SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 1995
Commission File No. 1-3660
Owens Corning
Fiberglas Tower, Toledo, Ohio 43659
Area Code (419) 248-8000
A Delaware Corporation
I.R.S. Employer Identification No. 34-4323452
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on
Which Registered
Common Stock - $.10 Par Value New York Stock Exchange
Rights to Purchase Series A New York Stock Exchange
Participating Preferred
Stock, no par value, of the
Registrant
Securities registered pursuant to Section 12(g) of the Act:
None
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 / /
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of
Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [ ]
At December 31, 1995, the aggregate market value of
Registrant's $.10 par value common stock (Registrant's voting
stock) held by non-affiliates was $2,289,208,060, assuming
for purposes of this computation only that all directors and
executive officers are considered affiliates.
At December 31, 1995, there were outstanding 51,389,618
shares of Registrant's $.10 par value common stock.
Parts of Registrant's definitive 1996 proxy statement filed
or to be filed pursuant to Regulation 14A (the "1996 Proxy
Statement") are incorporated by reference into Part III of
this Form 10-K.
-2-
PART I
ITEM 1. BUSINESS
Owens Corning (formerly known as Owens-Corning Fiberglas
Corporation), a global company incorporated in Delaware in
1938, serves consumers and industrial customers with high
performance glass composites and building materials systems.
These products are used in industries such as home
improvement, new construction, transportation, marine,
aerospace, energy, appliance, packaging and electronics.
Many of these products are marketed under the trademark
FIBERGLAS(R).
Approximately eighty-two percent of the Company's sales are
related to home improvement, sales of composite materials
and sales outside U.S. markets. Approximately eighteen
percent of the Company's sales are related to new U.S.
residential construction.
Owens Corning's executive offices are at Fiberglas Tower,
Toledo, Ohio 43659; telephone (419) 248-8000. Unless the
context requires otherwise, the terms "Owens Corning" and
"Company" in this report refer to Owens Corning and its
subsidiaries.
The Company operates in two industry segments - Building
Materials and Composite Materials - divided into eleven
businesses. As a general rule, there is a commonality of
process equipment and/or products within each industry
segment.
The Company also has affiliate companies in a number of
countries. Affiliated companies' sales, earnings and assets
are not included in either industry segment unless the
Company owns more than 50% of the affiliate.
Revenue, operating profit, and identifiable assets
attributable to each of the Company's industry and
geographic segments, as well as information concerning the
dependence of the Company's industry segments on foreign
operations, for each of the years 1995, 1994 and 1993, are
contained in Note 1 to Owens Corning's Consolidated
Financial Statements, entitled "Segment Data", on pages 34
through 39 hereof.
BUILDING MATERIALS
Principal Products And Methods Of Distribution
Building Materials operates primarily in North America and
Europe. It also has a growing presence in Latin America and
Asia Pacific. Building Materials sells a variety of
building and home improvement products in three major
categories: glass fiber and foam insulation, roofing
materials, and other specialty products for the home, such
as housewrap, vinyl windows and patio doors, and vinyl
siding. The businesses responsible for these products and
markets include: Insulation - North America, Building
Materials Sales and Distribution - North America, Building
Materials - Europe, Roofing/Asphalt, Specialty and Foam
Products, Western Fiberglass Group, Miraflex(TM) Products,
Latin America, and Asia Pacific.
-3-
The Company's Building Materials Sales and Distribution -
North America business is a major source of sales of
building insulation products to lumber yards and home
centers, and roofing shingles, housewrap, windows/patio
doors, and vinyl siding to retailers and
distributors. These products are used primarily in the home
improvement and new residential construction markets. In
1995, the retail channel accounted for 40% of all of the
Company's building material sales and over 25% of total
overall corporate sales, including glass fiber and foam
insulation products, asphalt roofing shingles, shingle
underlayment, windows and patio doors, vinyl siding, and
housewrap. More than 75% of the Company's retail channel
sales are related to repair and remodeling activity within
the home improvement industry.
Other channels for the Company's building materials include
sales of insulation products in North America to insulation
contractors, metal building insulation laminators,
mechanical insulation distributors and fabricators,
manufactured housing producers, and appliance, office
products and automotive manufacturers. Foam insulation and
related products are sold to distributors and retailers who
resell to residential builders, remodelers and do-it-
yourself customers; commercial and industrial markets
through specialty distributors; and, in some cases, large
contractors, particularly in the agricultural and cold
storage markets.
In Europe, the Company sells building insulation to large
insulation wholesalers, builders, merchants, contractors,
distributors, and retailers. The Company sells mechanical
insulation products to distributors, fabricators, and
manufacturers in the heating, ventilation, power and
process, appliance and fire protection industries.
In Latin America, the Company produces and sells building
and mechanical insulation through joint venture and licensee
relationships. In Asia Pacific, the Company sells primarily
mechanical insulation through joint venture businesses,
including a new insulation plant in China, and licensees.
The Company has licensed others for the manufacture of foam
products at locations in Canada, Europe, the Middle East and
Asia. The Company sells foam products through traditional
agents and distributors where licensing does not exist.
The Company sells roofing shingles to distributors and
retailers, who resell them to residential roofing and
remodeling contractors, as well as to do-it-yourself
customers. Approximately 80% of roofing shingles sold in
North America are used for reroofing, with new residential
construction accounting for the remainder.
The Company sells industrial asphalt under the Trumbull(TM)
brand name. There are three principal kinds of industrial
asphalt: Built-Up Roofing Asphalt (BURA), used in
commercial roofing systems to provide waterproofing and
adhesion; saturants or coating asphalt, used to manufacture
roofing mats, felts and shingles; and industrial specialty
asphalt, used by manufacturers in a variety of products such
as waterproofing systems, adhesives, coatings, and product
extenders, as well as in various automotive applications.
There are various channels of distribution for the Company's
asphalt products. The Company's asphalt products are used
internally in the manufacture of the Company's residential
roofing products and are also sold to other shingle
manufacturers. In addition, asphalt is sold to roofing
contractors and distributors for BURA systems and to
manufacturers in a variety of other industries, including
automotive, chemical, rubber and construction.
-4-
Seasonality
Sales in the Building Materials segment tend to follow
seasonal home improvement, remodeling and renovation, and
new construction industry patterns. Sales levels for the
segment, therefore, are typically lower in the winter
months.
Major Customers
No customer in the Building Materials segment accounts for
more than three percent of the segment's sales.
COMPOSITE MATERIALS
Principal Products and Methods of Distribution
Composite Materials operates in North America, Europe and
Latin America, with affiliates and licensees around the
world, including a growing presence in Asia Pacific. The
businesses responsible for these products include:
Composites, Latin America, Pipe, and Asia Pacific.
The Company is the world's leading producer of glass fiber
materials used in composites. Composites are fabricated
material systems made up of two or more components (e.g.,
plastic resin and glass fiber) used in various applications
to replace traditional materials, such as aluminum, wood,
and steel. The global composites industry has expanded to
include more than 40,000 end-use applications. Worldwide,
the composites industry has relatively few raw material
component suppliers (glass fiber, resin and additives)
delivering to thousands of industrial customers through
various channels. Depending on the end-use application,
these raw materials move through different manufacturing
process chains, ultimately finding their way to consumers
through myriad markets worldwide. The primary end use
markets that the Company serves are construction,
transportation, and electrical/electronics.
Within the construction market, the major end-use
application for glass fiber is asphaltic roofing shingles,
where glass fiber is used to provide fire and mildew
resistance in 95% of all shingles produced in North America.
The Company sells glass fiber and/or mat directly to a small
number of major shingle manufacturers (including the
Company's own roofing business).
Tubs, showers and other related internal building components
used for both remodeling and new construction are also major
applications of glass fiber materials in the construction
market. These end-use products are some of the first
successful material substitution conversions normally
encountered in developing countries. Glass fiber for these
markets is sold to direct accounts, and also to distributors
around the world, who in turn service thousands of
customers.
The most significant use of glass fibers within the
transportation market is the automotive industry, which
continues to grow as the amount of composite materials used
per vehicle increases. There are hundreds of composites
applications, including exterior and interior body panels,
instrument panels, bumpers, lamp housings, headliners,
packaging for electronics, valve covers, luggage racks,
distributor caps, timing belts, mufflers and tanks for
alternative fuel vehicles. These composite parts are either
produced by original equipment manufacturers (OEMs), or are
purchased by OEMs from first-tier suppliers. Glass fibers
for these parts are
-5-
sold mostly to first-tier and second-tier OEM suppliers.
Non-automotive transportation applications include railcars,
shipping containers, intermodal refrigerated containers,
trailers and commercial ships.
Within the electrical/electronics markets, glass fiber is
used extensively in printed circuit boards made for the
consumer electronics, transportation, and telecommunications
industries. The Company sells glass fiber to a small number
of large fabric weavers, who, in turn, supply the rest of
the circuit board production value chain. Applications also
include fiber optics and copper cable reinforcement
connectors, circuit breaker boxes, computer housings,
electricians' safety ladders, and hundreds of various
electro/mechanical components.
The Company manufactures large diameter glass-reinforced
plastic (GRP) pipe designed for use in underground pressure
and gravity fluid handling systems. The pipe is a filament-
wound structural composite made with glass fiber and
polyester resins. The Company has pipe joint ventures in
Thailand, Saudi Arabia, Germany, Spain, Botswana, Argentina,
and Colombia (1996 start up), and wholly-owned pipe plants
in Norway and China. The Company, directly and with joint
venture partners around the world, manufactures and sells
GRP pipe directly to governments and private industry for
major infrastructure projects primarily for the safe and
efficient transport of water and waste.
Major Customers
No customer in the Composite Materials segment accounts for
more than four percent of the segment's sales.
GENERAL
Raw Materials And Patents
Owens Corning considers the sources and availability of raw
materials, supplies, equipment and energy necessary for the
conduct of its business in each industry segment to be
adequate.
The Company has numerous U.S. and foreign patents issued and
applied for relating to its products and processes in each
industry segment resulting from research and development
efforts. The Company has issued royalty-bearing patent
licenses to companies in several foreign countries. The
licenses cover technology relating to both industry
segments.
Including the registered trademark Fiberglas, the Company
has approximately 95 trademarks registered in the United
States and approximately 400 trademarks registered in other
countries.
The Company considers its patent and trademark positions to
be adequate for the present conduct of its business in each
of its industry segments.
Working Capital
Owens Corning's manufacturing operations in each of its
industry segments are generally continuous in nature and it
warehouses much of its production prior to sale since it
operates primarily with short delivery cycles. Inventories
of finished goods, materials and supplies were within
historical ranges at year-end 1995, when expressed as a
percentage of fourth quarter annualized sales.
-6-
Research And Development
During 1995, 1994 and 1993, the Company spent approximately
$69 million, $64 million, and $61 million, respectively, for
research and development activities. Customer sponsored
research and development was not material in any of the last
three years.
Environmental Control
Owens Corning's capital expenditures relating to compliance
with environmental control requirements were approximately
$14 million in 1995. The Company currently estimates that
such capital expenditures will be approximately $19 million
in 1996 and $25 million in 1997.
The Company does not consider that it has experienced a
material adverse effect upon its capital expenditures or
competitive position as a result of environmental control
legislation and regulations. Operating costs of
environmental control equipment, however, were approximately
$55 million in 1995. Owens Corning continues to invest in
equipment and process modifications to remain in compliance
with applicable environmental laws and regulations.
The 1990 Clean Air Act Amendments (Act) provide that the
United States Environmental Protection Agency (EPA) will
issue regulations on a number of air pollutants over a
period of years. Until these regulations are developed, the
Company cannot determine the extent the Act will affect it.
The Company anticipates that its sources to be regulated
will include glass fiber manufacturing and asphalt
processing activities. The EPA's announced schedule is to
issue regulations covering glass fiber manufacturing by late
1997 and asphalt processing activities by late 2000, with
implementation as to existing sources up to three years
thereafter. Based on information now known to the Company,
including the nature and limited number of regulated
materials it emits, the Company does not expect the Act to
have a material adverse effect on the Company's results of
operations, financial condition, or long-term liquidity.
Number Of Employees
Owens Corning averaged approximately 17,300 employees during
1995 and had approximately 17,300 employees at December 31,
1995.
Competition
Owens Corning's products compete with a broad range of
products made from numerous basic, as well as high-
performance, materials.
The Company competes with a number of manufacturers in the
United States of glass fibers in primary forms, not all of
which produce a broad line of glass fiber products.
Approximately one-half of these producers compete with the
Company's Building Materials industry segment in the sale of
glass fibers in primary form. A similar number compete with
the Company's Composite Materials industry segment.
Companies in other countries, primarily Japan, export glass
fiber products to the United States. The Company also
competes outside the United States against a number of
manufacturers of glass fibers in primary forms.
Owens Corning also competes with many manufacturers,
fabricators and distributors in the sale of products made
from glass fibers. In addition, the Company competes with
many other manufacturers in the sale of industrial asphalts
and other products.
Methods of competition include product performance, price,
terms, service and warranty.
-7-
ITEM 2. PROPERTIES
PLANTS
Owens Corning's plants as of February 1, 1996 are listed
below by industry segment and primary products, and are
owned except as noted. The Company considers that these
properties are in good condition and well maintained, and
are suitable and adequate to carry on the Company's
business. The capacity of each plant varies depending upon
product mix.
BUILDING MATERIALS SEGMENT
Thermal And Acoustical Insulation
Delmar, New York Newark, Ohio
Eloy, Arizona Palestine, Texas*
Fairburn, Georgia Salt Lake City, Utah
Kansas City, Kansas Santa Clara, California
Mount Vernon, Ohio Waxahachie, Texas
Candiac, Canada Ravenhead, United
Kingdom
Edmonton, Canada Scarborough, Canada
Guangzhou, China Shanghai, China*
Pontyfelin, United Kingdom Vise, Belgium
Queensferry, United Kingdom
*Under construction.
Roofing And Asphalt Processing (one of each at every
location, except as noted)
Atlanta, Georgia Kearney, New Jersey
Brookville, Indiana (1) Medina, Ohio
Channelview, Texas (2) Memphis, Tennessee
Compton, California Minneapolis, Minnesota
Denver, Colorado Morehead City, North
Detroit, Michigan (2) Carolina (2) (3)
Houston, Texas Oklahoma City,
Oklahoma (2)
Irving, Texas Portland, Oregon (4)
Jacksonville, Florida (3) Savannah, Georgia
Jessup, Maryland Summit, Illinois (3)
(1) Roofing plant only.
(2) Asphalt processing plant only.
(3) Facility is partially leased.
(4) Two asphalt processing plants, as well as one roofing
plant.
-8-
Specialty and Foam Products
Byron Center, Michigan Rockford, Illinois
Hazleton, Pennsylvania St. Louis, Missouri
Martinsville, Virginia* Tallmadge, Ohio
*Facility is leased.
Fabrication Centers
Angola, Indiana Los Angeles,
California*
Athens, Alabama Memphis, Tennessee*
Atlanta, Georgia* Montgomery, Alabama*
Cleveland, Tennessee* Newark, New Jersey*
Columbus, Ohio* Orlando, Florida*
Dallas, Texas* Sacramento, California*
Grand Rapids, Michigan* Shelbyville, Kentucky*
Hebron, Ohio Springfield, Tennessee*
Johnson City, Tennessee* Tiffin, Ohio*
Laredo, Texas*
Brantford, Canada
*Facility is leased.
COMPOSITE MATERIALS SEGMENT
Textiles And Reinforcements
Aiken, South Carolina Fort Smith, Arkansas
Amarillo, Texas Huntingdon,
Pennsylvania
Anderson, South Carolina Jackson, Tennessee*
Apeldoorn, The Netherlands Liversedge, United
Kingdom
Battice, Belgium Rio Claro, Brazil
Birkeland, Norway San Vincente deCastellet/
Guelph, Canada Barcelona, Spain
L'Ardoise, France Wrexham, United Kingdom
*Facility is leased.
Pipe
Changchun, China Sandefjord, Norway*
*Facility is leased.
-9-
OTHER PROPERTIES
Owens Corning's general offices of approximately 300,000
square feet are located in the Fiberglas Tower, Toledo,
Ohio. The lease for these offices terminates December 31,
1996. The Company has entered into lease arrangements for a
new world headquarters facility of approximately 400,000
square feet, currently under construction in downtown
Toledo. The lease for this facility terminates May 31,
2015, with options to extend through May 31, 2030. Under
separate leases, the Company has additional general office
space of approximately 145,000 square feet, and warehouse
space of approximately 100,000 square feet, located in other
buildings in Toledo.
The Company's research and development function is conducted
at its Science and Technology Center, located on
approximately 500 acres of land outside Granville, Ohio. It
consists of twenty-three structures totaling approximately
635,000 square feet, of which 25,000 square feet were
mothballed at the end of 1995.
ITEM 3. LEGAL PROCEEDINGS
The paragraphs in Note 21 to the Company's Consolidated
Financial Statements, entitled "Contingent Liabilities", on
pages 63 through 67 hereof, are incorporated here by
reference.
Securities and Exchange Commission rules require the Company
to describe certain governmental proceedings arising under
federal, state or local environmental provisions unless the
Company reasonably believes that the proceeding will result
in monetary sanctions of less than $100,000. The following
proceedings are reported in response to this requirement.
Based on the information presently available to it, however,
the Company believes that the costs which may be associated
with these matters will not have a materially adverse effect
on the Company's financial position or results of
operations.
As previously reported, the Company and more than 100 other
companies have signed individual agreements with the United
States Environmental Protection Agency (EPA) to conduct a
Toxic Substance Control Act (TSCA) Audit Program to
determine compliance status under TSCA section 8(e). The
agreement provides that the Company will audit its records
and report to the EPA any reportable matters which were not
reported or which were reported late. The Company will pay
stipulated penalties of up to $15,000 for each matter not
timely reported, with a maximum penalty of $1 million in the
aggregate. The Company has completed the portion of the
audit dealing with substantial risk of injury to health. It
has not been notified as to the amount of penalties it will
be required to pay but estimates that the penalty for health
related filings will be less than $150,000. The final
report to the EPA, regarding environmental issues, is due
six months after the EPA publishes final refined guidance on
such reporting.
During the first quarter of 1995, the Company signed a
consent order with the Tennessee Department of Environment
and Conservation, providing for a remedial investigation and
feasibility study for two state Superfund sites. The
Company is the primary generator in both sites.
-10-
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Owens Corning has nothing to report under this Item.
-11-
Executive Officers of the Company
(as of February 1, 1996)
The term of office for elected officers is one year from the
annual election of officers by the Board of Directors
following the Annual Meeting of Stockholders on the third
Thursday of April. All those listed have been employees of
Owens Corning during the past five years except as
indicated.
Name and Age Position*
Glen H. Hiner (61) Chairman of the Board and Chief
Executive Officer since January
1992; formerly Senior Vice President
- G.E. Plastics at General Electric
Company (1983). Director since
1992.
Alan D. Booth (52) Vice President and President,
Insulation - North America since
January 1994; formerly Vice
President, Insulation Division,
Construction Products Group (1993)
and Vice President, Mechanical
Products Division (1986).
David T. Brown (47) Vice President and President,
Building Materials Sales and
Distribution-North America since
January 1996; formerly Vice
President and President,
Roofing/Asphalt (1994), Vice
President, Roofing/Asphalt Division
(1993) and Vice President, Atlanta
Regional Sales, Building Materials
(1986).
Christian L. Senior Vice President,
Campbell (45) General Counsel and Secretary since
January 1995; formerly Vice
President, General Counsel and
Secretary at Nalco Chemical (1990).
Domenico Cecere (46) Vice President and President,
Roofing/Asphalt since January 1996;
formerly Vice President and
Controller (1993); and Vice
President, Finance and
Administration, Europe (1992), Vice
President and Assistant Controller
(1991) and Vice President, Finance,
Industrial Business (1990) at
Honeywell, Inc.
Charles H. Dana (56) Executive Vice President since
January 1994; formerly Senior Vice
President, and President -
Industrial Materials Group (1989).
David W. Senior Vice President
Devonshire (50) and Chief Financial Officer since
July 1993; formerly Corporate Vice
President, Finance (1992) and
Corporate Vice President and
Controller (1990) at Honeywell, Inc.
-12-
Name and Age Position*
Carl B. Hedlund (48) Vice President and President, Asia
Pacific since December 1995;
formerly Vice President and
President, Retail/Distribution
(1994), Vice President, Retail and
Distribution, Construction Products
Group (1993) and Vice President,
Roofing Products Operating Division
(1989).
Robert C. Vice President and President,
Lonergan (52) Science & Technology since January
1995; formerly President, Windows
(1993); and President of Reb
Plastics, Inc. (1984).
Bradford C. Vice President - Corporate Relations
Oelman (58) since November 1986.
Gregory M. Senior Vice President, Human
Thomson (48) Resources since October 1994;
formerly Vice President, Human
Resources, Public Service Electric &
Gas (1988).
Efthimios O. Vice President and
Vidalis (41) President, Composites since January
1994; formerly Vice President,
Reinforcements Division, Europe
(1986).
*Information in parentheses indicates year in which service
in position began.
-13-
Part II
<TABLE>
ITEM 5. MARKET FOR OWENS CORNING'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The principal market on which Owens Corning's common stock
is traded is the New York Stock Exchange. The high and low
sales prices in dollars per share for Owens Corning's common
stock as reported in the consolidated transaction reporting
system for each quarter during 1995 and 1994 are set forth
in the following tables.
<S> <C> <C> <C> <C> <C>
1995 High Low 1994 High Low
First Quarter 36-1/4 30-1/4 First Quarter 46 33-1/2
Second Quarter 40 34-5/8 Second Quarter 36-1/8 30-1/2
Third Quarter 47-1/8 36-1/2 Third Quarter 36-1/4 30-1/8
Fourth Quarter 46-3/4 40-3/8 Fourth Quarter 33-1/2 27-3/4
</TABLE>
The number of stockholders of record of the Company's common
stock on December 31, 1995 was 6,936.
No dividends have been declared by the Company since the
Company's November 5, 1986 recapitalization. In connection
with certain of its current bank credit facilities, the
Company has agreed to restrictions affecting the payment of
cash dividends. As of January 1, 1996, these restrictions
limited funds available for the payment of cash dividends by
the Company to approximately $77 million. While the Company
periodically evaluates the advisability of paying dividends,
it currently does not anticipate paying dividends during
1996.
-14-
<TABLE>
ITEM 6. SELECTED FINANCIAL DATA
The following is a summary of certain financial information of the
Company.
1995(a) 1994(b)1993(c) 1992(d)1991(e)
(In millions of dollars, except per share data and where noted)
<S> <C> <C> <C> <C> <C>
Net sales $ 3,612$ 3,351 $ 2,944$ 2,878 $ 2,783
Cost of sales 2,670 2,536 2,266 2,234 2,186
Marketing, administrative
and other expenses 454 429 350 350 1,171
Science and technology
expenses 76 71 69 65 54
Restructure costs - 89 23 16 -
Income (loss) from
operations 412 226 236 213 (628)
Cost of borrowed funds 87 94 89 110 131
Income (loss) before
provision for
income taxes 325 132 147 103 (759)
Provision (credit)
for income taxes 106 58 47 33 (238)
Net income (loss) 231 159 131 73 (742)
Net income (loss) per share
Primary 4.64 3.61 3.00 1.70 (18.13)
Fully diluted 4.40 3.35 2.81 1.67 (18.13)
Dividends per share on common
stock
Declared - - - - -
Paid - - - - -
Weighted average number of shares
outstanding (in thousands)
Primary 49,711 44,209 43,593 43,013 40,924
Fully diluted 54,106 50,025 49,410 48,844 42,924
Net cash flow from
operations 342 361 312 184 264
Capital spending 276 258 178 144 114
Total assets (f) 3,261 3,274 3,013 3,162 3,511
Long-term debt 794 1,037 898 1,018 1,148
Average number of employees
(in thousands) 17 17 17 17 17
(a) During 1995, the Company recorded a one time $8 million
tax credit as a result of a tax loss carryback.
(b) During 1994, the Company recorded a $117 million charge
($85 million after-tax) for productivity initiatives
and other actions. The Company also recorded a $10
million after-tax charge for the adoption of Statement
of Financial Accounting Standards (SFAS) No. 106,
"Employers' Accounting for Postretirement Benefits
Other Than Pensions" for its non-U.S. plans, a $28
million after-tax charge for the adoption of SFAS No.
112, "Employers' Accounting for Postemployment
Benefits," and a $123 million after-tax credit for the
change in accounting method for rebuilding furnaces.
-15-
(c) During 1993, the Company recorded a $23 million charge
for the restructuring of its European operations, an $8
million charge ($5 million after-tax) for the writedown
of its hydrocarbon ventures to their net realizable
value, a $26 million credit for the adoption of SFAS
No. 109, "Accounting for Income Taxes," and a $14
million credit for the revaluation of deferred taxes.
(d) During 1992, the Company recorded a $16 million charge
($11 million after-tax) to reorganize the Company's
Building Materials segment and to centralize the
Company's accounting and information systems. The
Company also recorded a net extraordinary gain of $1
million resulting from the utilization of tax loss
carryforwards, partially offset by a loss on the early
retirement of debt.
