-----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, InAoNYbIJouPe0qpzZwMMyJRbeNBfsLrhyXNj/PjRRDK5o9beFHD2RPj9HBmTQDm 5pNh696QItNxhWog98lKCA== 0000075234-98-000029.txt : 19981216 0000075234-98-000029.hdr.sgml : 19981216 ACCESSION NUMBER: 0000075234-98-000029 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19981215 ITEM INFORMATION: FILED AS OF DATE: 19981215 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: 98770176 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): December 15, 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. (a) December 15, 1998 News Release. On December 15, 1998, Owens Corning (the "Company") issued the News Release attached hereto as Exhibit 99(a). Such news release is incorporated herein by this reference. (b) Owens Corning National Settlement Program Update attached hereto as Exhibit 99(b), which is incorporated herein by this reference. 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: December 15, 1998 EXHIBIT INDEX The following exhibits are filed herewith as noted below. Exhibit No. 99(a). News Release of Owens Corning dated December 15, 1998. Exhibit No. 99(b). Owens Corning National Settlement Program Update. EX-99 2 Owens Corning Announces National Settlement Program With Firms Representing 176,000 Asbestos Cases Settlements with More Than 50 Law Firms Resolve 90 percent of Owens Corning's Asbestos Backlog TOLEDO, Ohio, December 15, 1998 - Owens Corning (NYSE:OWC) announced today a National Settlement Program (NSP) under which over 50 plaintiffs' law firms have agreed to resolve more than 176,000 asbestos cases against the company. The program settles close to 90 percent of the company's existing backlog and establishes procedures and fixed payments for resolving future claims without litigation, for a term of at least 10 years. Under the NSP, Owens Corning, which stopped selling asbestos- containing products in 1972, will make payments for pending claims of approximately $1.2 billion, primarily in 1999 and 2000. Payments will be made from the company's available cash and credit resources, including its existing bank lines. The company's bank lenders have endorsed the plan. Under the NSP agreements, payments on future claims would begin in 2001 and will be subject to an annual aggregate cash flow cap. Glen Hiner, chairman and chief executive officer of Owens Corning, said, "The National Settlement Program is a major achievement towards resolving Owens Corning's liabilities in one of the largest and longest-running mass tort litigations in the history of the United States. It dramatically reduces the high cost of legal defense and the risk of excessive verdicts against Owens Corning, makes more predictable the costs of our asbestos liability going forward, and enables the company to focus on capital-efficient growth." The company established the National Settlement Program in response to the rising cost of mesothelioma settlements and judgments, as well as significant changes in the legal environment, such as the 1997 Supreme Court decision (Georgine v. Amchem Products, Inc.) striking down an asbestos class action settlement. Reflecting these developments and the substantial new information about pending and future claims gained in the NSP negotiations, the company in 1998 intends to increase its asbestos reserves by $1.4 billion, resulting in an after-tax charge to earnings of approximately $900 million. "By agreeing to pay only those individuals in the future who meet agreed medical impairment criteria," stated Hiner, "the company expects that beginning in 2002 the total annual cash outflow related to its asbestos liability will decline to less than $200 million before the benefits of insurance and tax proceeds. "The NSP," continued Hiner, "focuses on doing the right thing - getting fair compensation in a timely manner to those most directly in need. For more than 25 years, our industry and tens of thousands of people have been stuck in the morass of asbestos litigation. The plaintiffs' bar must be credited with exceptional vision and responsiveness to their clients by helping us to move the issue from the arena of litigation to the arena of settlement." Terms of the Agreements Under the NSP agreements, Owens Corning will pay both current and future claimants through an administrative procedure according to compensation schedules that take into account each claimant's type and severity of asbestos- related disease, and the extent of exposure to Owens Corning's former products. Payment on the future claims will require medical evidence of impairment. The agreements allow claimants to receive prompt payments under the NSP. Settling claimants will also be entitled to additional compensation if they develop a more severe asbestos-related medical condition in the future. Payments for pending and future claims will be managed by Integrex, a wholly owned Owens Corning subsidiary, devoted to efficient and timely claims processing. Owens Corning would also be entitled to terminate an NSP agreement with an individual law firm, and continue to seek resolution in the courts, if an unusual number of the clients of that firm elect not to participate in the NSP. Benefits to Claimants and the Courts The NSP allows claimants to receive substantial and timely payments without the risk of