-----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, PSdV4d8w4G/UhDAGKMaTgfzvI8M194nE/yy4ihcQbZkfI4R7h4Hz4kru1Gykfpy6 Vv009jcEH6io8nPGnlOtQg== 0000075234-99-000003.txt : 19990416 0000075234-99-000003.hdr.sgml : 19990416 ACCESSION NUMBER: 0000075234-99-000003 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990415 ITEM INFORMATION: FILED AS OF DATE: 19990415 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: 99595011 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): April 15, 1999. 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 Toledo, Ohio 43659 (Address of principal executive offices) (Zip Code) (419) 248-8000 (Registrant's telephone number, including area code) Item 5. Other Events. (a) April 15, 1999 Press Release. On April 15, 1999, Owens Corning issued the press release attached hereto as Exhibit 99. Such press release is incorporated herein by this reference. Item 7. Financial Statements and Exhibits (c) Exhibits The exhibit accompanying this report is listed in the accompanying Exhibit Index. 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/ Steven J. Strobel Steven J. Strobel Vice President and Controller Dated: April 15, 1999 EXHIBIT INDEX The following exhibit is filed herewith: Exhibit No. 99. Press Release of Owens Corning dated April 15, 1999. EX-99 2 Owens Corning Reports Strong First Quarter Results TOLEDO, Ohio, April 15, 1999 - Owens Corning (NYSE: OWC) today reported record earnings on strong sales for the first quarter of 1999. Net income was $44 million, a record for the first quarter. Earnings per share on a diluted basis were $0.77. This represents an increase of $36 million over 1998 first quarter results of $8 million or $0.16 per diluted share. Income was driven by increased volume in the company's Building Materials businesses, continuing improvement in productivity, incremental restructuring benefits and increases in market pricing. Net sales for the quarter were $1.130 billion, down slightly compared to $1.137 billion in the first quarter of 1998. However, sales in the first quarter were up 6 percent over last year when adjusted for the Yarns business, which transferred into a joint venture during the third quarter of 1998. "We are extremely pleased with the solid performance of our businesses in the first quarter," said Glen H. Hiner, Owens Corning chairman and chief executive officer. "Building Materials had an exceptional quarter, and two units within that business - Insulating Systems and Roofing Systems - had all time record first quarters. In addition, all of our businesses continued to benefit from company-wide productivity initiatives. On the strategic front, we are encouraged by the initial results of our National Settlement Program, which is making our future more predictable." Building Materials Building Materials income from operations was $76 million during the quarter, compared to a loss of $10 million during the first quarter of 1998. The improvement was due to strength in the roofing and insulation markets and the success of productivity initiatives. Sales in Building Materials were $925 million during the first quarter of 1999, up 8 percent compared to the prior-year period. Demand for Insulation Systems continued at a record pace in the quarter, and unseasonably mild weather helped drive demand for Roofing Systems. Exterior Systems vinyl siding unit volumes were up 8 percent compared to the first quarter of 1998. Composite Materials Composite Materials income from operations was $31 million, down from $52 million in the first quarter of 1998, due largely to the transfer of the Yarns business into a joint venture in the third quarter of 1998. This unit had good productivity in the quarter, which offset slightly lower volume. Composite sales in the first quarter of 1999 were $236 million, compared to $312 million in the prior-year period. On a comparative basis, adjusted for the transfer of the Yarns business, sales were down 4 percent for the quarter. High demand globally for polymer reinforcement products was offset by volume declines in the United States. First Quarter Highlights * In January, Owens Corning announced the formation of a dedicated Acoustic Systems Business to capitalize on the strength of its brand, its long history of acoustic research, and its expanding