康寧 (GLW) 2013 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the Corning Incorporated quarter one 2013 earnings results. It is my pleasure to turn the call over to Ms. Ann Nicholson, Director of Investor Relations. Please go ahead.

各位女士、先生，感謝您稍候。歡迎參加康寧公司（Corning Incorporated）2013 年第一季財報結果電話會議。我很榮幸將電話會議交給投資人關係總監 Ann Nicholson 女士。請開始。

Thank you John, and good morning. Welcome to Corning's first quarter conference call.

謝謝你，John，早安。歡迎參加康寧第一季電話會議。

With me today are Wendell Weeks, Chairman and Chief Executive Officer and Jim Flaws, Vice Chairman and Chief Financial Officer. Before Wendell and Jim begin their 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 SEC reports. We should also note that this presentation contains a number of non-GAAP measures. A reconciliation can be found on our website.

今天與我一同出席的有董事長暨執行長 Wendell Weeks，以及副董事長暨財務長 Jim Flaws。在 Wendell 與 Jim 開始正式發言之前，我想提醒各位，今天的談話包含前瞻性陳述，屬於 1995 年《私人證券訴訟改革法》（Private Securities Litigation Reform Act of 1995）所界定的範圍。這些陳述涉及多項風險、不確定性及其他因素，可能導致實際結果出現重大差異。相關因素已在本公司向 SEC 提交的報告中詳述。我們也要指出，本簡報包含若干非 GAAP 衡量指標。其調節表可於我們的網站查閱。

Now I'd like to turn the call over to Wendell.

現在我想把電話會議交給 Wendell。

Thanks, Ann. Good morning, everyone.

謝謝，Ann。各位早安。

At our Investor Day in February, we explained to investors why we believe Corning is a strong investment. We highlighted growth in our existing businesses, our expectations for solid cash generation, and a rich R&D portfolio with the potential to create entirely new businesses. We reminded investors of our goal to return to earnings growth. We outlined the progress we made in 2012, and we noted that our fourth quarter results provided evidence that our strategy was working. I am very pleased to say that we started off 2013 with a strong quarter, exceeding analyst consensus. Our first quarter core earnings per share were up 15% year-over-year, and up double digits year-over-year for the second quarter in a row.

在二月的投資人日（Investor Day）上，我們向投資人說明了為何我們相信康寧是一項強勁的投資。我們強調既有事業的成長、對穩健現金創造能力的預期，以及具備創造全新事業潛力的豐富研發（R&D）組合。我們也提醒投資人，我們的目標是重回獲利成長。我們概述了 2012 年所取得的進展，並指出第四季的結果已提供證據，顯示我們的策略正在奏效。我非常高興地表示，我們在 2013 年以強勁的一季開局，表現超越分析師一致預期。我們第一季核心每股盈餘（core earnings per share）年增 15%，且已連續第二季達成年增雙位數。

You may recall that early in 2012 we identified two priorities for returning to earnings growth. Reestablish positive momentum in Display and grow our other businesses. In Display, our number one priority was to moderate LCD glass price declines. As expected, quarter one 2013 price declines for LCD glass were more moderate sequentially. And we expect price declines to moderate further in quarter two. Going forward, we believe price declines will continue to be moderate, as a result of the customer agreements we entered into last year, as well as the weakening yen. This improved price outlook, the stabilization of our share, and new product introductions are creating positive momentum again for Display.

各位或許記得，在 2012 年初我們提出重回獲利成長的兩項優先事項。一是讓顯示（Display）業務重新建立正向動能，二是推動其他事業成長。在顯示業務方面，我們的首要任務是緩和 LCD 玻璃價格下跌。如預期所示，2013 年第一季 LCD 玻璃價格跌幅在季比上更為溫和。我們預期第二季跌幅將進一步趨緩。展望未來，我們相信價格下跌將持續維持溫和，原因包括我們去年與客戶簽訂的協議，以及日圓走弱。更佳的價格展望、市占率的穩定，以及新產品導入，正再次為顯示業務帶來正向動能。

Now for the second priority, to grow our other businesses. We believe that we are on the right track here too. Our other businesses had solid operational results, combining to contribute 70% higher net income on a year-over-year basis. Jim will give you more color on our financial results, but I just want to summarize by saying that t combination of moderating LCD glass price declines, improved operational performance, and two consecutive quarters of double digit year-over-year earnings per share growth demonstrate that Corning has begun the march up in earnings.

接著談第二項優先事項：推動其他事業成長。我們相信在這方面也走在正確的軌道上。我們其他事業的營運表現穩健，合計淨利年增 70%。Jim 會提供更多財務結果的細節，但我想先總結：LCD 玻璃價格跌幅趨緩、營運表現改善，以及連續兩季每股盈餘年增雙位數，顯示康寧已開始邁向獲利上升的軌道。

I would also like to take a moment to talk about our other announcement this morning. We previously told investors that we were entering a period where our strong operating cash flow and lower capital spending would allow us to devote more cash to shareholder returns. We are delivering on this commitment with a new $2 billion share repurchase. This comes on top of the $1.5 billion buyback that we completed in the fourth quarter of 2012. This reflects our belief that the Company is undervalued at the current stock price. We are also increasing the quarterly dividend to $0.10 per quarter. This 11% increase means that we have doubled our dividend level in the last 18 months.

我也想花點時間談談我們今天早上的另一項公告。我們先前告訴投資人，我們正進入一個階段：強勁的營運現金流與較低的資本支出，將使我們能把更多現金用於回饋股東。我們以新的 20 億美元庫藏股回購計畫來履行這項承諾。這是在我們於 2012 年第四季完成 15 億美元回購之後的追加措施。這反映出我們相信公司在目前股價水準下被低估。我們也將季度股利提高至每季 0.10 美元。這項 11% 的調升意味著我們在過去 18 個月內已將股利水準提高一倍。

Finally, I would like to comment on the yen-to-US-dollar exchange rate, which affects the translation of our Display and Specialty segments' results. We moved decisively in the first quarter to hedge Corning's exposure to changes in the yen exchange rate. Investors should be aware that Corning's risk exposure to changes in the yen-to-US-dollar exchange rate is capped at JPY93.

最後，我想就日圓兌美元匯率發表一些看法，該匯率會影響我們顯示與特殊材料（Specialty）部門業績的換算。我們在第一季果斷採取行動，對沖康寧因日圓匯率變動所承擔的曝險。投資人應注意，康寧對日圓兌美元匯率變動的風險曝險上限為 93 日圓。

And now, I will turn the call over to Jim.

現在，我把電話會議交給 Jim。

Thanks Wendell, and good morning.

謝謝你，Wendell，早安。

I hope you've had a chance to read our quarter one earnings press release this morning. In it you will see our results reported as core earnings. I'd like to begin my comments by explaining to you our rationale for changing to core earnings and its major components. In February, we said that we wanted to clearly show you our performance so you could directly assess the status of our plan to return to earnings growth.

希望各位今天早上已經有機會閱讀我們第一季財報新聞稿。在其中你會看到我們以核心盈餘（core earnings）呈報的結果。我想先說明我們改採核心盈餘的理由及其主要組成。二月時我們表示，希望能更清楚地向各位呈現我們的表現，讓各位能直接評估我們重回獲利成長計畫的進展狀況。

Core earnings excludes nonperformance-related items from our results, so you are better able to see operating results. Similar to our prior reporting, it also excludes special items, like nonoperating charges and certain accruals. Core earnings measures performance of the Company without two significant external factors. First, the yen exchange rate fluctuations; and second, the solar industry upheaval. Let me say a little more about each.

核心盈餘會將與績效無關的項目自結果中排除，使各位更能看清營運成果。與我們先前的呈報方式類似，它也會排除特殊項目，例如非營運費用與某些應計項目。核心盈餘衡量的是在兩項重大外部因素之外的公司表現。第一是日圓匯率波動；第二是太陽能產業的動盪。我分別再多說一些。

Sales of our Display products are currently priced in yen, so we must translate these sales back to US dollars furnished for our financial statements. Additionally, our glass manufacturing cost in both Display and Gorilla Glass are primarily denominated in Asian currencies, including the yen. But again, we must report our cost of goods sold in US dollars. As a results, movements in the yen-to-US-dollar exchange rate can impact our results in Display and Gorilla, as we report them in US dollars.

我們顯示產品的銷售目前以日圓計價，因此在編製財務報表時必須將這些銷售額換算回美元。此外，我們在顯示業務與 Gorilla Glass 的玻璃製造成本主要以亞洲貨幣計價，包括日圓。但同樣地，我們必須以美元呈報銷貨成本。因此，日圓兌美元匯率的變動，可能影響我們以美元呈報的顯示業務與 Gorilla 的結果。

Now, we've experienced changes in the yen-to-US-dollars exchange rate before, but typically these changes have been more gradual. Since November of 2012, the rate of change has been dramatic, with the yen weakening by more than 20% since that time. So while we remain focused on managing reducing our vulnerability to foreign exchange rate changes, we've decided to report our results with a constant yen. This reporting will allow you as investors to see the operating results without the impact of yen-to-US-dollar exchange rate changes.

我們過去也曾經歷日圓兌美元匯率的變動，但通常變化較為漸進。自 2012 年 11 月以來，變動幅度相當劇烈，日圓自那時起已走弱超過 20%。因此，雖然我們仍專注於管理並降低對外匯匯率變動的脆弱度，我們已決定以固定日圓（constant yen）方式呈報結果。這種呈報方式將使各位投資人能在不受日圓兌美元匯率變動影響下，看見營運成果。

The use of constant exchange rate reporting is not uncommon for US companies, and is an accepted practice. The exchange rate that we will use, called out as a management rate, is JPY93 per US dollar. Now, as Wendell explained in his remarks, the Company moved decisively to hedge exposure to further weakening in the yen exchange rate. Our hedges protect the Company from any further weakening above JPY93. Because we have this economic protection at the JPY93 level, we chose this rate for the constant yen core performance reporting. Now, in an attachment to this morning's press release, we provided you our 2012 results, restated with this exchange rate, so you can update your models and compare apples to apples. We will also provide history for 2011 in the near future.

