<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to ____________
Commission file number 1-8247
JOHNS MANVILLE CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 84-0856796
- ------------------------------- ---------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
717 17th Street
Denver, Colorado 80202
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(303) 978-2000
--------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [_]
At May 8, 2000, there were 147,595,620 shares of the registrant's common
stock outstanding.
<PAGE>
*PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
--------------------
* "Johns Manville," the "Company," "JM," "we," "us" and "our" when used in
this report refers to Johns Manville Corporation, incorporated in the State
of Delaware in 1991, and includes, where applicable, its consolidated
subsidiaries.
I-1
<PAGE>
JOHNS MANVILLE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(Thousands of dollars)
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 2000 1999
- --------------------------------------------------------------------------
<S> <C> <C>
Current Assets
Cash and equivalents $ 44,556 $ 61,140
Marketable securities, at cost,
which approximates market 144 3,633
Receivables 302,640 283,102
Inventories 153,462 160,340
Prepaid expenses 9,297 10,714
Deferred tax assets 33,015 39,750
---------- ----------
Total Current Assets 543,114 558,679
Property, Plant and Equipment,
net of accumulated depreciation
of $717,548 and $718,545, respectively 1,044,535 1,040,343
Deferred Tax Assets 144,233 144,027
Goodwill, net of accumulated amortization
of $47,568 and $43,447, respectively 283,143 289,582
Other Assets 265,484 257,002
---------- ----------
$2,280,509 $2,289,633
========== ==========
LIABILITIES
- --------------------------------------------------------------------------
Current Liabilities
Short-term debt $ 11,753 $ 10,096
Accounts payable 159,517 169,747
Compensation and employee benefits 93,906 117,255
Income taxes 27,763 16,065
Other accrued liabilities 90,329 97,847
---------- ----------
Total Current Liabilities 383,268 411,010
Long-Term Debt, less current portion 486,375 503,148
Postretirement Benefits Other Than Pensions 181,488 177,836
Deferred Income Taxes and Other
Noncurrent Liabilities 319,042 329,339
---------- ----------
1,370,173 1,421,333
---------- ----------
Commitments and Contingencies
STOCKHOLDERS' EQUITY
- --------------------------------------------------------------------------
Common Stock 1,646 1,646
Capital in Excess of Par Value 555,777 552,549
Treasury Stock, at cost (229,851) (229,851)
Unearned Stock Compensation (4,039) (2,511)
Retained Earnings 570,148 533,879
Accumulated Other Comprehensive Income 16,655 12,588
---------- ----------
910,336 868,300
---------- ----------
$2,280,509 $2,289,633
========== ==========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
I-2
<PAGE>
JOHNS MANVILLE CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Thousands of dollars, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months
Ended March 31,
------------------------
<S> <C> <C>
2000 1999
- -------------------------------------------------------------------------
Net Sales $516,868 $495,758
Cost of Sales 380,190 359,929
Selling, General and Administrative 44,276 53,751
Research, Development and Engineering 8,266 9,714
Other Income (Expense), net (7,606) (7,357)
-------- --------
Income from Operations 76,530 65,007
Interest Income 924 628
Interest Expense 7,492 7,644
-------- --------
Income before Income Taxes 69,962 57,991
Income Tax Expense 24,837 20,297
-------- --------
Net Income $ 45,125 $ 37,694
=========================================================================
Comprehensive Income $ 49,192 $ 44,916
=========================================================================
Three Months
Ended March 31,
------------------------
EARNINGS PER COMMON SHARE 2000 1999
- -------------------------------------------------------------------------
Basic:
Net Income $.30 $.24
=========================================================================
Diluted:
Net Income $.30 $.23
=========================================================================
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
I-3
<PAGE>
JOHNS MANVILLE CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Thousands of dollars)
(Unaudited)
<TABLE>
<CAPTION>
Three Months
Ended March 31,
-----------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES: 2000 1999