acoustics product offering. The company is committed to taking a leadership position in this growing and fragmented market segment, which is estimated to be in excess of $3 billion. * Owens Corning issued $250 million of 10-year senior notes with a 7.037 percent yield and a 7.0 percent coupon rate. The offering was oversubscribed. Proceeds were used to reduce the company's borrowings under Owens Corning's U.S. Bank Credit Facility. * The company expanded its global network of manufacturing plants making glass fiber reinforcements for composites applications. In India, Owens Corning dedicated a new plant which manufactures Advantex glass fiber reinforcements. In Korea, the company acquired a majority share of its glass fiber reinforcements joint venture, now called Owens Corning Korea. * Following a licensee's decision to close an Australian reinforcements plant, Owens Corning established Owens Corning Australia to serve the former licensee's customer base and to develop and grow the market for composite systems in Australia and New Zealand. * Plans were announced to install a continuous filament mat (CFM) line at the company's plant in Guelph, Ontario, Canada. The new line will add approximately 8,000 metric tons of CFM capacity and is expected to be operational in the first quarter of 2000. The investment follows recent increases of CFM capacity at Owens Corning's facilities in Battice, Belgium, and Huntingdon, Penn., and it will enable the company to better serve the needs of this growing market worldwide. * During the first quarter of 1999, 25 additional law firms joined the National Settlement Program (NSP), bringing the total number of firms in the program to approximately 80, and the total asbestos personal injury cases settled to over 188,000. The NSP was announced in December 1998, to settle the company's pending asbestos cases and to establish a framework for resolving cases in the future without litigation. Under NSP agreements, Owens Corning will pay both current and future claimants through an administrative procedure using 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. New claims being filed in the court system generally do not list Owens Corning as a defendant; an indication that the program is working. Please see the addendum to this press release for more information about the progress of the company's National Settlement Program. Outlook "The strong results in our businesses this quarter are very satisfying, and we believe that our momentum will continue," Hiner said. "We are working to realize double-digit earnings growth through all of our System Thinking initiatives, while focusing on achieving additional cost savings from the restructuring program we implemented last year." Owens Corning is a world leader in high performance building materials systems and glass fiber composites with approximately 20,000 employees worldwide. 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. Tables Follow OWENS CORNING AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME (unaudited) Quarter Ended March 31, 1999 1998 (In millions of dollars, except share data) NET SALES $ 1,130 $ 1,137 COST OF SALES (1) 871 938 Gross margin 259 199 OPERATING EXPENSES Marketing and administrative expenses (1) 136 129 Science and technology expenses 14 15 Restructure costs (1) - 87 Other (1) 13 Total operating expenses 149 244 Gain on sale of assets (2) - 84 INCOME FROM OPERATIONS 110 39 Cost of borrowed funds 33 37 INCOME BEFORE PROVISION (CREDIT) FOR INCOME TAXES 77 2 Provision (credit) for income taxes 27 (7) INCOME BEFORE MINORITY INTEREST AND EQUITY IN NET INCOME OF AFFILIATES 50 9 Minority interest (2) (5) Equity in net income (loss) of affiliates (4) 4 NET INCOME $ 44 $ 8 NET INCOME PER COMMON SHARE Basic net income per share $ .81 $ .16 Diluted net income per share $ .77 $ .16 Weighted average number of common shares outstanding and common equivalent shares during the period (in millions) Basic 53.9 53.4 Diluted 59.3 53.8