採用固定匯率呈報對美國公司而言並不罕見，且屬可接受的作法。我們將使用的匯率稱為管理匯率（management rate），為每 1 美元兌 93 日圓（JPY93）。如同 Wendell 在談話中所說，公司已果斷採取行動，對沖日圓匯率進一步走弱的曝險。我們的避險可保護公司免於匯率弱於 JPY93 以上（即日圓進一步貶值）的影響。由於我們在 JPY93 水準具備此一經濟性保護，因此我們選擇該匯率作為固定日圓核心績效呈報的基準。此外，在今天早上新聞稿的附件中，我們提供了以此匯率重述的 2012 年結果，讓各位能更新模型並進行同口徑比較。我們也將在不久的將來提供 2011 年的歷史資料。

Now, our second adjustment for core reporting relates to our equity venture, Dow Corning Corporation, that has a subsidiary Hemlock Semiconductor Corporation. Hemlock makes polysilicone for the solar industry. I went into great detail on February 8 about the dire situation in the solar market, driven by the macro environment, and the investigation by the Chinese government regarding dumping of polysilicone. Driven by these events, Hemlock's earnings over the last 18 months have been unpredictable, and we expect that to continue.

現在，我們針對核心報告的第二項調整，與我們的權益法投資合資企業 Dow Corning Corporation 有關，其旗下有子公司 Hemlock Semiconductor Corporation。Hemlock 為太陽能產業生產多晶矽。我在 2 月 8 日已非常詳細地說明太陽能市場在總體環境驅動下的嚴峻情勢，以及中國政府對多晶矽傾銷的調查。受這些事件影響，Hemlock 過去 18 個月的獲利表現難以預測，我們預期這種情況仍將持續。

Pending the outcome of the investigation in the instability of the solar market, Hemlock may have to take actions to write off assets and call in their take-or-pay contracts. These potential actions, to whatever extent required, are unrelated to its core operations. Therefore, our core earnings also exclude equity earnings from Hemlock. This was a relatively minor impact in quarter one.

在等待調查結果以及太陽能市場持續不穩定的情況下，Hemlock 可能必須採取行動進行資產沖銷，並要求其「買或付」（take-or-pay）合約的對方履約付款。這些潛在行動（無論需要到何種程度）都與其核心營運無關。因此，我們的核心盈餘也排除來自 Hemlock 的權益法收益。這在第一季的影響相對較小。

Our core earnings are a non-GAAP financial measure, and of course, we will continue to report GAAP results. And you can refer to the GAAP reconciliations on our website. As always, Ann Nicholson in Investor Relations will be available after the call today to answer any questions you may have about the financial reconciliations as you update your models.

我們的核心盈餘是一項非 GAAP 的財務衡量指標，當然，我們仍將持續揭露 GAAP 結果。您可參考我們網站上的 GAAP 調節表。一如往常，投資人關係部的 Ann Nicholson 將在今天電話會議後提供協助，回答您在更新模型時對財務調節可能有的任何問題。

So now I'd like to turn to our quarter one core earnings results. First quarter sales for the Corporation were $1.8 billion, consistent with a year ago. Gross margin was 43%, up one point year-over-year, and better than our original expectation of 41%. Telecom and Specialty Material had very good gross margin growth versus last year. Gross equity earnings of $180 million, and as a reminder, this is also at constant yen, were consistent with a year ago. I'll provides some more color on this in a few minutes. Our core effective tax rate for Q1 was 16%. Note, we did have a special item, a $54 million tax benefit to record the impact of the American Taxpayer Relief Act, which was enacted on June 3, which are excluded from our core earnings.

接下來我想談談我們第一季核心盈餘的結果。公司第一季銷售額為 18 億美元，與去年同期一致。毛利率為 43%，較去年同期提高 1 個百分點，且優於我們原先預期的 41%。電信與特殊材料的毛利率較去年有非常好的成長。權益法毛收益為 1.8 億美元，提醒一下，這同樣是以固定日圓匯率計算，與去年同期一致。我會在幾分鐘後補充更多說明。我們第一季核心有效稅率為 16%。請注意，我們確實有一項特殊項目：為反映《American Taxpayer Relief Act》（美國納稅人減免法案）的影響而認列 5,400 萬美元的稅務利益；該法案於 6 月 3 日生效，這些項目已自核心盈餘中排除。

Now, investors may recall, we actually excluded a loss from this same item in Q4. It was the unusual timing of Congress approving this bill on January 3 that caused these two entries. The most important impact of that bill was to allow us to have lower ongoing tax expense this year, and we expect this benefit to continue into 2014. Core earnings per share were $0.30, up $0.04 over a year ago, and well above analyst consensus. Now, it is important to note that moving to core performance did not impact quarter one of this year's results, because the actual rate in the quarter was JPY93, and the same as our management reporting rate. Better operating performance drove the core EPS improvement over analyst consensus, and EPS as stated here is a non-GAAP measure, and as always a reconciliation to GAAP can be found on our website.

投資人可能還記得，我們其實在第四季排除了同一項目的損失。這兩筆分錄是由於國會在 1 月 3 日批准該法案的非典型時點所致。該法案最重要的影響，是讓我們今年的持續性稅負費用降低，我們預期這項利益將延續到 2014 年。每股核心盈餘為 0.30 美元，較去年同期增加 0.04 美元，且明顯高於分析師共識。另外需要注意的是，改採核心績效口徑並未影響今年第一季的結果，因為本季實際匯率為 93 日圓，與我們管理報告匯率相同。較佳的營運表現帶動核心 EPS 優於分析師共識；此處所述 EPS 為非 GAAP 指標，一如往常，與 GAAP 的調節可在我們網站上查閱。

As a reference versus a year ago, SG&A and R&D were consistent as a percentage of sales. Now, I'd like to go through our quarter one segment results, and I will start with Display. Core sales for Display, which exclude the impact of changes in the yen exchange rate, or at a constant yen, were $650 million in Q1, an increase of 7% versus last year. LCD glass buying was up significantly, more than offsetting price declines. Gross equity earnings, also measured at a constant yen, from our equity venture in Korea, SCP, were at $133 million quarter one, a decrease of 8% year-over-year. LCD glass volume at SCP was up slightly versus quarter one of 2012.

作為與去年同期的參考，SG&A（銷售、一般及行政費用）與 R&D（研發費用）占銷售額的比重維持一致。接下來我將說明第一季各事業部門的結果，先從顯示器（Display）開始。顯示器事業的核心銷售額（排除日圓匯率變動影響，即以固定日圓計）第一季為 6.5 億美元，較去年增加 7%。LCD 玻璃的採購量大幅上升，足以抵銷價格下滑。來自我們在韓國的權益法合資企業 SCP 的權益法毛收益（同樣以固定日圓衡量）第一季為 1.33 億美元，較去年同期下降 8%。SCP 的 LCD 玻璃出貨量較 2012 年第一季略有增加。

For your modeling purposes, Display equity company's first quarter LCD sales in constant yen were about $608 million, a decrease of 4% from last year. Now as a reminder, this represents SCP's LCD sales only. Our public filings will reported SCP's total sales, which include various other products. As we expected, our total LCD glass volumes were down mid-single digits sequentially, and up mid-teens year-over-year. SCP's volume versus last year was up slightly, reflecting the Korean panel maker's relatively consistent utilizations. Our wholly-owned business volume was up significantly versus the prior year, reflecting the growing Chinese television market.

供您建模參考，顯示器權益法公司第一季以固定日圓計的 LCD 銷售額約為 6.08 億美元，較去年下降 4%。提醒一下，這僅代表 SCP 的 LCD 銷售。我們的公開申報文件將揭露 SCP 的總銷售額，其中包含其他各類產品。如我們所預期，我們的 LCD 玻璃總出貨量較前一季呈中個位數下降，較去年同期則為中十位數成長。SCP 的出貨量較去年略增，反映韓國面板廠相對穩定的稼動率。我們全資業務的出貨量較去年大幅成長，反映中國電視市場的成長。

Last October, we explained that going forward after Q4, with our share stabilized and the industry maturing, we expected price declines to moderate at all of our customers, including those with new agreements. I'm very pleased to report that our share remains stable in Q1, and our price declines in Q1 were less than Q4. Core net income was up slightly versus Q1 of 2012, which is a good sign that we are stabilizing Display. We were able to have volume increases offset lower glass price declines. Now, on the supply chain front, we estimate that weeks of inventory grew in quarter one. That's likely the result of several things in combination, a healthier cash position, a need to carry more inventory for growing emerging markets, and the proliferation of television screen sizes, and preparation for China's May holliday. We continue to monitor the supply chain inventory closely, and I will comment more on the supply chain in our outlook section.

去年 10 月我們說明，展望第四季之後，隨著我們的市占率趨於穩定且產業走向成熟，我們預期所有客戶（包括簽訂新協議者）的價格下滑幅度將趨緩。我很高興報告，我們第一季的市占率仍維持穩定，且第一季的價格下滑幅度小於第四季。核心淨利較 2012 年第一季略有上升，這是我們正在穩定顯示器事業的良好跡象。我們得以透過出貨量增加來抵銷玻璃價格下滑。在供應鏈方面，我們估計第一季的庫存週數有所增加。這很可能是多項因素共同造成：現金部位更健康、為成長中的新興市場需要持有更多庫存、電視螢幕尺寸日益多樣化，以及為中國 5 月假期做準備。我們將持續密切監控供應鏈庫存，並會在展望部分對供應鏈再做更多評論。

Now, in Telecom, quarter one sales were $470 million, down 7% year-over-year. Fiber and cable sales in North America were down, due to the decline in the US government stimulus spending versus the prior year. Sales were also down versus our expectations, primarily driven by a slower NBN ramp-up, and a slower start than we expected in China for fiber and cable. We are seeing China fiber and cable market pick-up in Q2. Despite the sales decline, net income in Telecom was up almost 70%. Lower volume was offset by improved manufacturing performance and the implementation of strong spending controls. In our Environmental segment, sales were down 13% year-over-year, but actually slightly higher than our expectations.

接著在電信（Telecom）方面，第一季銷售額為 4.7 億美元，較去年同期下降 7%。北美的光纖與電纜銷售下滑，原因是美國政府相較去年減少刺激方案支出。銷售也低於我們的預期，主要是因 NBN 的擴張（ramp-up）速度較慢，以及中國光纖與電纜市場的起步較我們預期更慢。我們在第二季看到中國光纖與電纜市場回溫。儘管銷售下滑，電信事業的淨利卻成長近 70%。較低的出貨量被製造績效改善與強力的費用控管所抵銷。在環境（Environmental）事業方面，銷售額較去年同期下降 13%，但實際上略高於我們的預期。

Now, you may recall in Q1 of 2012, it was an unusually robust quarter for the auto and heavy-duty truck demand. Since then, the European auto market and the US Class A truck build rate have softened. We do expect sales growth throughout 2013 with demand picking up in the coming quarters. I will talk more about that in our outlook section. Net income was down 34% in the segment, driven by lower sales and production volumes.