- -------------------------------------------------------------------------------
Net income $ 45,125 $ 37,694
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 29,425 28,421
Deferred taxes 8,050 5,604
Other, net 5,853 8,833
(Increase) decrease in current assets:
Receivables (21,930) (5,838)
Inventories 5,494 (16)
Prepaid expenses 1,417 1,016
Increase (decrease) in current liabilities:
Accounts payable (3,014) 5,188
Compensation and employee benefits (22,288) (13,706)
Income taxes 12,188 2,518
Other accrued liabilities (11,262) 1,191
Change in other noncurrent liabilities (4,219) 257
-------- --------
Net cash provided by operating activities 44,839 71,162
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
- -------------------------------------------------------------------------------
Purchases of property, plant and equipment (37,125) (34,910)
Proceeds from maturities of held-to-maturity
securities 510 1,679
Increase in other assets (5,795) (10,480)
-------- --------
Net cash used in investing activities (42,410) (43,711)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
- -------------------------------------------------------------------------------
Revolving credit facilities, net (8,818) (4,210)
Issuances of debt 178 9,624
Payments on debt (486) (2,084)
Dividends on common stock (8,852) (9,520)
Stock compensation transactions 3,501
-------- --------
Net cash used in financing activities (17,978) (2,689)
-------- --------
Effect of Exchange Rate Changes on Cash (1,035) (327)
-------- --------
Net Increase (Decrease) in Cash and Equivalents (16,584) 24,435
Cash and Equivalents at Beginning of Period 61,140 12,350
-------- --------
Cash and Equivalents at End of Period $ 44,556 $ 36,785
===============================================================================
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
I-4
<PAGE>
JOHNS MANVILLE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The condensed consolidated financial statements of Johns Manville Corporation
("JM") as of March 31, 2000 and December 31, 1999 and for the three months ended
March 31, 2000 and 1999 reflect all normal, recurring adjustments which are, in
the opinion of management, necessary for a fair presentation of the financial
condition and the results of operations for the periods presented. The year-end
condensed consolidated balance sheet was derived from audited financial
statements, and as presented does not include all disclosures required by
generally accepted accounting principles. JM has reclassified the presentation
of certain prior period information to conform with the current presentation
format. Additional information regarding JM's accounting policies, operations
and financial position is contained or incorporated in JM's Form 10-K for the
year ended December 31, 1999 filed with the Securities and Exchange Commission.
Note 1 - Inventories
The major classes of inventories were as follows:
<TABLE>
<CAPTION>
(Thousands of dollars)
March 31, December 31,
2000 1999
-------- --------
<S> <C> <C>
Finished goods $101,303 $102,924
Raw materials and supplies 39,301 44,874
Work-in-process 12,858 12,542
-------- --------
$153,462 $160,340
======== ========
</TABLE>
Note 2 - Debt
In order to fix a portion of JM's variable interest rate debt and reduce the
aggregate risk to movements in interest rates, JM has interest rate swaps with
notional values totaling approximately $94 million. At March 31, 2000, the fair
market value of these instruments reflected unrecognized losses of approximately
$0.1 million.
Note 3 - Earnings Per Common Share and Equity
Basic and diluted earnings per common share amounts were determined using the
reported net income and the following weighted average number of common shares:
<TABLE>
<CAPTION>
First Quarter
2000 1999
----------- -----------
<S> <C> <C>
Basic 148,240,000 159,956,000
Diluted 148,649,000 162,244,000
</TABLE>
The difference between the basic and diluted weighted average shares outstanding
is due to stock options and deferred stock rights. JM paid a regular quarterly
dividend of $0.06 per common share totaling $8.9 million, and $0.06 per common
share totaling $9.5 million, in the first quarter of 2000 and 1999,
respectively.
In July 1999 JM purchased 12.2 million shares of its common stock from the
Manville Personal Injury Settlement Trust (the "Trust"), resulting in a decrease
in the weighted average number of common shares outstanding during 1999.
