-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QauXdt3RpFwXpsTzCJenlaqtKGO88EjNwTzz3xrpnIiwRKF/z6+yf87V09QiqTrk paZnXpPQme/17a2c1wogKA== 0000075234-98-000023.txt : 19980720 0000075234-98-000023.hdr.sgml : 19980720 ACCESSION NUMBER: 0000075234-98-000023 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980716 ITEM INFORMATION: FILED AS OF DATE: 19980717 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: OWENS CORNING CENTRAL INDEX KEY: 0000075234 STANDARD INDUSTRIAL CLASSIFICATION: ABRASIVE ASBESTOS & MISC NONMETALLIC MINERAL PRODUCTS [3290] IRS NUMBER: 344323452 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-03660 FILM NUMBER: 98668185 BUSINESS ADDRESS: STREET 1: OWENS CORNING WORLD HEADQUARTERS STREET 2: ONE OWENS CORNING PKWY CITY: TOLEDO STATE: OH ZIP: 43659 BUSINESS PHONE: 4192488000 MAIL ADDRESS: STREET 1: OWENS CORNING WORLD HEADQUARTERS STREET 2: ONE OWENS CORNING PARKWAY CITY: TOLEDO STATE: OH ZIP: 43659 FORMER COMPANY: FORMER CONFORMED NAME: OWENS CORNING FIBERGLAS CORP DATE OF NAME CHANGE: 19920703 8-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): July 16, 1998. OWENS CORNING (Exact name of registrant as specified in its charter) Delaware 1-3660 34-4323452 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) One Owens Corning Parkway 43659 Toledo, Ohio (Zip Code) (Address of principal executive offices) (419) 248-8000 (Registrant's telephone number, including area code) Item 5. Other Events. July 16, 1998 Press Release. On July 16, 1998, Owens Corning (the "Company") announced second quarter results, which are attached hereto as Exhibit 99, which is incorporated herein by reference. Item 7. Financial Information and Exhibits (c) Exhibits The exhibits accompanying this report are listed in the accompanying Exhibit Index. EXHIBIT INDEX The following exhibits are filed herewith as noted below. Exhibit No. Exhibit 99 Certain portions of the press release of Owens Corning issued July 16, 1998. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized. OWENS CORNING Registrant By: /s/ Domenico Cecere Domenico Cecere Senior Vice President and Chief Financial Officer Dated: July 17, 1998 Exhibit 99 Owens Corning, on July 16, 1998, reported sales and earnings for the second quarter of 1998. Net sales were $1,286 million, an increase of 26 percent over $1,017 million recorded in the second quarter of 1997. Acquisitions made in the company's Exterior Systems Business during the second half of 1997 were the primary contributors to the sales increase. Net income was $59 million, or $1.02 per diluted share in the second quarter, compared to $63 million, or $1.11 per diluted share reported for the same period in 1997. For the first six months of 1998, sales were $2,423 million, up 28 percent from $1,892 million in the first half of 1997. Net income was $67 million or $1.20 per diluted share, compared to $105 million or $1.88 per diluted share in the first half of 1997. Net income for the six months ended June 30, 1998 includes the following items from the first quarter of 1998: a pretax charge of $95 million ($63 million after-tax) for restructuring and other actions, a pretax gain of $84 million ($52 million after-tax) from the sale of the company's 50 percent ownership interest in Alpha/Owens-Corning, and a tax credit of $13 million associated with Asia Pacific operations. The company is achieving its forecast cost reductions from our restructuring program and realizing synergies in its acquired exterior businesses. Business Review Building Materials Second quarter sales of Building Materials were $995 million, up 40 percent compared to the same quarter in 1997. Excluding the Exterior Systems acquisitions made in the second half of 1997, second quarter sales in Building Materials were down slightly over the year-ago quarter due primarily to price. Volume was basically flat in Building Materials, with an unfavorable quarter-over-quarter price comparison in the Insulating Systems Business. The first half price increases the company instituted in the Insulating Systems Business are starting to have a positive impact on our bottom line. Income from operations in Building Materials was up 23 percent from the second quarter of 1997, despite the unfavorable price comparison. While vinyl siding prices were down, margins were maintained in the Exterior Systems Business due to lower raw material costs, higher volume and consolidation synergies. Composite Materials Sales in Composite Materials were $291 million, down slightly compared to the same period in 1997. Most of the sales decline was due to volume decline in the United States. Demand for electronic circuit boards slowed at the end of the quarter and sales were impacted by some order cancellations due to the General Motors strike. Volume was up in Europe but prices have not recovered from the declines in 