您可能還記得，2012 年第一季汽車與重型卡車需求異常強勁。自那之後，歐洲汽車市場以及美國 Class A 卡車的組裝（build）速度已轉弱。我們預期 2013 年全年銷售將成長，且需求會在接下來幾季回升。我會在展望部分再多談一些。該事業部門淨利下降 34%，主要受較低的銷售與產量所致。

Specialty Materials quarter one sales were down 10% versus a year ago, driven primarily by advanced optics. The cyclically down semiconductor market impacted advanced optics sales. Now, core net income in this segment was up 39%, with very significant improvement in Gorilla Glass gross margins versus the prior year. We are very pleased with Gorilla's improvement in gross margins over the last several quarters.

特殊材料（Specialty Materials）第一季銷售額較去年同期下降 10%，主要由先進光學（advanced optics）所帶動。半導體市場的景氣循環下行影響了先進光學的銷售。不過，該事業部門的核心淨利成長 39%，其中 Gorilla Glass 的毛利率較去年同期有非常顯著的改善。我們對 Gorilla 近幾季毛利率的改善感到非常滿意。

In Life Sciences, Q1 sales were up 34%, due to the additional sales from our Discovery Labware acquisition, which closed on October 31 of last year. The acquisition integration is just underway, but it is going very smoothly, and it was accretive to this segment this quarter. Year-over-year core net income doubled on the additional sales.

在生命科學（Life Sciences）方面，第一季銷售額成長 34%，主要來自我們收購 Discovery Labware 所增加的銷售；該收購案於去年 10 月 31 日完成交割。併購整合才剛開始進行，但進展非常順利，且本季對該事業部門具有增益（accretive）。在新增銷售帶動下，核心淨利較去年同期增加一倍。

Now, I will turn to Dow Corning, and as a reminder, we excluded Hemlock. Gross equity earnings were up 31%. On the balance sheet, we ended the first quarter with $5.8 billion in cash and short-term investments, with about $1.2 billion in the United States. We did repay a loan in China during the quarter, using about $500 million of cash. Our net cash position is $2.8 billion. Capital spending for the quarter was $194 million, and we remain on track to spend approximately $1.3 billion for the year. Free cash flow for the quarter was $323 million. As a reminder, free cash flow is actually a non-GAAP measure, and a reconciliation to GAAP on this measure can be found on our website.

現在，我將轉到道康寧（Dow Corning），提醒一下，我們已排除 Hemlock。權益法收益總額成長 31%。在資產負債表方面，我們在第一季末持有 58 億美元的現金及短期投資，其中約 12 億美元在美國。本季我們在中國償還了一筆貸款，使用了約 5 億美元現金。我們的淨現金部位為 28 億美元。本季資本支出為 1.94 億美元，我們仍按計畫全年支出約 13 億美元。本季自由現金流為 3.23 億美元。提醒一下，自由現金流其實是非 GAAP 指標，該指標與 GAAP 的調節表可在我們的網站上找到。

So, now let me turn to the outlook. As I mentioned that the beginning of my commentary, we have begun showing our results as core earnings, which exclude the impact of fluctuations in foreign exchange rates. But we've also told you we want to mitigate the negative impact to the weakening yen.

接下來我談談展望。如我在評論一開始提到的，我們已開始以核心盈餘呈現業績，排除外匯匯率波動的影響。但我們也告訴各位，我們希望減輕日圓走弱帶來的負面影響。

In February, management obtained authorization from the Board of Directors to execute a series of foreign exchange contracts over a two-year period to hedge our exposure to movements in the Japanese yen and its impact on our earnings. We completed the execution to purchase collar options in late February. These will settle quarterly for a total of eight quarters. The simplest way to think about these transactions is they protect our P&L from the yen moving higher than JPY93, which is good, given that the current yen exchange rate is JPY99. The protection above JPY93 is the reason that we chose JPY93 for our management rate for constant yen reporting.

2 月，管理層取得董事會授權，在兩年期間內執行一系列外匯合約，以對沖我們對日圓波動及其對盈餘影響的曝險。我們在 2 月下旬完成買入領式（collar）選擇權的執行。這些合約將按季結算，共八個季度。最簡單的理解方式是：它們保護我們的損益表（P&L），避免日圓升值至高於 93 日圓的水準；考量目前日圓匯率為 99 日圓，這是有利的。高於 93 日圓的保護，正是我們選擇以 93 日圓作為固定日圓（constant yen）報告之管理匯率的原因。

Now, we've kept the cost of this hedge low by implementing a collar structure. If the yen averages above JPY93, we get a hedge benefit, and it offsets the negative translation impact. If the yen exchange rate is between JPY87 and JPY93, we currently will not have any hedge settlements in those quarters. If the yen is below JPY87, Corning will owe on the hedges. But of course, our Display segment would be experiencing favorable translation results to offset these hedge payments. In summary, we think we've moved aggressively to protect the Company and investors from the unprecedented sudden weakening yen driven by the new Japanese government.

此外，我們透過採用領式結構，將此避險成本維持在較低水準。若日圓平均高於 93 日圓，我們將獲得避險收益，以抵銷不利的換算影響。若日圓匯率介於 87 至 93 日圓之間，我們目前在那些季度不會有任何避險結算。若日圓低於 87 日圓，康寧將需就避險合約支付款項。但當然，我們的顯示科技事業部門將因匯兌換算而出現有利結果，以抵銷這些避險付款。總結而言，我們認為我們已採取積極行動，保護公司與投資人免受新日本政府所驅動、前所未見且突然的日圓走弱影響。

Now let me turn to the Display outlook. Let's start with the current view of the end market in 2013. We still expect the retail market, as measured in square feet of glass, to be up mid- to high single digits. For reference, 2012 was 3.5 billion square feet. We think LCD TV units will grow in the mid- to high single digits, with area growth higher. Large-size televisions continued to sell well in many regions. Through February, 50-inch-plus television sales were actually up 107%.

接下來我談顯示科技的展望。先從 2013 年終端市場的目前看法開始。我們仍預期零售市場（以玻璃平方英尺衡量）將成長中到高個位數。供參考，2012 年為 35 億平方英尺。我們認為 LCD 電視出貨量將成長中到高個位數，面積成長將更高。在許多地區，大尺寸電視持續熱銷。截至 2 月，50 吋以上電視銷量實際上成長了 107%。

You've probably seen reports regarding weakness in the PC market. We are not bullish on the PC market, either, expecting only 10% year-over-year growth, with more than all of that is attributable to tablets. Monitor units are actually expected to be down about 5%.

各位可能已看到關於 PC 市場疲弱的報導。我們對 PC 市場也不樂觀，預期年增僅 10%，而且其中超過全部的成長都歸因於平板。顯示器出貨量預期實際上將下滑約 5%。

Now, let's talk about quarter two. As we near the end of April, we see Q2 LCD glass market at a consistent level sequentially. Our wholly-owned business and SCD are combined to expect to be consistent with Q1 volumes, as well. While Q2 is the seasonally slowest quarter at retail, glass volumes are actually up year-over-year in a slightly bigger market. We believe inventory will grow again in absolute square feet and as measured in weeks during Q2, before beginning to deplete in the back half of the year, when demand at retail peaks.

現在談談第二季。隨著 4 月接近尾聲，我們看到第二季 LCD 玻璃市場較上一季維持一致水準。我們的全資業務與 SCD 合併後，預期也將與第一季出貨量一致。雖然第二季在零售端是季節性最淡的季度，但在市場略為擴大的情況下，玻璃出貨量年增。我們認為第二季庫存將再度增加，無論以絕對平方英尺或以週數衡量皆然；之後在下半年零售需求達到高峰時，庫存將開始去化。

Quarter two, we expect our share will remain stable, and that our price declines will further moderate. We expect LCD glass price declines will decline by only and 2% to 3% sequentially. Going forward, we believe price declines will continue to be moderate as a result of customer agreements we entered into last year, as well as the weakening yen. The change in yen-dollar exchange rate actually helps most of our customers, as they sell their LCD panels and dollars and buy our glass in yen. So the change in the yen-dollar rate actually increases their profits on our glass, which we believe should decrease their pressure on us for price declines.

第二季我們預期市占率將維持穩定，且價格下滑將進一步趨緩。我們預期 LCD 玻璃價格降幅僅約季減 2% 至 3%。展望未來，我們認為在去年與客戶簽訂的協議以及日圓走弱的影響下，價格下滑將持續溫和。日圓兌美元匯率的變動實際上有利於我們多數客戶，因為他們以美元出售 LCD 面板，並以日圓購買我們的玻璃。因此，日圓兌美元匯率的變動實際上提高了他們在我們玻璃上的利潤，我們相信這將降低他們要求我們降價的壓力。

Now, turning to the Telecom outlook, we expect Q2 sales to be up slightly versus Q2 of 2012. This will be driven by the NBN ramp. Sequentially, we expect Q2 sales to be up approximately 20% coming off the slower than expected start to the year. In Environmental, we expect Q2 sales to be up slightly sequentially. This is flat to down slightly year-over-year across the Light and Heavy-duty business, compared to a stronger market in Q2 of 2012, which had much higher levels of US Class A Truck business. For the full year, we believe auto production will grow, driven by strength in North America and Asia. We believe tighter regulations in Europe and China will be leading to growth in demand for our heavy-duty diesel products.

接著看電信事業展望，我們預期第二季銷售額將較 2012 年第二季小幅成長。這將由 NBN 的放量（ramp）所帶動。就季比而言，因年初開局低於預期，我們預期第二季銷售額將成長約 20%。在環境科技方面，我們預期第二季銷售額將較上一季小幅成長。相較於 2012 年第二季較強的市場（當時美國 Class A 卡車業務水準高得多），輕型與重型業務合計年比大致持平至小幅下滑。就全年而言，我們認為汽車產量將成長，主要由北美與亞洲的強勁表現帶動。我們相信歐洲與中國更嚴格的法規將帶動對我們重型柴油產品需求的成長。

Specialty Materials sales are expected to increase sequentially about 15% to 20% in Q2, which is about 5% up year-over-year. Advanced optic sales are expected to be down year-over-year, given the continued end market softness. Gorilla glass volumes are up significantly year-over-year in quarter two. For the year, we believe there will be double digit market growth for Gorilla Glass, driven by the penetration of touch on notebooks and the continued growth of smartphones. We will likely see most of this impact in the second half.