I-5
<PAGE>
Note 4 - Commitments and Contingencies
Contingent Product Liability
Between 1988 and 1992 JM manufactured phenolic roofing insulation which may,
under certain circumstances, contribute to the corrosion of metal decks on which
it is installed. Since 1993 JM has had a program to inspect such metal decks
and remediate where appropriate. JM has accrued for expected costs relating
to future inspections, remediation and anticipated claims. These accruals are
based on JM's historical experience regarding the incidence of corrosion and the
cost of remediation and include a number of assumptions related to the types and
remaining expected lives of roofs on which phenolic insulation has been
installed. At March 31, 2000 JM had accruals of $23 million in connection with
these anticipated costs.
JM has entered into reimbursement agreements with JM's liability carriers and
the former owner of the phenolic roofing insulation business, which provide for
reimbursement of certain future costs related to phenolic roofing insulation to
be incurred by JM. At March 31, 2000 JM had receivables of $27 million in
connection with the expected reimbursement of these anticipated costs.
On April 12, 2000 JM entered into a settlement agreement with representatives of
a class consisting of substantially all building owners in the United States
with JM's phenolic roof insulation installed on their metal roof decks. The
settlement agreement, which provides for compensation to these owners, is
subject to certain conditions, including court approval before becoming final.
If the settlement agreement becomes final, JM expects to increase its accruals
by an amount in the range of $35 million to $40 million. In addition, as such
amount would be reimbursable under the reimbursement agreements, JM would
correspondingly increase its receivables by a like amount. Such reimbursements
could occur in periods subsequent to payments made under the settlement
agreement.
Based on the information available to date and subject to the assumptions and
agreements described above, JM does not believe that its costs associated with
phenolic roofing insulation will have a material adverse effect on JM's
financial condition, liquidity or results of operations.
Environmental Contingencies
At March 31, 2000 JM had remediation activities in progress at five sites, out
of a total of 16 such sites for which JM has identified environmental conditions
requiring remediation. In addition, JM has been identified as a potentially
responsible party at 15 non-Company owned or operated sites under the federal
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA")
or similar state legislation. Of these 15 sites, JM's potential liability for
13 sites will be determined pursuant to a global CERCLA order (the "Order")
described in the following paragraph. Two of the sites may not be subject to
the Order and, accordingly, JM could be jointly and severally liable for costs
of remediating these sites. However, both sites have multiple potentially
responsible parties working with the regulatory agencies. In addition, JM's
disposal percentage is at or near the de minimis level at both sites. During
1999 JM settled its CERCLA and Resource Conservation and Recovery Act ("RCRA")
liability at three sites under the Order, of which one is final.
In 1994 the U.S. government and JM settled certain litigation concerning JM's
disposal activities prior to consummation of its plan of reorganization. The
Order, which was made a court order, limits JM's future liability under both
CERCLA and RCRA to 55 percent of its share of site-wide response costs and
natural resources damages without regard to joint and
I-6
<PAGE>
several liability for disposals made by JM prior to consummation of JM's plan of
reorganization. The Order resolved JM's liability at certain historical sites
and also covers CERCLA and RCRA liability for other disposal sites at which the
U.S. Environmental Protection Agency ("EPA") has incurred or may incur response
costs and which were used by JM prior to consummation of the plan of
reorganization. The Order provides that the amount JM will be obligated to pay,
in the aggregate, for such sites shall never exceed $850,000 during any given
year. The EPA and others from time to time commence cleanup activities at such
sites and in the future the EPA and others may assert claims against JM with
respect to such sites. JM believes that all such activities and claims, if any,
will be subject to the Order.
As a result of factors such as changes in federal and state regulations, the
application and effectiveness of remedial actions, the difficulty in assessing
the extent of environmental contamination, and the allocation of costs among
potentially responsible parties, actual costs to be incurred for environmental
cleanup may vary from previous estimates. Subject to the uncertainties inherent
in evaluating environmental exposures, and based on information presently
available, including JM's historical remediation experience, currently enacted
environmental laws and regulations, the Order and existing remediation
technology, JM believes that if additional costs are incurred in excess of the
accrued amounts, such costs are not expected to have a material adverse effect
on JM's financial condition, liquidity or results of operations.
