollar bill and flexible enough to replace plastic films in certain applications.

We’ve increased the capacity of optical networks, so that a single fiber can carry 10 trillion bits of information per second over a kilometer, enough to fill 250 DVDs every second. And we've demonstrated the glass can improve our lives by cleaning our air, making surfaces smarter and accelerating drug discovery.

As Corning extends the capabilities of glass, more and more customers from a broad range of industries are turning to us to solve tough problems. At recent meetings, you’ve heard me describe a world of ubiquitous displays with lifelike images, intuitive interfaces based on touch and gestures, seamless delivery of realtime information and life enhancing technologies that deliver extraordinary benefits from everyday products. It’s the world we depicted in our day made of glass video, and it’s a world that depends on highly engineered specialty glass and fiber optics.

I will leave with you some food for thought before I close. The number of mobile devices already exceeds the number of people on earth. And between 2012 and 2016, the number of smartphones will double while tablets triple, increasing the need for both displays as well as thin tough cover glass.

Broadband traffic is expected to reach more than 116,000 terabytes per month in 2015, driving the need for fiber optic networks. To put that number in perspective, it would take nearly 2 million CD ROMs to hold the equivalent of 1 terabyte.

The resolution on your TV set will grow from an average of 2 million pixels today for standard high definition to 33 million pixels for ultra-high definition, increasing the need for display glass with exceptional surface quality, temperature tolerance and dimensional stability. I’m sad to report that more than 80% of the world’s population creates fine particulate pollution beyond what is recommended by the World Health Organization, prompting legislation around the globe for tighter emissions control.

In the U.S., Census Bureau estimates that by 2050 the number of people over 65 in the world will triple, increasing the need for more effective drug therapies. All of these trends drive demand for Corning’s display technologies, telecommunications, specialty materials, environmental technology, and life science products.

That's why we're so excited about Corning's long-term growth opportunities. I’ll close by summarizing what I believe Corning offers to shareholders. We are financially strong and stable, which allows us to weather the toughest business conditions. All of our business segments are tied to significant growth trend.

We have strong cash flow and a sustainable dividend, which allows us to reward our shareholders and our innovation portfolio creates the potential for explosive growth beyond our existing businesses. Now, we think that that’s pretty compelling package.

But as I look at this audience and see friends, neighbors, employees and alumni, I know that for many of you, Corning is more than a financial investment. This is a company that had succeeded for more than 160 years in the world, where only 0.1% of firms reached the age of 40, 0.1%. This is a company responsible for numerous life-changing innovations, a company with a relentless desire to make things better, a company that manufactures products that make a real difference in the world.

Our company, it has always upheld the values instilled by Amory Houghton, Sr. in 1851. We have never been satisfied with what is currently possible. We have never been seduced by what is easiest. And we have never substituted short-term returns for long-term value. The leadership team is proud to honor the legacy of this great institution. And we are committed to making Corning even stronger for the generations who will follow us.

I hope that we have earned your confidence with our track record and that you share our excitement about the company's future. We are glad to have you with us on this grand journey. Thank you all.

Before we turn to the final business of the meeting, I’d like to take a moment to acknowledge our retiring directors, Gordon Gund and Onno Ruding. Mr. Gund has served on Corning's Board for nearly 23 years and held the position of lead director for the past year.

Dr. Ruding has served for 18 years, including long-standing participation on Corning's finance and audit committees. They have both left an indelible mark on Corning and helped us honor our commitment to good corporate governance. We've been enriched by the experience, their wisdom and their friendship and we wish them the very best. Thank you both.

Now, let’s turn to the final business of the meeting. I hope that my remarks address some of the topics on your mind. We look forward to answering your questions over lunch. However, if you're not attending the luncheon but if you have a questions that cannot wait, please ask it now. Is there any further business to come before this meeting? If not, I will entertain a motion for adjournment?

Unidentified Participant

I so move.

Unidentified Participant

I second my motion.

Wendell Weeks

All in favor say I.

So I declare this meeting adjourned. Thank you for joining us today. The Directors and I need to leave for the final business of the day. So please stay seated for David Morse’s special presentation followed by lunch in the tent outside where I will join you. Thank you all very much.


Unidentified Participant

Please welcome Dr. David Morse, Executive Vice President and Chief Technology Officer.

David Morse

Thank you. Thanks and good morning. I’m David Morse, Corning’s Chief Technology Officer and it’s my great pleasure to talk to you today about Corning and about some of our exciting new innovations.

Over the past 105 years, there have been only nine CTOs leading Corning, Chief Technology Officers that have led our R&D. I’m proud to be the ninth and it’s great to see so many friends in the audience from my 36 years at Corning.