(e) During 1991, the Company recorded a non-recurring $800
million charge for unasserted asbestos litigation
claims and a $227 million after-tax charge, or $5.55
per share, for the adoption of SFAS No. 106,
"Employers' Accounting for Postretirement Benefits
Other Than Pensions" for its U.S. plans.
(f) During 1993, the Company adopted the provisions of FIN
39 which require the Company to present separately in
its balance sheet its estimated contingent liabilities
and related insurance assets. 1992 and 1991 assets
have been restated to conform with the 1995, 1994, and
1993 presentations.
</TABLE>
-16-
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(All per share information in Item 7 is on a fully diluted
basis.)
RESULTS OF OPERATIONS
Net income for the year ended December 31, 1995 was $231
million, or $4.40 per share, compared to net income of $159
million, or $3.35 per share, and net income of $131 million,
or $2.81 per share, for the years ended December 31, 1994
and 1993, respectively. The 1995 earnings growth reflects
pricing gains and the benefits of acquisitions, as well as a
one time gain of $8 million or $.15 per share which was the
result of a tax loss carryback. Excluding the impact of the
tax benefit, net income for the year ended December 31,
1995, was $223 million, or $4.25 per share. Please see Note
8 to the Consolidated Financial Statements.
Net income of $159 million for the year ended December 31,
1994, included the following offsetting special items: an
after-tax gain of $123 million, or $2.45 per share,
reflecting a change to the capital method of accounting for
the rebuilding of glass melting facilities; an after-tax
charge of $85 million, or $1.69 per share, for productivity
initiatives and other actions; a non-cash, after-tax charge
of $10 million, or $.20 per share, to reflect adoption of
Statement of Financial Accounting Standards (SFAS) No. 106,
"Employers' Accounting for Postretirement Benefits Other
Than Pensions," for plans outside the United States; and a
non-cash, after-tax charge of $28 million, or $.56 per
share, to reflect adoption of SFAS No. 112, "Employers'
Accounting for Postemployment Benefits." Please see Notes
6, 16 and 17 to the Consolidated Financial Statements.
Excluding special items, net income for the year ended
December 31, 1993 was $118 million, or $2.56 per share. The
1993 special items included a credit of $26 million, or $.53
per share, for the cumulative effect of adopting the
accounting standard for income taxes (SFAS No. 109); a one
time gain of $14 million, or $.29 per share, reflecting a
tax benefit resulting from a revaluation of deferred taxes,
offset in part by an increase in the Company's corporate tax
liability, necessitated by the increase in the federal
statutory tax rate; an after-tax charge of $5 million, or
$.10 per share, for the write-down of the Company's
hydrocarbon ventures to their net realizable value; and a
charge of $23 million, or $.47 per share, for the
restructuring of the Company's European operations. Please
see Notes 8 and 16 to the Consolidated Financial Statements.
Net sales were $3.612 billion for the year ended December
31, 1995, reflecting an 8% increase from the 1994 level of
$3.351 billion. Net sales in 1993 were $2.944 billion.
Most of the 1995 growth is attributable to pricing gains
achieved worldwide, with incremental growth resulting from
acquisitions, which occurred mid year 1994 and throughout
1995. Please see Note 5 to the Consolidated Financial
Statements. Sales outside the U.S. represented 27% of the
total sales for the year ended December 31, 1995 compared to
24% for the years 1994 and 1993. Gross margin for the year
ended December 31, 1995 increased to 26%, compared to 24%
and 23% in 1994 and 1993, respectively, reflecting primarily
pricing gains worldwide. Earnings before interest and taxes
(EBIT) from ongoing operations increased to $412 million in
1995, from $343 million in 1994 and $267 million in 1993.
-17-
In the Building Materials segment, sales increased 6% for
the year ended December 31, 1995 compared to 1994. This
growth reflects pricing gains, and incremental sales from
the 1995 acquisitions partially offset by a decline in
volume, particularly in the Canadian markets. Income from
operations for Building Materials decreased 9% from 1994
levels, after excluding the 1994 charge for restructure and
other initiatives, primarily due to the weak economic
conditions in Canada and start up costs associated with the
Company's new insulation plant in Guangzhou, China.
Building Materials sales in Europe increased 45% over the
1994 level, primarily resulting from a full year of sales
from the June 1994 acquisition of the United Kingdom based
insulation and industrial supply businesses of Pilkington
plc (the "U.K. Acquisition"), and the addition of a second
production line at the Company's insulation plant in Vise,
Belgium. Late in the third quarter of 1995, the Company
began shipping product from its insulation manufacturing
facility in Guangzhou, China and announced plans for the
construction of its second insulation plant in China, to be
built in Shanghai. Roofing margins improved in 1995, driven
primarily by improved pricing, and volume growth, including
the successful introduction of Prominence(R) roofing
shingles. The window business achieved significant sales
growth and productivity improvements during the year, but
has not yet reached break-even. In the foam insulation and
related product markets, the Company has expanded its
position with the acquisition of Falcon Manufacturing of
Michigan, Inc. The Company also completed four other
acquisitions in 1995 which are expected to contribute to the
Company's overall growth strategy. These acquisitions
increased the Company's small furnace technology base, as
well as expanded its position in fabricated systems for the
original equipment manufacturing market and its product
offering for the window market. The Company further
expanded its Building Materials multi-product offering in
1995 with the introduction of two branded products,
Transitions(TM) vinyl siding and PinkWrap(TM) housewrap.
In 1995 Miraflex(TM), the revolutionary new form of glass
fiber developed by Owens Corning which combines two
different glass compositions into one fiber, was
successfully introduced to North American markets in its
first commercial application, PinkPlus(R) insulation
featuring Miraflex fiber. The Miraflex fibers are flexible,
soft to the touch, virtually itch-free, resilient and form-
filling, characteristics not normally associated with glass
or inorganic fibers, which is driving the success of the new
fiber.
In the Composite Materials segment, sales increased 12% for
the year ended December 31, 1995, or approximately 20%
excluding the Company's previously consolidated polyester
resins business, discussed below. The Composite Materials
sales increase, driven by strong worldwide market demand, is
attributable to volume and pricing gains, coupled with
favorable currency impact from European markets. In the
U.S., sales increased slightly, while in Europe, the
Company's composites operations benefited from European
economic improvement which resulted in increased demand,
coupled with the positive effects of productivity
initiatives.
In 1995 the Company announced plans to expand global
composites capacity by 135,000 metric tons by 1997, with a
significant portion of the new capacity coming from the
refiring of the second furnace at the Company's Jackson,
Tennessee facility. The remaining expansion will be at
other existing facilities in the U.S., Europe, Asia and
Latin America. The Company in 1995 began a new large
diameter glass reinforced plastic (GRP) pipe facility in
China, pipe joint ventures in Spain and Argentina, as well
as a composite materials service center in Colombia. Early
in 1996 the Company announced the formation of a pipe joint
venture in Colombia, increasing the Company's global
presence.
-18-
During the third quarter of 1994, the Company entered into a
joint venture with Alpha Corporation of Tennessee, whereby
the two companies combined their existing resin businesses
for fifty percent interests in Alpha/Owens-Corning, L.L.C.,
the largest manufacturer of polyester resins in North
America. Please see Note 5 to the Consolidated Financial
Statements.
The Company's cost of borrowed funds for the year ended
December 31, 1995 was $7 million lower than 1994, reflecting
decreased borrowings resulting from the conversion of the
Company's 8% convertible junior subordinated debentures into
shares of common stock. Additionally, the proceeds from the
issuance of $200 million of convertible preferred securities
were partially used to pay off the Company's short-term
credit facility, established during the second quarter of
1994 to finance the U.K. Acquisition. Please see Notes 2, 3
and 4 to the Consolidated Financial Statements.
At December 31, 1995, certain of the Company's foreign
subsidiaries have tax net operating loss carryforwards of
approximately $27 million. The Company has $322 million in
net deferred tax assets at December 31, 1995, all of which
management expects will be realized through future income
from operations. Please see Note 8 to the Consolidated
Financial Statements.
Early in the first quarter of 1996, the Company completed
the sale of its share in a Japanese affiliate, Asahi Fiber
Glass Co. Ltd., to its partner Asahi Glass Company for
approximately $50 million and realized a pretax gain in
excess of $25 million. Please see Note 12 to the
Consolidated Financial Statements.
LIQUIDITY, CAPITAL RESOURCES AND OTHER RELATED MATTERS
Cash flow from operations, excluding asbestos-related
activities, was $342 million for 1995, compared to $361
million for 1994. The decline in cash flow from
operations from 1994 to 1995 was due in part to funding of a
Voluntary Employee's Beneficiary Association trust for tax
planning purposes. Total receivables at December 31, 1995
were $15 million lower than the December 31, 1994 level due
to the sale of $50 million in receivables early in 1995,
resulting in a total of $100 million of receivables sold
under the 1994 sales agreement. The receivables sold were
largely offset by increased sales in 1995. Please see Notes
6 and 10 to the Consolidated Financial Statements.
At December 31, 1995, the Company's net working capital was
negative $9 million and its current ratio was .99, compared
to negative $143 million and .87 at December 31, 1994, and
negative $49 million and .94 at December 31, 1993,
respectively. The increase in 1995 was due in part to
decreased short-term borrowings as a result of the
repayment of the financing used for the U.K.
Acquisition. Excluding the impact of the short-term
borrowings used to finance the U.K. Acquisition, the
Company's net working capital was negative $33 million and
its current ratio was .97 at December 31, 1994.
During 1995, virtually all of the Company's $173 million
issue of 8% convertible junior subordinated debentures
were converted. Debentures not converted were redeemed
for cash. The conversion resulted in the issuance of 5.8
million new shares of common stock. Also in 1995, Owens-
Corning Capital, L.L.C., a Delaware limited liability
company, of which all of the common limited company
interests are indirectly owned by the Company, issued $200
million of 6.5% cumulative convertible preferred securities.
The proceeds from the issuance were loaned to the Company
and partially used to repay its short-term credit facility.
Please see Notes 2 and 4 to the Consolidated Financial
Statements.
-19-
The Company's total borrowings at December 31, 1995 were
$893 million, $319 million lower than at year-end 1994,
primarily due to the conversion of its 8% convertible junior
subordinated debentures, and the repayment of debt through
the issuance of the above mentioned preferred securities.
As of December 31, 1995, the Company had unused lines of
credit of $358 million available under long-term bank loan
facilities and an additional $239 million under short-term
facilities, compared to $293 million and $91 million,
respectively, at year-end 1994. The increase in unused
available lines of credit reflects increased availability,
primarily in foreign credit facilities, a decrease in
borrowings and a decrease in outstanding letters of credit
supporting appeals from asbestos trials. Such letters of
credit reduce credit availability under the Company's long-
term U.S. loan facility.
Capital spending for property, plant and equipment,
excluding acquisitions, was $276 million during 1995. At
the end of 1995, approved capital projects were $134
million. The Company expects that funding for these
expenditures will be from the Company's operations and
external sources as required.
Gross payments for asbestos litigation claims during 1995,
including $54 million in defense costs, were $308 million.
Proceeds from insurance were $251 million, $100 million of
which was received as a prepayment of a third quarter 1995
settlement with a major insurer, which confirmed the
Company's access to $330 million of insurance for payment of
asbestos litigation claims. Excluding the impact of the $100
million prepayment by the carrier, cash flow from asbestos
related activities was a net pretax cash outflow of $157
million, or $94 million after-tax. During 1995, the Company
received approximately 55,900 new asbestos personal
injury cases and closed approximately 21,900 cases.
Over the next twelve months total payments for asbestos
litigation claims, including defense costs, are expected to
be approximately $250 million. Proceeds from insurance of
$100 million are expected to be available to cover these
costs, resulting in a net pretax cash outflow of $150
million, or $90 million after-tax. Please see Note 21 to
the Consolidated Financial Statements.
The Company expects funds generated from operations,
together with funds available under long and short term bank
loan facilities, to be sufficient to satisfy its debt
service obligations under its existing indebtedness, as well
as its contingent liabilities for uninsured asbestos
personal injury claims.
The Company has been deemed by the Environmental Protection
Agency (EPA) to be a potentially responsible party (PRP)
with respect to certain sites under the Comprehensive
Environmental Response, Compensation and Liability Act
(Superfund). The Company has also been deemed a PRP under
similar state or local laws, including two state Superfund
sites where the Company is the primary generator. In other
instances, other PRPs have brought suits or claims against
the Company as a PRP for contribution under such federal,
state or local laws. During 1995, the Company was
designated as a PRP in such federal, state, local or private
proceedings for nine additional sites. At December 31,
1995, a total of 42 such PRP designations remained
unresolved by the Company, some of which designations the
Company believes to be erroneous. The Company is also
involved with environmental investigation or remediation at
a number of other sites at which it has not been designated
a PRP. The Company has established a $20 million reserve
for its Superfund (and similar state, local and private
action) contingent liabilities. In addition, based upon
information presently available to the Company, and without
regard to the application of insurance, the Company believes
that, considered in the aggregate, the additional costs
associated with such contingent liabilities, including any
related litigation costs, will not have a materially adverse
effect on the Company's financial position or results of
operations.
-20-
The 1990 Clean Air Act Amendments (Act) provide that the EPA
will issue regulations on a number of air pollutants over a
period of years. Until these regulations are developed, the
Company cannot determine the extent to which the Act will
affect it. The Company anticipates that its sources to be
regulated will include glass fiber manufacturing and asphalt
processing activities. The EPA's announced schedule is to
issue regulations covering glass fiber manufacturing by late
1997 and asphalt processing activities by late 2000, with
implementation as to existing sources up to three years
thereafter. Based on information now known to the Company,
including the nature and limited number of regulated
materials it emits, the Company does not expect the Act to
have a materially adverse effect on the Company's results of
operations, financial condition or long-term liquidity.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Pages 23 through 68 hereof are incorporated here by
reference.
ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Owens Corning has nothing to report under this Item.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF OWENS CORNING
The information required by this Item is incorporated by
reference from the Company's 1996 Proxy Statement except
that certain information concerning Owens Corning's
executive officers is included on pages 11 through 12
hereof.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated by
reference from the Company's 1996 Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information required by this Item is incorporated by
reference from the Company's 1996 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is incorporated by
reference from the Company's 1996 Proxy Statement.
-21-
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K
(a) DOCUMENTS FILED AS PART OF THIS REPORT
1. See Index to Financial Statements on page 23 hereof
2. See Index to Financial Statement Schedules on page 69
hereof
3. See Exhibit Index beginning on page 71 hereof
Management contracts and compensatory plans and
arrangements required to be filed as an exhibit pursuant
to Item 14(c) of Form 10-K are denoted in the Exhibit
Index by an asterisk ("*").
(b) REPORTS ON FORM 8-K
No report on Form 8-K was filed during the fourth
quarter of 1995.
-22-
<TABLE>
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
<S> <C>
OWENS CORNING
By /s/ G. H. Hiner Date February 14, 1996
Glen H. Hiner, Chairman of the Board
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities
and on the dates indicated.
/s/ G. H. Hiner Date February 14, 1996
Glen H. Hiner, Chairman of the Board,
Chief Executive Officer and Director
/s/ David W. Devonshire Date February 14, 1996
David W. Devonshire, Senior Vice
President and Chief Financial Officer
/s/ Domenico Cecere Date February 14, 1996
Domenico Cecere, Vice President and
President, Roofing/Asphalt, and Controller
(Interim)
/s/ Norman P. Blake Date February 20, 1996
Norman P. Blake, Jr., Director
/s/ William Colville Date February 15, 1996
William W. Colville, Director
/s/ Landon Hilliard Date February 15, 1996
Landon Hilliard, Director
/s/ Trevor Holdsworth Date February 19, 1996
Trevor Holdsworth, Director
/s/ Jon M. Huntsman, Jr. Date February 16, 1996
Jon M. Huntsman, Jr., Director
W. Walker Lewis, Director Date
/s/ David T. McGovern Date February 20, 1996
David T. McGovern, Director
/s/ Furman C. Moseley Date February 19, 1996
Furman C. Moseley, Jr., Director
/s/ W. Ann Reynolds Date February 15, 1996
W. Ann Reynolds, Director
</TABLE>
-23-
INDEX TO FINANCIAL STATEMENTS
Item Page
Report of Independent Public Accountants 24
Summary of Significant Accounting Policies 25-26
Consolidated Statement of Income - for the
years ended December 31, 1995, 1994 and 1993 27-28
Consolidated Balance Sheet - December 31, 1995
and 1994 29-30
Consolidated Statement of Stockholders' Equity -
for the years ended December 31, 1995, 1994 and 1993 31
Consolidated Statement of Cash Flows - for the years
ended December 31, 1995, 1994 and 1993 32-33
Notes to Consolidated Financial Statements
Notes 1 through 22 34-68
-24-
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of Owens Corning:
We have audited the accompanying consolidated balance sheet
of OWENS CORNING (a Delaware corporation) and subsidiaries
as of December 31, 1995 and 1994, and the related
consolidated statements of income, stockholders' equity and
cash flows for each of the three years in the period ended
December 31, 1995. These financial statements are the
responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial
position of Owens Corning and subsidiaries as of December
31, 1995 and 1994, and the results of their operations and
their cash flows for each of the three years in the period
ended December 31, 1995, in conformity with generally
accepted accounting principles.
As discussed in Notes 6, 8 and 17 to the consolidated
financial statements, effective January 1, 1994, the Company
changed its methods of accounting for furnace rebuilds,
postretirement benefits other than pensions for its non-U.S.
plans, and postemployment benefits, and effective January 1,
1993, the Company changed its method of accounting for
income taxes.
Our audit was made for the purpose of forming an opinion on
the basic financial statements taken as a whole. The
schedule listed in the Index to Financial Statement
Schedules is presented for the purpose of complying with the
Securities and Exchange Commission's rules and is not part
of the basic financial statements. This schedule has been
subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, fairly
states in all material respects the financial data required
to be set forth therein in relation to the basic financial
statements taken as a whole.
ARTHUR ANDERSEN LLP
January 20, 1996
Toledo, Ohio
-25-
OWENS CORNING AND SUBSIDIARIES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts
of majority owned subsidiaries. Significant intercompany
accounts and transactions are eliminated.
Net Income per Share
Primary net income per share is computed using the weighted
average number of common shares outstanding and common
equivalent shares during the period. Fully diluted net
income per share reflects the dilutive effect of increased
shares that would result from the conversion of debt and
equity securities which are not treated as common stock
equivalents. Unless otherwise indicated, all per share
information included in the notes to the Owens Corning and
subsidiaries' (the "Company") consolidated financial
statements is presented on a fully diluted basis.
Inventory Valuation
Inventories are stated at cost, which is less than market
value, and include material, labor, and manufacturing
overhead. The majority of U.S. inventories are valued using
the last-in, first-out (LIFO) method and the balance of
inventories are generally valued using the first-in, first-
out (FIFO) method.
Intangible Assets
Intangible assets consist primarily of goodwill, patents,
and covenants not to compete and are carried at cost less
accumulated amortization. Goodwill is amortized on a
straight-line basis over a period of forty years. Other
intangible assets are amortized over their estimated useful
lives or actual contractual lives. The Company continually
evaluates whether events and circumstances have occurred
that indicate the remaining estimated useful lives of
intangible assets may warrant revision or that the remaining
balance of these intangible assets may not be recoverable.
When factors indicate that intangible assets should be
evaluated for possible impairment, the Company uses an
estimate of the related business segment's undiscounted net
income over the remaining life of the intangible asset in
measuring whether the intangible asset is recoverable.
Investments in Affiliates
Investments in affiliates are accounted for using the equity
method, under which the Company's share of earnings of these
affiliates is reflected in income as earned and dividends
are credited against the investment in affiliates when
received.
-26-
OWENS CORNING AND SUBSIDIARIES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Depreciation
For assets placed in service prior to January 1, 1992, the
Company's plant and equipment is depreciated primarily using
the double-declining balance method for the first half of an
asset's estimated useful life and the straight-line method
is used thereafter. For assets placed in service after
December 31, 1991, the Company's plant and equipment is
depreciated using the straight-line method.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results
could differ from those estimates.
Rebuilding of Glass Melting Furnaces
The Company's glass melting furnaces periodically require
substantial rebuilding. As discussed in Note 17 to the
consolidated financial statements, effective January 1,
1994, the Company adopted the capital method of accounting
for the cost of rebuilding glass melting furnaces. Under
this method, costs are capitalized when incurred and
depreciated over the estimated useful lives of the rebuilt
furnaces.
Derivative Financial Instruments
Gains and losses on hedges of existing assets or liabilities
are included in the carrying amount of those assets or
liabilities and are ultimately recognized in income as part
of those carrying amounts. Gains and losses on hedges of
net investments in foreign subsidiaries are included in
stockholders' equity. Gains and losses related to
qualifying hedges of firm commitments or anticipated
transactions also are deferred and are recognized in income
or as adjustments of carrying amounts when the hedged
transaction occurs. Gains and losses on forward currency
exchange contracts that do not qualify as hedges are
recognized as other income or expense.
Reclassifications
Certain reclassifications have been made to 1994 and 1993 to
conform with the classifications used in 1995.
-27-
<TABLE>
OWENS CORNING AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<S> <C> <C> <C>
1995 1994 1993
(In millions of dollars, except share data)
NET SALES $ 3,612 $ 3,351 $ 2,944
COST OF SALES 2,670 2,536 2,266
Gross margin 942 815 678
OPERATING EXPENSES
Marketing and administrative
expenses 444 391 327
Science and technology
expenses (Note 9) 76 71 69
Restructure costs (Note 16) - 89 23
Other (Notes 2, 4, 10 and 16) 10 38 23
Total operating expenses 530 589 442
INCOME FROM OPERATIONS 412 226 236
Cost of borrowed funds
(Notes 2 and 3) 87 94 89
INCOME BEFORE PROVISION FOR
INCOME TAXES 325 132 147
Provision for income taxes
(Note 8) 106 58 47
INCOME BEFORE EQUITY IN NET
INCOME OF AFFILIATES 219 74 100
Equity in net income of affiliates
(Notes 5 and 12) 12 - 5
INCOME BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGES 231 74 105
Cumulative effect of accounting changes
(Notes 6, 8 and 17) - 85 26
NET INCOME $ 231 $ 159 $ 131
</TABLE>
The accompanying summary of significant accounting policies and
notes
are an integral part of this statement.
-28-
<TABLE>
OWENS CORNING AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(Continued)
<S> <C> <C> <C>
1995 1994 1993
(In millions of dollars, except share data)
NET INCOME PER COMMON SHARE:
Primary:
Income before cumulative effect of
accounting changes $ 4.64 $ 1.70 $ 2.40
Cumulative effect of
accounting changes - 1.91 .60
Net income per share $ 4.64 $ 3.61 $ 3.00
Assuming full dilution:
Income before cumulative effect of
accounting changes $ 4.40 $ 1.66 $ 2.28
Cumulative effect of accounting
changes - 1.69 .53
Net income per share $ 4.40 $ 3.35 $ 2.81
Weighted average number of common shares
outstanding and common equivalent shares
during the period (in millions)
Primary 49.7 44.2 43.6
Assuming full dilution 54.1 50.0 49.4
</TABLE>
The accompanying summary of significant accounting policies and
notes
are an integral part of this statement.
-29-
OWENS CORNING AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET - DECEMBER 31, 1995 AND 1994
<TABLE>
<S> <C> <C>
ASSETS 1995 1994
(In millions of dollars)
CURRENT
Cash and cash equivalents $ 18 $ 59
Receivables, less allowances of
$19 million in 1995 and $16
million in 1994 (Note 10) 314 329
Inventories (Note 11) 253 223
Insurance for asbestos
litigation claims - current
portion (Note 21) 100 125
Deferred income taxes (Note 8) 70 156
VEBA trust (Note 6) 51 -
Income tax receivable 50 12
Investment in affiliate held
for sale (Note 12) 36 -
Other current assets 35 26
Total current 927 930
OTHER
Insurance for asbestos
litigation claims (Note 21) 330 556
Deferred income taxes (Note 8) 252 308
Goodwill, less accumulated
amortization of $19 million
in 1995 and $14 million in 1994
(Note 5) 249 151
Investments in affiliates
(Notes 5 and 12) 50 74
Other noncurrent assets (Note 6) 147 122
Total other 1,028 1,211
PLANT AND EQUIPMENT, at cost
Land 52 51
Buildings and leasehold
improvements 581 553
Machinery and equipment 2,266 2,172
Construction in progress 168 125
3,067 2,901
Less: Accumulated
depreciation (1,761) (1,768)
Net plant and equipment 1,306 1,133
TOTAL ASSETS $ 3,261 $ 3,274
</TABLE>
The accompanying summary of significant accounting policies and
notes
are an integral part of this statement.