Note 5 - New Accounting Pronouncements
In June 1998 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities." This statement, along with Statement of Financial
Accounting Standards No. 137, "Accounting for Derivative Instruments and Hedging
Activities - Deferral of the Effective Date of FASB Statement No. 133 - an
amendment of FASB Statement No. 133" issued in July 1999, is effective for JM on
January 1, 2001, and establishes accounting and reporting standards for
derivative instruments and for hedging activities. It requires that JM
recognize all derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at fair value. At this time,
JM cannot determine the effects, if any, adopting this statement will have on
its financial condition presentation or results of operations.
I-7
<PAGE>
Note 6 - Business Segment Information
JM reports separately the results of the Insulation, Roofing Systems and
Engineered Products segments. The Insulation segment consists of JM's building,
commercial and industrial, and original equipment manufacturers ("OEM")
insulation businesses. The Roofing Systems segment consists of JM's
commercial and industrial roofing systems business. The Engineered Products
segment consists of JM's mats and fibers, glass fabrics and air filtration
businesses.
<TABLE>
<CAPTION>
(Thousands of dollars)
Three Months
Ended March 31,
-----------------------
<S> <C> <C>
NET SALES 2000 1999
- ----------------------------------------------------------------------
Insulation $201,875 $192,982
Roofing Systems 134,893 121,838
Engineered Products 188,821 190,548
Eliminations (8,721) (9,610)
- ----------------------------------------------------------------------
$516,868 $495,758
======================================================================
INCOME BEFORE INCOME TAXES
- ----------------------------------------------------------------------
Income from Operations:
Insulation $ 43,109 $ 39,105
Roofing Systems 4,231 4,706
Engineered Products 29,190 21,196
- ----------------------------------------------------------------------
Income from Operations 76,530 65,007
Interest Income 924 628
Interest Expense 7,492 7,644
- ----------------------------------------------------------------------
Income before Income Taxes $ 69,962 $ 57,991
======================================================================
</TABLE>
Net sales included in Eliminations relate principally to intersegment sales from
the Engineered Products segment to the Roofing Systems segment at prices
approximating market.
I-8
<PAGE>
Item 2.
JOHNS MANVILLE CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Results of Operations
Net sales in the first quarter of 2000 increased $21.1 million, or 4.3 percent,
to $516.9 million from $495.8 million for the same period of 1999. Gross profit
increased $0.9 million to $136.7 million from $135.8 million. The gross profit
margin for the first quarter of 2000 decreased to 26.4 percent compared with
27.4 percent for the same period of 1999 primarily due to raw material and other
fixed cost increases and a less favorable product mix in insulation.
Selling, general and administrative and research, development and engineering
expenses, combined, decreased as a percentage of sales to 10.2 percent for 2000
compared with 12.8 percent for 1999, due primarily to 1999 staff reductions and
a lower 2000 pension expense. Other expense, net, for 2000 was flat at $7.6
million, compared with $7.4 million in 1999. Income from operations for the
first quarter of 2000 was $76.5 million, up 17.7 percent, compared with $65
million for the first quarter of 1999.
Insulation Segment
Net sales increased $8.9 million, or 4.6 percent, to $201.9 million for the
first quarter of 2000 from $193 million in 1999. Income from operations
increased 10.2 percent to $43.1 million for the first quarter of 2000 from $39.1
million in 1999. Building insulation experienced higher average selling prices
during the first quarter of 2000 compared with the first quarter of 1999. The
higher quarterly sales prices, which were lower than late 1999 levels, were
slightly offset by decreased volumes due to seasonality and reduced demand,
which were not experienced last year. Although sales were strong in commercial
and industrial insulation, gross and operating profits declined due to higher
fixed costs in 2000, despite significant volume increases in mechanical and OEM
insulation.
Roofing Systems Segment
Net sales increased $13.1 million, or 10.7 percent, to $134.9 million for the
first quarter of 2000 from $121.8 million for the first quarter of 1999. Income
from operations in the first quarter of 2000 was $4.2 million, a 10.1 percent
decline from $4.7 million in the comparable period of 1999. The sales increase
was driven by significant volume growth late in the quarter, along with the
incremental impacts of a third quarter 1999 acquisition. However, gross profit
and operating income decreased as volume gains were more than offset by higher
raw material costs and continued pricing pressures in membranes and polyiso foam
insulation.