特殊材料第二季銷售額預期將季增約 15% 至 20%，約年增 5%。由於終端市場持續疲弱，先進光學銷售額預期將年減。第二季 Gorilla Glass 出貨量年增顯著。就全年而言，我們認為 Gorilla Glass 市場將有雙位數成長，主要由筆電觸控滲透率提升以及智慧型手機持續成長所帶動。我們可能會在下半年看到大部分影響。

In Life Sciences, we expect sales to be up about 35% to 40% year-over-year, mostly due to added sales from our acquisition. We expect equity earnings from Dow Corning Silicone segment to be up about 20% year-over-year. Now, continuing down the rest of our Q2 forecast on the P&L, we expect core gross margin percent to be similar to Q1. This is up year-over-year, driven by manufacturing efficiencies and increased sales. SG&A is expected to be down versus last year as a percentage of sales, while R&D spending should be consistent. And core equity earnings should be down about 15% versus last year. Our core effective tax rate for 2013 should stay around 16%.

在生命科學方面，我們預期銷售額將年增約 35% 至 40%，主要來自併購帶來的新增銷售。我們預期道康寧矽膠事業部門的權益法收益將年增約 20%。接著看第二季損益表（P&L）其餘預測，我們預期核心毛利率百分比將與第一季相近。這較去年同期提高，主要由製造效率提升與銷售增加所帶動。SG&A 預期占銷售比重將較去年下降，而研發（R&D）支出應維持一致。核心權益法收益預期將較去年下降約 15%。我們 2013 年核心有效稅率應維持在約 16%。

That concludes my opening remarks. Ann?

以上是我的開場說明。Ann？

Thank you, Jim. John, now we're ready to take questions.

謝謝你，Jim。John，現在我們準備開始提問。

Certainly.

當然。

(Operator Instructions)

（接線員指示）

First we will go to Jim Suva with Citi. Please go ahead.

首先我們請花旗（Citi）的 Jim Suva 提問。請開始。

Thank you very much. If we just take a step back and look at the big picture of how you kind of see the macro supply/demand balance shaking out kind of currently, as well as looking forward, say, to the rest of the year. Can you help us understand the supply/demand dynamics? We know Corning, I believe, has in the past year or so opened up a couple of plants, and there's some more efficiency gains, not only from Corning, but also competitors to improve or increase the supply. But then on the demand front, we are seeing TV unit growth, which I think is kind of in the mid- to -- mid-single to upper mid-single digit growth, and then surface area's increasing in TVs. Can you just maybe take a step back and let us know the supply/demand equilibrium today, and looking forward, how you see it there at Corning? Thank you.

非常感謝。如果我們稍微退一步，從大局來看您目前以及展望今年剩餘時間，對宏觀供需平衡的看法。您能幫助我們理解供需動態嗎？我們知道康寧（Corning）我相信在過去一年左右開了幾座工廠，並且不僅康寧，競爭對手也有一些效率提升，以改善或增加供給。但在需求端，我們看到電視出貨量成長，我認為大約是中個位數到偏高的中個位數成長，另外電視的面積也在增加。您能否退一步，告訴我們目前的供需均衡狀況，以及往前看，您在康寧如何看待未來的供需平衡？謝謝。

Sure, Jim. Basically, things look relatively in balance right now. It is just that simple. There's, of course, going forward, there's always dynamics on both the supply and demand side, but our opinion right now is things look relatively in balance, which helps in addition to our contracts that we've entered into and the weakening yen with our view of a relatively more benign price environment.

當然，Jim。基本上，目前看起來相對平衡。就是這麼簡單。當然，往前看，供給與需求兩端總是會有變化，但我們目前的看法是整體相對平衡；再加上我們已簽訂的合約，以及日圓走弱，我們認為價格環境會相對溫和。

I'd like to add onto that, if I could, and that is, I think that the market is in balance, partially because of the disappointment Corning Incorporated is doing, and some of the other manufacturers are. As you know, we continue to keep capacity offline in Korea, and we will do that to make sure that we stay in balance.

如果可以的話，我想補充一點：我認為市場之所以平衡，部分原因在於康寧公司正在做的（令人失望的）事情，以及其他一些製造商也在做的事情。如您所知，我們持續讓韓國的產能維持離線狀態，並且會這麼做，以確保我們保持供需平衡。

Great. Thank you very much.

很好。非常感謝。

We will next go to Wamsi Mohan with Bank of America. Please go at.

接下來我們請美國銀行的 Wamsi Mohan 提問。請開始。

Yes, thank you. Good morning. Jim, I think you said the yen is hedged out for two years and settled quarterly. Can you talk about the cost to implement this collar? And I have a follow-up.

是的，謝謝。早安。Jim，我想您說日圓已避險兩年，並且按季結算。您能談談建立這個區間（collar）策略的成本嗎？我還有一個追問。

Yes. The cost was about $100 million for the two years.

可以。兩年的成本大約是 1 億美元。

And that would be realized all as the hedge continues to sort of be implemented over the course of the two years?

那這個成本會隨著避險在兩年期間持續執行，而逐步認列嗎？

It's spread of the two years.

會分攤在兩年期間。

Okay, great. Thanks. And then can you talk a little bit of some of the new capacity that's anticipated to come online this year, and if LG Chem early shipments are changing anything at all from a pricing dynamic or share dynamic?

好的，很好。謝謝。另外，您能談談今年預期會上線的一些新增產能嗎？以及 LG Chem 的提前出貨是否在定價動態或市占動態上帶來任何改變？

In terms of new capacity coming online for us?

您是指我們這邊會上線的新增產能嗎？

For the market. So any NEG has some capacity coming online, and LG Chem, too.

指整個市場。也就是 NEG 可能有一些產能上線，LG Chem 也是。

So NEG has capacity coming online. They've announced that they are building a tank in Korea, and I believe their expectations are that for the back half of the year. They have said in the original announcement that they will be shutting down capacity in Japan when that occurs, and we are taking that at their stated announcement. Their second tank is not until sometime late next year, per their statements. LG Chem has one tank running in [satch] have been running almost two years now. And the second tank, as far as our surveillance is, consists only a few steel pilings in the ground. We are not feeling LG Chem is a significant supplier in the industry.

NEG 確實有產能將上線。他們已宣布在韓國建一座熔窯（tank），我相信他們預期在今年下半年。他們在最初公告中表示，當韓國產能啟用時，會關停日本的產能，我們就按其公告內容看待。依其說法，第二座熔窯要到明年較晚的時候才會有。LG Chem 有一座熔窯在運轉，在 [satch] 已經運轉將近兩年。而第二座熔窯，就我們的監測來看，地上只有幾根鋼樁。我們不認為 LG Chem 是產業中的重要供應商。

Thanks a lot. I will get back in queue.

非常感謝。我回到隊列後面。

Next we go to Patrick Newton with Stifel. Please go ahead.

接下來是 Stifel 的 Patrick Newton。請繼續。

Thank you, Jim, Wendell, and Ann for taking my questions. I guess sticking to the hedge questions. You talk about taking care of translation exposure between JPY87 and JPY93 on the yen exchange rate, but you still have transaction exposure. So I guess if we look at your 10-K and take that as a base. I think previously and prior to these hedges, a 10% move in the yen-dollar FX rate would impact net income by about 6%. So using that metric, where would that stand post your hedge?

謝謝 Jim、Wendell 和 Ann 回答我的問題。我想繼續問避險相關問題。你們談到在日圓匯率 JPY87 到 JPY93 之間處理換算（translation）曝險，但你們仍有交易（transaction）曝險。所以如果我們看你們的 10-K，並以此作為基準。我記得在這些避險之前，日圓兌美元匯率每變動 10%，會讓淨利大約變動 6%。用這個指標來看，做完避險後會變成什麼情況？

Well, you have no further impact. I mean, that amount between JPY93 and JPY87, you would see that impact of about, I think it is about $5 million per yen for -- on an annualized basis. So you could calculate that between JPY93 and JPY87, if you want. But we are reporting basically at JPY93.

嗯，你不會再有進一步的影響。我的意思是，在 JPY93 到 JPY87 之間，你會看到的影響大約是——我想大概每變動 1 日圓，按年化計算約 500 萬美元。所以如果你願意，可以用 JPY93 到 JPY87 之間去計算。但我們基本上是以 JPY93 來報告。

The key element to what we sought to accomplish with the yen hedge is to basically take the risk off the table for the next couple of years.

我們希望透過日圓避險達成的關鍵要素，是在接下來幾年基本上把風險從桌面上移除。

Right.

了解。

So that capping the exposure at JPY93 puts us in the spot where it gives us much more stable earnings pattern going forward. The relative degree of gain on that hedge or not will depend on what the and actually performs like. One of the reasons we did it, why we moved to core earnings in Q1, was because it really didn't impact quarter one earnings per share, because our hedge rate and the actual yen in quarter one are close to the same thing. So then no matter how you looked at our earnings, GAAP, our normal way of ex-specials, or core earnings, were significantly better than consensus. As we go forward, if the yen stays where it is right now for quarter two, and it is closer to JPY100 to the dollar, we'd experience some significant gains on the hedge, which would offset any of the translation loss of bringing our yen-based pricing deterioration in the yen factor back into dollars. That make sense?

因此把曝險上限設在 JPY93，讓我們處於一個能在未來帶來更穩定獲利型態的位置。該避險的相對收益程度，取決於日圓實際走勢。我們做這件事的原因之一、也是為什麼我們在第一季改用核心盈餘（core earnings），是因為它其實沒有影響第一季每股盈餘，因為我們的避險匯率與第一季實際日圓匯率非常接近。所以不論你怎麼看我們的盈餘——GAAP、我們一般的扣除特殊項目（ex-specials）方式，或核心盈餘——都明顯優於市場共識。往後看，如果第二季日圓維持在目前水準、也就是更接近 1 美元兌 100 日圓，我們在避險上會出現一些顯著收益，這將抵銷把以日圓計價的定價惡化（yen-based pricing deterioration）中的日圓因素換算回美元時所產生的換算損失。這樣說有道理嗎？

Yes, that make sense. So in essence, though, no transaction exposure at the yen-dollar level?