(1) During the first quarter of 1998, the Company recorded a $95 million pretax charge for restructuring and other actions, of which $87 million was recorded as restructure costs, $5 million as cost of sales, and $3 million as marketing and administrative expenses. (2) During the first quarter of 1998, the Company recorded an $84 million pretax gain from the sale of its 50% ownership interest in Alpha/Owens-Corning. OWENS CORNING AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (unaudited) March 31, December 31, March 31, 1999 1998 1998 ASSETS (In millions of dollars) CURRENT Cash and cash equivalents $ 51 $ 54 $ 115 Receivables 555 451 560 Inventories 496 437 533 Insurance for asbestos litigation claims - current portion (1) 150 150 100 Deferred income taxes 368 293 140 Income tax receivable 30 117 108 Other current assets 25 27 51 Total current 1,675 1,529 1,607 OTHER Insurance for asbestos litigation claims (1) 241 260 340 Asbestos costs to be reimbursed - Fibreboard 70 74 117 Deferred income taxes 508 608 394 Goodwill 754 762 792 Investments in affiliates 42 45 53 Other noncurrent assets 241 205 174 Total other 1,856 1,954 1,870 PLANT AND EQUIPMENT, at cost 3,572 3,498 3,603 Less--Accumulated depreciation (1,904) (1,880) (1,858) Net plant and equipment 1,668 1,618 1,745 TOTAL ASSETS $5,199 $5,101 $5,222
OWENS CORNING AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (Continued) (unaudited) March 31, December 31, March 31, 1999 1998 1998 (In millions of dollars) LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT Accounts payable and accrued liabilities $ 755 $ 942 $ 812 Reserve for asbestos litigation claims - current portion (1) 1,050 850 300 Short-term debt 108 69 59 Long-term debt - current portion 51 22 127 Total current 1,964 1,883 1,298 LONG-TERM DEBT 1,903 1,535 1,874 OTHER Reserve for asbestos litigation claims (1) 1,385 1,780 1,241 Asbestos-related liabilities - Fibreboard 75 79 124 Other employee benefits liability 325 326 332 Pension plan liability 47 55 63 Other 358 364 186 Total other 2,190 2,604 1,946 COMPANY OBLIGATED SECURITIES OF ENTITIES HOLDING SOLELY PARENT DEBENTURES 195 194 503 MINORITY INTEREST 44 19 24 STOCKHOLDERS' EQUITY Common stock 696 679 662 Deficit (1,723) (1,762) (1,035) Accumulated other comprehensive income (48) (37) (33) Other (22) (14) (17) Total stockholders' equity (1,097) (1,134) (423) TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $5,199 $ 5,101 $5,222
(1) As of March 31, 1999, the current portion of the reserve for asbestos litigation claims, net of insurance, is $900 million. Excluding Fibreboard activity, the total reserve, net of insurance, is $2,044 million. OWENS CORNING AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited) Quarter Ended March 31, 1999 1998 (In millions of dollars) NET CASH FLOW FROM OPERATIONS Net income $ 44 $ 8 Reconciliation of net cash provided by operating activities: Noncash items: Provision for depreciation and amortization 53 52 Provision (credit) for deferred income taxes 23 (45) Gain on sale of assets - (84) Other 5 (7) (Increase) decrease in receivables (86) (129) (Increase) decrease in inventories (53) (36) Increase (decrease) in accounts payable and accrued liabilities (181) (12) Increase (decrease) in accrued income taxes 80 (2) Proceeds from insurance for asbestos litigation claims, excluding Fibreboard 19 17 Payments for asbestos litigation claims, excluding Fibreboard (195) (129) Other (13) 37 Net cash flow from operations (304) (330) NET CASH FLOW FROM INVESTING Additions to plant and equipment (40) (47) Proceeds from the sale of affiliate or business - 134 Other (11) (19) Net cash flow from investing $ (51) $ 68
OWENS CORNING AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited) Quarter Ended March 31, 1999 1998 (In millions of dollars) NET CASH FLOW FROM FINANCING Net additions to long-term credit facilities $ 91 $ 285 Other additions to long-term debt 250 3 Net increase in short-term debt 18 36 Dividends paid (4) (4) Other (3) - Net cash flow from financing 352 320 Effect of exchange rate changes on cash - (1) Net increase (decrease) in cash and cash equivalents (3) 57 Cash and cash equivalents at beginning of period 54 58 Cash and cash equivalents at end of period $ 51 $ 115
OWENS CORNING AND SUBSIDIARIES QUARTERLY INFORMATION ON REPORTABLE OPERATING SEGMENTS (unaudited) Quarter Ended March 31, 1999 1998 (In millions of dollars) NET SALES Reportable Operating Segments Building Materials United States $ 814 $ 739 Europe 63 65 Canada and other 48 52 Total Building Materials 925 856 Composite Materials United States 128 182 Europe 82 97 Canada and other 26 33 Total Composite Materials 236 312 Total Reportable Operating Segments 1,161 1,168 Reconciliation to Consolidated Net Sales Composite Materials U.S. Sales to Building Materials U.S. (31) (31) Net sales $1,130 $1,137 External Customer Sales by Geographic Region United States $ 911 $ 890 Europe 145 162 Canada and other 74 85 Net Sales $1,130 $1,137