Engineered Products Segment
Net sales decreased slightly to $188.8 million in the first quarter of 2000
compared with $190.5 million in 1999. Income from operations for the first
quarter of 2000 increased $8 million, or 37.7 percent, to $29.2 million from
$21.2 million for 1999. Mats and fibers in the U.S. experienced higher sales in
2000 due to continued strong demand in roofing mats, specialty mats and base
fibers. Improved productivity and lower fixed costs also led to significant
operating earnings and gross margin gains for this business. Despite sales
declines due to unfavorable currency comparisons, operating earnings for
European mats and fibers were also significantly higher in 2000
I-9
<PAGE>
compared with 1999. However, sales and operating income for European fabrics
declined due to weak demand, along with unfavorable currency comparisons.
Operating income improved significantly on moderate sales growth in filtration
on higher volumes for microfibers due primarily to increased clean room build
activity.
Interest Expense, net, and Income Taxes
Interest expense, net of interest income, decreased $0.4 million, or 6.4
percent, to $6.6 million for the first quarter of 2000 compared with $7
million in 1999 due to lower average borrowing levels. JM's year-to-date
effective tax rates were approximately 35.5 percent in 2000 and 35 percent in
1999.
Net Income
JM's net income for the first quarter of 2000 was $45.1 million, or $0.30 per
diluted share, compared with net income for the first quarter of 1999 of $37.7
million, or $0.23 per diluted share. As a result of JM's July 1999 repurchase of
12.2 million shares of JM common stock from the Trust, there were fewer shares
outstanding in the first quarter of 2000 than in the first quarter of 1999,
which contributed to the earnings per share increase.
Liquidity and Capital Resources
JM's agreements with its lenders contain financial and general covenants. These
include, among other things, limitations on borrowings, investments, and asset
dispositions, and maintenance of various financial ratios. Noncompliance with
these or other covenants, or the occurrence of any other event of default, could
result in the termination of existing credit agreements and the acceleration of
debt owed by JM and its subsidiaries. At March 31, 2000 JM was in compliance
with these covenants.
At March 31, 2000 JM had net working capital of $159.8 million, including cash
and marketable securities totaling $44.7 million. Total cash and marketable
securities located outside the U.S. and Canada were approximately $16.8 million.
At March 31, 2000 JM had approximately $482 million available under its $750
million unsecured multicurrency revolving credit facilities. JM's international
subsidiaries had additional borrowing and working capital facilities totaling
approximately $18.5 million, of which $10.7 million was available at March 31,
2000. These facilities are primarily unsecured or are guaranteed by JM, with the
remaining portion secured by certain international receivables.
Net operating activities provided $44.8 million of cash during the first three
months of 2000. Net operating activities for the same period of 1999 provided
$71.2 million. Cash flows from operating activities are primarily influenced by
selling prices, sales volume and working capital requirements. As discussed in
"Results of Operations," JM benefited from selling price improvements in
building insulation and volume increases in several businesses, partially offset
by higher fixed and raw material costs during the first three months of 2000.
Operating activities also included cash outlays to build working capital for the
construction season, which typically peaks during the third quarter. These cash
usages were significantly lower in 1999 as the building insulation and mats and
fibers businesses operated at full capacity. Compared with the first quarter of
1999, operating cash flows for 2000 were reduced by the January semi-annual
interest payment on $200 million of senior notes, which were issued in July
1999.
I-10
<PAGE>
Investing activities for the three months ended March 31, 2000 included $37.1
million for capital expenditures, principally to increase building and
commercial and industrial insulation capacity, and to complete a furnace rebuild
for mats and fibers. Estimated 2000 capital expenditures total approximately
$178 million, excluding acquisitions, of which approximately $87 million relate
to capacity expansion projects. As of March 31, 2000 outstanding purchase
commitments for capital projects totaled $51 million.