是的，這樣說得通。所以本質上，在日圓兌美元層面就沒有交易曝險了？

That's what you should be -- that's what you will see in our results.

這就是你應該——也就是你會在我們的結果中看到的。

Right.

了解。

Perfect. Then I guess something, Jim. It seemed like in your prepared remarks you kind of inflected in your voice that LCD prices are currently priced in yen. Maybe I'm reading too much into that, but I'd love you to discuss the likelihood of changing to pricing the US dollars, the thoughts on could that happen within kind of this two-year hedge window, and the pros and cons of what has kept you from changing in the past, and perhaps with the change in the FX rate, what makes it more attractive in the future?

很好。那我還有一點，Jim。在你準備好的發言中，你的語氣似乎暗示 LCD 價格目前是以日圓計價。也許我解讀過度，但我很希望你談談改成以美元計價的可能性、是否可能在這兩年的避險期間內發生，以及過去是什麼利弊讓你們沒有改、而或許在匯率變動後，未來為何會更有吸引力？

So it is clearly is a possibility, as we talked about at our IR day in February, that we could convert over to US dollar pricing, and clearly it could occur during this two-year hedge period of time. It is obviously a complex shift, because you have to figure out what rate you are going to do it at, and you've got to get your customers to agree, and of course, we also have to think about what our competition will do. But I didn't mean to anything with my inflection, but clearly I will state to you that the possibility of us going to US dollar pricing for our Display business is very real.

所以這顯然是一種可能性，正如我們在二月的投資人關係日（IR day）所談到的，我們可能會轉為以美元計價，而且很明確地，這也可能在這兩年的避險期間內發生。這顯然是一個複雜的轉換，因為你必須決定要用什麼匯率來轉換，還得讓客戶同意，當然我們也必須考量競爭對手會怎麼做。但我並不是想用語氣暗示什麼；不過我可以清楚告訴你，我們在顯示（Display）業務上改採美元計價的可能性非常真實。

I will add to it that I would agree with James' statements. When we told you at the beginning of the year that our time and attention was going to the yen, and making sure that we would be taking the appropriate action, we look both at commercial changes, like shipping to the dollar in the near-term, as well as doing what we did in the hedge. What we did is cover this next two years. It will give us time to figure out what the appropriate commercial change is, as well as opportunities to reach very considered opinions on how we should handle the yen going forward.

我補充一點，我同意 James 的說法。當我們在年初告訴各位，我們的時間與注意力將放在日圓上，並確保我們會採取適當行動時，我們同時檢視商業面的變更，例如短期內改以美元出貨，以及我們在避險上所做的安排。我們所做的是把接下來兩年都涵蓋在內。這將給我們時間去釐清適當的商業調整為何，也讓我們有機會對未來應如何處理日圓形成更審慎的看法。

All right. Thank you for taking my questions.

好的。謝謝你回答我的問題。

Next we will go to Mark Sue with RBC Capital Markets. Please go ahead.

接下來我們請 RBC Capital Markets 的 Mark Sue 提問。請開始。

Thank you. Gentlemen, the pricing change as a relates to market share, it is good to see that things are stabilizing on price. What's the staying power, and what's been the competitive response, if any, and are getting indications that rationality for the Display industry can prevail on a going-forward basis, just as we look through the back half of the year and into next year?

謝謝。各位先生，關於定價變動與市占率的關係，很高興看到價格面正在趨於穩定。這樣的穩定能維持多久？競爭對手是否有任何回應？以及我們是否看到任何跡象顯示，顯示器產業的理性定價在未來能夠持續——尤其是展望今年下半年到明年？

Well, clearly what we are seeking to accomplish is just that. All we really control are our actions, and what we've done with the series of agreements we put in place is to stabilize our share, develop a fixed relationship between our price and market price, which should make for economic decision-making by all the players involved. We are encouraged by the progress that we've made in quarter one, as well as quarter two. Only time will tell how this all turns out, but we are encouraged.

嗯，很明顯我們想達成的目標正是如此。我們真正能控制的只有我們自己的行動；而我們透過一系列已簽訂的協議所做的，是穩定我們的市占率，建立我們價格與市場價格之間的固定關係，這應能讓所有參與者都做出符合經濟效益的決策。我們對第一季以及第二季所取得的進展感到鼓舞。最終結果如何仍需時間驗證，但我們是受到鼓舞的。

Will it be a quarter or so while you could kind of call it a success (inaudible) change in pricing, or is this a ongoing thing that we have to kind of monitor?

那大概需要再過一季左右，你們才會比較能稱之為定價變動的成功（聽不清楚）？還是說這是一件需要持續監控的事情？

Clearly, getting another quarter under our belt with this continued moderation, we'd feel even better. But at the core of it, pricing and pricing strategy's always going to be important in this business. So we think we can reduce the volatility, and we are making some progress towards just that, but it will continue to take a good amount of time and attention.

很明顯地，如果在這種持續降溫的情況下再多累積一季的表現，我們會更有信心。但核心在於，定價與定價策略在這個產業永遠都很重要。所以我們認為可以降低波動性，我們也正朝這個方向取得一些進展，但這仍將持續需要投入相當多的時間與注意力。

Okay, understood. Then separately, if the regional demand for Display continues to change around the world, does that make you reconsider your CapEx by region? I understand the plan's for this year at $1.3 billion. Just thinking about if things move around in 2014 and beyond?

好的，了解。另外，如果顯示器的區域需求在全球持續變動，這會讓你們重新考量按地區配置的資本支出（CapEx）嗎？我了解今年的計畫是 13 億美元。只是想問，如果 2014 年及之後需求版圖移動，會怎麼影響？

Not quite sure I follow your question, Mark, about regionally. Are you asking about spending in glass business?

Mark，我不太確定我理解你所說的「按地區」的問題。你是在問玻璃事業的投資支出嗎？

Yes, in Display as you try to move closer to your end customers. So we understand the plans that you are making for this year, in China for example. Do you things change the following (inaudible) do you concentrate your production and capacity in certain regions, and does that require changes in CapEx longer term?

是的，在顯示器業務上，當你們試著更貼近終端客戶時。例如我們了解你們今年在中國的規劃。如果接下來（聽不清楚）情況改變，你們是否會把生產與產能更集中在某些地區？而這是否需要在較長期調整資本支出？

No, I don't think in 2014 you should expect to see much change in the Company's capital spending for our glass business. We are really what we would call more of a maintenance level in the Display area now. Because of the result of thin, we think we are in good shape there. And we feel that we can regionally supply very effectively between Taiwan, Japan, and Korea. And so we don't feel that this fact that China is growing very rapidly causes us problem. I mean, we've been shipping glass to China for a long time. So the capital spending should feel pretty good about the $1.3 billion this year, and right now, as I think we've told you, we think it is $1.3 billion again next year. And Display is not a big portion of that. It really is driven by some spending in our other businesses, including Environmental.

不，我認為 2014 年你不應預期公司在玻璃業務的資本支出會有太大變化。我們目前在顯示器領域基本上處於我們所稱的較偏維持性（maintenance level）的投資水準。由於薄化的成果，我們認為那邊的狀況良好。而且我們覺得在區域供應上，可以在台灣、日本與韓國之間非常有效地供貨。因此，我們不認為中國快速成長會對我們造成問題。我的意思是，我們長期以來一直向中國出貨玻璃。所以對於今年 13 億美元的資本支出你應該可以相當放心；而且目前，如同我們先前告訴各位的，我們認為明年也會是 13 億美元。顯示器在其中並不是很大的一部分。主要是由其他業務的投資所驅動，包括環境（Environmental）業務。

Yes, we're pretty happy with our asset platform in China as well. It is all been previously announced, what we are doing, and productivity there looks really good.

是的，我們對在中國的資產平台也相當滿意。我們正在做的事情先前都已公告過，而那邊的生產力看起來非常好。

All right. Thank you, gentlemen. Good luck.

好的。謝謝各位先生。祝順利。

Our next question is from Amitabh Passi with UBS. Please go ahead.

下一個問題來自 UBS 的 Amitabh Passi。請開始。

Hi, thank you. I just had a couple questions. Jim, on the $2 billion buyback plan you announced. From a funding perspective, will you need to repatriate any cash, or do you think you can fund that based on what you have onshore? And I just wanted to clarify, your gross margin of 42.4% came in about 200 basis points above, I think, your expectations. Again, I think given all the restatements, can you just help me understand, is that, quote unquote, a clean number? How does it compared to last year's gross margin? It seems like it was flattish, and then I had one other follow-up.

嗨，謝謝。我有幾個問題。Jim，關於你們宣布的 20 億美元庫藏股回購計畫。就資金來源而言，你們需要匯回（repatriate）任何海外現金嗎？還是你們認為可以用境內（onshore）的資金來支應？另外我想確認一下，你們 42.4% 的毛利率比我認為你們的預期高了大約 200 個基點。再者，考量到所有重編（restatements），你能否協助我理解：這個數字是否可以說是「乾淨」的？它與去年的毛利率相比如何？看起來似乎大致持平；我還有一個後續問題。

On gross margin, 200 basis point improvement was driven by very strong manufacturing within particularly Telecom and Gorilla. Really drove the improvement in expectations, and I cannot remember what last year's number is. Maybe Ann can look it up in the script. I just cannot remember off the top of my head. Your first question was on?

關於毛利率，提升 200 個基點主要是由非常強勁的製造表現所帶動，特別是在 Telecom 與 Gorilla 這兩塊。這確實推升了我們相對於預期的改善；至於去年的數字我一時想不起來。也許 Ann 可以在講稿裡查一下。我現在一時想不起來。你第一個問題是關於？

Just the funding mechanism of the $2 billion buyback plan, would you need to repatriate any cash, or do you think you have enough onshore to fund the $2 billion buyback, if you chose to go through the entire amount?

就是 20 億美元回購計畫的資金機制：你們需要匯回任何海外現金嗎？或者你們認為若選擇執行到全額 20 億美元，你們境內資金就足以支應？

We don't have a need to repatriate the cash. We are not changing our assertion that it's permanently invested during the time frame that we are talking about.