-30-
OWENS CORNING AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET - DECEMBER 31, 1995 AND 1994
(Continued)
<TABLE>
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY 1995 1994
(In millions of dollars)
CURRENT
Accounts payable and accrued
liabilities (Note 13) $ 587 $ 598
Reserve for asbestos
litigation claims -
current portion (Note 21) 250 300
Short-term debt (Note 3) 64 155
Long-term debt - current
portion (Note 2) 35 20
Total current 936 1,073
LONG-TERM DEBT (Note 2) 794 1,037
OTHER
Reserve for asbestos litigation
claims (Note 21) 887 1,145
Other employee benefits liability
(Note 6) 367 390
Pension plan liability (Note 7) 75 77
Other 220 232
Total other 1,549 1,844
COMMITMENTS AND CONTINGENCIES
(Notes 15, 20 and 21)
COMPANY OBLIGATED CONVERTIBLE
SECURITY OF SUBSIDIARY HOLDING
SOLELY PARENT DEBENTURES
(MIPS, Note 4) 194 -
STOCKHOLDERS' EQUITY
Preferred stock, no par value;
authorized 8 million shares,
none outstanding (Note 19)
Common stock, par value $.10
per share; authorized 100
million shares; issued
1995--51.4 million and
1994--44.2 million shares
(Notes 2, 5 and 18) 579 348
Deficit (781) (1,012)
Foreign currency translation
adjustments 9 (1)
Other (Note 7) (19) (15)
Total stockholders' equity (212) (680)
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 3,261 $ 3,274
</TABLE>
The accompanying summary of significant accounting policies and
notes
are an integral part of this statement.
-31-
OWENS CORNING AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<S> <C> <C> <C>
1995 1994 1993
(In millions of dollars)
COMMON STOCK
Balance beginning of year $ 348 $ 315 $ 299
Issuance of stock for:
Conversion of debt
(Note 2) 173 - -
Acquisitions (Note 5) 42 27 -
Awards under stock
compensation plans (Note 18) 16 6 16
Balance end of year 579 348 315
DEFICIT
Balance beginning of year (1,012) (1,171) (1,302)
Net income 231 159 131
Balance end of year (781) (1,012) (1,171)
FOREIGN CURRENCY TRANSLATION
ADJUSTMENTS
Balance beginning of year (1) 5 4
Translation adjustments 10 (6) 1
Balance end of year 9 (1) 5
OTHER
Balance beginning of year (15) (18) (9)
Net increase (decrease) (4) 3 (9)
Balance end of year (19) (15) (18)
STOCKHOLDERS' EQUITY $ (212) $ (680) $ (869)
</TABLE>
The accompanying summary of significant accounting policies and
notes
are an integral part of this statement.
-32-
OWENS CORNING AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<S> <C> <C> <C>
1995 1994 1993
(In millions of dollars)
NET CASH FLOW FROM OPERATIONS
Net income $ 231 $ 159 $ 131
Reconciliation of net cash provided
by operating activities:
Noncash items:
Cumulative effect of
accounting changes
(Notes 6, 8 and 17) - (85) (26)
Provision for depreciation,
amortization, and
rebuilding furnaces
(Note 17) 125 118 121
Provision for deferred
income taxes
(Note 8) 142 59 10
Other 5 9 10
(Increase) decrease in
receivables (Note 10) 36 21 (22)
(Increase) decrease in
inventories (15) 17 4
Increase (decrease) in
accounts payable
and accrued liabilities (50) 53 114
Funding of VEBA trust (Note 6) (64) - -
Other (68) 10 (30)
Net cash flow from
operations 342 361 312
NET CASH FLOW FROM INVESTING
Additions to plant and
equipment (276) (258) (178)
Investment in subsidiaries,
net of cash acquired
(Note 5) (81) (120) -
Other (4) 23 -
Net cash flow from
investing (361) (355) (178)
</TABLE>
The accompanying summary of significant accounting policies and
notes
are an integral part of this statement.
-33-
OWENS CORNING AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(Continued)
<TABLE>
<S> <C> <C> <C>
1995 1994 1993
(In millions of dollars)
NET CASH FLOW FROM FINANCING
(Notes 2, 3 and 4)
Net additions (reductions)
to long-term credit
facilities $ 55 $ 10 $ (90)
Other additions to
long-term debt 9 145 -
Other reductions to
long-term debt (128) (51) (21)
Net increase (decrease)
in short-term debt (94) 69 26
Issuance of preferred
stock of subsidiary,
net of fees 194 - -
Other - 5 11
Net cash flow from
financing 36 178 (74)
NET CASH FLOW FROM ASBESTOS-
RELATED ACTIVITIES (Note 21)
Proceeds from insurance for
asbestos litigation claims 251 87 224
Payments for asbestos
litigation claims (308) (215) (283)
Net cash flow from
asbestos-related
activities (57) (128) (59)
Effect of exchange rate
changes on cash (1) - -
Net increase (decrease) in
cash and cash equivalents (41) 56 1
Cash and cash equivalents
at beginning of year 59 3 2
Cash and cash equivalents
at end of year $ 18 $ 59 $ 3
</TABLE>
The accompanying summary of significant accounting policies and
notes
are an integral part of this statement.
-34-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Segment Data
The Company operates in two industry segments, Building
Materials and Composite Materials, and reports its results
in two ways: by industry segment and by geographic segment.
See Note 5 for detail of 1995 and 1994 acquisitions and
divestitures of businesses.
The industry segments are defined as follows:
Building Materials
Production and sale of glass wool fibers formed
into thermal and acoustical insulation and air
ducts; extruded and expanded polystyrene
insulation; roofing shingles and asphalt materials;
underground storage tanks; windows; and the
rebranded sale of patio doors; vinyl siding and
housewrap.
Composite Materials
Production and sale of glass fiber yarns; rovings,
mats and veils; strand and reinforcement products;
fiber reinforced plastic pipe; and polyester and
vinyl ester resins.
The geographic segment reporting combines the two industry
segments within the major regions: United States, Europe,
and Canada and other.
Intersegment sales are generally recorded at market or
equivalent value. Income (loss) from operations by industry
and geographic segment consists of net sales less related
costs and expenses. In computing income (loss) from
operations by segment, cost of borrowed funds and other
general corporate income and expenses have been excluded.
Certain corporate operating expenses directly traceable to
industry and geographic segments have been allocated to
those segments.
During the first quarter of 1994, the Company recorded a
$117 million pretax charge for productivity initiatives and
other actions (Note 16). The impact of this charge was to
reduce income from operations for Building Materials and
Composite Materials by $70 million and $22 million,
respectively, and to increase general corporate expense by
$25 million. Geographically, income from operations for
Building Materials in the United States and Canada and other
was reduced by $50 million and $20 million, respectively.
Income from operations for Composite Materials in the United
States, Europe, and Canada and other was reduced by $6
million, $13 million, and $3 million, respectively. During
the first quarter of 1993, the Company recorded a $23
million charge to reorganize its European operations, the
full impact of which was reflected as a reduction to income
from operations for the Composite Materials segment (Note
16).
-35-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
<TABLE>
1. Segment Data (Continued)
Identifiable assets by industry and geographic segment are
those assets that are used in the Company's operations in
each industry and geographic segment and do not include
general corporate assets. General corporate assets consist
primarily of cash and cash equivalents, VEBA trust, deferred
taxes, asbestos insurance, and corporate property and
equipment.
<S> <C> <C> <C>
NET SALES 1995 1994 1993
(In millions of dollars)
Industry Segments
Building Materials
United States $ 2,033 $ 1,952 $ 1,699
Europe 264 182 97
Canada and other 107 139 150
Total Building Materials 2,404 2,273 1,946
Composite Materials
United States 610 595 528
Europe 459 355 346
Canada and other 139 128 124
Total Composite Materials 1,208 1,078 998
Intersegment sales
Building Materials - - -
Composite Materials 96 99 85
Eliminations (96) (99) (85)
Net sales $ 3,612 $ 3,351 $ 2,944
Geographic Segments
United States $ 2,643 $ 2,547 $ 2,227
Europe 723 537 443
Canada and other 246 267 274
3,612 3,351 2,944
Intersegment sales
United States 54 43 42
Europe 21 22 15
Canada and other 88 91 66
Eliminations (163) (156) (123)
Net sales $ 3,612 $ 3,351 $ 2,944
</TABLE>
-36-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
1. Segment Data (Continued)
<TABLE>
<S> <C> <C> <C>
INCOME (LOSS) FROM OPERATIONS 1995 1994 1993
(In millions of dollars)
Industry Segments
Building Materials
United States $ 195 $ 145 $ 153
Europe 29 26 16
Canada and other 13 18 6
Total Building Materials 237 189 175
Composite Materials
United States 135 108 101
Europe 64 (8) (15)
Canada and other 26 9 12
Total Composite Materials 225 109 98
General corporate expense (50) (72) (37)
Income from operations 412 226 236
Cost of borrowed funds (87) (94) (89)
Income before provision
for income taxes $ 325 $ 132 $ 147
Geographic Segments
United States $ 330 $ 253 $ 254
Europe 93 18 1
Canada and other 39 27 18
General corporate expense (50) (72) (37)
Income from operations 412 226 236
Cost of borrowed funds (87) (94) (89)
Income before provision
for income taxes $ 325 $ 132 $ 147
</TABLE>
-37-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
1. Segment Data (Continued)
<TABLE>
<S> <C> <C> <C>
IDENTIFIABLE ASSETS AT 1995 1994 1993
DECEMBER 31, (In millions of dollars)
Industry Segments
Building Materials
United States $ 893 $ 718 $ 596
Europe 170 162 46
Canada and other 194 136 155
Total Building Materials 1,257 1,016 797
Composite Materials
United States 361 326 302
Europe 388 335 256
Canada and other 145 160 157
Total Composite Materials 894 821 715
General corporate 1,024 1,363 1,438
3,175 3,200 2,950
Investments in affiliates
accounted for under the
equity method 86 74 63
Total assets $ 3,261 $ 3,274 $ 3,013
Geographic Segments
United States $ 1,254 $ 1,044 $ 898
Europe 558 497 302
Canada and other 339 296 312
General corporate 1,024 1,363 1,438
3,175 3,200 2,950
Investments in affiliates
accounted for under the
equity method 86 74 63
Total assets $ 3,261 $ 3,274 $ 3,013
</TABLE>
-38-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
1. Segment Data (Continued)
<TABLE>
<S> <C> <C> <C>
PROVISION FOR DEPRECIATION, 1995 1994 1993
AMORTIZATION, AND REBUILDING (In millions of dollars)
FURNACES
Industry Segments
Building Materials
United States $ 49 $ 48 $ 47
Europe 11 6 2
Canada and other 8 8 11
Total Building Materials 68 62 60
Composite Materials
United States 22 22 24
Europe 18 17 16
Canada and other 7 8 10
Total Composite Materials 47 47 50
General corporate 10 9 11
Total provision for
depreciation, amortization,
and rebuilding furnaces $ 125 $ 118 $ 121
Geographic Segments
United States $ 71 $ 70 $ 71
Europe 29 23 18
Canada and other 15 16 21
General corporate 10 9 11
Total provision for
depreciation, amortization,
and rebuilding furnaces $ 125 $ 118 $ 121
</TABLE>
-39-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
1. Segment Data (Continued)
<TABLE>
<S> <C> <C> <C>
ADDITIONS TO PLANT AND EQUIPMENT 1995 1994 1993
(In millions of dollars)
Industry Segments
Building Materials
United States $ 60 $ 85 $ 82
Europe 36 41 2
Canada and other 33 7 5
Total Building Materials 129 133 89
Composite Materials
United States 37 41 31
Europe 39 35 32
Canada and other 18 26 7
Total Composite Materials 94 102 70
General corporate 53 23 19
Total additions $ 276 $ 258 $ 178
Geographic Segments
United States $ 97 $ 126 $ 113
Europe 75 76 34
Canada and other 51 33 12
General corporate 53 23 19
Total additions $ 276 $ 258 $ 178
</TABLE>
-40-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
<TABLE>
2. Long-Term Debt
<S> <C> <C>
1995 1994
(In millions of dollars)
Unsecured U.S. credit facility
due in 1997, variable $ 55 $ 35
Unsecured European credit
facilities due through
2002, variable 40 -
Unsecured Canadian credit
facility due in 1997,
variable - 4
Guaranteed debentures due
in 2001, 10% 150 150
Debentures due in 2002, 8.875% 150 150
Debentures due in 2012, 9.375% 150 149
Guaranteed debentures due in
1998, 9.8% 100 100
Eurobonds due through 2001,
9.814% (Note 20) 63 140
Bonds due in 2000, 7.25%,
payable in Deutsche marks
(Note 20) 50 50
Convertible junior subordinated
debentures due in 2005, 8%,
convertible at $29.75 per
share - 173
Notes due through 2002, 6.06%
to 8.50%, payable in
foreign currencies 26 38
Other long-term debt due
through 2012, at rates from
5.375% to 12.47% 45 68
829 1,057
Less: Current portion (35) (20)
Total long-term debt $ 794 $ 1,037
</TABLE>
The U.S. credit facility has a maximum commitment of $475
million at December 31, 1995, of which $176 million was used
for standby letters of credit and $244 million was unused.
The rate of interest is either the bank's base rate, or
13/16% over the certificate of deposit rate, or 11/16% over
the London Interbank Offered Rate (LIBOR). The weighted
average rate of interest paid on borrowings under this
facility during 1995 was 6.9%, (8.5% at December 31, 1995).
A commitment fee of 1/4 of 1% is charged on the unused
portions of this facility.
The Canadian credit facility is payable in Canadian dollars
and has a maximum commitment of 135 million Canadian dollars
($99 million U.S. dollars), all of which was unused at
December 31, 1995. The rate of interest is either 11/16%
over the Canadian cost of funds rate, or 11/16% over LIBOR
on U.S. deposits, or .7875% over the Canadian bankers'
acceptance rate. A commitment fee of 1/4 of 1% is charged on
the unused portions of this facility.
-41-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
2. Long-Term Debt (Continued)
The European credit facilities, payable in Belgian francs,
have an aggregate commitment of 1.6 billion Belgian francs
($55 million U.S. dollars) of which 400 million Belgian
francs ($15 million U.S. dollars) was unused at December 31,
1995. The rate of interest on the facilities ranges from
4.28% to 4.51% at December 31, 1995. The commitment fee on
the unused portions of the facilities range from 3/20 to 1/4
of 1%.
As is typical for bank credit facilities, the agreements
relating to the facilities described above contain
restrictive covenants, including requirements for the
maintenance of working capital, interest coverage, and
minimum coverage of fixed charges; and limitations on the
early retirement of subordinated debt, additional
borrowings, certain investments, payment of dividends, and
purchase of Company stock. The agreements include a
provision which would result in all of the unpaid principal
and accrued interest of the facilities becoming due
immediately upon a change of control in ownership of the
Company. A material adverse change in the Company's
business, assets, liabilities, financial condition or
results of operations constitutes a default under the
agreements.
During 1995, the Company's $173 million issue of 8%
convertible junior subordinated debentures were converted.
The conversion resulted in the issuance of 5.8 million new
shares of common stock. In conjunction with the conversion
of the debentures, the Company paid fees of approximately $3
million which are reflected as other expenses on the
Company's consolidated statement of income for the year
ended December 31, 1995.
In November 1994, Owens-Corning Finance (U.K.) PLC, a wholly-
owned subsidiary of the Company, issued $140 million of
Eurobonds. These bonds are convertible into fixed rate
preference shares of Owens-Corning Finance (U.K.) PLC in
November 2004 and may be redeemed at any time, at a premium,
at the option of the Company. The bonds are guaranteed by
the Company as to payments of principal and interest and
rank similarly with all other senior unsecured debt of the
Company. Subsequently, in a separate transaction, the
Company sold a put option to the holder of the bonds
allowing the option holder to require the Company to
purchase a portion of the bonds. As a result of the
holder's exercise of the put option, in May 1995, the
Company repurchased a portion of the $140 million issue of
Eurobonds for $77 million.
-42-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
2. Long-Term Debt (Continued)
The aggregate maturities and sinking fund requirements for
all long-term debt issues for each of the five years
following December 31, 1995 are:
<TABLE>
<S> <C> <C> <C>
Credit Other Long-
Year Facilities Term Debt
(In millions of dollars)
1996 $ - $ 35
1997 63 19
1998 8 112
1999 8 12
2000 6 75
</TABLE>
<TABLE>
3.Short-Term Debt
<S> <C> <C>
1995 1994
(In millions of dollars)
Balance outstanding at
December 31 $ 64 $ 155
Weighted average
short-term borrowings $ 184 $ 165
Weighted average interest
rates on short-term debt
outstanding at December 31 7.5% 6.6%
</TABLE>
In May 1995 the Company repaid its unsecured, variable rate,
short-term bank credit facility that was used to finance the
1994 U.K. acquisition (Note 5). This facility had a maximum
commitment of $110 million at December 31, 1994, all of
which was used. The rate of interest on borrowings under
this facility was 1/2 of 1% over LIBOR, or 6.6875% at
December 31, 1994.
In December 1995 the Company entered into two revolving
credit agreements. Each quarter during 1996, the Company
may borrow up to a predetermined amount from $13 million to
$16 million. The amount borrowed may be repaid in U.S.
dollars at less than or equal to the original borrowing,
based upon predetermined British pound or Belgian franc
currency exchange rates. The agreements are in effect
through 1996 and bear interest at market rates in effect at
the time of each borrowing.
The Company had unused short-term lines of credit totalling
$239 million and $91 million at December 31, 1995 and 1994,
respectively.
-43-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
4. Convertible Monthly Income Preferred Securities (MIPS)
In May 1995, Owens-Corning Capital, L.L.C. ("OC Capital"), a
Delaware limited liability company, all of the common
limited liability company interests in which are owned
indirectly by the Company, completed a private offering of 4
million shares of Convertible Monthly Income Preferred
Securities ("preferred securities"). The aggregate purchase
price for the offering was $200 million. In conjunction
with the offering, the Company incurred $6 million in
issuance costs.
The preferred securities are guaranteed in certain respects
by the Company and are convertible, at the option of the
holders, into Company common stock at the rate of 1.1416
shares of Company common stock for each preferred security
(equivalent to a conversion price of $43.80 per common
share). OC Capital cannot initiate any action relating to
conversion until after June 1, 1998. Distributions on the
preferred securities are cumulative and are payable at the
annual rate of 6-1/2 percent of the liquidation preference
of $50 per preferred security. Distributions of $8 million
have been recorded as other expenses on the Company's
consolidated statement of income for the year ended December
31, 1995.
The Company issued $200 million of 6-1/2 percent Convertible
Subordinated Debentures due 2025 to OC Capital, which
represents the sole asset of OC Capital, in exchange for the
proceeds of the offering. The Company used the proceeds to
repay the $110 million short-term bank credit facility
utilized for the 1994 U.K. acquisition (Note 5), with the
balance used to reduce borrowings under the Company's
revolving credit facilities.
5. Acquisitions and Divestitures of Businesses
During 1995 and 1994, the Company made several acquisitions
in the Building Materials segment in the United States and
Europe, which were consummated through the exchange of
various combinations of common stock and cash. The
aggregate purchase price including possible subsequent
contingent consideration was $126 million and $155 million
for 1995 and 1994, respectively. The 1995 acquisitions
exchanged 946,922 shares of the Company's common stock and
$82 million in cash which includes $1 million to be paid in
the first quarter of 1996 and the 1994 acquisitions
exchanged 855,556 shares of the Company's common stock and
$120 million in cash, net of cash acquired, for all of the
assets and liabilities of the companies acquired. The
incremental sales from the acquisitions, in the year of
acquisition, were $41 million and $134 million for the years
ended December 31, 1995 and 1994, respectively.
The largest of these acquisitions was the 1994 second
quarter acquisition of Pilkington Insulation Limited and
Kitsons Insulation Products Limited (collectively, "the U.K.
acquisition"), the United Kingdom based insulation
manufacturing and industrial supply businesses of Pilkington
PLC. Acquiring two glass fiber insulation manufacturing
facilities, one rock wool manufacturing facility and 14
distribution centers, the Company now represents the United
Kingdom's largest manufacturer of glass fiber and rock wool
insulation is a major
-44-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
5. Acquisitions and Divestitures of Businesses (Continued)
supplier of thermal and acoustical insulation products to
the United Kingdom construction industry. The purchase
price of the U.K. acquisition was $110 million and was
financed with borrowings from the Company's short-term bank
credit facility (Note 3).
All acquisitions were accounted for under the purchase
method of accounting, whereby the assets acquired and
liabilities assumed have been recorded at their fair values
and the results of operations for the acquisitions have been
included in the Company's consolidated financial statements
subsequent to the acquisition dates.
The purchase price allocations were based on preliminary
estimates of fair market value and are subject to revision.
The 1995 acquisitions included goodwill of $97 million and
non-competition agreements of $3 million. The 1994
acquisitions included goodwill of $78 million and non-
competition agreements of $6 million.
The goodwill and non-competition agreements are being
amortized on a straight-line basis over 40 years and 7
years, respectively. The pro forma effect of the
acquisitions was not material to net income for the years
ended December 31, 1995, 1994 or 1993.
On September 30, 1994, the Company entered into a joint
venture with Alpha Corporation of Tennessee, whereby the two
companies combined their existing resin businesses to form
Alpha/Owens-Corning, L.L.C., the largest manufacturer of
polyester resins in North America. The Company contributed
two manufacturing plants (Valparaiso, Indiana and Guelph,
Ontario) and owns a 50 percent interest in the joint
venture. This joint venture is being accounted for under
the equity method. For the nine months ended September 30,
1994 and the year ended December 31, 1993, resin sales
totaled $58 million and $63 million, respectively, and were
included in the Composite Materials segment.
Late in the fourth quarter of 1994, the Company completed
the sale of its underground storage tank manufacturing
business. Sales for this business totaled $41 million and
$43 million in 1994 and 1993, respectively, and were
included in the Building Materials segment.
6. Postemployment and Postretirement Benefits Other Than
Pensions
The Company and its subsidiaries maintain health care and
life insurance benefit plans for certain retired employees
and their dependents. The health care plans in the U.S. are
unfunded and pay either 1) stated percentages of covered
medically necessary expenses, after subtracting payments by
Medicare or other providers and after stated deductibles
have been met or, 2) fixed amounts of medical expense
reimbursement. Employees become eligible to participate in
the health care plans upon retirement under one of the
Company's pension plans if they have accumulated 10
years of service after age 45. Some of the plans
are
-45-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
6. Postemployment and Postretirement Benefits Other Than
Pensions (Continued)
contributory, with some retiree contributions adjusted
annually. The Company has reserved the right to change or
eliminate these benefit plans subject to the terms of
collective bargaining agreements during their term.
Effective January 1, 1994, the Company adopted Statement of
Financial Accounting Standards No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions"
for its non-U.S. plans. Accordingly, the projected cost of
postretirement benefits is charged to expense during the
years in which eligible employees render service. The
cumulative effect of the adoption of this standard was a
charge of $10 million, or $.20 per share. (The Company
adopted Statement No. 106 for its U.S. plans effective
January 1, 1991.)
During 1993, the Company approved changes in its
postretirement health care plans for retirees and active
employees. These changes, which reduced the accumulated
benefit obligation by $120 million and 1993 expense by $18
million, resulted in an unrecognized net reduction in prior
service cost which will be amortized through 1999.
The following table reconciles the status of the accrued
postretirement benefits cost liability at October 31, 1995
and 1994, as reflected on the balance sheet as of December
31, 1995 and 1994:
<TABLE>
<S> <C> <C>
1995 1994
(In millions of dollars)
Accumulated Postretirement
Benefits Obligation:
Retirees $ (194) $ (176)
Fully eligible active
plan participants (21) (24)
Other active plan
participants (54) (46)
Funded status (269) (246)
Unrecognized net gain (11) (39)
Unrecognized net reduction
in prior service cost (72) (88)
Benefit payments subsequent to
the valuation date
(October 31) 3 3
Accrued postretirement benefits
cost liability (includes
current liabilities of
$19 million in 1995 and
1994) $ (349) $ (370)
</TABLE>
-46-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
6. Postemployment and Postretirement Benefits Other Than
Pensions (Continued)
For measurement purposes, a 10.5% annual rate of increase in
the per capita cost of covered health care claims was
assumed for 1996. The rate was assumed to decrease to 10%
for 1997, then decrease gradually to 6.0% by 2005. The
health care cost trend rate assumption has a significant
effect on the amounts reported. To illustrate, increasing
the assumed health care cost trend rate by one percentage
point in each year would increase the accumulated
postretirement benefits obligation as of October 31, 1995,
by $14 million and the aggregate of the service and interest
cost components of net postretirement benefits cost for the
year then ended by $2 million. The discount rate used in
determining the accumulated postretirement benefits
obligation was 7.5% in 1995, 8.5% in 1994, and 7.5% in 1993.
Effective January 1, 1994, the Company adopted Statement of
Financial Accounting Standards No. 112, "Employers'
Accounting for Postemployment Benefits." This standard
requires the Company to recognize the obligation to provide
benefits to former or inactive employees after employment
but before retirement under certain conditions. These
benefits include, but are not limited to, salary
continuation, supplemental unemployment benefits, severance
benefits, disability-related benefits (including workers'
compensation), job training and counseling, and continuation
of benefits such as health care and life insurance coverage.
The cumulative effect of the adoption of this standard,
recorded in 1994, was an undiscounted charge of $28 million,
or $.56 per share, net of related income taxes of $18
million.