Financing activities for the first quarter of 2000 consisted of net repayments
of debt totaling $9.3 million and issuances of debt totaling $0.2 million. JM
paid a regular quarterly dividend of $0.06 per common share totaling $8.9
million, and $0.06 per common share totaling $9.5 million, in the first quarter
of 2000 and 1999, respectively. Financing activities for the first quarter of
1999 also included net repayments of debt totaling $6.3 million and issuances of
debt totaling $9.6 million. JM also received $3.5 million from the exercise of
stock options previously granted to employees in the first quarter of 1999.
Contingent Product Liability
Between 1988 and 1992 JM manufactured phenolic roofing insulation which may,
under certain circumstances, contribute to the corrosion of metal decks on which
it is installed. Since 1993 JM has had a program to inspect such metal decks
and remediate where appropriate. JM has accrued for expected costs relating
to future inspections, remediation and anticipated claims. These accruals are
based on JM's historical experience regarding the incidence of corrosion and the
cost of remediation and include a number of assumptions related to the types and
remaining expected lives of roofs on which phenolic insulation has been
installed. At March 31, 2000 JM had accruals of $23 million in connection with
these anticipated costs.
JM has entered into reimbursement agreements with JM's liability carriers and
the former owner of the phenolic roofing insulation business, which provide for
reimbursement of certain future costs related to phenolic roofing insulation to
be incurred by JM. At March 31, 2000 JM had receivables of $27 million in
connection with the expected reimbursement of these anticipated costs.
On April 12, 2000 JM entered into a settlement agreement with representatives of
a class consisting of substantially all building owners in the United States
with JM's phenolic roof insulation installed on their metal roof decks. The
settlement agreement, which provides for compensation to these owners, is
subject to certain conditions, including court approval before becoming final.
If the settlement agreement becomes final, JM expects to increase its accruals
by an amount in the range of $35 million to $40 million. In addition, as such
amount would be reimbursable under the reimbursement agreements, JM would
correspondingly increase its receivables by a like amount. Such reimbursements
could occur in periods subsequent to payments made under the settlement
agreement.
Based on the information available to date and subject to the assumptions and
agreements described above, JM does not believe that its costs associated with
phenolic roofing insulation will have a material adverse effect on JM's
financial condition, liquidity or results of operations.
Environmental Contingencies
At March 31, 2000 JM had remediation activities in progress at five sites, out
of a total of 16 such sites for which JM has identified environmental conditions
requiring remediation. In addition, JM has been identified as a potentially
responsible party at 15 non-Company owned or operated sites under the federal
Comprehensive Environmental Response, Compensation and
I-11
<PAGE>
Liability Act ("CERCLA") or similar state legislation. Of these 15 sites, JM's
potential liability for 13 sites will be determined pursuant to a global CERCLA
order (the "Order") described in the following paragraph. Two of the sites may
not be subject to the Order and, accordingly, JM could be jointly and severally
liable for costs of remediating these sites. However, both sites have multiple
potentially responsible parties working with the regulatory agencies. In
addition, JM's disposal percentage is at or near the de minimis level at both
sites. During 1999 JM settled its CERCLA and Resource Conservation and Recovery
Act ("RCRA") liability at three sites under the Order, of which one is final.
In 1994 the U.S. government and JM settled certain litigation concerning JM's
disposal activities prior to consummation of its plan of reorganization. The
Order, which was made a court order, limits JM's future liability under both
CERCLA and RCRA to 55 percent of its share of site-wide response costs and
natural resources damages without regard to joint and several liability for
disposals made by JM prior to consummation of JM's plan of reorganization. The
Order resolved JM's liability at certain historical sites and also covers CERCLA
and RCRA liability for other disposal sites at which the U.S. Environmental
Protection Agency ("EPA") has incurred or may incur response costs and which
were used by JM prior to consummation of the plan of reorganization. The Order
provides that the amount JM will be obligated to pay, in the aggregate, for such
sites shall never exceed $850,000 during any given year. The EPA and others
from time to time commence cleanup activities at such sites and in the future
the EPA and others may assert claims against JM with respect to such sites. JM
believes that all such activities and claims, if any, will be subject to the
Order.