我們不需要匯回現金。在我們所談的這段期間內，我們不會改變「永久性投資」（permanently invested）的主張。

Okay, and then just as a quick follow-up, Maybe one for you, Wendell. The sequential growth in telecom and Gorilla Glass. Can you give us any insight in terms of what the drivers are, where you are seeing that sequential growth coming from?

好的，另外快速追問一下，可能是問你，Wendell。Telecom 與 Gorilla Glass 的季對季成長。你能否提供一些洞見，說明驅動因素是什麼、你們看到這個季對季成長主要來自哪裡？

Definitely, and I will add briefly to Jim's previous comment. I think your question was right on, on are these results clean, and given our move to core earnings. It is a great question, and they are. It is one of the reasons we are doing it this quarter. And to try to match going forward, the economic reality of being hedged out at JPY93 ought to be able to help us and help you all be able to get a nice, clean forward-looking forecast as well. So now onto that forecast and sequentials. In Telecom, we would expect the sequential ups to be driven by season out of normal to a little bit above normal seasonality increases out of China, especially, as well as some uptick in our enterprise business. In Specialty and in Gorilla, we will see that uptick be linked more to new product launches, and we would expect that to ramp through the year. For example, something like the Galaxy S4, which is just going to start really ramping up their supply chain in quarter two with Gorilla Glass 3.

當然可以，我也簡短補充 Jim 先前的評論。我認為你的問題切中要點：在我們轉向核心盈餘（core earnings）之後，這些結果是否「乾淨」。這是個很好的問題，而答案是：是的。這也是我們選擇在本季這麼做的原因之一。而且，未來若能把在日圓 93（JPY93）水準完成避險的經濟實質反映出來，應該能幫助我們，也能幫助各位做出更清楚、乾淨的前瞻預測。接著談這個預測與季對季變化。在 Telecom，我們預期季對季上升將由季節性帶動，從正常季節性到略高於正常的季節性增長，尤其來自中國，另外我們的企業（enterprise）業務也會有一些回升。在 Specialty 與 Gorilla，我們會看到這個上升更多與新產品上市相關，我們預期會在全年逐步放量。例如 Galaxy S4，第二季其供應鏈才會真正開始放量，並採用 Gorilla Glass 3。

Just to follow up on your gross margin question, Ann tells me quarter one of a year ago was 42%.

就您關於毛利率的問題再補充一下，Ann 告訴我去年第一季是 42%。

Okay, perfect. Thank you.

好的，完美。謝謝。

Next question is from Steven Fox with Cross Research. Please go ahead.

下一個問題來自 Cross Research 的 Steven Fox。請開始。

Thanks, good morning. A couple questions from me, just following up on the last question. Could you -- can we talk about SG&A in a similar manner? It looks like you came in, by my count, $30 million, $35 million less than you guys were originally guided to. I was curious if that is sustainable? Then secondly, Jim, just on the equity earnings line, that came in greater than expected. How much was that related to not including the solar polysilicon results in the numbers, and by not including it, is that sort of an admission that we are definitely going to see a write-down of those assets? Thanks.

謝謝，早安。我有幾個問題，先延續上一個問題。你們能不能——我們能用類似方式談談 SG&A（銷售、一般及行政費用）？依我計算，你們實際數字比原先指引少了 3,000 萬到 3,500 萬美元。我想知道這是否可持續？第二個問題，Jim，就權益法收益那一行，結果高於預期。其中有多少是因為數字中未納入太陽能多晶矽的結果？而不納入是否某種程度上等於承認我們肯定會看到那些資產的減記？謝謝。

On the latter, I think it was $5 million. So Hemlock was not a significant exclusion, and no, it is not an admission. It really was our choice on taking Hemlock out is we really feel it is got -- it so much influenced by what's happening in the trade war between China and the United States and Europe that you really run the risk of the results being effected by that rather than really what we focus on, which is making and selling product. We do not have a ruling from MOFCOM, they delayed it again. We now think it is going to be in June. We don't know what is going to be. So we are not predicting that, but we just decided it would easier for you to not have the potential swings in Hemlock in our results, but in quarter one it was a very tiny amount. I think some of the SG&A gain is sustainable from quarter one, but not all of it.

就後者而言，我想是 500 萬美元。所以 Hemlock 並不是一個重大的排除項目，而且不，這不是一種承認。我們選擇把 Hemlock 拿掉，主要是因為我們覺得它受到中國與美國及歐洲之間貿易戰的影響太大，你確實會有風險讓結果被那些因素影響，而不是我們真正關注的——製造並銷售產品。我們還沒有收到中國商務部（MOFCOM）的裁決，他們又延後了。我們現在認為會在六月。我們不知道結果會是什麼。所以我們不做預測，但我們只是決定，為了讓你們不必在我們的結果中承受 Hemlock 可能帶來的波動，把它排除會更容易理解；不過在第一季它的金額非常小。我認為 SG&A 的部分改善在第一季是可持續的，但不是全部。

Then just one quick follow-up on the equity earnings line. So just a little bit more color around Dow Corning. It looks like, I guess, the core silicone's business is improving more. Is that -- can you talk about your outlook now for that business recovering as the year goes on?

那再就權益法收益那一行快速追問一下。能否再多談一點 Dow Corning 的情況？看起來我猜核心矽酮（silicones）業務改善得更多。你能談談你們現在對該業務在今年接下來逐步復甦的展望嗎？

Yes, we are expecting it to improve again in quarter two. Silicones does go through a cycle. The cycle is driven somewhat by capacity adds in the industry. Dow Corning did that, as well as some of our competition. There has been raw material pressure, but -- so 2012 probably was our low point, if you look at silicone margins. And we think we are getting, as the industry goes into some of that new capacity, and with moderation in some raw material pricing, we think that we are starting to move up on the margin cycle. So we are expecting improvement in silicones in quarter two, and as of now, I have no reason to not expect that the back half of the year to be good year-over-year also.

是的，我們預期第二季會再改善。矽酮業務確實會經歷景氣循環。這個循環在某種程度上是由產業新增產能所驅動。Dow Corning 做了擴產，我們的一些競爭對手也一樣。原物料也有壓力；因此如果你看矽酮的利潤率，2012 年大概是我們的低點。我們認為，隨著產業消化部分新增產能，加上部分原物料價格趨於溫和，我們正開始沿著利潤率循環往上走。所以我們預期第二季矽酮會改善；而就目前而言，我沒有理由不預期下半年也會有良好的年增表現。

Thanks very much.

非常感謝。

And Next we go to Simona Jankowski with Goldman Sachs, please go ahead.

接下來是高盛（Goldman Sachs）的 Simona Jankowski，請開始。

Hi, thanks very much. I just wanted to ask first, what the EPS would have been in the quarter under the old accounting, or maybe kind of put another the way, I just wanted to understand in terms of the FX impact that was included, clearly the cost of the hedges excluded, but what about the move of the yen up to JPY93? Was that included in the quarterly results, or if not, what would that have looked like if it had not been excluded?

嗨，謝謝。我首先想問，在舊會計處理下，本季 EPS 會是多少？或者換個方式說，我想了解就已納入的匯率（FX）影響而言，顯然避險成本被排除在外，但日圓升到 93 日圓（JPY93）那段變動呢？那是已包含在本季結果中嗎？如果沒有包含，那如果不排除會呈現什麼樣子？

Well, the yen, there really is no change. I mean, because the yen was JPY93. So there really was no impact, and the cost of the hedge for the quarter after tax was a very small amount.

嗯，日圓其實沒有變化。我的意思是，因為日圓就是 93。所以基本上沒有影響，而本季避險成本稅後金額非常小。

Okay.

好的。

I think the answer to your question is, no difference.

我想你問題的答案是：沒有差異。

Got you.

了解。

One of the reasons we wanted to do it this quarter, core earnings are about going forward on the volatility standpoint and to be able to link to our actual hedge.

我們之所以想在這一季這麼做，其中一個原因是核心盈餘著眼於未來的波動性，並且能夠與我們實際的避險連結起來。

Okay, that's helpful. Then the other question is on your guidance for a relatively volume into the second quarter. That seemed a bit weaker than I would have expected, given that you had some correction in the first quarter and seasonality, and even some of your customers like LG Display had guided for something a bit higher. So can you just go into the drivers of that view, and then what you see in terms of inventory downstream?

好的，這很有幫助。另一個問題是關於你們對第二季相對持平的出貨量（volume）指引。考量第一季有一些修正、季節性因素，甚至你們部分客戶如 LG Display 也指引會更高一些，這看起來比我預期弱。你能否說明形成這個看法的驅動因素，以及你們對下游庫存的觀察？

What goes into that view is our reflection on the fact that inventories grew again in quarter one, and are likely to grow a little in quarter two. And we think that level will temper a little the potential volume that the panel makers will take. We recognize we could be wrong in that, and I would say if we had to say where the error would come, it might be stronger. Clearly demand right now from our panel maker customers is quite strong. We are actually airshipping in order to meet their demand. So it could be that it is -- that we will actually see it go up. It is just that our caution, as we measure the amount of inventory in the supply chain north of where the panel makers are, is we are worried that it is built up quite a bit, and therefore that's what lead us to our flat guidance.

這個看法的基礎是我們反映出第一季庫存再次增加，而且第二季可能還會再小幅增加。我們認為這個水位會稍微抑制面板廠可能拉貨的量。我們也承認我們可能判斷錯；如果要說誤差可能出在哪裡，可能會是更強。很明顯，目前我們面板廠客戶的需求相當強。我們實際上正在用空運來滿足他們的需求。所以也可能——我們實際上會看到它上升。只是我們的謹慎在於：當我們衡量供應鏈中、位於面板廠上游的庫存量時，我們擔心它累積得相當多，因此這就是我們給出持平指引的原因。

I think it is on the high side of healthy, but to your point, we would like to see the May sales in China, and then it could be that we are underestimating where the market's going to be.

我認為它處在健康水位的偏高端；但如你所說，我們希望看到中國 5 月的銷售情況，之後也可能是我們低估了市場將走向何處。

In your view, what explains that disconnect between your customers requiring it to airship while at the same time having excess levels in inventory?

以你們的觀點，如何解釋這種落差：你們的客戶需要你們用空運出貨，但同時庫存水位又偏高？

I don't think they are in excess. We'd say that they're just on the high side of healthy, right?

我不認為是過剩。我們會說只是處在健康水位的偏高端，對吧？

Okay.

