Corning to acquire full ownership of SCP, enabling
significant synergies
Corning's board authorizes
additional $2 billion share repurchase
program
Actions expected to be
immediately accretive on fully diluted basis for
Corning
CORNING, N.Y., October 22,
2013 - Corning Incorporated (NYSE: GLW) announced
today that it is entering into a series of strategic and financial
agreements with Samsung Display Co., Ltd., intended to strengthen
product and technology collaborations between the two companies.
These agreements will allow Corning to extend its leadership in
specialty glass and drive earnings growth. Corning expects the
transactions to close in the first quarter of 2014.
The series of transactions, subject to closing
conditions being met, will result in:
-
Corning obtaining full ownership of Samsung
Corning Precision Materials Co., Ltd. (SCP), an unconsolidated
equity venture with Samsung Display that manufactures LCD glass in
Korea. Samsung Display currently owns 43% of SCP.
In addition, Corning's board of directors has
authorized an additional $2 billion of share repurchases through
Dec. 31, 2015, dependent upon the transaction closing.
"We are excited to enter this new era of
collaboration in our 40-year equity relationship with Samsung, one
of the world leaders in consumer electronics," Wendell P. Weeks,
chairman, chief executive officer and president, said. "The
agreements provide important financial and strategic benefits to
both Corning and Samsung."
"Corning and its shareholders will realize
attractive financial returns as the transactions produce immediate
earnings accretion through the addition of the remainder of SCP,
substantial cost synergies and significant incremental free cash
flow. Our new long-term supply agreement will provide Corning
steady demand in the global LCD market. By leveraging SCP's
fusion-based manufacturing assets, we will further extend our
leadership in advanced glass. This affords us greater flexibility
in servicing customers, managing capacity, and minimizing capital
spending as we expand production of Corning®
Gorilla® Glass and
pursue new specialty glass applications," he added.
"We are pleased to have an opportunity to
strengthen the strategic ties between our two companies," Kinam
Kim, president and chief executive officer of Samsung Display,
said. "We look forward to concentrating our efforts and combining
our expertise in product development with Corning's renowned
leadership in glass technologies to develop new market
opportunities in consumer products and other industries."
Corning Expects to Realize
Immediate and Long-Term Financial Benefits
"Shareholders will benefit from access to $1.2 billion which
represents Corning's share of existing cash on SCP's balance sheet,
as well as the cumulative incremental free cash flow going forward,
which could total $2 billion over the next four years," Weeks said.
The structure of the transaction will also immediately increase
Corning's domestic cash balances.
He added, "Synergies from integrating our
worldwide fusion glass assets should approach $100 million pretax
in 2015 and continue to grow thereafter. We believe that accretion
to Corning's core earnings per share, on a fully diluted basis of
approximately 20% in 2014 and 2015, can be generated from the
combination of profits from the soon-to-be acquired 50% of SCP; the
resulting manufacturing synergies; and the impact of the additional
share repurchase program. The impact of the additional share
repurchase program should offset the potential dilution of shares
embedded in the convertible preferred security. The transaction
should add approximately $2 billion in annual sales; $350 million
in incremental profit before special items; and approximately $500
million in additional cash flow to Corning."
Corning also expects to realize increased
flexibility in glass-melting capabilities, which should bring added
capital savings. Furthermore, the company will re-evaluate the need
for major capital expenditures for additional fusion glass
manufacturing assets.
The new convertible preferred shares will have an
annual 4.25% coupon and are convertible into common shares based on
a price of $20 per common share. The preferred shares are not
convertible for seven years, subject to certain exceptions, and
contain only limited voting rights until conversion. Effective
today, Corning and Samsung have entered into a standstill agreement
that limits Samsung's activities with respect to Corning's shares
and governance. Effective upon closing, a shareholder agreement
between Corning and Samsung will limit Samsung's ownership to no
more than 9% of Corning's common shares on an as-converted basis.
The transaction contains a re-pricing mechanism that will account
for changes in SCP's glass prices, volume and Japanese yen to U.S.
dollar exchange.
Corning has LCD glass manufacturing operations in
the United States, Japan, Taiwan and China. Samsung Corning
Precision Materials has LCD glass manufacturing facilities in
Korea. Following completion of the transaction, the SCP
organization will be integrated into Corning's Display Technologies
segment. Corning will be able to service all specialty glass
customers in all regions directly, utilizing its manufacturing
facilities throughout Asia. U.S. Corsam Technologies LLC, and
Samsung Corning Advanced Glass LLC, both equity affiliates
established between Corning and Samsung Display, will continue
under their current agreements.