As a result of factors such as changes in federal and state regulations, the
application and effectiveness of remedial actions, the difficulty in assessing
the extent of environmental contamination, and the allocation of costs among
potentially responsible parties, actual costs to be incurred for environmental
cleanup may vary from previous estimates. Subject to the uncertainties inherent
in evaluating environmental exposures, and based on information presently
available, including JM's historical remediation experience, currently enacted
environmental laws and regulations, the Order and existing remediation
technology, JM believes that if additional costs are incurred in excess of the
accrued amounts, such costs are not expected to have a material adverse effect
on JM's financial condition, liquidity or results of operations.
JM believes that its current cash position, funds available under credit
facilities and cash generated from operations will enable it to satisfy its debt
service requirements, its ongoing capital expansion program and its other
ongoing operating costs. However, JM may need to access capital markets to pay
the principal of its credit facilities and senior notes, or in connection with
possible significant future acquisitions.
I-12
<PAGE>
Forward-Looking Statements
This report contains "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Statements of JM contained in
this report concerning matters that are not historical facts, including, without
limitation, statements concerning:
^ expected levels of capital spending,
^ expectations as to contingencies related to phenolic roofing
insulation and environmental liabilities, and
^ the ability to satisfy its debt service requirements, its ongoing
capital expansion program and its other ongoing operating costs,
constitute such forward-looking statements. See "Liquidity and Capital
Resources."
Forward-looking statements of JM are subject to risks and uncertainties that
could cause actual results to differ materially from those expressed in such
statements. Important factors relating to such risks and uncertainties are set
forth below.
Factors that could affect the forward-looking statements generally are related
to demand for JM's products, overall capacity levels in the industry and the
overall competitive environment in which JM operates. These factors are
discussed in "Business" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in JM's Annual Report on Form 10-K for the
year ended December 31, 1999.
Factors that could affect JM's capital spending and capital expansion
activities, ability to satisfy debt service requirements, ongoing capital
expansion program and other ongoing operating costs, include, without
limitation, the general factors noted above, the level of cash flow generated by
JM and the ability of JM to otherwise fund such commitments, which in turn could
be affected by general U.S. and international economic conditions as well as
financial market conditions. In addition, JM's expansion activities could be
affected by risks inherent in large capital projects.
For a discussion of factors concerning contingencies related to phenolic roofing
insulation and environmental matters, see "Liquidity and Capital Resources -
Contingent Product Liability and Environmental Contingencies."
I-13
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
-----------------
Not applicable.
ITEM 2. CHANGES IN SECURITIES.
---------------------
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
-------------------------------
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
---------------------------------------------------
On May 12, 2000, the Company's Annual Meeting of Stockholders was held in
Denver, Colorado and the following items were voted upon and approved by the
stockholders.
1. The following Directors were elected by the stockholders:
NAME FOR VOTE WITHHELD
---- --- -------------
Leo Benatar 144,001,539 268,451
Ernest H. Drew 143,983,452 286,538
Robert A. Falise 143,116,860 1,153,130
Todd Goodwin 144,008,503 261,487
Michael N. Hammes 143,993,449 276,541
Kathryn Rudie Harrigan 143,919,291 350,699
Louis Klein, Jr. 143,215,703 1,054,287
Christian E. Markey, Jr. 143,340,727 929,263
William E. Mayer 144,014,042 255,948
2. Approval of the appointment of the firm of PricewaterhouseCoopers LLP
as independent accountants of the Company for the fiscal year ending December
31, 2000.
In addition, on May 12, 2000, Charles L. ("Jerry") Henry was reappointed as a
Director and Chairman of the Board of Directors.
For: 144,086,512 Against: 110,136
Abstain: 73,342 Broker Non-Vote: -0-
II-1
<PAGE>
ITEM 5. OTHER INFORMATION.
------------------
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
--------------------------------
(a) Exhibits.
--------
Exhibit 10.1, Amendment No. 1 to Transition and Retirement
Agreement between Johns Manville Corporation and Charles L. Henry
dated March 31, 2000.