costly and protracted litigation. The company estimates that under current conditions, due to the tremendous backlog of cases and the time-intensive nature of litigation and settlement negotiations, many claimants would otherwise have to wait 10 to 15 years before payment of their claims. Maura J. Abeln, senior vice president and general counsel of Owens Corning, said, "This settlement program resolves 15 years of pending cases and establishes a fair process to resolve future claims. It is a major step forward for all concerned, reflecting Owens Corning's commitment to pay fair and meritorious claims. "Clearly, the success of the program depends on making payments only to those who meet appropriate medical criteria and can demonstrate exposure to Owens Corning's former asbestos-containing products. Plaintiff lawyer cooperation with Owens Corning reflects our shared view that fair settlements can be negotiated within the confines of the existing legal system," stated Abeln. Perry Weitz, a prominent asbestos attorney, of Weitz and Luxenberg, said, "Owens Corning and the plaintiffs' bar have come a long way to arrive at a comprehensive settlement program that will fulfill our mutual commitment to provide compensation on an expedited basis to people who have been injured through exposure to Owens Corning's former asbestos products. We have all learned that the parties are capable of resolving complex mass tort litigation through private administrative settlements, proving that the tort system can work for all involved." The Fibreboard Settlement Owens Corning also said the NSP agreements could settle asbestos cases that are pending against the company's subsidiary, Fibreboard Corporation. Those cases were resolved as part of a 1993 global settlement with its insurers and representatives of a class of future asbestos plaintiffs. The U.S. Supreme Court reviewed that global settlement earlier this month to decide whether the class action meets legal requirements. If the Supreme Court upholds the Fibreboard global settlement, the liabilities will be resolved through insurance funds by the terms of the global settlement. If the Supreme Court strikes down this global settlement, Fibreboard plaintiffs' claims, which are typically identical to plaintiff filings against Owens Corning, will also be paid under the terms of the NSP. A separate 1993 insurance settlement between Fibreboard and its insurers, which received final court approval, will establish an insurance fund of approximately $2.0 billion to be administered by Owens Corning to resolve all remaining Fibreboard asbestos claims. A Supreme Court decision is expected during the second quarter of 1999. Owens Corning is a world leader in high performance building materials systems and glass fiber composites with approximately 20,000 employees worldwide. The company had 1997 sales of $4.4 billion, and is positioned to achieve $5 billion in sales in 1998. The most recent discussion of the company's asbestos liabilities including its current reserve and estimated indemnity and defense costs and insurance coverage, is set forth in Note 11 to the company's Consolidated Financial Statements included in its Quarterly Report on Form 10-Q for the quarter ended September 30, 1998. This news release 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. Further information on factors that could affect the company's financial and other results are included in the company's Form 10-Q and 10-K, filed with the Securities and Exchange Commission. EX-99 3 OWENS CORNING Owens Corning National Settlement Program Update December 1998 1998 OC Backlog Analysis NSP Settlements 176,000 Routine Docket 18,000 Unsettled Cases 5,000 Previously Settled Cases 11,000 Total Cases Filed and In Process 210,000
Backlog Settlement Summary Total Cases Settled 176,000 Total Value of OC Settlement Payments: $ 1.200 Billion OC Settlement Average Payment Per Case $ 7,200 Three-Year Historical OC Average Per Case $ 13,800 * Total Value of Fibreboard Settlement Payments $ 0.900 Billion * Fibreboard Settlement Average Payment Per Case $ 5,500 Three-Year Historical Fibreboard Average Per Case $ 11,500
* Contingent on Supreme Court striking down Fibreboard Global Settlement OC Asbestos Cash Outflow (In millions of dollars) Average 1991-1994 1995 1996 1997 1998 (a) Total Payments $ 301 $ 308 $267 $ 300 $363 Insurance Proceeds $ 252 251 101 97 45 Owens Corning Pretax Cash Outflow 49 57 166 203 318 (a) Defense costs $ 63 Verdicts Paid 117 Routine Settlements 183 Total 1998 Payments $ 363
OC Financing Source of Funds - - Remaining availability under $1.8 Billion line of credit $1.300 Billion - - Financing Alternatives Under Consideration - Additional Long-Term Debt - Convertible Preferred Security - Sale or Joint Venture of Non-Strategic Assets or Businesses
OC Asbestos Liability Payments # of Cases $ Billions Settlement of existing backlog 176,000 ($.9-$1.2) Existing settlements and verdicts 11,000 ($.3) Defense and administrative processing costs - ($.2) Future claims processing under NSP and payments to non-NSP participants ($1.1-$1.3) Total Liability (Range of $2.5 to $3.0) ($2.7) Existing Reserve ($1.3) Net Reserve Addition ($1.4) Tax Benefit @ 37% $ .5 Effect on 1998 Net Income ($ .9)
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