Note 17 - Shareholders' Equity

12 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

17.

   Shareholders’ Equity

Fixed Rate Cumulative Convertible Preferred Stock, Series A

On

January

15,

2014,

Corning designated a new series of its preferred stock as Fixed Rate Cumulative Convertible Preferred Stock, Series A, par value

$100

per share, and issued

1,900

shares of Preferred Stock at an issue price of

$1

million per share, for an aggregate issue price of

$1.9

billion, to Samsung Display in connection with the acquisition of its equity interests in Samsung Corning Precision Materials. Corning also issued to Samsung Display an additional amount of Preferred Stock at closing, for an aggregate issue price of

$400

million in cash.

Dividends on the Preferred Stock are cumulative and accrue at the annual rate of

4.25%

on the per share issue price of

$1

million. The dividends are payable quarterly as and when declared by the Company’s Board of Directors. The Preferred Stock ranks senior to our common stock with respect to payment of dividends and rights upon liquidation. The Preferred Stock is not redeemable except in the case of a certain deemed liquidation event, the occurrence of which is under the control of the Company. The Preferred Stock is convertible at the option of the holder and the Company upon certain events, at a conversion rate of

50,000

shares of Corning’s common stock per

one

share of Preferred Stock, subject to certain anti-dilution provisions. As of

December

31,

2016,

the Preferred Stock has not been converted, and none of the anti-dilution provisions have been triggered. Following the

seventh

anniversary of the closing of the acquisition

of Samsung Corning Precision Materials, the Preferred Stock will be convertible, in whole or in part, at the option of the holder. The Company has the right, at its option, to cause some or all of the shares of Preferred Stock to be converted into Common Stock, if, for

25

trading days (whether or not consecutive) within any period of

40

consecutive trading days, the closing price of Common Stock exceeds

$35

per share. If the aforementioned right becomes exercisable before the

seventh

anniversary of the closing, the Company must

first

obtain the written approval of the holders of a majority of the Preferred Stock before exercising its conversion right. The Preferred Stock does not have any voting rights except as

may

be required by law.

Share Repurchases

2014

Share Repurchases

On

March

4,

2014,

as part of the

$2

billion share repurchase program announced on

October

22,

2013

and made effective concurrent with the closing of Corning’s acquisition of Samsung Corning Precision Materials on

January

15,

2014

(the

“March

2014

Repurchase Program”), Corning entered into an ASR agreement (the

“2014

ASR agreement”) with Citibank N.A. (“Citi”). Under the

2014

ASR agreement, Corning agreed to purchase

$1.25

billion of its common stock, with an initial delivery by Citi of

52.5

million shares based on the current market price, and payment of

$1.25

billion made by Corning to Citi. The

2014

ASR agreement was completed on

May

28,

2014,

and Corning received an additional

8.7

million shares to settle the

2014

ASR agreement. In total, Corning repurchased

61.2

million shares based on the average daily volume weighted-average price of Corning’s common stock during the term of the

2014

ASR agreement, less a discount.

In addition to the shares repurchased through the

2014

ASR agreement, in the year ended

December

31,

2014,

we repurchased

36.9

million shares of common stock on the open market for approximately

$750

million, as part of the

March

2014

Repurchase Program. This program was completed in the

fourth

quarter of

2014,

with a total of

98.1

million shares repurchased for approximately

$2

billion.

On

December

3,

2014,

Corning’s Board of Directors authorized the repurchase of up to

$1.5

billion shares of common stock (the

“December

2014

Repurchase Program”) between the date of announcement and

December

31,

2016.

2015

Share Repurchases

On

July

15,

2015,

Corning’s Board of Directors approved a

$2

billion share repurchase program (the

“July

2015

Repurchase Program”) and on

October

26,

2015

the Board of Directors authorized an additional

$4

billion share repurchase program (together with the

July

2015

Repurchase Program, the

“2015

Repurchase Programs”). The

2015

Repurchase Programs permit Corning to effect repurchases from time to time through a combination of open market repurchases, privately negotiated transactions, advance repurchase agreements and/or other arrangements.