The following table reconciles the status of the accrued
postemployment benefits cost liability at October 31, 1995
and 1994, as reflected on the balance sheet as of December
31, 1995 and 1994:
<TABLE>
<S> <C> <C>
1995 1994
(In millions of dollars)
Funded status $ (40) $ (45)
Unrecognized net gain (2) -
Benefit payments subsequent
to the valuation date
(October 31) 1 1
Accrued postemployment benefit
cost liability (includes
current liabilities of $4
million in 1995 and $5
million in 1994) $ (41) $ (44)
</TABLE>
The net postemployment benefits expense was $2 million and
$3 million for 1995 and 1994, the year of adoption,
respectively.
-47-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
6. Postemployment and Postretirement Benefits Other Than
Pensions (Continued)
The net postretirement benefits cost for 1995, 1994 and 1993
included the following components:
<TABLE>
<S> <C> <C> <C>
1995 1994 1993
(In millions of dollars)
Service cost $ 7 $ 8 $ 7
Interest cost on accumulated
post-retirement benefits
obligation 19 19 23
Net amortization and deferral (24) (20) (13)
Net postretirement benefits
cost $ 2 $ 7 $ 17
</TABLE>
In December 1995, the Company established and funded a
Voluntary Employees' Beneficiary Association (VEBA) trust to
cover certain employee welfare and postretirement benefits
in the amount of $64 million, of which $13 million has been
classified as long-term.
7. Pension Plans
The Company has several defined benefit pension plans
covering most employees. Under the plans, pension benefits
are generally based on an employee's number of years of
service. Company contributions to these pension plans are
based on the calculations of independent actuaries using the
projected unit credit method. Plan assets consist primarily
of equity securities with the balance in fixed income
investments or insurance contracts. The unrecognized cost
of retroactive amendments and actuarial gains and losses are
amortized over the average future service period of plan
participants expected to receive benefits.
In August of 1995, the Company amended the pension plan for
U.S. salaried employees to change from a final average pay
formula to a cash balance formula. The new plan provisions
become effective on January 1, 1996. The change resulted in
a reduction in the projected benefit obligation of $20
million. The change is expected to reduce pension expense
in the future through the amortization of the reduction in
the projected benefit obligation, reduced service cost and
reduced interest cost on the projected benefit obligation.
The reduction in pension expense for 1996 is expected to be
$11 million. The impact on pension expense for 1995 was a
reduction of $4 million.
-48-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
7. Pension Plans (Continued)
Pension expense for the Company's defined benefit pension
plans includes the following:
<TABLE>
<S> <C> <C> <C>
1995 1994 1993
(In millions of dollars)
Service cost $ 20 $ 22 $ 23
Interest cost on projected
benefit obligation 64 58 62
Actual return on plan assets (114) (13) (124)
Net amortization and deferral 30 (64) 50
Net pension expense $ - $ 3 $ 11
</TABLE>
<TABLE>
The funded status at October 31, 1995 and 1994 is as
follows:
<S> <C> <C> <C> <C>
1995 1994
(In millions of dollars)
Over Under Over Under
Funded Funded Funded Funded
Vested benefit obligation $ 359 $ 312 $ 310 $ 273
Accumulated benefit
obligation $ 395 $ 355 $ 341 $ 343
Plan assets at fair value $ 500 $ 316 $ 466 $ 306
Projected benefit obligation 447 365 430 352
Plan assets in excess of
(less than) projected
benefit obligation 53 (49) 36 (46)
Unrecognized loss 15 59 8 55
Unrecognized prior service
cost (30) (31) (12) (24)
Unrecognized transition amount (35) (11) (39) (13)
Adjustment to minimum liability - (7) - (12)
Net pension liability (includes
current liabilities of $2 million
in 1995 and $8 million in 1994
and noncurrent assets of $41
million in 1995 and $38 million
in 1994) $ 3 $ (39) $ (7) $(40)
</TABLE>
-49-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
7. Pension Plans (Continued)
The 1995, 1994 and 1993 primary actuarial assumptions used
for pension plans were:
<TABLE>
<S> <C> <C> <C>
1995 1994 1993
Discount rate 7.5% 8.5% 7.5%
Expected long-term rate of
return on plan assets 9.0% 9.5% 10.0%
Rate of compensation
increase 5.1% 5.1% 4.1%
</TABLE>
The Company also sponsors defined contribution plans
available to substantially all U.S. employees. Company
contributions for the plans are based on matching a
percentage of employee savings up to a maximum savings
level. The Company's contributions were $12 million in
1995, $10 million in 1994, and $9 million in 1993.
8. Income Taxes
Effective January 1, 1993, the Company adopted Statement of
Financial Accounting Standards No. 109, "Accounting for
Income Taxes." Statement No. 109 changed the criteria for
measuring the provision for income taxes and recognizing
deferred tax assets and liabilities. Deferred tax assets and
liabilities are determined based on the difference between
the financial statement and tax bases of corresponding
liabilities and assets using enacted tax rates in effect for
the year in which the differences are expected to reverse.
The cumulative effect of the adoption of this standard,
recorded in 1993, was an increase to earnings of $26
million, or $.53 per share.
-50-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
<TABLE>
8. Income Taxes
<S> <C> <C> <C>
1995 1994 1993
(In millions of dollars)
Income (loss) before provision
(credit) for income taxes:
U.S. $ 226 $ 119 $ 163
Foreign 99 13 (16)
Total $ 325 $ 132 $ 147
Provision (credit) for income taxes:
Current
U.S. $ (45) $ (2) $ 24
State and local (4) (7) 7
Foreign 13 5 6
Total current (36) (4) 37
Deferred
U.S. 113 51 27
State and local 15 13 1
Foreign 14 (2) (4)
Total deferred 142 62 24
Adjustment to deferred tax assets and
liabilities for an increase in the U.S.
federal statutory rate - - (14)
Total provision for income
taxes $ 106 $ 58 $ 47
</TABLE>
The reconciliation between the U.S. federal statutory rate
and the Company's effective income tax rate is:
<TABLE>
<S> <C> <C> <C>
1995 1994 1993
U.S. federal statutory rate 35% 35% 35%
Operating losses of foreign
subsidiaries - 7 10
Utilization of research and
development credits (3) - -
Utilization of operating loss
carryforwards - (7) (2)
Utilization of tax loss
carryback (2) - -
Enacted federal tax rate
change - - (10)
State and local income taxes 2 3 3
Other 1 6 (4)
Effective tax rate 33% 44% 32%
</TABLE>
-51-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
8. Income Taxes (Continued)
As of December 31, 1995, the Company has not provided for
withholding or U.S. federal income taxes on approximately
$196 million of accumulated undistributed earnings of its
foreign subsidiaries as they are considered by management to
be permanently reinvested. If these undistributed earnings
were not considered to be permanently reinvested,
approximately $25 million of deferred income taxes would
have been provided.
During 1995 and 1994, the Company utilized tax net operating
loss carryforwards for certain of its foreign subsidiaries
of approximately $2 million and $9 million, respectively.
At December 31, 1995 and 1994, the Company had tax net
operating loss carryforwards for certain of its foreign
subsidiaries of approximately $27 million, certain of which
expire through 1999.
The cumulative temporary differences giving rise to the
deferred tax assets and liabilities at December 31, 1995 and
1994 are as follows:
<TABLE>
<S> <C> <C> <C> <C>
1995 1994
Deferred Deferred
Deferred Tax Deferred Tax
Tax Assets Liabilities Tax Assets Liabilities
(In millions of dollars)
Asbestos litigation
claims $ 244 $ - $ 306 $ -
Other employee
benefits 160 - 171 -
Depreciation - 116 - 138
Warranty and product
liability reserves 27 - 29 -
Operating loss
carryforwards 27 - 27 -
State and local
taxes - 21 - 20
Other 60 39 122 6
Subtotal 518 176 655 164
Valuation allowances (20) - (27) -
Total deferred $ 498 $ 176 $ 628 $ 164
</TABLE>
Management fully expects to realize its net deferred tax
assets through income from future operations.
9. Science and Technology Expenses
Science and technology expenses include research and
development costs of $69 million in 1995, $64 million in
1994, and $61 million in 1993. In addition to research and
development costs, science and technology expenses include
continuing commercial activities such as engineering and
product modifications for special applications and testing.
-52-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
10. Accounts Receivable Securitization
In 1994 and 1995, the Company sold certain accounts
receivable of its Building Materials operations to a 100%
owned subsidiary, Owens-Corning Funding Corporation ("OC
Funding"). In December 1994, OC Funding entered into a
three-year agreement whereby it can sell, on a revolving
basis, an undivided percentage ownership interest in a
designated pool of accounts receivable up to a maximum of
$100 million. At December 31, 1995 and 1994, $100 million
and $50 million, respectively, have been sold under this
agreement and the sale has been reflected as a reduction of
accounts receivable in the Company's consolidated balance
sheet. The discount of $6 million on the receivables sold
has been recorded as other expenses on the Company's
consolidated statement of income for the year ended December
31, 1995.
The Company maintains an allowance for doubtful accounts
based upon the expected collectibility of all consolidated
trade accounts receivable, including receivables sold by OC
Funding.
11. Inventories
Inventories are summarized as follows:
<TABLE>
<S> <C> <C>
1995 1994
(In millions of dollars)
Finished goods $ 210 $ 192
Materials and supplies 127 118
FIFO inventory 337 310
Less: Reduction to LIFO basis (84) (87)
$ 253 $ 223
</TABLE>
Approximately $175 million of FIFO inventories were valued
using the LIFO method at December 31, 1995 and 1994.
During 1995, 1994, and 1993, certain inventories were
reduced, resulting in the liquidation of LIFO inventory
layers carried at lower costs in prior years as compared
with the current cost of inventory. The effect of these
inventory reductions was to reduce 1995, 1994, and 1993 cost
of sales by $7 million, $3 million, and $1 million,
respectively.
-53-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
12. Investments in Affiliates
At December 31, 1995 and 1994, the Company's affiliates,
which generally are engaged in the manufacture of fibrous
glass and related products for the insulation, construction,
reinforcements, and textile markets, include:
<TABLE>
<S> <C> <C>
Percent Ownership
1995 1994
COMPOSITES:
Alpha/Owens-Corning, L.L.C. (USA) 50% 50%
Knytex Company, L.L.C. (USA) 50% 50%
Vitro-Fibras, S.A. (Mexico) 40% 40%
GLOBAL PIPE:
Amiantit Fiberglass Industries,
Ltd. (Saudi Arabia) 30% 30%
Owens-Corning Eternit Rohre GmbH
(Germany) 50% 50%
Owens-Corning Pipe Botswana
(Pty.), Ltd. (Botswana) 46% 49%
Owens-Corning Tubs S.A. (Spain) 50% 50%
Owens-Corning Canos, S.A.
(Argentina) 50% -
BUILDING MATERIALS - EUROPE:
Arabian Fiberglass Insulation
Company, Ltd. (Saudi Arabia) 49% 49%
ASIA PACIFIC:
Asahi Fiber Glass Company, Ltd.
(Japan) 28% 28%
LG Owens-Corning Corp. (Korea) 31% 30%
Siam Fiberglass Co., Ltd.
(Thailand) 20% 20%
</TABLE>
-54-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
12. Investments in Affiliates (Continued)
The following table provides summarized financial
information on a combined 100% basis for the Company's
affiliates accounted for under the equity method:
<TABLE>
<S> <S> <C> <C>
1995 1994 1993
(In millions of dollars)
At December 31:
Current assets $ 338 $ 328 $ 214
Noncurrent assets 472 513 387
Current liabilities 403 331 240
Noncurrent liabilities 253 250 147
For the year:
Net sales 962 630 486
Gross margin 178 96 81
Net income 47 7 16
</TABLE>
The Company's equity in undistributed net income of
affiliates was $36 million at December 31, 1995.
Subsequent to year end, the Company sold all of its interest
in Asahi Fiber Glass Company, Ltd. for approximately $50
million, and realized a pretax gain in excess of $25
million.
13. Accounts Payable and Accrued Liabilities
<TABLE>
<S> <C> <C>
1995 1994
(In millions of dollars)
Accounts payable $ 309 $ 298
Payroll and vacation pay 87 117
Payroll, property, and
miscellaneous taxes 39 30
Other employee benefits
liability (Note 6) 23 24
Other 129 129
$ 587 $ 598
</TABLE>
-55-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
14. Consolidated Statement of Cash Flows
Cash payments, net of refunds, for income taxes and cost of
borrowed funds are summarized as follows:
<TABLE>
<S> <C> <C> <C>
1995 1994 1993
(In millions of dollars)
Income taxes $ (34) $ (4) $ 43
Cost of borrowed funds 94 97 95
</TABLE>
The Company considers all highly liquid debt instruments
purchased with a maturity of three months or less to be cash
equivalents.
See Notes 2 and 5 for supplemental disclosure of Non-cash
Investing and Financing Activities.
15. Leases
The Company leases certain manufacturing equipment and
office and warehouse facilities under operating leases, some
of which include cost escalation clauses, expiring on
various dates through 2015. Total rental expense charged to
operations was $63 million in 1995, $54 million in 1994, and
$42 million in 1993. At December 31, 1995, the minimum
future rental commitments under noncancellable leases
payable over the remaining lives of the leases are:
<TABLE>
<S> <C> <C>
Minimum Future
Period Rental Commitments
(In millions of dollars)
1996 $ 52
1997 52
1998 40
1999 20
2000 18
2001 through 2015 134
$ 316
</TABLE>
-56-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
16. Restructuring of Operations and Other Initiatives
During the first quarter of 1994, the Company recorded a
$117 million pretax charge for productivity initiatives and
other actions aimed at reducing costs and enhancing the
Company's speed, focus, and efficiency. This $117 million
pretax charge is comprised of an $89 million charge
associated with the restructuring of the Company's business
segments, as well as a $28 million charge, primarily
composed of final costs associated with the administration
of the Company's former commercial roofing business. The
components of the $89 million restructure include: $44
million for personnel reductions, $20 million for
divestiture of non-strategic businesses and facilities, $22
million for business realignments, and $3 million for other
actions. The $44 million cost for personnel reductions
primarily represents severance costs associated with the
elimination of nearly 400 positions worldwide. The primary
employee groups affected include science and technology
personnel, field sales personnel, corporate administrative
personnel, and commercial roofing and resin business
personnel.
As of December 31, 1995, the Company has recorded
approximately $82 million in costs against its 1994
restructure reserve, of which $67 million represents actual
cash expenditures and $15 million represents the non-cash
effects of asset write-offs and business realignments. The
$67 million cash expenditure includes severance costs of $42
million, divestiture or realignment of businesses and
facilities costs of $22 million, and $3 million for other
actions.
During the first quarter of 1993, the Company recorded a $23
million charge to reorganize its European operations. This
charge included $17 million for personnel reductions and $6
million for the writedown of fixed assets.
17. Glass Melting Furnace Rebuilds
Effective January 1, 1994, the Company adopted the capital
method of accounting for the cost of rebuilding glass
melting furnaces. Under this method, costs are capitalized
when incurred and depreciated over the estimated useful
lives of the rebuilt furnaces. Previously, the Company
established a reserve for the future rebuilding costs of its
glass melting furnaces through a charge to earnings between
dates of rebuilds. The change to the capital method
provides a more appropriate measure of the Company's capital
investment and is consistent with industry practice. The
cumulative effect of this change in accounting method was an
increase to earnings of $123 million, or $2.45 per share,
net of related income taxes of $54 million. The effect of
this change in accounting method was to increase
depreciation expense and eliminate furnace rebuild
provision. The pro forma effect of this change was not
material to net income for the year ended December 31, 1993.
-57-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
18. Stock Compensation Plans
The Company's Stock Performance Incentive Plan (SPIP) and
the Owens-Corning 1995 Stock Plan, (collectively, the
"Plans"), permit up to two percent and one percent,
respectively, of common shares outstanding at the beginning
of each calendar year to be awarded as stock options and
restricted stock (with 25% of this amount as the maximum
permitted number of restricted stock awards). The Company
may carry forward, independently for each plan, unused
shares from prior years and may increase the shares
available for awards in any calendar year through an advance
of up to 25% of the subsequent year's allocation (determined
by using 25% of the current year's allocation). These
shares are also subject to the 25% limit for restricted
stock awards. During 1995, the total number of shares
available under the Plans for stock awards was 1,565,004
shares, 1,006,950 of which were awarded as stock options and
232,224 as restricted stock, which includes an advance of
54,355 shares from the 1996 allocation for SPIP. 599,840
shares are also available to be awarded under a prior plan;
however, the Company does not expect any awards to be made
under that plan.
Additionally, the Company has a plan to award stock options
and deferred stock awards to nonemployee directors, of which
95,500 shares were available for this purpose as of December
31, 1995. In 1995, 10,000 options and 4,000 stock awards
were granted, of which 2,000 were issued in conjunction with
the plan for nonemployee directors.
During 1994, the total number of shares available for stock
awards for SPIP was 1,075,752 shares, 894,000 of which were
awarded as stock options and 59,450 as restricted stock,
which included an advance of 93,478 shares from the 1995
allocation. Additionally, in 1994, 8,500 options and 4,000
stock awards were granted, of which 2,000 were issued in
conjunction with the plan for nonemployee directors.
Stock Options
Activity during 1995 and 1994 in shares under option:
<TABLE>
<S> <C> <C> <C> <C>
1995 1994
Number Price Number Price
of Range per of Range per
Shares Share Shares Share
Beginning of year 3,290,454 $17.86-47.00 2,560,826 $17.86-47.00
Options granted 1,016,950 31.50-45.00 902,500 28.50-34.88
Options exercised (300,663) 17.86-40.50 (137,059) 18.75-30.63
Options cancelled (63,631) 30.63-40.50 (35,813) 26.75-40.50
End of year 3,943,110 $17.86-47.00 3,290,454 $17.86-47.00
Exercisable 2,107,427 $17.86-47.00 1,619,119 $17.86-47.00
</TABLE>
-58-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
18. Stock Compensation Plans (Continued)
Option prices represent the market price at date of grant.
Shares issued under options are recorded in the common stock
accounts at the option price. Options granted vest ratably
through 1998 for the SPIP plan and, as determined by the
compensation committee, for the Owens-Corning 1995 Stock
Plan.
Deferred Stock Awards
At December 31, 1995, the Company had 15,711 shares of
deferred stock outstanding, all of which were vested.
During 1995, 2,000 shares of deferred stock were granted,
and 2,629 shares were issued.
Compensation expense is measured based on the market price
of the stock at date of grant and is recognized on a
straight-line basis over the vesting period.
Restricted Stock Awards
At December 31, 1995, the Company had 448,973 shares of
restricted stock outstanding. Stock restrictions lapse,
subject to alternate vesting plans for approved early
retirement and involuntary termination, over various periods
ending in 2005.
19.Share Purchase Rights
Each outstanding share of the Company's common stock
includes a preferred share purchase right. Each right
entitles the holder to buy from the Company one one-
hundredth of a share of Series A Participating Preferred
Stock of the Company at a price of $50. The Board of
Directors has designated 750,000 shares of the Company's
authorized preferred stock as Series A Participating
Preferred Stock. There are currently no preferred shares
outstanding.
Rights become exercisable and detach from the common stock
ten days after a person or group acquires, or announces a
tender offer for, 20% or more of the Company's outstanding
shares of common stock. The rights expire on
December 30, 1996, unless redeemed earlier by the Company.
The rights are redeemable by the Company at one cent each at
any time prior to ten days following public announcement or
notice to the Company that an acquiring person or group has
purchased 20% or more of the Company's outstanding common
stock. If the Company is acquired in a merger or other
business combination at any time after the rights become
exercisable, each right would entitle its holder to buy
shares of the acquiring or surviving company having a market
value of twice the exercise price of the right.
-59-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
20. Derivative Financial Instruments and Fair Value of
Financial Instruments
The Company is a party to financial instruments with
off-balance-sheet risk in the normal course of business to
help meet financing needs and to reduce exposure to
fluctuating foreign currency exchange rates and interest
rates. The Company is exposed to credit loss in the event
of nonperformance by the other parties to the financial
instruments described below. However, the Company does not
anticipate nonperformance by the other parties. The Company
does not engage in trading activities with these financial
instruments and does not generally require collateral or
other security to support these financial instruments. The
notional amounts of derivatives summarized in the foreign
exchange risk and interest rate risk management section
below do not represent the amounts exchanged by the parties
and, thus, are not a measure of the exposure of the Company
through its use of derivatives. The amounts exchanged are
calculated on the basis of the notional amounts and the
other terms of the derivatives, which relate to interest
rates, exchange rates, securities prices, or financial or
other indexes.
Foreign Exchange Risk and Interest Rate Risk Management
The Company enters into various types of derivative
financial instruments to manage its foreign exchange risk
and interest rate risk, as indicated in the following table.
<TABLE>
<S> <C> <C>
Notional Amount Notional Amount
December 31, 1995 December 31, 1994
(In millions of dollars)
Forward currency exchange
contracts $ 234 $ 194
Options purchased 25 22
Currency swaps 190 190
Interest rate swaps 150 150
</TABLE>
The Company enters into forward currency exchange contracts
to manage its exposure against foreign currency fluctuations
on certain assets and liabilities denominated in foreign
currencies. As of December 31, 1995, the Company has 21
forward currency exchange contracts maturing in 1996 which
exchange 2.7 billion Belgian francs, 19 million U.S.
dollars, 11 million British pounds, 117 million French
francs, 17 billion Italian lira, and various other
currencies. As of December 31, 1994, the Company had 29
forward currency exchange contracts which matured in 1995
and exchanged 4.4 billion Belgian francs, 23 million U.S.
dollars, 38 million British pounds, 22 million Deutsche
marks, 19 billion Italian lira, and various other
currencies. Gains and losses on these foreign currency
hedges are included in the carrying amount of the related
assets and liabilities. At December 31, 1995 and 1994,
deferred gains and losses on these foreign currency hedges
are not material to the consolidated financial statements.
-60-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
20. Derivative Financial Instruments and Fair Value of
Financial Instruments (Continued)
The Company enters into forward currency exchange contracts
to hedge its equity investments in certain foreign
subsidiaries and to manage its exposure against fluctuations
in foreign currency rates. As of December 31, 1995, the
Company has two forward currency exchange contracts maturing
in 1996 which exchange 1 billion Belgian francs against
approximately 34 million U.S. dollars to hedge its equity
investments in certain of its European subsidiaries. As of
December 31, 1994, the Company had two forward currency
exchange contracts which matured in 1995 and exchanged 1
billion Belgian francs against approximately 32 million U.S.
dollars to hedge its equity investments in certain of its
European subsidiaries. At December 31, 1995 and 1994,
losses of $4 million and $3 million on hedges of net
investments in foreign subsidiaries are included in
stockholders' equity, respectively.
The Company has entered into forward currency exchange
contracts to reduce its exposure to currency fluctuations on
the proceeds of the sale of its investment in Asahi Fiber
Glass Company, Ltd. (Note 12). As of December 31, 1995,
these contracts exchange 5 billion Japanese yen for 50
million U.S. dollars. At December 31, 1995, gains of $3
million are included as deferred revenue.
The Company entered into forward currency exchange contracts
to reduce its exposure to currency fluctuations on the
anticipated 1995 earnings of certain European subsidiaries.
The nine forward currency exchange contracts which matured
in 1995, exchanged 412 million Belgian francs and 8 million
British pounds against approximately 25 million U.S.
dollars. Gains and losses on these foreign currency hedges
were included in income in the period in which the exchange
rates changed. Gains on these forward currency exchange
contracts were not material to the consolidated financial
statements.
The Company enters into option contracts to hedge
anticipated transactions with certain of its foreign
subsidiaries. As of December 31, 1995, the Company has
eight currency option contracts maturing in 1996 which hedge
the 1996 royalty payments of the Company's European
subsidiaries. As of December 31, 1995, the currency option
contracts exchanged 526 million Belgian francs and 6 million
British pounds against approximately 25 million U.S.
dollars. As of December 31, 1994, the Company had six
currency option contracts which exchanged 496 million
Belgian francs and 4 million British pounds against
approximately 22 million U.S. dollars. Gains on the
Company's hedges of these anticipated transactions are
included as deferred revenue. At December 31, 1995 and
1994, deferred gains on option contracts are not material to
the consolidated financial statements.
As of December 31, 1994, the Company entered into two
currency swap transactions to manage its exposure against
foreign currency fluctuations on the principal amount of its
guaranteed .814% Eurobonds (Note 2). At December 31, 1994,
gains on these currency swaps were not material to the
consolidated financial statements. During May 1995 the
Company terminated these swaps. The termination of these
swaps exchanged 140 million U.S. dollars for approximately
89 million British pounds, resulting in a gain of
approximately 10 million U.S dollars. At that time, the
Company entered into two cross-currency interest rate swaps
from U.S. dollars into British pounds to hedge the interest
and principal payments of the remaining Eurobonds through
2002. These agreements also convert part of the fixed rate
interest into variable rate interest. The gain on the
exercised swaps is being amortized over the
-61-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
20. Derivative Financial Instruments and Fair Value of
Financial Instruments (Continued)
life of the original hedge. At December 31, 1995, $7
million of unamortized gain on the four cross-currency
interest rate swaps is included in other liabilities.