This is truly a place for innovation where technology is fundamental to the character of the company. These nine scientists that you see here, glass scientists, physicists, chemists and engineers represent continuity and more than a century of continuous steadfast investment and innovation.

Their legacy includes dozens of life-changing innovations. The major ones are shown here. Starting with the light bulb. Most of you know the story. Thomas Edison came to Corning and asked us to create the glass and bulb for an incandescent light bulb but really what we needed was the machine that could make light bulbs.

So he invented the ribbon machine almost 90 years ago and 100s of billions of light bulbs were made on that machine and people are still making light bulbs on ribbon machines, the only technology that ever worked. And TV, tube forming without which TV could never have taken off; an optical fiber, without fiber, there could be no internet; and Gorilla Glass, without it, smart phone would not be a reality today.

I'm pleased to report that we’re still making life-changing innovations. We have a large project portfolio and today I want to share a few of those innovations with you.

Let’s start with display the essential keystone device for our digital age. Just think of how many of these things we have in our lives, TVs, phones, tablets everywhere you turn, from your living room to the airport. They have changed the way we get information and they all have tactical glass. Several glass components in each one. This is the information age. It’s also the age of specialized technical glass.

With its advance glass technology, Corning is poised to enable the next wave of display innovation, very small to very large, ultrathin form factors, immersive experience where you feel like part of the display. We’re at the heart of this incredible industry and we’re working on technology and make new sizes, thicknesses and shapes. It is fantastic to be part of this.

I grew up with one black-and-white TV. Now, I live with a family with 20 color displays of all kinds, phones, pods, computers, TVs, even in cars. In fact, the world has already hit 1 billion mark for LCD televisions.

Nothing in the world combines transparency, versatility, and durability like advance glass from Corning. You’ve heard lot of our Corning’s Gorilla Glass but we have three new glasses for display, EAGLE XG Slim, Lotus and Willow. These glasses will help make the next generations of TVs, tablets, and handhelds a reality. I’ll mention each of these briefly.

Our new EAGLE XG Slim glass means thinner and lighter displays. Our new glass is as thin as 0.3 millimeters and up to Gen 6 size, that’s 5 by 6 feet. So imagine a big picture window with the thickness of the playing card. It’s going to save LCD panel makers lot of money, since they won’t have to etch glass to make it thinner as they do today. And they will be able to make their superslim mobile phones, tablets, notebooks, monitors and even Ultrabooks such as Intel’s new product for touch.

The newest bright high-resolution displays will need our Lotus Glass. Lotus is tough enough to withstand the demanding manufacturing processes of these high-performance displays while delivering the pristine surface quality customers require. This allows for the vibrant colors and clarity that LCD displays and now OLED displays are known for.

Let me talk about one of the most exciting recent developments, thin flexible Willow Glass. It’s simply better than plastic. We’ve just introduced this product but we’re already looking at many applications from OLED displays to transparent antennas for wireless applications on mobile devices.

The number of applications for our product that bends like plastic and could be processed on a roll like plastic but has the optical properties, the temperature resistance and the total impermeability of glass are almost endless.

So let’s talk for a moment about our major recent innovations in Gorilla Glass. You know that more than 1.5 billion consumer devices are a reality because of the strength and toughness of Gorilla Glass. Gorilla is everywhere and you can see in a short video running behind me. The science behind Gorilla is not trivial.

Fusion glass is immersed in molten salt which changes the chemistry and the surface of the glass, making it much stronger. To stay in the lead, we’re coming up with new technology to make each generation of Gorilla even better. For example, our new Gorilla 3 provides outstanding scratch performance along with all the properties that we had brought before in Gorilla.

In this brief video, you will see a sample of strengthened soda lime glass, a competitor’s glass. I hope you will see. There we go. Strengthened soda lime glass, competitor’s glass, Corning Gorilla 2 and our newest innovation Gorilla 3.

During the test, each sample is subjected to higher and higher scratch forces. By the end of the test, all of the samples except Gorilla 3 are deeply scratched, in fact, the competitive glasses have broken. There is no comparison.

Gorilla glass 3 is really better. It’s amazing really. It’s more scratch resistance. It retains its’ strength even if it is scratched and any scratches it does get are much harder to see, if they should occur.

Now, we continue everyday to come up with new ways to make Gorilla even better. And one, that you’ve heard from Wendell earlier is that we’re working to introduce a germ-resistant surface treatment.