Exhibit 27, Financial Data Schedule.
(b) Form 8-K.
--------
None.
II-2
<PAGE>
SIGNATURE
---------
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 thereunto duly authorized.
JOHNS MANVILLE CORPORATION
--------------------------
(Registrant)
Date: May 12, 2000 By: /s/ Kenneth L. Jensen
----------------------------------
Kenneth L. Jensen
Senior Vice President and
Chief Financial Officer
Date: May 12, 2000 By: /s/ D. Dion Persson
-----------------------------------
D. Dion Persson
Vice President, Assistant
General Counsel and Secretary
II-3
<PAGE>
EXHIBIT 10.1
AMENDMENT NO. 1 TO
TRANSITION AND RETIREMENT AGREEMENT
-----------------------------------
This AGREEMENT (the "Agreement") is entered into as of the 31st of
March, 2000, by and between JOHNS MANVILLE CORPORATION, a Delaware corporation
(the "Company"), and CHARLES L. HENRY (the "Executive").
WHEREAS, the Company and the Executive are parties to a Transition and
Retirement Agreement, dated as of February 3, 2000 (the "Retirement Agreement");
and
WHEREAS, the Company and Executive wish to extend the Transition
Period (as defined in the Retirement Agreement) and to make certain clarifying
amendments to the Retirement Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, the Company and the Executive hereby agree as
follows:
1. Capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Retirement Agreement.
2. The first sentence of Section 1(a) of the Retirement Agreement is
hereby amended to read as follows:
"The Company shall continue to employ the Executive, and the
Executive shall continue to serve the Company, as Chairman,
President and CEO, subject to the terms and conditions set forth
in this Agreement, for a period (the "Transition Period")
commencing as of the date hereof (the "Effective Date") and ending
on the earliest of (1) such date as the Executive's non-interim
successor shall have taken office, (2) the date set forth in a
written notice from one party to the other (which date shall be no
earlier than the tenth business day following receipt of such
notice and which notice, in the case of the Company, shall be
authorized by the Committee, as hereinafter defined) or (3) June
30, 2000."
<PAGE>
3. Each of Section 3(c) and the first sentence of Section 3(d) of the
Retirement Agreement is hereby amended by changing the date "March 31, 2000" to
"June 30, 2000".
4. The second sentence of Section 3(d) of the Retirement Agreement is
hereby amended by adding the following parenthetical at the end thereof:
"(and, more particularly, it being understood that the Retirement
Benefits to which Executive is entitled under said Section 8(d) shall
be offset by the amounts payable to Executive under Sections 3(a)(4)
and 3(a)(5) hereof)."
5. Except as amended hereby, the Retirement Agreement shall remain in
full force and effect.
2
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of March
31, 2000.
JOHNS MANVILLE CORPORATION
ATTEST: By: /s/ Todd Goodwin
--------------------------------
Chairman: Compensation Committee
/s/ Dion Persson
- ---------------------------
Corporate Secretary
/s/ Charles L. Henry
------------------------------------
Executive
3
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MARCH
31, 2000 FORM 10-Q OF JOHNS MANVILLE CORPORATION AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 44,556
<SECURITIES> 144
<RECEIVABLES> 302,860
<ALLOWANCES> 3,771
<INVENTORY> 153,462
<CURRENT-ASSETS> 543,114
<PP&E> 1,762,083
<DEPRECIATION> 717,548
<TOTAL-ASSETS> 2,280,509
<CURRENT-LIABILITIES> 383,268
<BONDS> 486,375
0
0
<COMMON> 1,646
<OTHER-SE> 908,690
<TOTAL-LIABILITY-AND-EQUITY> 2,280,509
<SALES> 516,868
<TOTAL-REVENUES> 516,868
<CGS> 380,190
<TOTAL-COSTS> 380,190
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 995
<INTEREST-EXPENSE> 7,492
<INCOME-PRETAX> 69,962
<INCOME-TAX> 24,837
<INCOME-CONTINUING> 45,125
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 45,125
<EPS-BASIC> .30
<EPS-DILUTED> .30
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