OWENS CORNING AND SUBSIDIARIES QUARTERLY INFORMATION ON REPORTABLE OPERATING SEGMENTS (Continued) (unaudited) Quarter Ended March 31, 1999 1998 (In millions of dollars) INCOME (LOSS) FROM OPERATIONS Reportable Operating Segments Building Materials United States $ 67 $ (6) Europe 3 (4) Canada and other 6 - Total Building Materials 76 (10) Composite Materials United States 28 42 Europe - 9 Canada and other 3 1 Total Composite Materials 31 52 Total Reportable Operating Segments $ 107 $ 42 Geographic Regions United States $ 95 $ 36 Europe 3 5 Canada and other 9 1 Total Reportable Operating Segments $ 107 $ 42 Reconciliation to Consolidated Income Before Provision for Income Taxes Restructuring and other charges - (95) Gain on sale of affiliate or business - 84 General corporate income (expense) 3 8 Cost of borrowed funds (33) (37) Consolidated Income before provision $ 77 $ 2 for income taxes
Addendum To Owens Corning's First Quarter Earnings Release National Settlement Program Update During the first quarter of 1999, 25 additional law firms joined the National Settlement Program (NSP), bringing the total number of firms in the program to approximately 80, and the total asbestos personal injury cases settled to over 188,000. The NSP, announced in December of 1998, also settles a similar number of pending claims and currently barred claims that would be filed against its Fibreboard subsidiary in the event that the U.S. Supreme Court strikes down Fibreboard's global settlement. A Supreme Court decision is expected sometime in the second quarter of 1999. In the first quarter the company paid approximately $40 million for claims settled under the NSP. The company estimates that it will pay an additional $610 million for claims resolved under the NSP in 1999, primarily in the third and fourth quarters. Other payments related to non-NSP cases, including verdicts and defense costs, as well as the cost of pursuing recoveries from tobacco companies, PFT laboratories and insurance companies, are expected to be approximately $125 million in 1999, of which $27 million was spent in the first quarter. This projected annual amount could be reduced, and NSP payments in 1999 and 2000 increased, depending on the number of additional law firms and claims resolved under the NSP in the next several quarters. Also, the costs of litigation, as well as future indemnity payments, could be offset by positive results in our proactive litigation efforts listed above. All such estimated amounts are before tax and before insurance recoveries. As a result of the National Settlement Program and the company's ability to focus on fewer remaining cases, Owens Corning took no adverse verdicts in the first quarter. The company went to trial 18 times, and in four cases it paid no money. In the remainder of those cases, it agreed to settle prior to a jury decision at values consistent with values in the NSP. These positive results were achieved while paying only $8 million in the first quarter in ongoing asbestos-related defense costs. This is a substantial reduction from prior quarters. Finally, in 1999, the company expects to pay approximately $200 million to resolve a substantial majority of all pre-NSP verdicts, settlements and appeals from 1993 through 1997, of which approximately $120 million was paid in the first quarter. With these payments, the company will be able to proceed with the NSP, and minimize ongoing litigation costs, appealing only those adverse verdicts where the company believes there has been an unjust result. The Owens Corning National Settlement Program was created in 1998 to settle the company's pending asbestos cases and to establish a framework for resolving cases in the future without litigation. Under NSP agreements, Owens Corning will pay both current and future claimants through an administrative procedure using 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. # # # -----END PRIVACY-ENHANCED MESSAGE-----