So what we’ve learnt is the touch surface on phones and tablets collect and grow lot of germs. What this data says if the touch screens are dirtier than almost everything in our lives, including an average bathroom. And we leave with these devices all they long. We touch them all the time and so to other people.

Antimicrobial glass can kill more than 99% of the germs on its surface. Our new antimicrobial Gorilla Glass are amazingly effective at killing these germs and keeping new ones from growing, included some of the really nasty ones that you read about in then press.

You can see from this brief sequence just how effective this is. On the left, there is an untreated piece of cover and on the right is our new any antimicrobial treated glass. Both are covered with bacteria. It end died so that you can see them.

The left it’s covered with bugs. And on the right is our new antimicrobial 3 treated glass, both are covered with bacteria that have been dyed so that you can see them. The left is covered with bugs. The anti-microbial treated glass on the right just obliterates them. We’re getting ready to put this on millions of cell phones and tablets, but think where else this could go, elevators, hospitals, kitchens, for example.

Another exciting new area for Gorilla is automotive glazing, windows for cars, trucks and buses. As you know, manufacturers already use aluminum, magnesium, even carbon fiber to take weight away from cars. Glass is one of the last places to take significant weight out of cars, saving fuel, electricity and making handling better.

And Gorilla is tough making cars more secure and more effect proof. As you saw from Corning’s, they made a glass video, electro-chromic adjustable tinting and displays right on car windows are coming and they all need technical glass. The car markers now respect Corning, our 50-year relationship for their catalytic converters substrate products.

Beyond the many applications I have already talked about, our R&D team is looking at new application Gorilla. From appliances to white boards, Corning is working with leading manufactures to integrate Gorilla Glass right into household appliances. Designers love the credibility and beautiful looking feel of technical glass.

Architects love the weight savings and the toughness that really can bring to elevate our interiors and building lobbies. And the elevator manufactures Gorilla’s toughness and light weight. Even white board companies are excited about the thin tough surfaces that you can write on and erase time and time again.

Let’s talk about another area. Enormous potential for Corning’s innovation, Lifesciences. We’re in the information age but with a lot of focus on biological information. Corning products help drug companies’ screen and test new compounds, help culture the cells, the need for research. Even health, food and beverage companies test their products for safety.

And today almost every facet of life science and biological research uses Corning products, more than 2 billion pieces last year alone, sold from Corning life sciences. And we have a big portfolio of innovations with many more on the way. We dramatically expanded our new product portfolio and market access with the acquisition of Discovery Labware from Becton Dickinson, a perfect complement to our line of products. New packaging products, vessels, specialized surfaces and cell handling technology will help researchers invent better, safer drugs and we will participate from invention in the lab to production.

Let’s turn to another area where Corning is making life-changing innovations, the environment. Today more than 1.5 billion vehicles utilized Corning’s proven clean air products. Our filters and catalytic substrates have made our air cleaner, our cities less smoggy and our lives better compared that to Beijing. And we are creating new substrates that reduced emissions even more by starting faster and using less scarce precious metals and filters that can track even finer particles and thin wall filters that can regenerate even faster and more reliably.

We’re not yet done making the environment cleaner. There are lot of places where we can still clean up the air much further. Gasoline vehicles still emit particles. Boats and ships are still significant polluters. And for those of you who think that weather has been bad recently, the world keeps pouring billions of pounds of CO2 carbon dioxide, green house gas into the atmosphere every year. Our filters and substrates can help solve all of those problems and we have some exciting technologies on the way.

Another way Corning can help save fuels with ultracapacitor, there is a big portion in the automotive world where something called stop/start to save fuel. That means when you pull up to the stop light, your car engine shuts off, when you touch the gas its starts again. But to start again you need to build power. That’s where ultarcapacitors come in. They store a lot of electricity and it can release really fast, much faster than a battery.

And they can do it, a million times, which you battery cannot. That’s important because you may stop and start your car 125 times and its typical used pattern in a day. And Corning ultracapacitor are way ahead of the current industry leader take a look at this brief video.

What you see here is the test of Mercedes diesel auto engine, at the upper right of the screen, the chart showing the number of stops and starts for the industry leaders ultracapacitor, it manages four times. Now, you see the Corning ultracapacitor, which starts the engine six to seven times, which would you prefer in the cold days here in up state New York.

Let me wrap-up by talking about the cornerstone of the information age, Corning’s innovations and optical communications. The impact of Corning optical fiber has been just amazing to those of us, who have been here since its inception, 1.8 billion kilometers of fiber, that’s enough go around our glob 45,000 times. And after more than 40 years it’s still the best, the most deployed and the highest performance fiber in the world.