The Company has a cross-currency interest rate conversion
agreement from Deutsche marks into U.S. dollars to hedge the
interest and principal payments of its 7.25% Deutsche mark
bonds, due in 2000. The agreement establishes a fixed
interest rate of 11.1%.
The Company enters into interest rate swaps to manage its
interest rate risk. The Company has entered into four
interest rate swap agreements to reduce the interest rates
on its fixed rate borrowings. These agreements effectively
convert an aggregate principal amount of $150 million of
fixed rate long-term debt into variable rate borrowings with
interest rates ranging from 5.875% to 8.025% in 1995 and
5.81% to 7.96% in 1994. The agreements mature in 1998. The
differential interest to be paid or received is accrued as
interest rates change and is recognized over the life of the
agreements.
Other Financial Instruments with Off-Balance-Sheet Risk
As of December 31, 1995 and 1994, the Company is
contingently liable for guarantees of indebtedness owed by
certain unconsolidated affiliates of $71 million and $27
million, respectively. The Company is of the opinion that
its unconsolidated affiliates will be able to perform under
their respective payment obligations in connection with such
guaranteed indebtedness and that no payments will be
required and no losses will be incurred by the Company under
such guarantees.
Concentrations of Credit Risk
As of December 31, 1995 and 1994, the Company has no
significant group concentrations of credit risk.
Fair Value of Financial Instruments
The following methods and assumptions were used to estimate
the fair value of each category of financial instruments.
Cash and short-term financial instruments
The carrying amount approximates fair value due to the
short maturity of these instruments.
-62-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
20. Derivative Financial Instruments and Fair Value of
Financial Instruments (Continued)
Long-term notes receivable
The fair value has been estimated using the expected
future cash flows discounted at market interest rates.
Long-term debt
The fair value of the Company's long-term debt has been
estimated based on quoted market prices for the same or
similar issues, or on the current rates offered to the
Company for debt of the same remaining maturities.
Foreign currency swaps and interest rate swaps
The fair values of foreign currency swaps and interest
rate swaps have been estimated by traded market values
or by obtaining quotes from brokers.
Forward currency exchange contracts, option contracts,
and financial guarantees
The fair values of forward currency exchange contracts,
option contracts, and financial guarantees are based on
fees currently charged for similar agreements or on the
estimated cost to terminate these agreements or
otherwise settle the obligations with the counter
parties at the reporting date.
The estimated fair values of the Company's financial
instruments as of December 31, 1995 and 1994, which have
fair values different than their carrying amounts, are as
follows:
<TABLE>
<S> <C> <C> <C> <C>
1995 1994
Carrying Fair Carrying Fair
Amount Value Amount Value
(In millions of dollars)
Assets
Long-term notes
receivable $ 24 $ 22 $ 20 $ 18
Liabilities
Long-term debt 794 875 1,037 1,076
Off-Balance-Sheet
Financial Instruments
- Unrealized gains
Foreign currency
swaps - 39 - 26
Interest rate swaps - 14 - 4
</TABLE>
-63-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
20. Derivative Financial Instruments and Fair Value of
Financial Instruments (Continued)
As of December 31, 1995 and 1994, the Company is
contingently liable for guarantees of indebtedness owed by
certain unconsolidated affiliates. There is no market for
these guarantees and they were issued without explicit cost.
Therefore, it is not practicable to establish their fair
value.
As of December 31, 1995 and 1994, the Company has also
entered into certain forward currency exchange and option
contracts, the fair values of which are not material to the
consolidated financial statements.
21. Contingent Liabilities
ASBESTOS LIABILITIES
The Company is a co-defendant with other former
manufacturers, distributors and installers of products
containing asbestos and with miners and suppliers of
asbestos fibers (collectively, the Producers) in personal
injury and property damage litigation. The personal injury
claimants generally allege injuries to their health caused
by inhalation of asbestos fibers from the Company's
products. Most of the claimants seek punitive damages as
well as compensatory damages. The property damage claims
generally allege property damage to school, public and
commercial buildings resulting from the presence of products
containing asbestos. Virtually all of the asbestos-related
lawsuits against the Company arise out of its manufacture,
distribution, sale or installation of an asbestos-containing
calcium silicate, high temperature insulation product, the
manufacture of which was discontinued in 1972.
Status
As of December 31, 1995, approximately 144,200 asbestos
personal injury claims were pending against the Company,
55,900 of which were received in 1995. The Company received
approximately 29,100 such claims in 1994, and 32,400 in
1993.
Through December 31, 1995, the Company had resolved (by
settlement or otherwise) approximately 160,600 asbestos
personal injury claims. During 1993, 1994, and 1995, the
Company resolved approximately 60,000 such claims and
incurred total indemnity payments of $641 million (an
average of about $10,700 per case). The Company's indemnity
payments have varied considerably over time and from case to
case, and are affected by a multitude of factors. These
include the type and severity of the disease sustained by
the claimant (i.e., mesothelioma, lung cancer, other types
of cancer, asbestosis or pleural changes); the occupation of
the claimant; the extent of the claimant's exposure to
asbestos-containing products manufactured, sold or installed
by the Company; the extent of the claimant's exposure to
asbestos-containing products manufactured, sold or
installed by other Producers; the number and financial
resources of other Producer defendants; the
jurisdiction of suit; the
-64-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
21. Contingent Liabilities (Continued)
presence or absence of other possible causes of the
claimant's illness; the availability or not of legal
defenses such as the statute of limitations or state of the
art; whether the claim was resolved on an individual basis
or as part of a group settlement; and whether the claim
proceeded to an adverse verdict or judgment.
Insurance
As of December 31, 1995, the Company had approximately $430
million in unexhausted insurance coverage (net of
deductibles and self-insured retentions and excluding
coverage issued by insolvent carriers) under its liability
insurance policies applicable to asbestos personal injury
claims. This insurance, which is substantially confirmed,
includes both products hazard coverage and primary level non-
products coverage. Portions of this coverage are not
available until 1997 and beyond under agreements with the
carriers confirming such coverage. All of the Company's
liability insurance policies cover indemnity payments and
defense fees and expenses subject to applicable policy
limits.
In addition to its confirmed non-products insurance, the
Company has a significant amount of potential non-products
coverage with excess level carriers. The Company cautions,
however, that this coverage is unconfirmed and that the
amount and timing of additional recovery from these
policies, if any, will depend on subsequent negotiations or
proceedings.
Reserve
The Company's estimated total liabilities in respect of
indemnity and defense costs associated with pending and
unasserted asbestos personal injury claims that may be
received through the year 1999 (the "Liabilities"), and its
estimated insurance recoveries in respect of such claims
(the "Insurance"), are reported separately as follows:
-65-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
21. Contingent Liabilities (Continued)
<TABLE>
<S> <C> <C>
Asbestos Litigation Claims
December 31, December 31,
1995 1994
(In millions of dollars)
Reserve for asbestos litigation claims
Current $ 250 $ 300
Other 887 1,145
Total Reserve 1,137 1,445
Insurance for asbestos litigation claims
Current 100 125
Other 330 556
Total Insurance 430 681
Net Asbestos Liability $ 707 $ 764
</TABLE>
Case filing rates have continued at historically high levels
with the receipt of approximately 55,900 new claims during
1995, following the receipt of approximately 29,100 claims
in 1994 and approximately 32,400 claims in 1993. Many of
these new claims appear to be the product of mass screening
programs and not to involve significant asbestos-related
impairment. The large number of recent filings and the
uncertain value of these claims have added to the
uncertainties involved in estimating the Company's asbestos
liabilities.
Certain of the Company's principal co-defendants, the 20
members of the Center for Claims Resolution, have entered
into a proposed "global" settlement which would require
future claimants to satisfy certain medical criteria
indicative of significant asbestos-related impairment as a
pre-condition to their eligibility for settlement payments.
The Company is using similar criteria in the implementation
of its own settlement and litigation strategy and is also
seeking to require more careful proof than in the past that
claimants had significant exposure to the Company's asbestos-
containing product or operations. The Company believes that
this strategy will reduce the overall cost of asbestos
personal injury claims in the long run by channeling
indemnity payments to claimants who can establish
significant asbestos-related impairment and exposure to the
Company's asbestos-containing product or operations and by
substantially reducing indemnity payments to individuals who
are unimpaired or who did not have significant such
exposure. The Company's strategy has resulted in an
increased level of trial activity and an increase in the
number and amount of compensatory and punitive damage
verdicts and judgments against the Company. This strategy
may have the effect of increasing average per-case indemnity
costs for claims resolved with payment, while also
increasing the number of claims dismissed without payment.
-66-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
21. Contingent Liabilities (Continued)
The Company cautions that such factors as the number of
future asbestos personal injury claims received by it, the
rate of receipt of such claims, and the indemnity and
defense costs associated with asbestos personal injury
claims, as well as the prospects for confirming additional,
applicable insurance coverage beyond the $430 million
referenced above, are influenced by numerous variables that
are difficult to predict, and that estimates, such as the
Company's, which attempt to take account of such variables,
are subject to considerable uncertainty. Depending upon the
outcome of the various uncertainties described above,
particularly as they relate to unimpaired claims, it may be
necessary at some point in the future for the Company to
make additional provision for the uninsured costs of
asbestos personal injury claims received through the year
1999 (although no such amounts are reasonably estimable at
this time). The Company remains confident that its estimate
of Liabilities and Insurance will be sufficient to provide
for the costs of all such claims that involve malignancies
or significant asbestos-related functional impairment. The
Company has reviewed and will continue to review the
adequacy of its estimate of Liabilities and Insurance on a
periodic basis and make such adjustments as may be
appropriate.
The Company cannot estimate and is not providing for the
cost of unasserted claims which may be received by the
Company after the year 1999 because management is unable to
predict the number of claims to be received after 1999, the
severity of disease which may be involved and other factors
which would affect the cost of such claims.
Cash Expenditures
The Company's anticipated cash expenditures for uninsured
asbestos-related costs of claims received through 1999 are
expected to approximate $707 million, the Company's
Liabilities, net of Insurance, before tax benefits. Cash
payments will vary annually depending upon a number of
factors, including the pace of the Company's resolution of
claims and the timing of payment of its Insurance.
Management Opinion
Although any opinion is necessarily judgmental and must be
based on information now known to the Company, in the
opinion of management, the additional uninsured and
unreserved costs which may arise out of pending personal
injury and property damage asbestos claims and additional
similar asbestos claims filed in the future will not have a
materially adverse effect on the Company's financial
position. While such additional uninsured and unreserved
costs incurred in and after the year 2000 may be substantial
over time, management believes that any such additional
costs will not impair the ability of the Company to meet its
obligations, to reinvest in its businesses or to take
advantage of attractive opportunities for growth.
-67-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
21. Contingent Liabilities (Continued)
NON-ASBESTOS LIABILITIES
Various other lawsuits and claims arising in the normal
course of business are pending against the Company, some of
which allege substantial damages. Management believes that
the outcome of these lawsuits and claims will not have a
materially adverse effect on the Company's financial
position or results of operations.
22.Quarterly Financial Information (Unaudited)
<TABLE>
<S> <C> <C> <C> <C>
Quarter
First Second Third Fourth
(In millions of dollars, except share data)
1995
Net sales $ 844 $ 877 $ 927 $ 964
Cost of sales 630 639 684 717
Gross margin $ 214 $ 238 $ 243 $ 247
Net income $ 33 $ 63 $ 70 $ 66
Net income per share:
Primary net income
per share $ .71 $ 1.25 $ 1.35 $ 1.27
Fully diluted net
income per share $ .68 $ 1.20 $ 1.28 $ 1.21
</TABLE>
-68-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
22. Quarterly Financial Information (Unaudited) (Continued)
<TABLE>
<S> <C> <C> <C> <C>
Quarter
First Second Third Fourth
(In millions of dollars, except share data)
1994
Net sales $ 677 $ 852 $ 936 $ 886
Cost of sales 523 644 705 664
Gross margin $ 154 $ 208 $ 231 $ 222
Income (loss) before
cumulative effect
of accounting changes $ (67) $ 45 $ 53 $ 43
Cumulative effect of
accounting changes
(Notes 6 and 17) 85 - - -
Net income $ 18 $ 45 $ 53 $ 43
Net income per share:
Primary
Income (loss) before
cumulative effect
of accounting
changes $ (1.52) $ 1.03 $ 1.19 $ .98
Cumulative effect of
accounting changes 1.93 - - -
Net income per
share $ .41 $ 1.03 $ 1.19 $ .98
Fully diluted
Income (loss) before
cumulative effect
of accounting
changes $ (1.30) $ .95 $ 1.09 $ .91
Cumulative effect
of accounting
changes 1.70 - - -
Net income per
share $ .40 $ .95 $ 1.09 $ .91
</TABLE>
Net income per share and primary and fully diluted weighted
average shares are computed independently for each of the
quarters presented. Therefore, the sum of the quarterly net
income per share may not equal the per share total for the
year.
-69-
INDEX TO FINANCIAL STATEMENT SCHEDULES
Number Description Page
II Valuation and Qualifying Accounts and Reserves -
for the years ended December 31, 1995, 1994,
and 1993 70
-70-
<TABLE>
OWENS CORNING AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<S> <C> <C> <C> <C>
Column A Column B Column C Column D Column E
Additions
(1) (2)
Balance at Charged to Charged Balance
Beginning Costs and to Other at End
Classification of Period Expenses Accounts Deductions of Period
(In millions of dollars)
FOR THE YEAR ENDED DECEMBER 31, 1995:
Allowance deducted from
asset to which it
applies - Doubtful
Accounts $ 16 $ 5 $ - $ 2(A) $ 19
FOR THE YEAR ENDED DECEMBER 31, 1994:
Allowance deducted from
asset to which it
applies - Doubtful
Accounts $ 16 $ 5 $ - $ 5(A) $ 16
Shown separately -
Rebuilding
furnaces 124 - - 124(C) -
FOR THE YEAR ENDED DECEMBER 31, 1993:
Allowance deducted from
asset to which it
applies - Doubtful
Accounts $ 20 $ 1 $ - $ 5(A) $ 16
Shown separately -
Rebuilding
furnaces 124 17 - 17(B) 124
Notes:
(A) Uncollectible accounts written off, net of recoveries.
(B) Expenditures for purposes for which reserve was created.
(C) Effective January 1, 1994, the Company adopted the
capital method for rebuilding furnaces. See Note 17 to
the Consolidated Financial Statements.
</TABLE>
-71-
EXHIBIT INDEX
Exhibit
Number Document Description
(3) Articles of Incorporation and By-Laws.
Certificate of Incorporation of Owens Corning, as
amended (filed herewith).
By-Laws of Owens Corning, as amended (filed
herewith).
(4) Instruments Defining the Rights of Security Holders,
Including Indentures.
Credit Agreement, dated as of November 2, 1993,
among Owens-Corning Fiberglas Corporation**, the
Banks listed on Annex A thereto, and Credit Suisse,
as Agent for the Banks (incorporated herein by
reference to Exhibit (4) to the Company's quarterly
report on Form 10-Q (File No. 1-3660) for the
quarter ended September 30, 1993), as amended by
Amendment No. 1 thereto (incorporated herein by
reference to Exhibit (10) to the Company's quarterly
report on Form 10-Q (File No. 1-3660) for the
quarter ended June 30, 1994) and by Amendment No. 2
and Amendment No. 3 thereto (filed herewith).
The Company agrees to furnish to the Securities and
Exchange Commission, upon request, copies of all
instruments defining the rights of holders of long-
term debt of the Company where the total amount of
securities authorized under each issue does not
exceed ten percent of the Company's total assets.
(10) Material Contracts.
Credit Agreement, dated as of November 2, 1993,
among Owens-Corning Fiberglas Corporation**, the
Banks listed on Annex A thereto, and Credit Suisse,
as Agent for the Banks (incorporated herein by
reference to Exhibit (4) to the Company's quarterly
report on Form 10-Q (File No. 1-3660) for the
quarter ended September 30, 1993), as amended by
Amendment No. 1 thereto (incorporated herein by
reference to Exhibit (10) to the Company's quarterly
report on Form 10-Q (File No. 1-3660) for the
quarter ended June 30, 1994) and by Amendment No. 2
and Amendment No. 3 thereto (filed as Exhibit (4) to
this annual report on Form 10-K).
Rights Agreement, dated as of December 18, 1986,
between Owens-Corning Fiberglas Corporation** and
Manufacturers Hanover Trust Company, as Rights
Agent, including, as Exhibit B of such Rights
Agreement, the form of Right Certificate
(incorporated herein by reference to Exhibits 1 and
2 to the Company's Registration Statement on Form 8-
A (File No. 1-3660), dated December 23, 1986).
-72-
EXHIBIT INDEX
Exhibit
Number Document Description
*Corporate Incentive Plan Terms Applicable to
Certain Executive Officers (filed herewith).
*Corporate Incentive Plan Terms Applicable to Key
Employees Other Than Certain Executive Officers
(filed herewith).
*Long-Term Performance Incentive Plan Terms
Applicable to Certain Executive Officers (filed
herewith).
*Long-Term Performance Incentive Plan Terms
Applicable to Officers Other Than Certain Executive
Officers (filed herewith).
*Stock Performance Incentive Plan, as amended (filed
herewith).
*Agreement, dated December 2, 1994, with Christian
L. Campbell (filed herewith).
The following documents are incorporated herein by
reference to Exhibit (10) to the Company's annual
report on Form 10-K (File No. 1-3660) for 1994:
* - Agreement, dated as of January 1, 1995, with
William W. Colville.
* - Agreement, dated June 16, 1993, with David W.
Devonshire.
*Director's Charitable Award Program (incorporated
herein by reference to Exhibit (10) to the Company's
quarterly report on Form 10-Q (File No. 1-3660) for
the quarter ended September 30, 1993).
*Executive Supplemental Benefit Plan, as amended
(incorporated herein by reference to Exhibit (10) to
the Company's quarterly report on Form 10-Q (File
No. 1-3660) for the quarter ended March 31, 1993).
*Employment Agreement, dated as of December 15,
1991, with Glen H. Hiner (incorporated herein by
reference to Exhibit (10) to the Company's annual
report on Form 10-K (File No. 1-3660) for 1991), as
amended by First Amending Agreement made as of April
1, 1992 (incorporated herein by reference to Exhibit
(19) to the Company's quarterly report on Form 10-Q
(File No. 1-3660) for the quarter ended June 30,
1992).
*1987 Stock Plan for Directors, as amended
(incorporated herein by reference to Exhibit (19) to
the Company's quarterly report on Form 10-Q (File
No. 1-3660) for the quarter ended March 31, 1992).
*Form of Key Management Severance Benefits Agreement
(incorporated herein by reference to Exhibit (10) to
the Company's annual report on Form 10-K (File No. 1-
3660) for 1991).
-73-
EXHIBIT INDEX
Exhibit
Number Document Description
*1986 Equity Partnership Plan, as amended
(incorporated herein by reference to Exhibit (19) to
the Company's quarterly report on Form 10-Q (File
No. 1-3660) for the quarter ended March 31, 1988),
as amended by Amendment 1 thereto (incorporated
herein by reference to Exhibit (19) to the Company's
quarterly report on Form 10-Q (File No. 1-3660) for
the quarter ended March 31, 1989), by Amendment 2
thereto (incorporated herein by reference to Exhibit
(10) to the Company's annual report on Form 10-K
(File No. 1-3660) for 1989) and by Amendment 3
thereto (incorporated herein by reference to Exhibit
(10) to the Company's annual report on Form 10-K
(File No. 1-3660) for 1990).
*Form of Directors' Indemnification Agreement
(incorporated herein by reference to Exhibit (10) to
the Company's annual report on Form 10-K (File No. 1-
3660) for 1989).
The following documents are incorporated herein by
reference to Exhibit (10) to the Company's annual
report on Form 10-K (File No. 1-3660) for 1987:
* - Officers Deferred Compensation Plan.
* - Deferred Compensation Plan for Directors, as
amended.
(11) Statement re Computation of Per Share Earnings
(filed herewith).
(21) Subsidiaries of Owens Corning (filed herewith).
(23) Consent of Arthur Andersen LLP (filed herewith).
(27) Financial Data Schedule (filed herewith).
* Denotes management contract or compensatory plan or
arrangement required to be filed as an exhibit pursuant
to Item 14(c) of Form 10-K.
** Now known as Owens Corning.
xxxiii
Exhibit (3)
CERTIFICATE OF INCORPORATION
OF
OWENS CORNING
We, the undersigned, in order to form a
corporation for the purposes hereinafter stated,
under and pursuant to the provisions of the
General Corporation Law of the State of Delaware,
do hereby certify as follows:
FIRST. The name of this corporation is
Owens Corning
SECOND. Its principal office in the State of
Delaware is located at 1209 Orange Street, City
of Wilmington, County of New Castle, State of
Delaware. The name and address of its resident
agent is The Corporation Trust Company, 1209
Orange Street, Wilmington, Delaware.
THIRD. The nature of the business and the
objects and purposes to be transacted, promoted
and carried on by the corporation are as follows:
A. To manufacture, fabricate, buy, sell and
deal in all kinds, forms and combinations of
fibres composed of glass, minerals or any other
substance and in the products thereof or in
which such fibres form a part; and machinery,
tools, implements, materials and supplies for
the manufacture thereof; and to acquire,
construct, equip, operate, maintain and dispose
of factories, laboratories and all other things
necessary or convenient for manufacturing and
dealing in such fibres and substances and
products thereof, and such machinery, tools,
implements, materials and supplies;
B. To manufacture, purchase or otherwise
acquire, own, mortgage, pledge, sell, assign
and transfer, or otherwise dispose of, and to
invest, trade, deal in and deal with goods,
wares and merchandise, and real and personal
property of every class and description;
C. To apply for, purchase or otherwise
acquire patents, licenses, inventions,
improvements, processes, copyrights, trade
systems, trademarks and trade names and any
secret or other information and any right,
option, or contract in relation thereto, and to
fulfill the terms and conditions thereof, and
to maintain, lease, license, sell, transfer or
otherwise dispose of and turn to account and
deal in the same;
D. To enter into any agreement for the
sharing of profits, union of interest,
cooperation or joint adventure, or otherwise,
with any person, partnership, trustee, joint
stock association, or corporation, or any
business or transaction capable of being
conducted so as, directly or indirectly, to
benefit this corporation;
E. To establish, support, maintain and
operate or aid in the establishment, support,
maintenance and operation of associations,
institutions, funds, trusts and conveniences
calculated to benefit employees or the ex-
employees of the corporation or the dependents
or connections of such persons; and to grant
pensions and allowances, and to make payments
for insurance, and to subscribe or guarantee
money for any charitable or benevolent objects,
or for any exhibition, or for any public,
general or useful objects;
F. To promote and organize any corporation
or corporations for the purpose of acquiring or
owning any of the properties, rights and
liabilities of this corporation, or for any
other purpose which may seem directly or
indirectly calculated to benefit this
corporation;
G. To acquire the goodwill, rights, and
properties and the whole or any part of the
assets, tangible or intangible, and to
undertake or in any way assume the liabilities
of any person, firm, association or
corporation, or to purchase the shares of or
any other interest in any firm, association or
corporation; to pay for said goodwill, rights,
properties, assets, shares or other interest in
cash, the shares of this company, bonds or
other obligations of this corporation, or any
other consideration, or by undertaking the
whole or any part of the liabilities of the
transferors; to hold or in any manner dispose
of the whole or any part of such property so
purchased; to conduct the whole or any part of
any business so acquired; and to exercise all
the powers necessary or convenient in and about
the conduct and management of such business;
H. To guarantee, purchase, hold, sell,
assign, transfer, mortgage, pledge or otherwise
dispose of shares of the capital stock of, or
any bonds, securities or evidences of
indebtedness created by any other corporation
or corporations organized under the laws of
this state or any other state, country, nation
or government, and while the owner thereof to
exercise all the rights, powers and privileges
of ownership;
I. To enter into, make and perform contracts
of every kind and description with any person,
firm, association, corporation, municipality,
county, state, body politic or government or
colony or dependency thereof;
J. To borrow or raise moneys for any of the
purposes of the corporation and from time to
time, without limit as to amount, to draw,
make, accept, endorse, execute and issue
promissory notes, drafts, bills of exchange,
warrants, bonds, debentures and other
negotiable or non-negotiable instruments and
evidences of indebtedness and to secure the
payment of any thereof and of the interest
thereon by mortgage upon or pledge, conveyance
or assignment in trust of the whole or any part
of the property of the corporation, whether at
the time owned or thereafter acquired, and to
sell, pledge or otherwise dispose of such bonds
or other obligations of the corporation for its
corporate purposes;
K. To purchase, hold, sell and transfer the
shares of its own capital stock provided it
shall not use its funds or property for the
purchase of its own shares of capital stock
when such use would cause any impairment of its
capital except as otherwise permitted by law
and provided further that shares of its own
capital stock belonging to it shall not be
voted upon directly or indirectly;
L. To have one or more offices and to
conduct any or all of its operations or
business and to promote its objects within and
without the State of Delaware without
restriction as to place or amount;
M. To have and to exercise any and all
powers and privileges now or hereafter
conferred by the laws of Delaware and all
extensions thereof by amendments thereto
hereafter made;
N. To do all or any of the above things in
any part of the world as principal, agent,
contractor or otherwise, and by or through
trustees, agents or otherwise, and either alone
or in conjunction with others, and to do all
such other things as are necessary, convenient
or expedient to the above purposes.
