Corning traces its origins to a glass business established in 1851. Corning operates in 5 reportable segments: (1) Display Technologies, which manufactures glass substrates for liquid crystal displays (LCDs) used in TVs, notebook computers and flat panel monitors; (2) Optical Communications, which makes optical fiber products for carriers and enterprises; (3) Environmental Technologies, which manufactures ceramic substrates and filters fo...Morer catalytic converters; (4) Specialty Materials, which manufactures glass, ceramics and fluoride crystal products to meet specialty customer needs in industrial markets that include display optics, semiconductor optics, aerospace and defense, astronomy, ophthalmic products, telecommunications components and cover glass for portable display devices; and (5) Life Sciences, a supplier of scientific laboratory products. Less
|Most recent||Growth rate (CAGR)|
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|Book value of equity per share||$14.29||-17.9%||-0.5%||5.1%|
|BV including aggregate dividends||-14%||2.9%||7.7%|
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|Most recent||Growth rate (CAGR)|
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A company creates wealth for its long-term shareholders in 2 main ways - through dividend payments and through the accumulation of retained earnings. This graph shows the accumulation of per-share equity of long-term shareholders (green bars), which consists of the retained earnings plus all capital invested in the company, and the cumulative dividends the company has paid over time per share of its stock (blue bars).
In the words of Warren Buffett: "We're looking for... businesses earning good returns on equity while employing little or no debt."
Return on equity is a key metric of financial performance, indicating a company's ability to generate earnings using shareholder capital. Over time, ROE is one of the major determinants of the rate at which a company creates shareholder wealth. The average ROE for large U.S. companies is 12%, and many investors use it as a threshold for attractive investments.
Companies can boost ROE by increasing leverage, which reduces the safety of the investment. Therefore, it is useful to look at the return on assets (ROA), which measures a company's earning power regardless of its capital structure. A widening gap between ROE and ROA may be a warning sign that should be thoroughly investigated.
Earnings per share is a popular metric used to value a company (using P/E ratio); growth in EPS is often used to judge company growth potential. However, many investors believe that EPS is an inferior metric to ROE, because it ignores the amount of capital the company used to generate earnings.
Free cash flow shows how much cash a company generates from operations, above and beyond what is required to maintain or expand its productive assets. This cash can be returned to investors, or spent by management on growing the company or paying back its debts.
Balance sheets of many companies contain intangible assets such as goodwill, trademarks, patents, etc. Many investors consider intangibles more difficult to value than physical assets. If intangible assets had been valued incorrectly, they must be impaired, resulting in a loss charged against shareholder equity. This chart demonstrates the potential loss to shareholder equity from such impairments.
Companies often use debt financing to increase their return on equity. However, as the amount of debt financing increases relative to the amount of equity financing, the company becomes more sensitive to down turns and other negative events. As a result, many investors use the ratio of debt to equity as a measure of a company's financial risk, and avoid companies that have this ratio above 1.
This chart shows shareholder equity as a percentage of total assets, allowing investors to judge the overall leverage. Companies with a higher proportion of equity can be viewed as safer investments. This metric is particularly important for highly leveraged institutions, such as banks, where it must be at least 4% according to government regulations.
The ratio of current assets to current liabilities is known as the current ratio. This metric is a quick measure of the company's ability to pay its short-term obligations. A current ratio below 1 is a warning sign that should be investigated, especially for companies that cannot count on adequate cash flow from operations.
This chart shows the cumulative dilution of investor ownership in a company over time. Dilution reduces an investor's participation in the future earnings. Dilution increases when a company issues new shares, and decreases when a company buys its shares back. Many investors avoid companies with large chronic dilution.
analysis provides insight into factors affecting the Return On Equity of a company.
The DuPont equation decomposes ROE as follows:
ROE = (Net margin) * (Asset turnover) * (Asset to equity ratio)
Net margin indicates operating efficiency, Asset turnover measures the total asset use efficiency, and the Asset to equity ratio is a measure of financial leverage.
The dividend payout ratio tells investors what percentage of earnings a company returns to shareholders, and what percentage it retains and reinvests. This ratio represents a major capital allocation decision by the company, and can be used to judge management rationality. Rational management should pay out all earnings that cannot be productively reinvested. Therefore, a low dividend payout ratio for a profitable company with a low growth potential may be a warning sign.
Many investors use the P/B ratio as a quick way of judging company valuation. Value investors - followers of Graham and Dodd - specifically seek out companies with low P/B ratios. However, investors should be careful not to make investment decisions on this metric alone, without considering a company's earning and growth potential, since a low P/B ratio can be a sign of a bleak future for the business.
P/E ratio is a popular way of making a quick judgment of a company valuation. Value investors - followers of Graham and Dodd - often seek solid companies with low P/E ratios as investment opportunities. However, P/E ratio represents an oversimplified approach to business valuation, and can often lead to incorrect investment decisions.
Effective January 1, 1996, Corning made several changes to its accounting calendar to make Corning's results more comparable with other companies and to enable Corning to report results of certain subsidiaries on a more current basis. First, Corning adopted an annual reporting calendar. Previously Corning operated on a fiscal year ending on the Sunday nearest December 31. As a result, Corning's 1996 quarters will include results for three calendar months while Corning's quarters previously included results for 12 weeks (16 weeks in the third quarter). Second, Corning's 1996 quarters will include three months of operations for all significant subsidiaries and affiliates. Previously, certain subsidiaries reported two months of results in the first quarter and four months of results in the third quarter. Third, Corning Life Sciences Inc. and certain other consolidated subsidiaries that previously reported on a fiscal year ending November 30 adopted a calendar year end. The December 1995 net loss of these subsidiaries totaled $7.7 million and was recorded in retained earnings in the first quarter of 1996.