1997. Sales were down significantly in Latin America due to a furnace problem in the company's Brazilian operations, however Asia Pacific volumes were stable and the company continues to grow its share in that region. Income from operations in Composites Materials increased 18 percent, on slightly lower sales compared to the second quarter of 1997, as a result of productivity improvements and cost reductions. This Current Report on Form 8-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in these statements. Some of the important factors that may influence possible differences are continued competitive factors and pricing pressures, construction activity, interest rate movements, issues involving implementation of new business systems, achievement of expected cost reductions and asbestos litigation. Further information on factors that could affect the company's financial and other results are included in the company's Forms 10-Q and 10-K, filed with the Securities and Exchange Commission. Financial Tables Follow: OWENS CORNING AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME (unaudited) Quarter Ended Six Months Ended June 30, June 30, 1998 1997 1998 1997 (In millions of dollars, except share data) NET SALES $1,286 $1,017 $2,423 $1,892 COST OF SALES 985 778 1,923 1,430 Gross margin 301 239 500 462 OPERATING EXPENSES Marketing and administrative expenses 152 122 281 244 Science and technology expenses 14 17 29 34 Restructure costs - - 87 - Other (1) 1 (8) (70) (4) Total operating expenses 167 131 327 274 INCOME FROM OPERATIONS 134 108 173 188 Cost of borrowed funds 36 23 73 42 INCOME BEFORE PROVISION FOR INCOME TAXES 98 85 100 146 Provision for income taxes 34 25 27 45 INCOME BEFORE MINORITY INTEREST AND EQUITY IN NET INCOME OF AFFILIATES 64 60 73 101 Minority interest (5) (2) (10) (4) Equity in net income of affiliates - 5 4 8 NET INCOME $ 59 $ 63 $ 67 $ 105 NET INCOME PER COMMON SHARE Basic net income per share $1.09 $1.19 $1.25 $1.99 Diluted net income per share $1.02 $1.11 $1.20 $1.88 Weighted average number of common shares outstanding and common equivalent shares during the period (in millions) Basic 53.6 52.9 53.5 52.6 Diluted 58.9 58.2 58.7 57.9
(1) Includes an $84 million pretax gain from the sale of the Company's 50% ownership interest in Alpha/Owens-Corning during the first quarter of 1998. OWENS CORNING AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (unaudited) June 30, December 31, June 30, 1998 1997 1997 ASSETS (In millions of dollars) CURRENT Cash and cash equivalents $ 42 $ 58 $ 19 Receivables 597 432 567 Inventories 535 503 541 Insurance for asbestos litigation claims - current portion (1) 125 100 50 Deferred income taxes 137 160 147 Assets held for sale - 41 41 Income tax receivable 27 96 11 Other current assets 64 38 57 Total current 1,527 1,428 1,433 OTHER Insurance for asbestos litigation claims (1) 310 357 440 Asbestos costs to be reimbursed - Fibreboard 131 116 110 Deferred income taxes 356 328 394 Goodwill 788 778 704 Investments in affiliates (2) 50 52 73 Other noncurrent assets 181 184 241 Total other 1,816 1,815 1,962 PLANT AND EQUIPMENT, at cost 3,647 3,585 3,470 Less--Accumulated depreciation (1,888) (1,832) (1,789) Net plant and equipment 1,759 1,753 1,681 TOTAL ASSETS $5,102 $4,996 $5,076
OWENS CORNING AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (Continued) (unaudited) June 30, December 31, June 30, 1998 1997 1997 (In millions of dollars) LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT Accounts payable and accrued liabilities $ 793 $ 814 $ 694 Reserve for asbestos litigation claims - current portion (1) 325 350 300 Short-term debt 119 23 156 Long-term debt - current portion 128 120 23 Total current 1,365 1,307 1,173 LONG-TERM DEBT 1,761 1,595 1,854 OTHER Reserve for asbestos litigation claims (1) 1,121 1,320 1,485 Asbestos - related liabilities - Fibreboard 138 123 114 Other employee benefits liability 340 335 340 Pension plan liability 61 65 66 Other 174 165 178 Total other 1,834 2,008 2,183 COMPANY OBLIGATED SECURITIES OF ENTITIES HOLDING SOLELY PARENT DEBENTURES 503 503 194 MINORITY INTEREST 21 24 25 STOCKHOLDERS' EQUITY Common stock 669 657 653 Deficit (987) (1,041) (980) Accumulated other comprehensive income (48) (40) (11) Other (16) (17) (15) Total stockholders' equity (382) (441) (353) TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $5,102 $4,996 $5,076