Conference Call
Information
The company will host a conference call on Tuesday, Oct. 22, 2013
at 4:30 p.m., ET. To participate, please call toll free (800)
230-1085 or for international access call (612) 332-0228
approximately 10-15 minutes prior to the start of the call. The
password is 'CORNING INCORPORATED OCTOBER 22ND
CONFERENCE CALL.' The host is 'NICHOLSON'. To listen to a live
audio webcast of the call, go to Corning's Web site at
www.corning.com/investor_relations and click Investor Events on the
left. A replay will be available beginning at approximately 6:30
p.m., ET and will run through 12 a.m. ET Tuesday, Nov. 12, 2013. To
listen, dial (800) 475-6701 or for international access dial (320)
365-3844. The access code is 306287. The webcast will be archived
for one year following the call.
Presentation of Information
in this News Release
Non-GAAP financial measures are not in accordance with, or an
alternative to, GAAP. Corning's non-GAAP financial measures exclude
the impact of items that are driven by general economic conditions
and events that do not reflect the underlying fundamentals and
trends in the Company's operations. The company believes
presenting non-GAAP financial measures assists in analyzing
financial performance without the impact of items that may obscure
trends in the company's underlying performance. Detailed
reconciliations outlining the differences between these non-GAAP
measures and the most directly comparable GAAP measure can be found
on the company's website by going to
www.corning.com/investor_relations and clicking Financial Reports
on the left. These reconciliations also accompany this news
release.
Forward-Looking and
Cautionary Statements
This press release contains "forward-looking statements" (within
the meaning of the Private Securities Litigation Reform Act of
1995), which are based on current expectations and assumptions
about Corning's financial results and business operations, that
involve substantial risks and uncertainties that could cause actual
results to differ materially. These risks and uncertainties
include: the effect of global political, economic and business
conditions; conditions in the financial and credit
markets; currency fluctuations; tax rates; product demand
and industry capacity; competition; reliance on a concentrated
customer base; manufacturing efficiencies; cost reductions;
availability of critical components and materials; new product
commercialization; pricing fluctuations and changes in
the mix of sales between premium and non-premium products; new
plant start-up or restructuring costs; possible
disruption in commercial activities due to terrorist activity,
armed conflict, political or financial instability, natural
disasters, adverse weather conditions, or major health concerns;
adequacy of insurance; equity company activities; acquisition and
divestiture activities; the level of excess or obsolete inventory;
the rate of technology change; the ability to enforce patents;
product and components performance issues; retention of key
personnel; stock price fluctuations; and adverse litigation or
regulatory developments. These and other risk factors
are detailed in Corning's filings with the Securities and
Exchange Commission. Forward-looking statements speak only as
of the day that they are made, and Corning undertakes no obligation
to update them in light of new information or future events.
About Samsung Corning
Precision Materials
Samsung Corning Precision Materials is a South Korea-based
manufacturer of LCD glass for flat panel displays. The business was
formed as an equity venture in 1995 between Corning (50%
ownership), Samsung (42.6% ownership) and minority ownership of the
remainder (7.4%). In 2012, SCP recorded net sales of $3.1 billion
with net income of $1.4 billion. Corning includes full financial
statements for SCP in its annual report.
About
Samsung Display Co., Ltd.
Samsung Display Co., Ltd. is a global leader in display panel
technology and products. Employing approximately 39,000 people at
seven production facilities and nine sales offices worldwide,
Samsung Display specializes in high-quality displays for consumer,
mobile, IT and industrial usage, including those featuring OLED
(organic light emitting diode) and LCD technologies. As a total
solution provider, Samsung Display strives to advance the future
with next-generation technologies featuring ultra-thin,
energy-efficient, flexible, and transparent displays. For more
information, please visit www.samsungdisplay.com.
About Corning
Incorporated
Corning Incorporated (www.corning.com) is the world leader in
specialty glass and ceramics. Drawing on more than 160 years of
materials science and process engineering knowledge, Corning
creates and makes keystone components that enable high-technology
systems for consumer electronics, mobile emissions control,
telecommunications and life sciences. Our products include glass
substrates for LCD televisions, computer monitors and laptops;
ceramic substrates and filters for mobile emission control systems;
optical fiber, cable, hardware & equipment for
telecommunications networks; optical biosensors for drug discovery;
and other advanced optics and specialty glass solutions for a
number of industries including semiconductor, aerospace, defense,
astronomy, and metrology.
Media Relations
Contact:
Daniel F. Collins
(607) 974-4197
collinsdf@corning.com
Investor Relations
Contact:
Ann H. S. Nicholson
(607) 974-6716
nicholsoas@corning.com
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This
announcement is distributed by Thomson Reuters on behalf of Thomson
Reuters clients.
The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the
information contained therein.
Source: Corning Incorporated via Thomson Reuters ONE
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