On

October

28,

2015,

Corning entered into an ASR with Morgan Stanley and Co. LLC (“Morgan Stanley”) to repurchase

$1.25

billion of Corning’s common stock (the

“2015

ASR agreement”). The

2015

ASR was executed under the

July

2015

Repurchase Program. Under the

2015

ASR agreement, Corning made a

$1.25

billion payment to Morgan Stanley on

October

29,

2015

and received an initial delivery of approximately

53.1

million shares of Corning common stock from Morgan Stanley on the same day.

On

January

19,

2016,

the

2015

ASR agreement was completed. Corning received an additional

15.9

million shares on

January

22,

2016

to settle the

2015

ASR agreement. In total, Corning purchased

69

million shares based on the average daily volume weighted-average price of Corning’s common stock during the term of the

2015

ASR agreement, less a discount.

In addition to the shares repurchased through the

2015

ASR agreement, we repurchased

98

million shares of common stock on the open market for approximately

$2

billion, as part of the

December

2014

Repurchase Program and the

July

2015

Repurchase Program, resulting in a total of

167

million shares repurchased for

$3.25

billion during

2015.

2016

Share Repurchases

In

July

2016,

Corning entered into an accelerated share repurchase agreement (the

“2016

ASR agreement”) under the

2015

Repurchase Program with Morgan Stanley to repurchase Corning’s common stock. Under the

2016

ASR agreement, Corning made a

$2.0

billion payment to Morgan Stanley in

July

and received an initial delivery of approximately

74.4

million shares of Corning common stock on the same day.  The transaction was structured with

two

tranches resulting in a total of

12.3

million shares being delivered to Corning in the

fourth

quarter of

2016,

for a total of

86.7

million shares repurchased under the

2016

ASR agreement. 

In addition to the

2016

ASR agreement, during the year ended

December

31,

2016,

the Company repurchased

110

million shares of common stock on the open market for approximately

$2.2

billion as part of its

2015

Repurchase Programs, resulting in a total of

197.1

million shares repurchased for

$4.2

billion during

2016.

The following table presents changes in capital stock for the period from

January

1,

2014

to

December

31,

2016

(in millions):

	Common stock				Treasury stock
	Shares		Par value		Shares			Cost
Balance at December 31, 2013		1,661	$	831		(262	)	$	(4,099	)
Shares issued to benefit plans and for option exercises		11		5					(2	)
Shares purchased for treasury						(135	)		(2,612	)
Other, net						(1	)		(14	)
Balance at December 31, 2014 (1)		1,672	$	836		(398	)	$	(6,727	)
Shares issued to benefit plans and for option exercises		9		4					(1	)
Shares purchased for treasury						(151	)		(2,978	)
Other, net						(2	)		(19	)
Balance at December 31, 2015		1,681	$	840		(551	)	$	(9,725	)
Shares issued to benefit plans and for option exercises		10		6					(2	)
Shares purchased for treasury						(214	)		(4,409	)
Other, net									(16	)
Balance at December 31, 2016		1,691	$	846		(765	)	$	(14,152	)

(1) On January 15, 2014, in conjunction with the acquisition of Corning Precision Materials, Corning issued 2,300 Fixed Rate Cumulative Convertible Preferred Stock, Series A (“Preferred Stock”), par value $100 per share, at an issue price of $1 million per share, for an aggregate issue price of $2.3 billion. There have been no further issuances or conversions of Preferred Stock since 2014.

Accumulated Other Comprehensive Income (Loss)

A summary of changes in the components of accumulated other comprehensive income (loss), including our proportionate share of equity method investee’s accumulated other comprehensive income (loss), is as follows (in millions) 

(1)

:

	Foreign currency translation adjustments and other			Unamortized actuarial gains (losses) and prior service (costs) credits			Net unrealized gains (losses) on investments			Net unrealized gains (losses) on designated hedges			Accumulated other comprehensive income (loss)
Balance at December 31, 2013	$	492		$	(428	)	$	(14	)	$	(6	)	$	44
Other comprehensive (loss) income before reclassifications (4)		(821	)		(172	)		4			10			(979	)
Amounts reclassified from accumulated other comprehensive income (loss) (2)(8)					18			1			(6	)		13
Equity method affiliates (3)(8)		(252	)		(127	)		(6	)					(385	)
Net current-period other comprehensive (loss) income		(1,073	)		(281	)		(1	)		4			(1,351	)
Balance at December 31, 2014	$	(581	)	$	(709	)	$	(15	)	$	(2	)	$	(1,307	)
Other comprehensive (loss) income before reclassifications (5)	$	(487	)	$	(59	)				$	(18	)	$	(564	)
Amounts reclassified from accumulated other comprehensive income (loss) (2)					105		$	1			(20	)		86
Equity method affiliates (3)		(103	)		75						2			(26	)
Net current-period other comprehensive (loss) income		(590	)		121			1			(36	)		(504	)
Balance at December 31, 2015	$	(1,171	)	$	(588	)	$	(14	)	$	(38	)	$	(1,811	)
Other comprehensive income before reclassifications (6)	$	(89	)	$	(63	)	$	(2	)	$	(21	)	$	(175	)
Amounts reclassified from accumulated other comprehensive income (loss) (2)					40						22			62
Equity method affiliates (3)(7)		(15	)		264			(1	)					248
Net current-period other comprehensive (loss) income		(104	)		241			(3	)		1			135
Balance at December 31, 2016	$	(1,275	)	$	(347	)	$	(17	)	$	(37	)	$	(1,676	)

(1) All amounts are after tax. Amounts in parentheses indicate debits to accumulated other comprehensive income.

(2) Tax effects of reclassifications are disclosed separately in this Note 17.

(3) Tax effects related to equity method affiliates are not significant in the reported periods except for the tax expense of $20 million related to the pension component in 2016.

(4) Amounts are net of total tax benefit of $96 million, including $(7) million related to the hedges component and $104 million related to the retirement plans component and $(1)  million related to the investments component.

(5) Amounts are net of total tax benefit of $41 million, including $35 million related to the retirement plans component and $6 million related to the hedges component.

(6) Amounts are net of total tax benefit of $52 million, including $36 million related to the retirement plans component, $12 million related to the hedges component, $3 million related to the foreign currency translation adjustments, and $1 million related to the investments component.

(7) Most of the changes in equity method affiliate accumulated other comprehensive income components in 2016 relate to disposal transactions with amounts reclassified to the income statement.  See Note 7 (Investments) to the Consolidated Financial Statements for more information on the Dow Corning realignment and PCE disposition transactions.

(8) Certain amounts have been reclassified to conform to the current year presentation of accumulated other comprehensive income changes related to equity method affiliates.  See Note 8 (Acquisitions) to the Consolidated Financial Statements for more information on the Samsung Corning Precision acquisition.

(In millions)

Reclassifications Out of Accumulated Other Comprehensive Income (AOCI) by Component (1)
	Amount reclassified from AOCI									Affected line item
	Years ended December 31,									in the consolidated
Details about AOCI Components	2016			2015			2014			statements of income
Amortization of net actuarial loss	$	(62	)	$	(168	)	$	(29	)	(2)
Amortization of prior service (cost) credit		(1	)		1					(2)
		(63	)		(167	)		(29	)	Total before tax
		23			62			11		Tax benefit
	$	(40	)	$	(105	)	$	(18	)	Net of tax
Realized gains (losses) on investments				$	(1	)	$	(1	)	Other income (expense), net
										Tax expense
				$	(1	)	$	(1	)	Net of tax
Realized (losses) gains on designated hedges	$	4		$	20		$	3		Sales
		(36	)		6			7		Cost of sales
		(2	)							Other expense (income), net
		(34	)		26			10		Total before tax
		12			(6	)		(4	)	Tax benefit (expense)
	$	(22	)	$	20		$	6		Net of tax
Total reclassifications for the period	$	(62	)	$	(86	)	$	(13	)	Net of tax

(1) Amounts in parentheses indicate debits to the statement of income.

(2) These accumulated other comprehensive income components are included in net periodic pension cost. See Note 13 (Employee Retirement Plans) to the Consolidated Financial Statements for additional details.