And it is hereby expressly provided that the
enumeration herein of specific purposes or
powers shall not be held to limit or restrict
in any manner the general powers of the
corporation; and it is further provided that
any and all of the foregoing objects, powers or
purposes may at any time and from time to time
be changed, altered or amended in the manner
provided by law for the amendment of
certificates of incorporation, and none of the
above clauses or the purposes therein specified
or the powers thereby conferred shall be deemed
subsidiary or auxiliary merely to the purposes
mentioned in the first or any other clause of
this article, but the company shall have full
power to exercise all or any of the powers
conferred by any part of this article in any
part of the world.
FOURTH. The total number of shares of stock
which the Corporation is authorized to issue is
108,000,000 shares of which:
(a) 8,000,000 shares shall be Preferred Stock,
issuable in series, of no par value per share,
and
(b) 100,000,000 shares shall be Common Stock
of par value of $.1O per share.
The designations, powers, preferences and
rights, and the qualifications, limitations or
restrictions of the Preferred Stock and the
Common Stock are as follows:
A. Preferred Stock
The Preferred Stock may be issued from time
to time in one or more series and with such
designation for each such series as shall be
stated and expressed in the resolution or
resolutions providing for the issue of each
such series adopted by the Board of
Directors. The Board of Directors in any such
resolution or resolutions is expressly
authorized to state and express for each such
series:
(i) Voting rights, if any, including,
without limitation, the authority to confer
multiple votes per share, voting rights as to
specified matters or issues or, subject to
the provisions of this Certificate of
Incorporation, as amended, voting rights to
be exercised either together with holders of
Common Stock as a single class, or
independently as a separate class;
(ii) The rate per annum and the times at and
conditions upon which the holders of shares
of such series shall be entitled to receive
dividends, the conditions and the dates upon
which such dividends shall be payable and
whether such dividends shall be cumulative or
noncumulative, and, if cumulative, the terms
upon which such dividends shall be
cumulative;
(iii) Redemption, repurchase, retirement
and sinking fund rights, preferences and
limitations, if any, the amount payable on
shares of such series in the event of such
redemption, repurchase or retirement, the
terms and conditions of any sinking fund, the
manner of creating such fund or funds and
whether any of the foregoing shall be
cumulative or noncumulative;
(iv) The rights to which the holders of the
shares of such series shall be entitled upon
any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation;
(v) The terms, if any, upon which the shares
of such series shall be convertible into, or
exchangeable for, shares of stock of any
other class or classes or of any other series
of the same or any other class or classes,
including the price or prices or the rate or
rates of conversion or exchange and the terms
of adjustment, if any; and
(vi) Any other designations, preferences and
relative, participating, optional or other
special rights, and qualifications,
limitations or restrictions thereof so far as
they are not inconsistent with the provisions
of this Certificate of Incorporation, as
amended, and to the full extent now or
hereafter permitted by the laws of the State
of Delaware.
All shares of the Preferred Stock of any one
series shall be identical to each other in all
respects, except that shares of any one series
issued at different times may differ as to the
dates from which dividends thereon, if
cumulative, shall be cumulative.
B. Common Stock
(i) Whenever dividends upon the Preferred
Stock at the time outstanding shall have
been paid in full for all past dividend
periods or declared and set apart for
payment, such dividends as may be determined
by the Board of Directors may be declared by
the Board of Directors and paid from time to
time to the holders of the Common Stock.
(ii) In the event of any liquidation,
dissolution or winding up of the affairs of
the Corporation, whether voluntary or
involuntary, the assets and funds of the
Corporation remaining after the payment to
the holders of the Preferred Stock at the
time outstanding of the full amounts to
which they shall be entitled shall be
distributed among the holders of the Common
Stock according to their respective shares.
(iii) The shares of Common Stock shall
entitle the holders of record thereof to one
vote for each share upon all matters upon
which stockholders have the right to vote,
subject only to any exclusive voting rights
which may vest in holders of the Preferred
Stock under the provisions of any series of
the Preferred Stock established by the Board
of Directors pursuant to the authority
provided in this Article Fourth.
FIFTH. The minimum amount of capital with
which the corporation will commence business is
One Thousand Dollars ($1,000.00).
SIXTH. The name and place of residence of
each of the incorporators are as follows:
Names Residence
L. E. Gray...............Wilmington, Delaware
L. H. Herman.............Wilmington, Delaware
Walter Lenz..............Wilmington, Delaware
SEVENTH. The private property of the
stockholders shall not be subject to the
payment of corporate debts to any extent
whatever.
EIGHTH. In furtherance and not in limitation
of the powers conferred by the laws of the
State of Delaware, the Board of Directors is
expressly authorized:
A. To authorize and cause to be executed
mortgages and liens, without limit as to
amount, upon the real and personal property of
the corporation, including after-acquired
property;
B. From time to time without the assent or
vote of the stockholders, to fix the times for
the declaration and payment of dividends; to
fix and vary the amount to be reserved as
working capital; to set apart out of any of the
funds of the corporation available for
dividends a reserve or reserves for any proper
purpose and to abolish any reserve so created;
to fix and determine, subject to the
limitations imposed by law, what portion of the
consideration received upon any issue of stock
shall constitute capital and what portion, if
any, paid-in surplus; to cause dividends to be
paid from such paid-in surplus or from any
surplus due to appreciation in value of any
property of the corporation in the same manner
as though the same were net profits or earned
surplus; to determine whether dividends shall
be declared and paid in cash or capital stock
of the corporation or in other property; to
determine the use and disposition of any
surplus or net profits of the corporation and
to use and apply any such surplus or net
profits for the purchase or acquisition of
bonds or other obligations or shares of stock
of the corporation to such extent and in such
manner and upon such terms as the Board of
Directors shall deem expedient, and shares of
stock of the corporation so purchased or
acquired may be resold unless such shares
have been canceled and retired for the
purpose of decreasing the stock of the
corporation as provided by law;
C. Without the assent or vote of the
stockholders, from time to time, to authorize
and put into operation a plan or plans whereby
the officers and employees of the corporation,
or any of them, shall participate in the
earnings and profits of the corporation; and
pursuant to any plan so adopted, the Board of
Directors shall have power to authorize the
payment of extra compensation to any officer or
employee and in the discretion of the Board of
Directors such payment may be made in cash or
in full-paid shares of the capital stock of the
corporation or otherwise.
D. The Corporation may in its By-Laws confer
powers upon its Board of Directors in addition
to the foregoing and in addition to the powers
and authorities expressly conferred upon it by
statute.
NINTH. The fact that the stockholders or
directors or officers of the corporation are,
in whole or in part, the same as those of any
other corporation shall not in any way affect
the validity and enforceability of any
agreement or transaction between the two
corporations.
TENTH. The stockholders and directors shall
have the power to hold their meetings, to
have an office or offices and to keep the books
of this corporation (subject to the provisions
of the statutes) outside of the State of
Delaware at such places as may from time to
time be designated by the By-Laws or by
resolution of the Board of Directors.
ELEVENTH.
(a) Elections for directors shall not be by
ballot unless demand is made for election by
ballot by a stockholder entitled to vote for
the election of directors.
(b) The business and affairs of the
Corporation shall be managed by a Board of
Directors consisting of not less than nine nor
more than twelve persons. The exact number of
directors within the minimum and maximum
limitations specified in the preceding sentence
shall be fixed from time to time by the Board
of Directors pursuant to a resolution adopted
by the affirmative vote of a majority of the
entire Board of Directors; and such exact
number shall be eleven unless otherwise
determined by resolution so adopted by a
majority of the entire Board of Directors. As
used in this Certificate of Incorporation, the
term "entire Board of Directors" means the
total authorized number of directors which the
Corporation would have if there were no
vacancies.
At the 1984 Annual Meeting of Stockholders,
the directors shall be divided into three
classes, as nearly equal in number as possible,
with the term of office of the first class to
expire at the 1985 Annual Meeting of
Stockholders, the term of office of the second
class to expire at the 1986 Annual Meeting of
Stockholders and the term of office of the
third class to expire at the 1987 Annual
Meeting of Stockholders. Commencing with the
1985 Annual Meeting of Stockholders, directors
elected to succeed those directors whose terms
have thereupon expired shall be elected for a
term of office to expire at the third
succeeding Annual Meeting of Stockholders after
their election. If the number of directors is
changed, any increase or decrease shall be
apportioned among the classes so as to
maintain, if possible, the equality of the
number of directors in each class, but in no
case will a decrease in the number of directors
shorten the term of any incumbent director. If
such equality is not possible, the increase or
decrease shall be apportioned among the classes
in such a way that the difference in the number
of directors in any two classes shall not
exceed one.
(c) Subject to the rights of the holders of
any series of Preferred Stock or any other
class of capital stock of the Corporation
(other than the Common Stock) then outstanding,
newly-created directorships resulting from an
increase in the authorized number of directors
in any class of directors or vacancies in any
such class resulting from death, resignation,
retirement, disqualification, removal from
office or other cause shall, if occurring prior
to the expiration of the term of office of such
class, be filled only by the affirmative vote
of a majority of the remaining directors of the
entire Board of Directors then in office,
although less than a quorum, or by the sole
remaining director. Any director of any class
so elected shall hold office for a term that
shall coincide with the remaining term of that
class. His successor shall be elected by the
stockholders at the same time and for the same
term as the other directors of that class.
(d) Whenever the holders of any one or more
series of Preferred Stock issued by the
Corporation shall have the right, voting
separately by series, to elect directors at an
annual or special meeting of stockholders, the
election, term of office, filling of vacancies
and other features of such directorships shall
be governed by this Article Eleventh unless
expressly otherwise provided by the resolution
or resolutions providing for the creation of
such series.
(e) Notwithstanding any other provision of
this Certificate of Incorporation and subject
to the other provisions of this Article
Eleventh, the Board of Directors shall
determine the rights, powers, duties, rules and
procedures that shall affect the directors'
power to manage and direct the business and
affairs of the Corporation. Without limiting
the foregoing, the Board of Directors shall
designate and empower committees of the Board
of Directors, shall elect and empower the
officers of the Corporation, may appoint and
empower other officers and agents of the
Corporation, and shall determine the time and
place of, and the notice requirements for,
Board meetings, as well as quorum and voting
requirements for, and the manner of taking,
Board action.
TWELFTH. Any action required or permitted to
be taken by the stockholders of the corporation
must be effected at a duly called annual or
special meeting of such holders and may not be
effected by any consent in writing by such
holders. Except as otherwise required by law
and subject to the rights of the holders of any
class or series of stock having a preference
over the Common Stock as to dividends or upon
liquidation, special meetings of stockholders
of the corporation may be called only by the
Board of Directors pursuant to a resolution
approved by a majority of the entire Board of
Directors.
THIRTEENTH.
A. In addition to any affirmative vote
required by law or this Certificate of
Incorporation or the By-Laws of the
corporation, and except as otherwise expressly
provided in Section B of this Article
THIRTEENTH, a Business Combination (as
hereinafter defined) with, or proposed by or on
behalf of, an Interested Stockholder (as
hereinafter defined) or any Affiliate or
Associate (as hereinafter defined) of such
Interested Stockholder or any person who
thereafter would be an Affiliate or Associate
of such Interested Stockholder shall require
the affirmative vote of not less than sixty-six
and two-thirds percent (66 2/3%) of the votes
entitled to be cast by the holders of all the
then outstanding shares of Voting Stock (as
hereinafter defined), voting together as a
single class, excluding Voting Stock
beneficially owned by such Interested
Stockholder. Such affirmative vote shall be
required notwithstanding the fact that no vote
may be required, or that a lesser percentage or
separate class vote may be specified, by law or
in any agreement with any national securities
exchange or otherwise.
B. The provisions of Section A of this
Article THIRTEENTH shall not be applicable to
any particular Business Combination, and such
Business Combination shall require only such
affirmative vote, if any, as is required by law
or by any other provision of this Certificate
of Incorporation or the By-Laws of the
corporation, or any agreement with any national
securities exchange, if all of the conditions
specified in either of the following Paragraphs
1 or 2 are met or, in the case of a Business
Combination not involving the payment of
consideration to the holders of the
corporation's outstanding Capital Stock (as
hereinafter defined), if the condition
specified in the following Paragraph 1 is met:
1. The Business Combination shall have been
approved, either specifically or as a
transaction which is within an approved
category of transactions, by a majority
(whether such approval is made prior to or
subsequent to the acquisition of, or
announcement or public disclosure of the
intention to acquire, beneficial ownership of
the Voting Stock that caused the Interested
Stockholder to become an Interested
Stockholder) of the Continuing Directors (as
hereinafter defined).
2. All of the following conditions shall
have been met:
a. The aggregate per share amount of cash and
the Fair Market Value (as hereinafter defined),
as of the date of the consummation of the
Business Combination, of consideration other
than cash to be received by holders of Common
Stock in such Business Combination shall be at
least equal to the highest amount determined
under clauses (i), (ii), (iii) and (iv) below;
(i) (if applicable) the highest per share
price (including any brokerage commissions,
transfer taxes and soliciting dealers' fees)
paid by or on behalf of the Interested
Stockholder for any share of Common Stock in
connection with the acquisition by the
Interested Stockholder of beneficial ownership
of shares of Common Stock (x) within the two-
year period immediately prior to the first
public announcement of the proposed Business
Combination (the "Announcement Date") or (y) in
the transaction in which it became an
Interested Stockholder, whichever is higher, in
either case as adjusted for any subsequent
stock split, stock dividend, subdivision or
reclassification affecting or relating to the
Common Stock;
(ii) the Fair Market Value per share
of Common Stock on the Announcement Date or on
the date on which the Interested Stockholder
became an Interested Stockholder (the
"Determination Date"), whichever is higher, as
adjusted for any subsequent stock split, stock
dividend, subdivision or reclassification
affecting or relating to the Common Stock;
(iii) (if applicable) the price per share
equal to the Fair Market Value per share of
Common Stock determined pursuant to the
immediately preceding clause (ii), multiplied
by the ratio of (x) the highest per share price
(including any brokerage commissions, transfer
taxes and soliciting dealers' fees) paid by or
on behalf of the Interested Stockholder for any
share of Common Stock in connection with the
acquisition by the Interested Stockholder of
beneficial ownership of shares of Common Stock
within the two-year period immediately prior to
the Announcement Date, as adjusted for any
subsequent stock split, stock dividend, subdivi
sion or reclassification affecting or relating
to the Common Stock to (y) the Fair Market
Value per share of Common Stock on the day
immediately preceding the first day in such two-
year period on which the Interested Stockholder
acquired beneficial ownership of any share of
Common Stock, as adjusted for any subsequent
stock split, stock dividend, subdivision or
reclassification affecting or relating to the
Common Stock; and
(iv) the corporation's net income per
share of Common Stock for the four full
consecutive fiscal quarters immediately
preceding the Announcement Date, multiplied by
the higher of the then price/earnings multiple
(if any) of such Interested Stockholder or the
highest price/earnings multiple of the
Corporation within the two-year period
immediately preceding the Announcement
Date (such price/earnings multiples being
determined as customarily computed and
reported in the financial community).
b.The aggregate amount per share of cash and
the Fair Market Value, as of the date of the
consummation of the Business Combination, of
consideration other than cash to be received by
holders of shares of any class or series of
outstanding Capital Stock, other than Common
Stock, shall be at least equal to the highest
amount determined under clauses (i), (ii),
(iii) and (iv) below:
(i) (if applicable) the highest per share
price (including any brokerage commissions,
transfer taxes and soliciting dealers' fees)
paid by or on behalf of the Interested
Stockholder for any share of such class or
series of Capital Stock in connection with the
acquisition by the Interested Stockholder of
beneficial ownership of shares of such class or
series of Capital Stock (x) within the two-year
period immediately prior to the Announcement
Date or (y) in the transaction in which it
became an Interested Stockholder, whichever is
higher, in either case as adjusted for any
subsequent stock split, stock dividend,
subdivision or reclassification affecting or
relating to such class or series of Capital
Stock;
(ii) the Fair Market Value per share
of such class or series of Capital Stock on the
Announcement Date or on the Determination Date,
whichever is higher, as adjusted for any
subsequent stock split, stock dividend,
subdivision or reclassification affecting or
relating to such class or series of Capital
Stock;
(iii) (if applicable) the price per share
equal to the Fair Market Value per share of
such class or series of Capital Stock
determined pursuant to the immediately
preceding clause (ii), multiplied by the ratio
of (x) the highest per share price (including
any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid by or on behalf
of the Interested Stockholder for any share of
such class or series of Capital Stock in
connection with the acquisition by the
Interested Stockholder of beneficial ownership
of shares of such class or series of Capital
Stock within the two-year period immediately
prior to the Announcement Date, as adjusted for
any subsequent stock split, stock dividend,
subdivision or reclassification affecting or
relating to such class or series of Capital
Stock to (y) the Fair Market Value per share of
such class or series of Capital Stock on the
day immediately preceding the first day in such
two-year period on which the Interested
Stockholder acquired beneficial ownership of
any share of such class or series of Capital
Stock, as adjusted for any subsequent stock
split, stock dividend, subdivision or
reclassification affecting or relating to such
class or series of Capital Stock; and
(iv) (if applicable) the highest
preferential amount per share to which the
holders of shares of such class or series of
Capital Stock would be entitled in the event of
any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the
corporation regardless of whether the Business
Combination to be consummated constitutes such
an event.
The provisions of this Paragraph 2 shall be
required to be met with respect to every class
or series of outstanding Capital Stock, whether
or not the Interested Stockholder has
previously acquired beneficial ownership of any
shares of a particular class or series of
Capital Stock.
c. The consideration to be received by
holders of a particular class or series of
outstanding Capital Stock shall be in cash or
in the same form as previously has been paid by
or on behalf of the Interested Stockholder in
connection with its direct or indirect
acquisition of beneficial ownership of shares
of such class or series of Capital Stock. If
the consideration so paid for shares of any
class or series of Capital Stock varied as to
form, the form of consideration for such class
or series of Capital Stock shall be either cash
or the form used to acquire beneficial
ownership of the largest number of shares of
such class or series of Capital Stock
previously acquired by the Interested
Stockholder.
d. After the Determination Date and prior
to the consummation of such Business
Combination: (i) except as approved by a
majority of the Continuing Directors, there
shall have been no failure to declare and pay
at the regular dates therefor any full
quarterly dividends (whether or not cumulative)
payable in accordance with the terms of any
outstanding Capital Stock; (ii) there shall
have been no reduction in the annual rate of
dividends paid on the Common Stock (except as
necessary to reflect any stock split, stock
dividend or subdivision of the Common Stock),
except as approved by a majority of the
Continuing Directors; (iii) there shall have
been an increase in the annual rate of
dividends paid on the Common Stock as necessary
to reflect any reclassification (including any
reverse stock split), recapitalization,
reorganization or any similar transaction that
has the effect of reducing the number of
outstanding shares of Common Stock, unless the
failure so to increase such annual rate is
approved by a majority of the Continuing
Directors; and (iv) such Interested Stockholder
shall not have become the beneficial owner of
any additional shares of Capital Stock except
as part of the transaction that results in such
Interested Stockholder becoming an Interested
Stockholder and except in a transaction that,
after giving effect thereto, would not result
in any increase in the Interested Stockholder's
percentage beneficial ownership of any class or
series of Capital Stock.
e. A proxy or information statement
describing the proposed Business Combination
and complying with the requirements of the
Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder (the
"Exchange Act") or, any subsequent provisions
replacing the Exchange Act, shall be mailed
to all stockholders of the corporation at
least 30 days prior to the consummation of
such Business Combination (whether or not
such proxy or information statement is
required to be mailed pursuant to the
Exchange Act or subsequent provisions). The
proxy or information statement shall contain on
the first page thereof, in a prominent place,
any statement as to the advisability
(or inadvisability) of the Business
Combination that the Continuing Directors,
or any of them, may choose to make
and, if deemed advisable by a majority of the
Continuing Directors, the opinion of an
investment banking firm selected by a majority
of the Continuing Directors as to the fairness
(or absence thereof) of the terms of the
Business Combination from a financial point of
view to the holders of the outstanding shares
of Capital Stock other than the Interested
Stockholder and its Affiliates or Associates,
such investment banking firm to be paid a
reasonable fee for its services by the
corporation.
f. Such Interested Stockholder shall not
have made any major change in the corporation's
business or equity capital structure without
the approval of a majority of the Continuing
Directors.
C. The following definitions shall apply with
respect to this Article
THIRTEENTH:
1. The term "Business Combination" shall
mean:
a. any merger or consolidation of the
corporation or any Subsidiary (as hereinafter
defined) with (i) any Interested Stockholder or
(ii) any other company (whether or not itself
an Interested Stockholder) which is or after
such merger or consolidation would be an
Affiliate or Associate of an Interested
Stockholder; or
b. any sale, lease, exchange, mortgage,
pledge, transfer or other disposition or
security arrangement, investment, loan,
advance, guarantee, agreement to purchase,
agreement to pay, extension of credit, joint
venture participation or other arrangement (in
one transaction or a series of transactions)
with or for the benefit of any Interested
Stockholder or any Affiliate or Associate of
any Interested Stockholder involving any
assets, securities, obligations or commitments
of the corporation, any Subsidiary or any
Interested Stockholder or any Affiliate or
Associate of any Interested Stockholder which
has an aggregate Fair Market Value and/or
involves aggregate commitments of $2,500,000 or
more or constitutes more than 5 percent of the
book value of the total assets (in the case of
transactions involving assets or commitments
other than capital stock) or 5 percent of the
stockholders' equity (in the case of
transactions in capital stock) of the entity in
question (the "Substantial Part"), as reflected
in the most recent fiscal year-end consolidated
balance sheet of such entity existing at the
time the stockholders of the corporation would
be required to approve or authorize the
Business Combination involving the assets,
securities, obligations and/or commitments
constituting any Substantial Part, provided
that any arrangement, whether as employee,
consultant or otherwise, other than as a
director, pursuant to which any Interested
Stockholder or any Affiliate or Associate
thereof shall, directly or indirectly, have any
control over or management of any aspect of the
business or affairs of the corporation, shall
be deemed to be a "Business Combination"
irrespective of the value test set forth above;
or
c. the adoption of any plan or proposal for
the liquidation or dissolution of the
corporation or for any amendment to the corpora
tion's By-Laws; or
d. any reclassification of securities
(including any reverse stock split), or
recapitalization of the corporation, or any
merger or consolidation of the corporation with
any of its Subsidiaries or any other
transaction (whether or not with or otherwise
involving an Interested Stockholder) that has
the effect, directly or indirectly, of
increasing the proportionate share of any class
or series of Capital Stock, or any securities
convertible into Capital Stock or into equity
securities of any Subsidiary, that is
beneficially owned by any Interested
Stockholder or any Affiliate or Associate of
any Interested Stockholder; or
e. any agreement, contract or other
arrangement providing for any one or more of
the actions specified in the foregoing clauses
(a) to (d).
2. The term "Capital Stock" shall mean all
capital stock of the corporation authorized to
be issued from time to time under Article
FOURTH of this Certificate of Incorporation,
and the term "Voting Stock" shall mean all
Capital Stock which by its terms may be voted
on all matters submitted to stockholders of the
corporation generally.
3. The term "person" shall mean any
individual, firm, company or other entity and
shall include any group comprised of any person
and any other person with whom such person or
any Affiliate or Associate of such person has
any agreement, arrangement or understanding,
directly or indirectly, for the purpose of
acquiring, holding, voting or disposing of
Capital Stock.
4. The term "Interested Stockholder" shall
mean any person (other than the corporation or
any Subsidiary and other than any profit-
sharing, employee stock ownership or other
employee benefit plan of the corporation or any
Subsidiary or any trustee of or fiduciary with
respect to any such plan when acting in such
capacity) who (a) is or has announced or
publicly disclosed a plan or intention to
become the beneficial owner of Voting Stock
representing ten percent (10%) or more of the
votes entitled to be cast by the holders of all
then
outstanding shares of Voting Stock; or (b) is
an Affiliate or Associate of the corporation
and at any time within the two-year period
immediately prior to the date in question was
the beneficial owner of Voting Stock
representing ten percent (10%) or more of the
votes entitled to be cast by the holders of all
then outstanding shares of Voting Stock.
5. A person shall be a "beneficial owner" of
any Capital Stock (a) which such person or any
of its Affiliates or Associates beneficially
owns, directly or indirectly; (b) which such
person or any of its Affiliates or Associates
has, directly or indirectly, (i) the right to
acquire (whether such right is exercisable
immediately or subject only to the passage of
time), pursuant to any agreement, arrangement
or understanding or upon the exercise of
conversion rights, exchange rights, warrants or
options, or otherwise, or (ii) the right to
vote pursuant to any agreement, arrangement or
understanding; or (c) which are beneficially
owned, directly or indirectly, by any other
person with which such person or any of its
Affiliates or Associates has any agreement,
arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of any
shares of Capital Stock. For the purposes of
determining whether a person is an Interested
Stockholder pursuant to Paragraph 4 of this
Section C, the number of shares of Capital
Stock deemed to be outstanding shall include
shares deemed beneficially owned by such person
through application of this Paragraph 5 of
Section C, but shall not include any other
shares of Capital Stock that may be issuable
pursuant to any agreement, arrangement or
understanding, or upon exercise of conversion
rights, warrants or options, or otherwise.
