21. Subsequent Events
Acquisitions
On January 15, 2014, Corning completed the series of strategic and financial agreements previously announced on October 22, 2013, to acquire the common shares of Samsung Corning Precision Materials previously held by Samsung Display Co., Ltd. As a result of these transactions, Corning is now the owner of 100% of the common shares of Samsung Corning Precision Materials, giving us greater flexibility in asset use, improved operational efficiencies, and better positioning for new specialty-glass market opportunities. A summary of the series of transactions follow:
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Corning obtained full ownership of Samsung Corning Precision Materials on January 15, 2014;
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After redemption of Samsung Display’s 43% interest in Samsung Corning Precision Materials, Corning issued its Fixed Rate Cumulative Convertible Preferred Stock, Series A (“Preferred Stock”), to Samsung Display in an aggregate face amount of $1.9 billion;
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Samsung Display invested an additional $400 million in Corning’s Preferred Stock; and
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A new long-term LCD display glass supply agreement between Corning and Samsung Display through 2023.
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As part of the acquisition process, Corning hired a third-party valuation firm to assist it in estimating the fair value of the acquired business. Included in this process is the valuation of pre-existing arrangements, which could result in a gain or loss which will be recognized in the first quarter of 2014. We have not completed our accounting for the acquisition by the date of the filing of our 2013 Form 10-K, and, therefore, have not included detailed purchase accounting in this note.
In addition, Corning’s Board of Directors has authorized an additional $2 billion of share repurchases through December 31, 2015.
Foreign Exchange Contracts
In February 2014, the Company obtained authorization from the Board of Directors to execute a series of foreign exchange contracts over a three year period to hedge our exposure to movements in the Japanese yen and its impact on our earnings. The Company’s execution of these contracts will be dependent upon market conditions. The foreign exchange contracts will not be designated derivatives and will be marked to market through the other income line of the consolidated statements of income.
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