好的。

And I think what it really comes down to is how big a sales cycle do they see, especially in China, as the retailers and the get ready for the May Day sales.

而我認為歸根結底在於：他們預期銷售週期會有多大，尤其是在中國，因為零售商在為五一促銷做準備。

I just want to make sure you understand that the inventories we are talking about are not at the panel makers. So it is our estimation what exists at set assembly and at retail, and the panel makers are continuing to run strong in order to keep up with them, we are doing some airshipping, which regretfully is costing us a little bit in gross margin. But if China, the May holidays perform as well as what we saw in the New Year's holidays, we could be surprised on the upside and do a little bit better than what our guidance has been.

我想確保你理解：我們談的庫存不是在面板廠端。所以那是我們對整機組裝端與零售端現有庫存的估計；面板廠為了跟上需求仍持續強勁運轉，我們也做了一些空運，遺憾的是這讓我們的毛利率付出了一點成本。但如果中國 5 月假期的表現能像我們在農曆新年假期看到的那樣好，我們可能會有上行驚喜，表現會比我們的指引稍微好一些。

Okay, that's very clear. Thank you.

好的，這非常清楚。謝謝。

Our next question is from Ehud Gelblum with Morgan Stanley. Please go ahead.

下一個問題來自摩根士丹利（Morgan Stanley）的 Ehud Gelblum。請開始。

Hey, guys. Thanks, I appreciate it. A couple of clarifications first. Jim, $100 million hedge expenses. Where does that show up and where are we going to see that in the P&L? And also the change in pension accounting that you made, did that have an impact on EPS this quarter? And what do you expect that to be for the year, and that I have some fundamental follow-ups.

各位好。謝謝，我很感激。先澄清幾點。Jim，那 1 億美元的避險費用。那會列在哪裡？我們會在損益表（P&L）的哪裡看到？另外，你們做的退休金會計變更，這一季對 EPS 有影響嗎？那你預期全年會是多少？然後我還有一些基本面的追問。

On the pension, it basically was $0.01, and it's both this year and last year. So it really isn't making a change statement. The cost of the hedge we exclude from core performance, but as you divide the $100 million by eight quarters and tax effect it, it is a very small amount.

關於退休金，基本上是 0.01 美元，而且今年和去年都是如此。所以它其實不會造成顯著的變動。避險成本我們會從核心績效中排除；但如果把 1 億美元除以 8 個季度再考慮稅負影響，其實是非常小的金額。

Okay. That is helpful. Digging a little bit deeper into the equity earnings, the $173 million versus we had about $120 million. Count that SEP was probably around $17 million of that. The rest, does that came basically from silicones, and can you give more color on what is driving that? Can you make some comments that you think it's sustainable and it comes back. Just what are the drivers there, and sort of understand kind of moving pieces? And then on cash, someone asked before, and I'm not sure I quite got the answer, what is your US cash balance right now? I think it was $1.5 billion at the end of last year.

好的。這很有幫助。再深入一點看權益法收益，1.73 億美元相較於我們原本大約 1.2 億美元。估計 SEP 大概貢獻了其中 1,700 萬美元。其餘部分基本上是來自矽利康（silicones）嗎？能否多說一些是什麼在驅動？你能否評論一下你認為這是否可持續、是否會回落？主要驅動因素是什麼，讓我們理解一下其中的變動項？另外關於現金，之前有人問過，我不確定我是否完全聽到答案，你們目前在美國的現金餘額是多少？我記得去年底是 15 億美元。

Cash balance was $1.2 billion right now

目前現金餘額是 12 億美元。

In the US?

在美國？

In the US.

在美國。

Okay.

好的。

And in terms of equity earnings, we believe that silicone business is doing quite well in the current quarter, and it is going to continue to do well in the second quarter.

至於權益法收益，我們認為矽利康業務在本季表現相當不錯，而且第二季也會持續表現良好。

Any drivers behind that? I mean, what's creating that? Something we can track?

背後有什麼驅動因素嗎？我是說，是什麼造成的？有沒有我們可以追蹤的指標？

So we'd say demand is good, pricing has been okay. Raw materials, costs have been improving versus where they were. So those of the primary things. Demand is good in China, good in the United States, weak in Europe.

我們會說需求不錯，價格也還可以。原物料成本相較之前的水準正在改善。這些是主要因素。中國需求好、美國需求好，歐洲偏弱。

I've always thought of silicones as more being somewhat of a GDP-related thing because they go into a lot of different areas. So is that a comment on macro in general looking better from the perspective of products that silicones go into?

我一直認為矽利康比較像是與 GDP 相關的產品，因為它用在很多不同領域。所以這是否意味著，從矽利康所應用的終端產品角度來看，整體宏觀環境正在改善？

Well, it's definitely -- they have a very high correlation with GDP or industrial production. It depends on which segment usage of it, but I think the thing that you have to remember as emerging economies start to move up the scale, if you will, of the development, they actually use more silicone per population. So you actually get a multiplier effect, even though, say, China's GDP is 7.7%, as the example, the growth in silicones would be higher because they -- we consistently see in developing economies is most silicones per person, if you will, as they move up the scale of life. So that's where we think we are seeing some of the strength.

嗯，確實——它與 GDP 或工業生產高度相關。這取決於用在哪個細分領域，但我想你要記得的是，當新興經濟體開始在發展階梯上往上走時，實際上每人口使用的矽利康會更多。所以你會看到乘數效應；即使以中國 GDP 7.7% 為例，矽利康的成長會更高，因為——我們一貫看到在開發中經濟體，隨著生活水準提升，每人使用的矽利康會更多。所以我們認為這就是我們看到部分強勁的原因。

But China's GDP was even stronger last year, and yet it wasn't really helping you then. So I'm just trying to find out what was the turning point, or what's happening now that wasn't happening previously that seems to be bringing that category back up again? Is there anything you can pinpoint?

但中國的 GDP 去年更強，然而當時似乎並沒有幫到你們。所以我想了解轉折點是什麼，或是現在發生了什麼、以前沒有發生的事情，讓這個類別又回升？有沒有什麼你能具體指出的？

Because last year we were -- you were seeing the effect of more price competition, and we are not seeing that right now.

因為去年我們——你看到的是更激烈的價格競爭影響，而現在我們沒有看到那種情況。

So overlaying the GDP pieces and those factors, Ehud, you also have just sort of the supply demand cycles that you get in silicones over time, and feel like it bottomed out last year and starting its walk up as an industry as they get better and better balance between demand and supply.

所以在 GDP 的因素之上，Ehud，你也還有矽利康產業隨時間出現的供需循環；我們覺得去年已經觸底，現在正開始往上走，因為產業的需求與供給之間的平衡正變得越來越好。

And from your experience, is this a one-, two-, three-year cycle? So this is the beginning of a multiyear upswing, or is this -- does it happen every year, it goes up and down?

以你的經驗，這是一個一、兩、三年的循環嗎？也就是說，這是多年上行週期的開始，還是——每年都會上下波動？

No, we think silicones is coming off a low point in terms of margin performance. And assuming the world's economies behave, sales should grow. The unknown for us is really going to be Europe. It's really hard to tell what's going to happen in the European economies. And that's clearly been a drag on Dow Corning, but I think if we are starting to stabilize a little, even though it is at a lower level, that's helpful for Dow Corning.

不，我們認為矽利康正從利潤率表現的低點回升。假設全球經濟表現正常，銷售應該會成長。對我們而言真正的不確定性會是歐洲。很難判斷歐洲經濟接下來會怎麼走。這顯然一直在拖累 Dow Corning，但我想如果我們開始稍微穩定下來，即使是在較低水準，對 Dow Corning 也是有幫助的。

Helpful, thank you.

很有幫助，謝謝。

And next go to Rod Hall with JPMorgan. Please go ahead.

接下來請 JPMorgan 的 Rod Hall 提問。請開始。

Hi, guys, good morning. Thanks for taking my question. First of all, congrats on the hedging. That's a pretty cheap price, Jim, to get for all that, for $5.2 billion worth of hedges. Couple of questions on the rest of the business. I wanted to just check in on the inventory again and to see -- you've been talking about the structural reduction in inventory over time, and I wonder, based on what we're seeing now, do you think that we're coming to an end of that, and the inventory is actually kind of reaching a stability point, or do you think that it is just kind of a short term fluctuation in inventory we are observing?

各位早安。謝謝讓我提問。首先，恭喜你們做了避險。Jim，針對 52 億美元規模的避險，能拿到那樣的價格相當便宜。關於其他業務有幾個問題。我想再確認一下庫存——你們一直在談隨時間推進的結構性庫存下降，我想知道，基於我們現在看到的情況，你們是否認為這個過程快要結束了、庫存其實正接近穩定點？還是你們認為我們觀察到的只是短期的庫存波動？

Then I also wanted to talk a little bit about the -- or get you to talk a little bit about the panel supply demand situation as we head into the back end of the year. I mean, we see some of these, well, a lot of these panel manufacturers running pretty high utilization rates now, and we are not at the peak season. So I wonder, do you think that -- you think there's going to be enough supply in the second half of the year to meet demand, even in a more cautious economic scenario? And then I have a follow-up to that as well.

另外我也想談一下——或請你們談一下——面板供需狀況，尤其是我們進入今年下半年之際。我的意思是，我們看到一些——其實很多——面板製造商現在的稼動率都很高，但我們還沒到旺季。所以我想問，你們是否認為今年下半年會有足夠的供給來滿足需求，即使是在更謹慎的經濟情境下？然後我還有一個相關追問。

That's A lot of questions. So the structural reduction in inventory that we talked about in December of 2011, we still believe that that can occur. What has surprised us is the willingness of the supply chain to carry more inventory than what we expected, and we continue to struggle a little bit as to the reasons. As outlined in my prepared remarks, we clearly think that there could be some impact from the fact that panel prices have been relatively stable, and what has often driven supply chain fluctuations has been when, particularly when people think there is about to be a big reduction in panel prices no one wants to look dumb and buy when they are seeing that. So we think that stability may be playing into effect. The second thing, again hard to prove, is that LCD television market basically gets to full penetration, and we are capturing the more emerging parts of China, as an example, and other parts around the world.