And fabulous manufacturing technology here in United States is largely responsible and the video playing here, you can see gleams of the fiber making process, whereby our fiber blank becomes a thin perfect fiber. This elegant Corning process is one of the most tightly controlled precise manufacturing operations of any kind, any where.

Corning has let the world an optical fiber design and performance for decades and setting its standard again. I’m very happy to talk about SMF-28 ultra-fiber, our new fiber which makes for easy installation, better single transmission from across country to fiber-to-the-home. This product can be used everywhere. It’s much easier and more [forgiving] to install, you can wrap up it tightly around corners, obstacles without losing signal.

And the signal is much stronger for longer distances, this will save telecommunications companies like AT&T and Verizon and Sprint, a lot of money. And to help protect our customers past investments, ultra-fiber is fully compatible with the world’s huge installed base of standard single mode fiber, much of which is Corning’s.

Another area of telecommunications and one I’m very excited about is connectivity, because every day millions more devices get attached to the internet. In fact, it is estimated that in less than 10 years, 50 billion devices will be connected to the internet, 50 billion, that’s seven devices for every human on the planet, that’s cell phones and tablets and TVs and automobiles and even appliances.

So obviously optical fiber systems will be a huge factor in tying this all together. But so will wireless systems. You will not think of us, Corning as a wireless company and in fact where running in the big way and its can get a lot bigger.

This May at CTIA which is the largest wireless trade show in United States, we will announce, a major announcement, our all new, excuse me, our new all-optical ONE wireless platform, called ONE. This exciting platform helps tied together the various wireless networks in buildings and enterprises, and provide them with the unmatched capabilities of optical fiber.

So am I talking about fiber or wireless, imagine a major medical convention, imagine the convention with 1000 of surgeons attending. During a break we all head out to check their cell phone messages and look for critical high definition images that their officers have sent them.

You bring out their smartphones and what they’ll see a touchscreen, where we call us and grow through. And local Wi-Fi is agonizingly slow, as they all compete for bandwidth. But if the convention center had our new ONE wireless platform all the cell phones in the complex, even 1000s of them can connect at the same time and Wi-Fi too?

Anywhere, there is a high concentration of cellular and Wi-Fi users, schools, buildings, campuses, hospitals, convention centers; stadiums. ONE Wireless can provide access to the huge bandwidth the fiber. I’m really exciting about this technology. We’ve spend a number of years on it in the lab and it’s now being introduced, and it’s going to change wireless and our customers are equally excited.

We are also innovating in cables. Our new Thunderbolt and USB 3 optical cables are 10 times longer, 50% slimier and 80% lighter than copper cables. These can be used to connect computers, printers, storage components, where you want, how you want, using cables that include Corning’s ClearCurve fiber and the tiny optical engine. This means that you can move a huge amount of data fast using the huge bandwidth and reliability of optical fiber and you can do it yourself. We called that presumer, professional tools for consumers.

We started to reach the limits of coppers capability to connect really high performance computers and chips together. Light is the only thing that we will work. And for years chipmakers like Intel have been experimenting with exotic scarce materials to make high-speed optical chips.

But they’ve been too expensive, they’ve been unreliable and so working with the Intel and with one of Intel’s big data customers, Corning has developed whole new way to connect components and systems together for new data center designs, using light and silicon. It’s cheaper. It’s more reliable. It’s faster. These cables work at more than 100 gigabits per second. So we brought to the party a new fiber, a new cable and new connectors, all designed specifically for this application. We’ve got the whole works and it does work.

So you can see, we are working on a lot of exciting and important new technologies in display, in Specialty Materials, in environmental, Life Sciences and Telecommunications, plus a lot of new opportunities in R&D and many of that equipment described in the time today.

I’m really excited and I hope you’re excited too. But we have to have a lot more ambition to continue to change the world. And we’ve set ourselves some really tough problems to solve. We call these grand challenges.

Just a few of these as examples, glass filters break. We are working on a dozen ways to make it tougher and stronger, as you saw with Gorilla 3. All electronic communications can be monitored, today maybe but we are working to make optical fiber unattackable because it’s a hard one.

The speed of light in glass is fixed. We’ve gone faster then speed of lighted glass and we planed to go faster still. Climate change is inevitable. Not, if we can have anything to say about it. We are working hard to reduce and capture greenhouse gases. We have some exciting technologies that you will see soon. These are tough problems. We are meeting grand challenges. That’s what having life changing innovations is all about. That’s what Corning is about.

So, thank you very much for your attention and please join me and the other Corning Executives for lunch in the tents outside.

Question-and-Answer Session

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