(1) As of June 30, 1998, the current portion of the reserve for asbestos litigation claims, net of insurance, is $200 million. Excluding Fibreboard activity, the total reserve, net of insurance, is $1,011 million. (2) At the end of the first quarter of 1998, the Company sold its 50% ownership interest in Alpha/Owens-Corning for approximately $103 million and recorded a pretax gain of approximately $84 million. OWENS CORNING AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited) Quarter Ended Six Months Ended June 30 June 30, 1998 1997 1998 1997 (In millions of dollars) NET CASH FLOW FROM OPERATIONS Net income $ 59 $ 63 $ 67 $ 105 Reconciliation of net cash provided by operating activities: Noncash items: Provision for depreciation and amortization 47 39 99 76 Provision (credit) for deferred income taxes 40 39 (5) 56 Other 4 (6) (87) (7) (Increase) decrease in receivables (40) (56) (169) (163) (Increase) decrease in inventories (4) (1) (40) (92) Increase (decrease) in accounts payable and accrued liabilities (12) (31) (24) (90) Increase (decrease) in accrued income taxes 77 (15) 75 (26) Proceeds from insurance for asbestos litigation claims, excluding Fibreboard 5 24 22 64 Payments for asbestos litigation claims, excluding Fibreboard (95) (90) (224) (185) Other (26) (38) 11 (57) Net cash flow from operations 55 (72) (275) (319) NET CASH FLOW FROM INVESTING Additions to plant and equipment (74) (57) (121) (131) Investment in subsidiaries, net of cash acquired - - - (20) Proceeds from the sale of affiliate or business - - 134 - Other - (4) (19) (9) Net cash flow from investing $(74) $(61) $ (6) $(160)
OWENS CORNING AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited) Quarter Ended Six Months Ended June 30, June 30, 1998 1997 1998 1997 (In millions of dollars) NET CASH FLOW FROM FINANCING Net additions (reductions) to long-term credit facilities $(659) $ 26 $(374) $ 283 Other additions to long-term debt 565 108 570 136 Other reductions to long-term debt (11) (39) (13) (41) Net increase in short-term debt 60 45 96 62 Dividends paid (4) (4) (8) (7) Other (6) 2 (6) 21 Net cash flow from financing (55) 138 265 454 Effect of exchange rate changes on cash 1 1 - (1) Net increase (decrease) in cash and cash equivalents (73) 6 (16) (26) Cash and cash equivalents at beginning of period 115 13 58 45 Cash and cash equivalents at end of period $ 42 $ 19 $ 42 $ 19
OWENS CORNING AND SUBSIDIARIES QUARTERLY INFORMATION ON INDUSTRY AND GEOGRAPHIC SEGMENTS (unaudited) Quarter Six Months Ended Ended June 30, June 30, 1998 1997 1998 1997 (In millions of dollars) NET SALES Industry Segments Building Materials United States $ 872 $ 600 $1,611 $1,100 Europe 70 72 135 146 Canada and other 53 41 105 72 Total Building Materials 995 713 1,851 1,318 Composite Materials United States 155 161 306 299 Europe 100 103 197 200 Canada and other 36 40 69 75 Total Composite Materials 291 304 572 574 Intersegment sales Building Materials - - - - Composite Materials 27 29 58 56 Eliminations (27) (29) (58) (56) Net sales $1,286 $1,017 $2,423 $1,892 Geographic Segments United States $1,027 $ 761 $1,917 $1,399 Europe 170 175 332 346 Canada and other 89 81 174 147 Total $1,286 $1,017 $2,423 $1,892 Intersegment sales United States 38 31 70 60 Europe 1 7 10 16 Canada and other 17 26 29 48 Eliminations (56) (64) (109) (124) Net sales $1,286 $1,017 $2,423 $1,892
OWENS CORNING AND SUBSIDIARIES QUARTERLY INFORMATION ON INDUSTRY AND GEOGRAPHIC SEGMENTS (Continued) (unaudited) Quarter Six Months Ended Ended June 30, June 30, 1998 1997 1998 1997 (In millions of dollars) INCOME (LOSS) FROM OPERATIONS (1) Industry Segments Building Materials United States $ 88 $ 70 $ 90 $107 Europe 2 2 (13) 7 Canada and other 1 2 (2) 4 Total Building Materials 91 74 75 118 Composite Materials United States 53 52 90 94 Europe 3 (1) (14) 6 Canada and other 3 (1) 2 1 Total Composite Materials 59 50 78 101 General corporate expense (16) (16) 20 (31) Income from operations 134 108 173 188 Cost of borrowed funds (36) (23) (73) (42) Income before provision for income taxes $ 98 $ 85 $100 $146 Geographic Segments United States $141 $122 $180 $201 Europe 5 1 (27) 13 Canada and other 4 1 - 5 General corporate expense (16) (16) 20 (31) Income from operations 134 108 173 188 Cost of borrowed funds (36) (23) (73) (42) Income before provision for income taxes $ 98 $ 85 $100 $146
OWENS CORNING AND SUBSIDIARIES QUARTERLY INFORMATION ON INDUSTRY AND GEOGRAPHIC SEGMENTS (Continued) (unaudited) (1) Income from operations for the six months ended June 30, 1998 includes a pretax charge of $95 million for restructuring and other actions. The impact of these special items was to reduce income from operations for Building Materials in the United States, Europe, and Canada and other by $17 million, $11 million and $1 million, respectively; Composite Materials in the United States, Europe, and Canada and other by $8 million, $27 million and $1 million, respectively; and to increase general corporate expense by $30 million. Income from operations for the six months ended June 30, 1998 also includes a pretax gain of $84 million from the sale of the Company's 50% ownership interest in Alpha/Owens-Corning. The impact of this gain was to decrease general corporate expense by $84 million. # # # -----END PRIVACY-ENHANCED MESSAGE-----