6. The terms "Affiliate" and "Associate"
shall have the respective meanings ascribed to
such terms in Rule 12b-2 under the Exchange Act
as in effect on July 24, 1986 (the term
"registrant" in said Rule 12b-2 meaning in this
case the corporation).
7. The term "Subsidiary" means any company of
which a majority of any class of equity
security is beneficially owned by the
corporation; provided, however, that for the
purposes of the definition of Interested
Stockholder set forth in Paragraph 4 of this
Section C, the term "Subsidiary" shall mean
only a company of which a majority of each
class of equity security is beneficially owned
by the corporation.
8. The term "Continuing Director" means (i)
any member of the Board of Directors of the
corporation (the "Board of Directors"), while
such person is a member of the Board of
Directors, who is not an Interested Stockholder
or an Affiliate or Associate or representative
of the Interested Stockholder and was a member
of the Board of Directors prior to the time
that the Interested Stockholder became an
Interested Stockholder, and (ii) any person who
subsequently becomes a member of the Board of
Directors, while such person is a member of the
Board
of Directors, who is not an Interested
Stockholder or an Affiliate or Associate or
representative of the Interested Stockholder,
if such person's nomination for election or
election to the Board of Directors is
recommended or approved by a majority of the
Continuing Directors then in office.
9. The term "Fair Market Value" means (a) in
the case of cash, the amount of such cash; (b)
in the case of stock, the highest closing sale
price during the 30-day period immediately
preceding the date in question of a share of
such stock on the Composite Tape for New York
Stock Exchange-Listed Stocks, or, if such stock
is not quoted on the Composite Tape, on the New
York Stock Exchange, or, if such stock is not
listed on such Exchange, on the principal
United States securities exchange registered
under the Exchange Act on which such stock is
listed, or, if such stock is not listed on any
such exchange, the highest closing bid
quotation with respect to a share of such stock
during the 30-day period preceding the date in
question on the National Association of
Securities Dealers, Inc. Automated Quotations
System or any similar system then in use, or if
no such quotations are available, the fair
market value on the date in question of a share
of such stock as determined by a majority of
the Continuing Directors in good faith; and (c)
in the case of property other than cash or
stock, the fair market value of such property
on the date in question as determined in good
faith by a majority of the Continuing
Directors.
10. In the event of any Business Combination
in which the corporation survives, the phrase
"consideration other than cash to be received"
as used in Paragraphs 2.a and 2.b of Section B
of this Article THIRTEENTH shall include the
shares of Common Stock and/or the shares of any
other class or series of Capital Stock retained
by the holders of such shares.
D. A majority to the Continuing Directors
shall have the power and duty to determine for
the purposes of this Article THIRTEENTH, on the
basis of information known to them after
reasonable inquiry, all questions arising under
this Article THIRTEENTH, including without
limitation, (a) whether a person is an
Interested Stockholder, (b) the number of
shares of Capital Stock or other securities
beneficially owned by any person, (c) whether a
person is an Affiliate or Associate of another,
(d) whether a Proposed Action (as hereinafter
defined) is with, or proposed by, or on behalf
of an Interested Stockholder or an Affiliate or
Associate of an Interested Stockholder, (e)
whether the assets that are the subject of any
Business Combination have, or the consideration
to be received for the issuance or transfer of
securities by the corporation or any Subsidiary
in any Business Combination has, an aggregate
Fair Market Value of $2,500,000 or more, and
(f) whether the assets or securities that are
the subject of any Business Combination
constitute a Substantial Part. Any such
determination made in good faith shall be
binding and conclusive on all parties.
E. Nothing contained in this Article
THIRTEENTH shall be construed to relieve any
Interested Stockholder from any fiduciary
obligation imposed by law.
F. The fact that any Business Combination
complies with the provisions of Section B of
this Article THIRTEENTH shall not be construed
to impose any fiduciary duty, obligation or
responsibility on the Board of Directors, or
any member thereof, to approve such Business
Combination or recommend its adoption or
approval to the stockholders of the
corporation, nor shall such compliance limit,
prohibit or otherwise restrict in any manner
the Board of Directors, or any member thereof,
with respect to evaluations of or actions and
responses taken with respect to such Business
Combination.
G. For the purposes of this Article
THIRTEENTH, a Business Combination or any
proposal to amend, repeal or adopt any
provision of this Certificate of Incorporation
inconsistent with this Article THIRTEENTH
(collectively, "Proposed Action") is presumed
to have been proposed by, or on behalf of, an
Interested Stockholder or an Affiliate or
Associate of an Interested Stockholder or a
person who thereafter would become such if (1)
after the Interested Stockholder became such,
the Proposed Action is proposed following the
election of any director of the corporation who
with respect to such Interested Stockholder,
would not qualify to serve as a Continuing
Director, or (2) such Interested Stockholder,
Affiliate, Associate or person votes for or
consents to the adoption of any such Proposed
Action, unless as to such Interested
Stockholder, Affiliate, Associate or person a
majority of the Continuing Directors makes a
good faith determination that such Proposed
Action is not proposed by or on behalf of such
Interested Stockholder, Affiliate, Associate or
person, based on information known to them
after reasonable inquiry.
H. Notwithstanding any other provisions of
this Certificate of Incorporation or the By-
Laws of the corporation (and notwithstanding
the fact that a lesser percentage or separate
class vote may be specified by law, this
Certificate of Incorporation or the By-Laws of
the corporation), any proposal to amend, repeal
or adopt any provision of this Certificate of
Incorporation inconsistent with this Article
THIRTEENTH which is proposed by or on behalf of
an Interested Stockholder or an Affiliate or
Associate of an Interested Stockholder shall
require the affirmative vote of the holders of
not less than sixty-six and two-thirds percent
(66 2/3%) of the votes entitled to be cast by
the holders of all the then outstanding shares
of Voting Stock, voting together as a single
class, excluding Voting Stock beneficially
owned by such Interested Stockholder; provided,
however, that this Section H shall not apply
to, and such sixty-six and two-thirds percent
(66 2/3%) vote shall not be required for, any
amendment, repeal or adoption unanimously
recommended by the Board of Directors if all of
such directors are persons who would be
eligible to serve as Continuing Directors
within the meaning of Section C, Paragraph 8 of
this Article THIRTEENTH.
FOURTEENTH. The corporation shall indemnify
to the full extent authorized or permitted by
law any person made, or threatened to be made,
a party to any action or proceeding (whether
civil or criminal or otherwise) by reason of
the fact that he, his testator or intestate, is
or was a director or officer of the corporation
or by reason of the fact that such director or
officer, at the request of the corporation, is
or was serving any other corporation,
partnership, joint venture, trust, employee
benefit plan or other enterprise, in any
capacity. Nothing contained herein shall affect
any rights to indemnification to which
employees other than directors and officers may
be entitled by law. No director of the
corporation shall be personally liable to the
corporation or its stockholders for monetary
damages for any breach of fiduciary duty by
such a director as a director. Notwithstanding
the foregoing sentence, a director shall be
liable to the extent provided by applicable law
(i) for any breach of the director's duty of
loyalty to the corporation or its stockholders,
(ii) for acts or omissions not in good faith or
which involve intentional misconduct or a
knowing violation of law, (iii) pursuant to
Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which
such director derived an improper personal
benefit. No amendment to or repeal of this
Article FOURTEENTH shall apply to or have any
effect on the liability or alleged liability of
any director of the corporation for or with
respect to any acts or omissions of such
director occurring prior to such amendment.
FIFTEENTH. The By-Laws of this corporation
may be amended by the affirmative vote of a
majority of the whole Board of Directors or by
the affirmative vote of the holders of a
majority of the issued and outstanding common
stock of this corporation. Any provision of the
By-Laws adopted or amended by the stockholders
may be amended by the Board of Directors except
that the stockholders may from time to time
specify particular provisions thereof which
shall not be amended by the Board of Directors.
SIXTEENTH. (a) Notwithstanding anything
contained in this Certificate of Incorporation
to the contrary, Article ELEVENTH, Article
TWELFTH and Article FOURTEENTH hereof shall not
be altered, amended or repealed and no
provision inconsistent therewith shall be
adopted without the affirmative vote of the
holders of at least 66 2/3% of the voting power
of all the shares of the corporation entitled
to vote generally in the election of directors,
voting together as a single class.
Notwithstanding anything contained in this
Certificate of Incorporation to the contrary,
the affirmative vote of the holders of at least
66 2/3% of the voting power of all the shares
of the corporation entitled to vote generally
in the election of directors, voting together
as a single class, shall be required to alter,
amend, adopt any provision inconsistent with or
repeal this paragraph (a) of Article SIXTEENTH.
(b) The corporation reserves the right to
amend, alter, change or repeal any provision
contained in its Certificate of Incorporation,
or any amendment thereof, in the manner now or
hereafter prescribed by the laws of the State
of Delaware or this Certificate of
Incorporation, and all rights conferred upon
the stockholders of the corporation are granted
subject to this reservation.
SEVENTEENTH. The rights of the holders of the
Common Stock, the Preferred Stock or other
capital stock of the corporation, whenever
acquired, shall be subordinate to the rights of
all holders of indebtedness in the event of any
reorganization or liquidation of the
corporation, even if the claim for such
indebtedness is disallowed, avoided or
subordinated pursuant to the provisions of
Title 11 of the United States Code, as in
effect from time to time, or other applicable
laws.
EIGHTEENTH. The corporation is to have
perpetual existence.
In Witness Whereof, we have hereunto set our
hands and seals this 31st day of October, 1938.
L. E. Gray (L. S.)
L. H. Herman (L. S.)
Walter Lenz (L. S.)
In Presence of:
Harold E. Grantland
}ss
State of Delaware,
County of New Castle,
Be it remembered that on the 31st day of
October, 1938, personally came before me, a
Notary Public in and for the County and State
aforesaid, L. E. Gray, L. H. Herman and Walter
Lenz, all of the parties to the foregoing
Certificate of Incorporation, known to me
personally to be such, and severally
acknowledged said Certificate to be the act and
deed of the signers respectively and that the
facts herein stated are truly set forth.
Given under my hand and seal the day and year
aforesaid,
Harold E. Grantland
Notary Public
Harold E. Grantland
Notary Public
Appointed Jan. 11, 1937
State of Delaware
Term Two Years
TERMS OF PREFERRED STOCK
created by
CERTIFICATE OF DESIGNATION OF SERIES A
PARTICIPATING PREFERRED STOCK
filed December 24, 1986
and
CERTIFICATE OF INCREASE
OF DESIGNATION OF SERIES A
PARTICIPATING PREFERRED STOCK
filed August 9, 1994
Section 1. Designation and Amount. The
shares of such series shall be designated as
Series A Participating Preferred Stock, no
par value (the "Series A Preferred Stock")
and the number of shares constituting such
series shall be 750,000. Such number of
shares may be increased or decreased by
resolution of the Board of Directors;
provided, that no decrease shall reduce the
number of shares of Series A Preferred Stock
to a number less than the number of shares
then outstanding plus the number of shares
reserved for issuance upon the exercise of
outstanding options, rights or warrants or
upon the conversion of any outstanding
securities issued by the Corporation
convertible into Series A Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of
any shares of any series of Preferred Stock
(or any similar stock) ranking prior and
superior to the Series A Preferred Stock with
respect to dividends, the holders of shares
of Series A Preferred Stock, in preference to
the holders of Common Stock, $.10 par value
of the Corporation (the "Common Stock") and
of any other junior stock which may be
outstanding, shall be entitled to receive,
when, as and if declared by the Board of
Directors out of funds legally available for
the purpose, quarterly dividends payable in
cash on the first day of January, April, July
and October in each year (each such date
being referred to herein as a "Quarterly
Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after
the first issuance of a share or fraction of
a share of Series A Preferred Stock, in an
amount per share (rounded to the nearest
cent) equal to the greater of (a) $2.50 per
share ($10.00 per annum), or (b) subject to
the provision for adjustment hereinafter set
forth, 100 times the aggregate per share
amount of all cash dividends, and 100 times
the aggregate per share amount (payable in
kind) of all non-cash dividends or other
distributions, other than a dividend payable
in shares of Common Stock or a subdivision of
the outstanding shares of Common Stock (by
reclassification or otherwise), declared on
the Common Stock since the immediately
preceding Quarterly Dividend Payment Date,
or, with respect to the first Quarterly
Dividend Payment Date, since the first
issuance of any share or fraction of a share
of Series A Preferred Stock. In the event
the Corporation shall at any time declare or
pay any dividend on Common Stock payable in
shares of Common Stock, or effect a
subdivision or combination or consolidation
of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment
of a dividend in shares of Common Stock) into
a greater or lesser number of shares of
Common Stock, then in each such case the
amount to which holders of shares of Series A
Preferred Stock were entitled immediately
prior to such event under clause (b) of the
preceding sentence shall be adjusted by
multiplying such amount by a fraction, the
numerator of which is the number of shares of
Common Stock outstanding immediately after
such event and the denominator of which is
the number of shares of Common Stock that
were outstanding immediately prior to such
event.
(B) The Corporation shall declare a
dividend or distribution on the Series A
Preferred Stock as provided in paragraph (A)
of this Section immediately after it declares
a dividend or distribution on the Common
Stock (other than a dividend payable in
shares of Common Stock); provided that, in
the event no dividend or distribution shall
have been declared on the Common Stock during
the period between any Quarterly Dividend
Payment date and the next subsequent
Quarterly Dividend Payment Date, a dividend
of $2.50 per share ($10.00 per annum) on the
Series A Preferred Stock shall nevertheless
be payable on such subsequent Quarterly
Dividend Payment Date.
(C) Dividends shall begin to accrue and be
cumulative on outstanding shares of Series A
Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue
of such shares of Series A Preferred Stock,
unless the date of issue of such shares is
prior to the record date for the first
Quarterly Dividend Payment Date, in which
case dividends on such shares shall begin to
accrue from the date of issue of such shares,
or unless the date of issue is a Quarterly
Dividend Payment Date or is a date after the
record date for the determination of holders
of shares of Series A Preferred Stock
entitled to receive a quarterly dividend and
before such Quarterly Dividend Payment Date,
in either of which events such dividends
shall begin to accrue and be cumulative from
such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall accumulate
but shall not bear interest. Dividends paid
on the shares of Series A Preferred Stock in
an amount less than the total amount of such
dividends at the time accrued and payable on
such shares shall be allocated pro rata on a
share-by-share basis among all such shares at
the time outstanding. The Board of Directors
may fix a record date for the determination
of holders of shares of Series A Preferred
Stock entitled to receive payment of a
dividend or distribution declared thereon,
which record date shall be not more than 60
days prior to the date fixed for the payment
thereof.
Section 3. Voting Rights. The holders of
shares of Series A Preferred Stock shall have
the following voting rights:
(A) Subject to the provisions for
adjustment as hereinafter set forth, each
share of Series A Preferred Stock shall
entitle the holder thereof to 100 votes (and
each one one-hundredth of a share of Series A
Preferred Stock shall entitle the holder
thereof to one vote) on all matters submitted
to a vote of the stockholders of the
Corporation. In the event the Corporation
shall at any time declare or pay any dividend
on Common Stock payable in shares of Common
Stock or effect a subdivision or combination
or consolidation of the outstanding shares of
Common Stock (by reclassification or
otherwise than by payment of a dividend in
shares of Common Stock into a greater or
lesser number of shares of Common Stock, then
in each such case the number of votes per
share to which holders of shares of Series A
Preferred Stock were entitled immediately
prior to such event shall be adjusted by
multiplying such number by a fraction, the
numerator of which is the number of shares of
Common Stock outstanding immediately after
such event and the denominator of which is
the number of shares of Common Stock that
were outstanding immediately prior to such
event.
(B) Except as otherwise provided herein,
in the Restated Certificate of Incorporation,
in any other certificate of designation
creating a series of preferred stock or any
similar stock, or by law, the holders of
shares of Series A Preferred Stock and the
holders of shares of Common Stock and any
other capital stock of the Corporation having
general voting rights shall vote together as
one class on all matters submitted to a vote
of stockholders of the Corporation.
(C) If at the time of any annual meeting
of stockholders for the election of
directors, the equivalent of six quarterly
dividends (whether or not consecutive)
payable on any share or shares of Series A
Preferred Stock are in default, the number of
directors constituting the Board of Directors
of the Corporation shall be increased by two.
In addition to voting together with the
holders of Common Stock for the election of
other directors of the Corporation, the
holders of record of the Series A Preferred
Stock, voting separately as a class to the
exclusion of the holders of Common Stock,
shall be entitled at said meeting of
stockholders (and at each subsequent annual
meeting of stockholders), unless all
dividends in arrears have been paid or
declared and set apart for payment prior
thereto, to vote for the election of two
directors of the Corporation. Until the
default in payments of all dividends which
permitted the election of said directors
shall cease to exist any director who shall
have been so elected pursuant to the next
preceding sentence may be removed at any
time, either with or without cause, only by
the affirmative vote of the holders of the
shares at the time entitled to cast a
majority of the votes entitled to be cast,
for the election of any such director at a
special meeting of such holders called for
that purpose, and any vacancy thereby created
may be filled by the vote of such holders.
If and when such default shall cease to
exist, the holders of the Series A Preferred
Stock shall be divested of the foregoing
special voting rights, subject to revesting
in the event of each and every subsequent
like default in payments of dividends. Upon
the termination of the foregoing special
voting rights, the terms of office of all
persons who may have been elected directors
pursuant to said special voting rights shall
forthwith terminate, and the number of
directors constituting the Board of Directors
shall be reduced by two. The voting rights
granted by this Section 3(c) shall be in
addition to any other voting rights granted
to the holders of the Series B Preferred
Stock in this Section 3.
(D) Except as provided herein, in Section
10 or by applicable law, holders of Series A
Preferred Stock shall have no special voting
rights and their consent shall not be
required (except to the extent they are
entitled to vote with holders of Common Stock
as set forth herein) for authorizing or
taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other
dividends or distributions payable on the
Series A Preferred Stock as provided in
Section 2 are in arrears, thereafter and
until all accrued and unpaid dividends and
distributions, whether or not declared, on
shares of Series A Preferred Stock
outstanding shall have been paid in full, the
Corporation shall not:
(i) declare or pay dividends on, make any
other distributions on any shares or stock
ranking junior (either as to dividends or
upon liquidation, dissolution or winding-up)
to the Series A Preferred Stock;
(ii) declare or pay dividends, or make any
other distributions, on any shares of stock
ranking on a parity (either as to dividends
or upon liquidation, dissolution or winding
up) with the Series A Preferred Stock except
dividends paid ratably on the Series A
Preferred Stock, and all such parity stock on
which dividends are payable or in arrears in
proportion to the total amounts to which the
holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise
acquire for consideration shares of any
stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or
winding-up) with the Series A Preferred
Stock, provided that the Corporation may at
any time redeem, purchase or otherwise
acquire shares of any such parity stock in
exchange for shares of any stock of the
Corporation ranking junior (either as to
dividends or upon dissolution, liquidation or
winding up) to the Series A Preferred Stock;
or
(iv) purchase or otherwise acquire for
consideration any shares of Series A
Preferred Stock, or any shares of stock
ranking on a parity (either as to dividends
or upon liquidation, dissolution or winding-
up) with the Series A Preferred Stock, except
in accordance with a purchase offer made in
writing or by publication (as determined by
the Board of Directors) to all holders of
such shares upon such terms as the Board of
Directors, after consideration of the
respective annual dividend rates and other
relative rights and preferences of the
respective series and classes, shall
determine in good faith will result in fair
and equitable treatment among the respective
series or classes.
(B) The Corporation shall not permit any
subsidiary of the Corporation to purchase or
otherwise acquire for consideration any
shares of stock of the Corporation unless the
Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire
such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares
of Series A Preferred Stock purchased or
otherwise acquired by the Corporation in any
manner whatsoever, shall be retired and
cancelled promptly after the acquisition
thereof. All such shares shall upon their
cancellation become authorized but unissued
shares of preferred stock, without
designation asto series, and may be reissued
as part of a new series of preferred stock to
be created by resolution or resolutions of
the Board of Directors, subject to the
conditions and restrictions on issuance set
forth herein, in the Restated Certificate of
Incorporation, in any other certificate of
designation creating a series of preferred
stock or any similar stock or as otherwise
required by law.
Section 6. Liquidation, Dissolution or
Winding-Up. Upon any voluntary or
involuntary liquidation, dissolution or
winding-up of the Corporation, no
distribution shall be made (A) to the holders
of shares of stock ranking junior (either as
to dividends or upon liquidation, dissolution
or winding-up) to the Series A Preferred
Stock unless prior thereto, the holders of
shares of Series A Preferred Stock shall have
received the higher of (i) $100 per share,
plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether
or not declared, to the date of such payment,
or (ii) an aggregate amount per share,
subject to the provision for adjustment
hereinafter set forth, equal to 100 times the
aggregate amount to be distributed per share
to holders of Common Stock; nor shall any
distribution be made (B) to the holders of
stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or
winding-up) with the Series A Preferred
Stock, except distributions made ratably on
the Series A Preferred Stock and all other
such parity stock in proportion to the total
amounts to which the holders of all such
shares are entitled upon such liquidation,
dissolution or winding-up. In the event the
Corporation shall at any time declare or pay
any dividend on Common Stock payable in
shares of Common Stock, or effect a
subdivision or combination or consolidation
of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment
of a dividend in shares of Common Stock) into
a greater or lesser number of shares of
Common Stock, then in each such case the
aggregate amount to which holders of shares
of Series A Preferred Stock were entitled
immediately prior to such event under the
provision in clause (A) of the preceding
sentence shall be adjusted by multiplying
such amount by a fraction the numerator of
which is the number of shares of Common Stock
outstanding immediately after such event and
thedenominator of which is the number of
shares of Common Stock that were outstanding
immediately prior to such event.
Section 7. Consolidation, Merger, etc. In
case the Corporation shall enter into any
consolidation, merger, combination or other
transaction in which the shares of Common
Stock are exchanged for or changed into other
stock or securities, cash and/or any other
property, or otherwise changed, then in any
such case each share of Series A Preferred
Stock shall at the same time be similarly
exchanged or changed into an amount per share
(subject to the provision for adjustment
hereinafter set forth) equal to 100 times the
aggregate amount of stock, securities, cash
and/or any other property (payable in kind),
as the case may be, into which or for which
each share of Common Stock is changed or
exchanged. In the event the Corporation
shall at any time declare or pay any dividend
on Common Stock payable in shares of Common
Stock, or effect a subdivision or combination
or consolidation of the outstanding shares of
Common Stock (by reclassification or
otherwise than by payment of a dividend in
shares of Common Stock) into a greater or
lesser number of shares of Common Stock, then
in each such case the amount set forth in the
preceding sentence with respect to the
exchange or change of shares of Series A
Preferred Stock shall be adjusted by
multiplying such amount by a fraction the
numerator of which is the number of shares of
Common Stock outstanding immediately after
such event and the denominator of which is
the number of shares of Common Stock that
were outstanding immediately prior to such
event.
Section 8. No Redemption. The shares of
Series A Preferred Stock shall not be
redeemable.
Section 9. Rank. Unless otherwise
provided in the Restated Certificate of
Incorporation of the Corporation or a
Certificate of Designation relating to a
subsequent series of preferred stock of the
Corporation, the Series A Preferred Stock
shall rank junior to all other series of the
Corporation's preferred stock as to the
payment of dividends and the distribution of
assets on liquidation, dissolution or winding-
up, and senior to the Common Stock of this
Corporation.
Section 10. Amendment. The Restated
Certificate of Incorporation of the
Corporation, as amended, shall not be amended
in any manner which would materially alter or
change the powers, preferences or special
rights of the Series A Preferred Stock so as
to affect them adversely without the
affirmative vote of the holders of at least
two-thirds of the outstanding shares of
Series A Preferred Stock, voting together as
a single series.
Section 11. Fractional Shares. Series A
Preferred Stock may be issued in fractions of
a share (in one one-hundredths (1/100) of a
share and integral multiples thereof) which
shall be entitle the holder, in proportion to
such holder's fractional shares, to exercise
voting rights, receive dividends, participate
in distributions and to have the benefit of
all other rights of holders of Series A
Preferred Stock.