On December 31, 1996, Corning completed a strategic repositioning by distributing all of the shares of Quest Diagnostics Incorporated and Covance Inc. (the Distributions) to its shareholders on a pro rata basis. Corning's results for 1996 report Quest Diagnostics and Covance as discontinued operations. Income from discontinued operations net of income taxes of $11.3 million totaled $9.2 million, or $0.04 per share, for the first quarter 1996.
On January 28, 2000, Corning merged with Oak in a pooling of interests transaction. Corning issued 44,293,491 shares of Corning common stock and 8,137,500 options to purchase Oak common shares to complete the transaction. The consolidated financial statements for 1999 and 1998 have been restated to include the financial position and results of operations of Oak.
On January 31, 2000, Corning completed an equity offering of 14,950,000 shares of common stock generating net proceeds to Corning of approximately $2.2 billion.
In February 2000, Corning acquired Siemens AG's worldwide optical cable and hardware business and the remaining 50% of its investments in Siecor Corporation and Siecor GmbH for $1.4 billion. The purchase price includes approximately $120 million in assumed debt and $145 million in contingent performance payments to be paid, if earned, over a four-year period. The acquisition was recorded using the purchase method of accounting. Corning funded the acquisition with proceeds received from a common stock offering completed in January 2000.
On May 12, 2000, Corning completed the acquisition of NetOptix Corporation for 11,239,689 shares of Corning common stock and the assumption of stock options convertible into 829,080 Corning shares. Based on the average closing price of Corning stock for a range of days surrounding the announcement and a Black Scholes valuation of options issued the recorded purchase price approximated $2.1 billion. NetOptix manufactures thin film filters for use in dense wavelength division multiplexing components. The excess of the purchase price over the estimated fair value of tangible assets acquired was allocated to goodwill. Goodwill of approximately $2.065 billion will be amortized on a straight-line basis over ten years.
On December 12, 2000, Corning completed the acquisition of Optical Technologies USA, a manufacturer of lithium niobate modulators, pump lasers, certain specialty fibers and fiber gratings used in optical networks from Pirelli S.p.A. (90%) and Cisco Systems Inc. (10%) for approximately $3.6 billion in cash consideration to Pirelli and 5,473,684 shares of unregistered Corning stock to Cisco. Based upon the average closing price of Corning common stock for a range of days surrounding the agreement adjusted for a discount commensurate with restrictions on the shares the total purchase price was $4.0 billion. The excess of the purchase price over the estimated fair value of tangible assets acquired was allocated primarily to goodwill, other intangibles and IPRD. Goodwill of approximately $3,472 million is being amortized on a straight-line basis over 13 years. Patents of approximately $152 million are also being amortized over 13 years. Corning recorded a non-tax deductible charge of $322.9 million for IPRD in the fourth quarter of 2000 associated with this transaction. The allocation of the purchase price is based on preliminary data and could change when final valuation information is obtained.
In the second quarter, Corning recorded pre-tax charges of $4,648 million to impair a significant portion of goodwill and $116 million to impair intangible assets. Of the total charge of $4,764 million, $3,154 million related to the acquisition of the Pirelli optical components business and $1,610 million related to goodwill resulting from the acquisition of NetOptix Corporation.
Corning has approved and executed several restructuring actions throughout the year. In the first quarter of 2001, Corning reduced its workforce by approximately 3,300 positions, primarily in the photonic technologies and hardware and equipment businesses. In April 2001, Corning completed an additional workforce reduction of approximately 1,000 positions in photonic technologies, including both hourly and salaried employees. In the third quarter of 2001, additional actions were approved and undertaken, primarily in the Telecommunications Segment, which included closure of three manufacturing facilities in the photonic technologies business, resulting in the elimination of approximately 800 positions, and elimination of approximately 2,900 positions worldwide in the optical fiber and cable business. This action included a voluntary early retirement program for certain employees along with involuntary separations. In response to the continued deteriorating business condition, management approved and recorded the following restructuring actions in the fourth quarter: (i) closure or consolidation of several manufacturing locations as well as smaller businesses across all operating segments, (ii) discontinuation of its initiative in Corning Microarray Technology products, part of Corning's life sciences business, and (iii) further headcount reduction of approximately 4,000 positions across all businesses, research and staff organizations. This action also included a selective voluntary early retirement program for certain employees along with involuntary separations. In summary, Corning's restructuring actions totaled $961 million in pre-tax charges for the year ended December 31, 2001, of which $95 million related to exit costs primarily for lease termination and contract cancellation charges. Approximately one third of this total charge is expected to be paid in cash. The total number of positions eliminated was approximately 12,000. As of December 31, 2001, approximately 10,100 of the 12,000 employees had been separated under the plans.
In July and August 2002, Corning issued 5.75 million shares of 7% Series C mandatory convertible preferred stock having a liquidation preference of $100 per share, plus accrued and unpaid dividends, and recorded proceeds of $558 million... At September 30, 2002, approximately 3.3 million shares of the Series C preferred stock had been converted into 167.9 million common shares.
On December 13, 2002, we completed the sale of our precision lens business to 3M Company (3M) for cash proceeds up to $850 million, of which $50 million was deposited in an escrow account. During 2002, we received approximately $800 million in cash and recorded a gain on the sale of $415 million, net of tax, in income from discontinued operations in the consolidated statements of operations.
During the three and six months ended June 30, 2015, we repurchased 29.4 million and 50.5 million shares of common stock for $626 million and $1,128 million, respectively, as part of a $1.5 billion share repurchase program announced on December 3, 2014.