問題很多。所以我們在 2011 年 12 月談到的結構性庫存下降，我們仍然相信是可能發生的。讓我們意外的是，供應鏈願意持有比我們預期更多的庫存，而我們也一直有點難以理解原因。如同我事先準備的發言所述，我們明確認為，面板價格相對穩定這件事可能帶來一些影響；而過去經常驅動供應鏈波動的因素是——特別是當大家認為面板價格即將大幅下跌時，沒有人想看起來很蠢、在那種情況下還去買。所以我們認為這種穩定性可能正在發揮作用。第二點，同樣很難證明的是，LCD 電視市場基本上已接近全面滲透，而我們正在掌握中國較新興的區域（例如）以及全球其他地區。

It may be that the supply chains are just less efficient. The third factor that we are seeing is that the panel industry has chosen to improve their own efficiencies and also position themselves better, and seeing a proliferation of new sizes. So at one time life was pretty simple. It was either a 32, a 37, 40, or 42, or 46. Now you see these new sizes, like 39 coming in. And the more models you have, the more inventory you have. So we still believe over time that the supply chain will become efficient and will go down, but it is definitely carrying more than what we originally expected. Do you have any comment on the panel supply, Wendell, in terms of we know there's more capacity coming on in China as the year progresses. So we're hopeful that that is enough to supply the demand. But I don't have a lot of current data on panel supply.

可能是供應鏈的效率就是比較低。我們看到的第三個因素是，面板產業選擇提升自身效率、同時讓自身定位更佳，並且出現了各種新尺寸的激增。所以曾經有一段時間，情況相當單純。不是 32 吋、37 吋、40 吋、42 吋，就是 46 吋。現在你會看到像 39 吋這樣的新尺寸加入。而你的機種越多，庫存就越多。因此我們仍然相信，隨著時間推移，供應鏈會變得更有效率、成本也會下降，但目前確實承擔的庫存水位高於我們原先的預期。Wendell，關於面板供應你有什麼評論嗎？我們知道今年隨著時間推進，中國會有更多產能開出。所以我們希望那足以供應需求。但我手上沒有太多關於面板供應的最新數據。

It is hard to tell at this point in time. I'd say but boy, we would really be good if you were right. (Laughter).

就目前這個時間點很難判斷。我只能說，天啊，如果你是對的，那我們就真的太好了。(笑聲)。

Yes, exactly. Okay. I mean, my follow-up. Jim, I don't know if you could make any comment on your cash return policy going forward, particularly the dividend that you're thinking about metrics there. You have PAL ratio in mine, or a yield in mind, or can you just give us any feeling for how you are thinking about that looking forward?

是的，沒錯。好。我的追問是。Jim，我不知道你能否就你們未來的現金回饋政策做些評論，特別是你們在思考股利時所採用的衡量指標。你心中有 PAL 比率，或是殖利率之類的目標嗎？或者你能否讓我們感受一下你們未來會如何思考這件事？

We have not yet set a firm policy with the Board as either yield or percentage of our free cash flow. I can tell you that the Board's deliberations went into the announcement today is that we are really dedicating our free cash flow over this year and next year to shareholder returns through a combination of dividend and share repurchase. And I think, as always, I think we love to continue to increase the dividend as our earnings go up. We want to be cautious not to get too strong on the dividend, because you never want to have to lower it, and we lived through that once before, but I think you can expect to see the dividend continue to go up as our earnings go up. And us dedicated the free cash flow, the remainder of free cash flow against share repurchases as long as we feel the Company is undervalued, which we clearly do.

我們尚未與董事會訂定明確政策，無論是以殖利率或以自由現金流的百分比來界定。我可以告訴你，董事會在促成今天公告的討論中，核心是：我們確實要把今年與明年的自由現金流，用於透過股利與庫藏股回購的組合來回饋股東。而且我想，一如既往，我們很樂意在盈餘成長時持續提高股利。我們也希望謹慎，不要把股利拉得過高，因為你永遠不希望必須調降股利；我們以前曾經歷過一次。但我想你可以預期，隨著我們盈餘上升，股利會持續上調。至於自由現金流的其餘部分，只要我們認為公司被低估（而我們顯然是這麼認為），就會用於股票回購。

Thank you.

謝謝。

John, we have time for one more question, I think.

John，我想我們還有時間再問一個問題。

That'll be from the line of Jagadish Iyer with Piper Jaffray. Please go ahead.

接下來是 Piper Jaffray 的 Jagadish Iyer 這一路。請開始。

Thanks for taking my question. Two questions. First. Wendell, if the yen continues to weaken further, the prognosis being much closer to like JPY115 to JPY125, or something like that over the next 12 months, how do think that that your competitors are likely to respond in terms of pricing? Given that you've hedged, do you think that it doesn't matter anymore? So I would like to have your thoughts on that, based on the qualitative perspective, and then I have a follow-up.

謝謝讓我提問。兩個問題。第一個。Wendell，如果日圓持續進一步走弱，預測在未來 12 個月更接近例如 115 到 125 日圓兌 1 美元之類的區間，你認為競爭對手在定價上可能會如何回應？考量你們已做避險，你覺得這是否就不再重要了？我想聽聽你從質性角度的看法，然後我還有一個追問。

Well, what economically you would believe, if they were microeconomic decision-makers, is that it ought to have a very moderating effect on pricing. Because customers are getting the benefits from that, and actually the weakening yen hurts their financials, because of the way their cost structures are built and the way their P&L works. So that ought to give strong motivation to them to be more moderate in their pricing behavior, if indeed they're microeconomic decision-makers.

嗯，從經濟學角度你會認為，如果他們是以個體經濟（微觀經濟）的決策者來行事，這應該會對定價產生很強的抑制效果。因為客戶正在享受日圓走弱帶來的好處，而實際上日圓走弱會傷害他們的財務表現，原因在於他們成本結構的建構方式，以及他們損益表（P&L）的運作方式。因此，如果他們確實是微觀經濟的決策者，這應該會強烈驅使他們在定價行為上更為克制。

Okay. Just as a follow-up, Jim, just you alluded in your prepared remarks that the gross margins on Gorilla Glass was getting better. Just wanted to get your thoughts on the puts and takes in terms of how the ASP declines were in Gorilla Glass, and how your cost production initiatives have become? Thank you.

好的。再追問一下，Jim，你在事先準備的談話中提到 Gorilla Glass 的毛利率正在改善。想請你談談其中的拉力與阻力：Gorilla Glass 的 ASP（平均售價）下滑幅度如何，以及你們的生產成本改善措施進展到什麼程度？謝謝。

Our cost reductions is exceeding our ASP declines on Gorilla. So just a reminder on Gorilla, this remains a relatively new business and new product, and we are making improvements in our cost structure as we are making that glass thinner and improving our yields. So we are moving up the gross margins of that, and the profitability remains well above the corporate average, and it is improving.

我們在 Gorilla 這塊的成本下降幅度，超過了 ASP 的下滑幅度。提醒一下，Gorilla 仍然是一個相對新的事業與新產品；隨著我們把玻璃做得更薄並提升良率，我們也在改善成本結構。因此我們正在推升其毛利率，而其獲利能力仍遠高於公司整體平均，且還在改善。

Jim, do have any closing statements?

Jim，你有任何結語嗎？

Yes, I do. A couple quick wrap-up comments from me. First of all, we do have one Investor Relations announcement. We will be attending the JPMorgan T&T Conference on May 14 in Boston, and we hope to see a number of you there. I'd like to just summarize the call this morning. First, we think we've made great progress on stabilizing Display, and then turning that business to positive momentum. We didn't talk a lot this morning, but we continue to do well with new products for various usages. Second, we executing our goal to grow our earnings in our other businesses. You saw a very strong aggregate growth in profitability from our other businesses. Third, we grew core earnings per share year-over-year by double digits, both in quarter four and quarter one, and we think this is very strong evidence that we are marching up on our earnings. We think we've moved very assertively and appropriately to protect the Company investors with our yen hedges. And we remain very committed to shareholder returns, and we've acted on that commitment by increasing our dividend for the third in 18 months, effectively doubling it, and announcing a $2 billion share repurchase. We should consider these new actions as approximately a $3.2 billion commitment over the next two years, essentially putting our free cash flow work for shareholders, in line with our belief the Company is undervalued at its current price. And finally, look ahead to Q2, we are very confident that we will have a third consecutive quarter of year-over-year core earnings growth, driven by moderate LCD glass price declines and excellent growth in Telecom, Gorilla Glass, and Life Sciences. Ann?

有的。我這邊做幾點快速總結。首先，我們有一則投資人關係公告。我們將於 5 月 14 日在波士頓參加 JPMorgan T&T 會議，希望能在那裡見到各位中的不少人。我想簡要總結今天早上的電話會議。第一，我們認為在穩定 Display（顯示）業務、並讓該業務轉為正向動能方面已取得很大進展。今天早上我們談得不多，但我們在面向各種用途的新產品方面仍持續表現良好。第二，我們正在執行在其他事業中提升盈餘的目標。你們看到我們其他事業的整體獲利能力有非常強勁的成長。第三，我們的核心每股盈餘（core EPS）年增率在第四季與第一季都達到雙位數，我們認為這是我們盈餘持續上行的非常有力證據。我們認為，透過日圓避險，我們已非常果斷且適切地採取行動來保護公司投資人。我們也仍然非常致力於股東報酬，並以行動落實這項承諾：在 18 個月內第三次提高股利，等於將股利有效翻倍，並宣布 20 億美元的股票回購。我們應將這些新行動視為未來兩年約 32 億美元的承諾，基本上是把我們的自由現金流用在股東身上，這也符合我們認為公司以目前股價被低估的看法。最後，展望第二季，我們非常有信心在 LCD 玻璃價格溫和下滑，以及電信、Gorilla Glass 與生命科學的優異成長帶動下，核心盈餘將連續第三季呈現年增。Ann？

Thank you Jim, and thank you all for joining us today. The playback of the call is available beginning at 10.30 AM Eastern today, and will run until 5.00 PM Eastern on Wednesday, May 8. To listen, dial (800)475-6701. The access code is 287833. The audiocast, of course, is available on our website during that time. John, that concludes our call. Please disconnect all lines.

謝謝你，Jim，也謝謝各位今天加入我們。本次電話會議的重播將於今日美東時間上午 10:30 開始提供，並持續至 5 月 8 日（週三）美東時間下午 5:00。欲收聽請撥打 (800)475-6701。存取碼為 287833。當然，在此期間也可於我們網站收聽網路音訊直播回放（audiocast）。John，我們的電話會議到此結束。請切斷所有線路。