Exhibit (3)
OWENS CORNING
BY-LAWS
As Adopted April 21, 1988
OWEN CORNING
BY-LAWS
TABLE OF CONTENTS
SECTION PAGE
ARTICLE I STOCKHOLDERS
1. Annual Meeting 1
2. Special Meetings 1
3. Organization and Conduct of Business 1
4. Nomination of Directors 2
5. Notice of Meetings 3
6. Quorum 3
7. Record Dates 4
8. Proxies and Voting 4
9. Stock List 5
ARTICLE II BOARD OF DIRECTORS
1. Qualifications of Directors 5
2. Number, Term of Office and Vacancies 5
3. Regular Meetings 5
4. Special Meetings 5
5. Quorum 6
6. Participation in Meetings by
Conference Telephone 6
7. Conduct of Business 6
8. Compensation of Directors 6
9. Approval of Minutes 6
ARTICLE III COMMITTEES
1. Committees of the Board of Directors 6
2. Conduct of Business 7
3. Officers 8
ARTICLE IV OFFICERS
1. Elected Officers 8
2. Appointed Officers 8
3. Compensation 9
4. Chairman of the Board 9
5. Vice Chairman of the Board 9
SECTION PAGE
ARTICLE IV OFFICERS (Continued)
6. Chief Executive Officer 9
7. President 9
8. Vice President 9
9. Secretary 10
10. Treasurer 10
11. Controller 10
12. All Officers 10
13. Delegation of Authority 10
14. Removal 11
15. Action with Respect to Securities of Other
Corporations 11
16. Security 11
ARTICLE V STOCK
1. Certificates of Stock 11
2. Transfers of Stock 11
3. Lost, Stolen or Destroyed Certificates 12
4. Regulations 12
ARTICLE VI FINANCES
1. Fiscal Year 12
2. Borrowings 12
3. Banking Authorizations 12
ARTICLE VII NOTICES
1. Notices 13
2. Waivers 13
ARTICLE VIII MISCELLANEOUS
1. Facsimile Signatures 13
2. Corporate Seal 13
3. Reliance upon Books, Reports and Records 14
4. Time Periods 14
5. Gender 14
ARTICLE IX INDEMNIFICATION OF DIRECTORS
AND OFFICERS 14
ARTICLE X AMENDMENTS 16
BY-LAWS
of
OWENS CORNING
ARTICLE I
STOCKHOLDERS
Section 1. Annual Meeting.
An annual meeting of the stockholders, for the
election of directors to succeed those whose
terms expire and for the transaction of such
other business as may properly come before the
meeting, shall be held at such place, either
within or without the State of Delaware, on such
date, and at such time as the Board of Directors
shall each year fix, which date shall be within
thirteen months subsequent to the last annual
meeting of stockholders.
Section 2. Special Meetings.
Except as otherwise required by law or by the
Certificate of Incorporation and subject to the
rights of the holders of any class or series of
stock having a preference over the common stock
of the Corporation as to dividends or upon
liquidation, dissolution or winding up, special
meetings of stockholders may be called only by
the Board of Directors pursuant to a resolution
approved by a majority of the whole Board of
Directors. Special meetings of stockholders
shall be held at such place, within or without
the State of Delaware, date and time as the
Board of Directors shall fix.
Section 3. Organization and Conduct of
Business.
Such person as the Board of Directors may have
designated or, in the absence of such a person,
the Chief Executive Officer of the Corporation
or, in his absence, such person as may be chosen
by the holders of a majority of the shares
entitled to vote who are present, in person or
by proxy, shall call to order any meeting of the
stockholders and act as chairman of the meeting.
In the absence of the Secretary of the
Corporation, the secretary of the meeting shall
be such person as the chairman appoints. The
chairman of any meeting of stockholders shall
determine the order of business and the
procedure at the meeting, including such
regulation of the manner of voting and the
conduct of discussion as he determines to be in
order.
At a meeting of the stockholders, only such
business shall be conducted as shall have been
properly brought before the meeting. To be
properly brought before a meeting, business must
be (a) specified in the notice of meeting (or
any supplement thereto) given by or at the
direction of the Board of Directors, (b)
otherwise properly brought before the meeting by
or at the direction of the Board of Directors,
or (c) otherwise properly brought before the
meeting by a stockholder. For business to be
properly brought before a meeting by a
stockholder, the stockholder must have given
timely notice thereof in writing to the
Secretary of the Corporation. To be timely, a
stockholder's notice must be delivered to or
mailed and received at the principal executive
offices of the Corporation not less than 60 days
nor more than 90 days prior to the meeting;
provided, however, that in the event that notice
of the date of the meeting is not given to
stockholders, or public disclosure by means of a
filing with the Securities and Exchange
Commission of such date is not made, at least 70
days prior to the date of such meeting, notice
by the stockholder to be timely must be so
received not later than the close of business on
the 10th day following the day on which such
notice of the date of the meeting was mailed or
such public disclosure was made. A stockholder's
notice to the Secretary shall set forth as to
each matter the stockholder proposes to bring
before the meeting (a) a brief description of
the business desired to be brought before the
meeting and the reasons for conducting such
business at the meeting, (b) the name and
address, as they appear on the Corporation's
books, of the stockholder proposing such
business, (c) the class and number of shares of
the Corporation which are beneficially owned by
the stockholder and (d) any material interest of
the stockholder in such business.
Notwithstanding anything in the By-Laws to the
contrary, no business shall be conducted at a
meeting of stockholders, except in accordance
with the procedures set forth in this Article I,
Section 3.
The chairman of a meeting of stockholders shall,
if the facts warrant, determine and declare to
the meeting that business was not properly
brought before the meeting and in accordance
with the provisions of this Article I, Section
3, and if he should so determine, he shall so
declare to the meeting and any such business not
properly brought before the meeting shall not be
transacted.
Section 4. Nomination of Directors.
Only persons who are nominated in accordance
with the procedures set forth in this Article I,
Section 4, shall be eligible for election as
directors by action of the stockholders.
Nominations of persons for election to the Board
of Directors of the Corporation may be made at a
meeting of stockholders by or at the direction
of the Board of Directors or by any stockholder
of the Corporation entitled to vote for the
election of directors at the meeting who
complies with the notice procedures set forth in
this Article I, Section 4. Such nominations,
other than those made by or at the direction of
the Board of Directors, shall be made pursuant
to timely notice in writing to the Secretary of
the Corporation. To be timely, a stockholder's
notice shall be delivered to or mailed and
received at the principal executive offices of
the Corporation not less than 60 days nor more
than 90 days prior to the meeting; provided,
however, that in the event that notice of the
date of the meeting is not given to
stockholders, or public disclosure by means of a
filing with the Securities and Exchange
Commission of such date is not made, at least 70
days prior to the date of such meeting, notice
by the stockholder to be timely must be so
received not later than the close of business on
the 10th day following the day on which such
notice of the date of the meeting was mailed or
such public disclosure was made.
Such stockholder's notice shall set forth (a) as
to each person whom the shareholder proposes to
nominate for election or re-election as a
director, (i) the name, age, business address
and residence address of such person, (ii) the
principal occupation or employment of such
person, and (iii) the class and number of shares
of the Corporation which are beneficially owned
by such person; and (b) as to the stockholder
giving the notice (i) the name and address, as
they appear on the Corporation's books, of such
stockholder and (ii) the class and number of
shares of the Corporation which are beneficially
owned by such stockholder. The chairman of the
meeting shall, if the facts warrant, determine
and declare to the meeting that a nomination was
not made in accordance with the procedures
prescribed by the By-Laws, and if he should so
determine, he shall so declare to the meeting
and the defective nomination shall be
disregarded.
Section 5. Notice of Meetings.
Written notice of the place, date, and time of
all meetings of stockholders, and the purpose or
purposes for which the meeting was called, shall
be given, not less than ten nor more than sixty
days before the date on which the meeting is to
be held, to each stockholder entitled to vote at
such meeting, except as otherwise provided
herein or required by the Delaware General
Corporation Law or the Certificate of
Incorporation.
No notice of any meeting of stockholders need be
given to any stockholder who submits a signed
waiver of notice to the Secretary of the
Corporation, whether before or after the
meeting. Attendance of a person at a meeting
shall constitute a waiver of notice of such
meeting, except when the stockholder attends a
meeting, in person or by proxy, for the express
purpose of objecting, at the beginning of the
meeting, to the transaction of any business on
the grounds that the meeting is not lawfully
called or convened. When a meeting is adjourned
to another place, date or time, written notice
need not be given of the adjourned meeting if
the place, date and time thereof are announced
at the meeting at which the adjournment is
taken; provided, however, that if the date of
any adjourned meeting is more than thirty days
after the date for which the meeting was
originally noticed, or if a new record date is
fixed for the adjourned meeting, written notice
of the place, date, and time of the adjourned
meeting shall be given in conformity herewith.
At any adjourned meeting, any business may be
transacted which might have been transacted at
the original meeting.
Section 6. Quorum.
At any meeting of the stockholders, the holders
of a majority of all the shares of the stock
entitled to vote at the meeting, present in
person or by proxy, shall constitute a quorum
for all purposes, unless or except to the extent
that the presence of a larger number may be
required by the Certificate of Incorporation or
by law. Where a separate vote by a class or
classes is required, a majority of the shares of
such class or classes, present in person or
represented by proxy, shall constitute a quorum
entitled to take action with respect to the vote
on that matter.
If a quorum shall fail to attend any meeting,
the chairman of the meeting or the holders of a
majority of the shares of stock entitled to vote
who are present, in person or by proxy, may
adjourn the meeting to another place, date, or
time.
If a notice of any adjourned special meeting of
stockholders is sent to all stockholders
entitled to vote thereat, stating that it will
be held with those present constituting a
quorum, then except as otherwise required by the
Certificate of Incorporation or by law, those
present at such adjourned meeting, in person or
by proxy, shall constitute a quorum, and all
matters shall be determined by a majority of the
votes cast at such meeting.
Section 7. Record Dates.
In order that the Corporation may determine the
stockholders entitled to notice of or to vote at
any meeting of stockholders, or to receive
payment of any dividend or other distribution or
allotment of any rights, or to exercise any
rights in respect of any change, conversion or
exchange of stock or for the purpose of any
other lawful action, the Board of Directors may
fix a record date, which record date shall not
precede the date on which the resolution fixing
the record date is adopted and which record date
shall not be more than sixty nor less than ten
days before the date of such meeting, nor more
than sixty days prior to the time for such other
action as described in this section.
If no record date is fixed pursuant to the
foregoing paragraph: (a) the record date for
determining stockholders entitled to notice of
or to vote at a meeting of stockholders shall be
at the close of business on the day next
preceding the day on which notice is given, or,
if notice is waived, at the close of business on
the day next preceding the day on which the
meeting is held; and (b) the record date for
determining stockholders for any other purpose
shall be at the close of business on the day on
which the Board of Directors adopts the
resolution relating thereto.
A determination of stockholders of record
entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of
the meeting, provided, however, that the Board
of Directors may fix a new record date for the
adjourned meeting.
Section 8. Proxies and Voting.
A stockholder may, by written proxy filed in
accordance with the procedures established for
the meeting, authorize any other person to vote
for such stockholder at any and all meetings of
stockholders and to waive all notices which such
stockholder may be entitled to receive.
Each stockholder shall have one vote for every
share of stock entitled to vote which is
registered in his or her name on the record date
for the meeting, except as otherwise provided
herein or required by the Certificate of
Incorporation or by law.
All voting, including on the election of
directors, unless otherwise required by the
Certificate of Incorporation or by law, may be
by a voice vote; provided, however, that upon
demand therefor by a stockholder entitled to
vote for the election of directors, elections
for directors shall be by ballot. Every vote
taken by ballots shall be counted by an
inspector or inspectors appointed by the
chairman of the meeting.
All elections shall be determined by a plurality
of the votes cast, and, except as otherwise
required by the Certificate of Incorporation or
by law, all other matters shall be determined by
a majority of the votes cast.
Section 9. Stock List.
A complete list of stockholders entitled to vote
at any meeting of stockholders, arranged in
alphabetical order for each class of stock and
showing the address of each such stockholder and
the number of shares registered in the name of
each stockholder, shall be open to the
examination of any such stockholder, for any
purpose germane to the meeting, during ordinary
business hours for a period of at least ten (10)
days prior to the meeting, either at a place
within the city where the meeting is to be held,
which place shall be specified in the notice of
the meeting, or if not so specified, at the
place where the meeting is to be held.
The stock list shall also be kept at the place
of the meeting during the whole time thereof and
shall be open to the examination of any such
stockholder who is present. This list shall
presumptively determine the identity of the
stockholders entitled to vote at the meeting and
the number of shares held by each of them.
ARTICLE II
BOARD OF DIRECTORS
Section 1. Qualifications of Directors.
Each director shall be a person sui juris. No
director need be a stockholder of the
Corporation.
Section 2. Number, Term of Office and
Vacancies.
The number of directors who shall constitute the
whole Board of Directors, and the terms of
office of each director, shall be determined in
accordance with the Certificate of
Incorporation. Newly created directorships and
vacancies shall be filled in the manner provided
in the Certificate of Incorporation.
Section 3. Regular Meetings.
Regular meetings of the Board of Directors shall
be held at such place or places, on such date or
dates, and at such time or times as shall have
been established by the Board of Directors and
publicized among all directors. A notice of each
regular meeting shall not be required.
Section 4. Special Meetings.
Special meetings of the Board of Directors may
be called by one-third of the directors then in
office (rounded up to the nearest whole number)
or by the Chairman of the Board or Chief
Executive Officer and shall be held at such
place, on such date, and at such time as they or
he shall fix. Notice of each special meeting
shall be given to each director by the Secretary
or Assistant Secretary of the Corporation or by
the Chairman of the Board, Chief Executive
Officer, or directors calling said meeting. Such
notice may be given personally or by telephone,
or by written notice, telegram, cable, facsimile
or telex, mailed or directed to the address of
the director appearing upon the books of the
Corporation, and shall set forth the date, time
and place of the meeting, but need not state the
purpose or purposes thereof unless required by
the Certificate of Incorporation or by law.
Notice of the meeting shall be sufficient in
time if actually delivered to the director
notified, or delivered properly addressed and
prepaid to the carrier thereof, or telecopied,
sufficiently early to be delivered in due and
regular course to the director notified, in time
to enable him to attend such meeting. Notice to
any director of a meeting of the Board of
Directors may be waived by him, and shall be
deemed waived by him by his presence at the
meeting.
Section 5. Quorum.
At any meeting of the Board of Directors, a
majority of the total number of the whole Board
shall constitute a quorum for all purposes. If a
quorum shall fail to attend any meeting, a
majority of those present may adjourn the
meeting to another place, date, or time, without
further notice or waiver thereof.
Section 6. Participation in Meetings By
Conference Telephone.
Members of the Board of Directors, or of any
committee thereof, may participate in a meeting
of the Board or any committee by means of
conference telephone or similar communications
equipment by means of which all persons
participating in the meeting can hear each other
and such participation shall constitute presence
in person at such meeting.
Section 7. Conduct of Business.
At any meeting of the Board of Directors,
business shall be transacted in such order and
manner as the Board may from time to time
determine, and all matters shall be determined
by the vote of a majority of the directors
present, except as otherwise provided herein or
required by the Certificate of Incorporation or
by law. Action may be taken by the Board of
Directors without a meeting if all members
thereof consent thereto in writing, and the
writing or writings are filed with the minutes
of proceedings of the Board of Directors.
Section 8. Compensation of Directors.
Directors, pursuant to resolution of the Board
of Directors, may receive fixed fees and other
compensation for their services as directors,
including, without limitation, their services as
members of committees of the Board of Directors.
Section 9. Approval of Minutes.
The minutes of meetings of the Board of
Directors may be acted upon at any subsequent
meeting thereof and the approval of the minutes
of any meeting of the Board of Directors shall
have the effect of ratifying and validating any
of the acts reported therein with like effect as
if such acts had been properly approved or
authorized at such meeting, providing that such
approval is by such vote as would have been
sufficient to authorize the acts so reported.
ARTICLE III
COMMITTEES
Section 1. Committees of the Board of
Directors.
The Board of Directors, by a vote of a majority
of the whole Board may, from time to time,
designate committees of the Board, with such
lawfully delegable powers and duties as it
thereby confers, to serve at the pleasure of the
Board and shall, for those committees and any
other provided for herein, elect a director or
directors to serve as the member or members
thereof, designating, if it desires, other
directors as alternate members who may replace
any absent or disqualified member at any meeting
of the committee. If the resolution which
designates the committee or a supplemental
resolution of the Board of Directors shall so
provide, any committee so designated may
exercise the power and authority of the Board of
Directors to declare a dividend, to authorize
the issuance of stock or to adopt a certificate
of ownership and merger pursuant to Section 253
of the Delaware General Corporation Law. In the
absence or disqualification of any member of any
committee and any alternate member in his place,
the member or members of the committee present
at the meeting and not disqualified from voting,
whether or not he or they constitute a quorum,
may by unanimous vote appoint another member of
the Board of Directors to act at the meeting in
the place of the absent or disqualified member.
Section 2. Conduct of Business.
Each committee may determine the procedural
rules for meeting and conducting its business
and shall act in accordance therewith, except as
otherwise provided herein or required by the
Certificate of Incorporation or by law. Unless
otherwise designated by the Board of Directors,
one-third of the members shall constitute a
quorum unless the committee shall consist of one
or two members, in which event one member shall
constitute a quorum; and all matters shall be
determined by a majority vote of the members
present. If a quorum shall fail to attend any
meeting, a majority of those present may adjourn
the meeting to another place, date, or time,
without further notice or waiver thereof. Each
committee shall hold meetings upon the call of
its chairman, the Chairman of the Board, the
Chief Executive Officer, or any one of its
members, at such date, time and place as set
forth in the notice of meeting.
Notice of each meeting of a committee of the
Board of Directors shall be given to each member
by the Secretary or Assistant Secretary of the
Corporation, Chairman of the Board, Chief
Executive Officer or by the member of the
committee calling the meeting. Such notice may
be given personally or by telephone or by
written notice, telegram, cable, facsimile or
telex, mailed or directed to the address of the
member appearing upon the books of the
Corporation and shall set forth the date, time
and place of the meeting, but need not state the
purpose or purposes thereof unless required by
the Certificate of Incorporation or by law.
Notice of the meeting shall be sufficient in
time if actually delivered to the member of the
committee notified, or delivered properly
addressed and prepaid to the carrier thereof, or
telecopied, sufficiently early to be delivered
in due and regular course to the member
notified, in time to enable him to attend such
meeting. Notice to any member of a meeting of a
committee of the Board may be waived by him, and
shall be deemed waived by him by his presence at
the meeting. Action may be taken by conference
telephone as provided in Article II, Section 6.
Action may be taken by any committee without a
meeting if all members thereof consent thereto
in writing, and the writing or writings are
filed with the minutes of the proceedings of
such committee.
Section 3. Officers.
The Board of Directors may designate one or more
members of any committee to act as the chairman
and the secretary of any committee, and each
person so designated shall continue as such
during the pleasure of the Board. Unless so
designated, a committee may choose its own
officers, including officers pro tem, and if no
secretary has been designated by the Board or
the committee, the Secretary of the Corporation
shall act as secretary of the committee and keep
proper minutes of the proceedings of such
committee.
ARTICLE IV
OFFICERS
Section 1. Elected Officers.
The officers of the Corporation shall consist of
a President, one or more Vice Presidents, a
Secretary, a Treasurer and such other officers
as the Board of Directors may from time to time
elect. The Board of Directors shall consider the
election of officers at its first meeting after
every annual meeting of stockholders and may
consider that subject at such other times as the
Board may deem appropriate. Each officer shall
hold office until his successor is elected and
qualified or until his earlier resignation,
retirement or removal. Each officer elected by
the Board of Directors or appointed pursuant to
Section 2 of this Article IV shall be retired
from the Corporation, unless mandatory
retirement of such officer is prohibited by law,
in accordance with the Corporation's retirement
programs not later than the last day of the
month in which the officer attains age sixty-
five. Any number of offices may be held by the
same person.
Each officer elected by the Board of Directors
or any person thereto specifically authorized by
the Board may, in the name and on behalf of the
Corporation, receive and receipt for moneys and
other properties, execute and deliver contracts,
deeds, mortgages, leases, bonds, undertakings,
powers of attorney, and other instruments, and
assign, endorse, transfer, deliver, release, and
satisfy any and all contracts, mortgages,
leases, stock certificates, bonds, promissory
notes, drafts, checks, bills, orders, receipts,
acquittances, and other instruments, and may,
when necessary, affix the corporate seal
thereto.
The Chairman of the Board, President, Chief
Executive Officer and Vice Presidents elected by
the Board may delegate, designate or authorize
named individuals to execute and attest on
behalf of the Corporation bids, contracts,
performance bonds and similar documents arising
in the ordinary day-to-day operations of the
Corporation and its divisions.
Section 2. Appointed Officers.
The Chief Executive Officer designated by the
Board of Directors, or if a Chief Executive
Officer has not been so designated, the
President of the Corporation, may, from time to
time, create and abolish such functional,
divisional or regional offices of Vice President
or Assistant Vice President with such powers and
duties and subject to such limitations of
authority as he may prescribe and he may make
appointments to, and removals from, any such
office, but such appointees shall not exercise
specific powers or duties pertaining to the
elective offices of the Corporation as provided
in this Article IV of the By-Laws, except as
prescribed by the Board of Directors, either
generally or specially.
Section 3. Compensation.
The Board of Directors, or any committee thereof
so designated, may, from time to time, fix the
compensation of the several officers, agents,
and employees of the Corporation and may
delegate to any officer of the Corporation, or
any committee composed of officers of the
Corporation, the power to fix the compensation
of the officers, agents, and employees of the
Corporation.
Section 4. Chairman of the Board.
The Board of Directors may elect one of the
members of the Board as Chairman of the Board,
who, if elected, shall preside at all meetings
of stockholders and directors and shall also
perform such duties as may be prescribed by the
Board. Except where by law the signature of the
President is required, the Chairman of the Board
shall possess the same power as the President to
sign all certificates, contracts and other
instruments of the Corporation.
Section 5. Vice Chairman of the Board.
The Board of Directors may designate one of the
members of the Board as Vice Chairman of the
Board who, in the absence or disability of the
Chairman of the Board or during any vacancy of
that office, shall perform the duties of the
Chairman of the Board. He shall also perform
such duties as may be prescribed by the Board or
delegated to him by the Chief Executive Officer.
Section 6. Chief Executive Officer.
The Board of Directors shall designate either
the Chairman of the Board or the President as
Chief Executive Officer of the Corporation, who,
subject to the direction and control of the
Board, shall have the responsibility for the
general management and control of the business
and affairs of the Corporation and shall perform
all duties and have all powers which are
commonly incident to the office of chief
executive or which the Board of Directors
delegates to him. He shall have power to sign
all stock certificates, contracts and other
authorized instruments of the Corporation and
shall have general supervision and direction of
all other officers, employees and agents of the
Corporation. The Chief Executive Officer, prior
to each annual meeting of stockholders, shall
submit to the Board of Directors a report of the
operations of the Corporation during the
preceding fiscal year and of its affairs, and
from time to time shall report to the Board all
matters affecting the Corporation's interests
which may come to his knowledge.
Section 7. President.
The President, in the absence or disability of
the Chairman of the Board and the Vice Chairman
of the Board or during vacancies in both of such
offices, shall preside at all meetings of
stockholders and directors. He shall perform
such duties as may be prescribed by the Board of
Directors or delegated to him by the Chief
Executive Officer.
Section 8. Vice President.
Each Vice President shall have such powers and
duties as may be delegated to him by the Board
of Directors. The Board of Directors, or the
Chief Executive Officer, or if a Chief Executive
Officer has not been so designated, the
President, may assign further descriptive titles
to the Vice Presidents, prescribe their duties
and rank and may designate them numerically.
Section 9. Secretary.
The Secretary shall keep an accurate record of
all proceedings of the stockholders and the
Board of Directors and committees of the Board;
sign all certificates for shares and deeds,
mortgages, bonds, contracts, notes and other
instruments executed by the Corporation
requiring his signature or as may be prescribed
by the Chief Executive Officer or the President;
give notices of meetings of stockholders and of
directors; produce on request at any meeting of
stockholders a certified list of stockholders
arranged in alphabetical order, showing the
number of shares held by each; and perform such
other and further duties as may from time to
time be prescribed by the Board, or a committee
of the Board, or as may from time to time be
assigned or delegated to him by the Chief
Executive Officer or the President. He shall
have custody and care of the seal of the
Corporation.
Section 10. Treasurer.
Subject to the direction and control of the
Board of Directors, the Chief Executive Officer,
and any officer who may be designated by the
Board with responsibility for finance, the
Treasurer shall have custody of the funds and
securities belonging to the Corporation, and
shall deposit all funds in the name and to the
credit of the Corporation in such depository or
depositories as may be designated by the Board
or by an officer or officers duly authorized by
the Board to designate depositories. He shall
make such disbursements of the funds of the
Corporation as are authorized and shall render
to the Board of Directors, whenever the Board
may require it, an account of all his
transactions as Treasurer. The Treasurer shall
also perform such other duties as the Board of
Directors may prescribe from time to time.
Section 11. Controller.
The Controller shall keep proper books of
account and full and accurate records of the
receipts and disbursements of the funds
belonging to the Corporation and of its
operations. The Controller shall render to the
Board of Directors, any of its committees, the
Chief Executive Officer, and the President, such
statements as to the financial condition of the
Corporation and as to its operations as each or
any of them may request.
Section 12. All Officers.
The several officers shall perform all other
duties usually incident to their respective
offices, or which may be required by the
stockholders or Board of Directors; shall from
time to time, and also whenever requested,
report to the Board of Directors, the Chairman
of the Board, the Chief Executive Officer or the
President all matters affecting the
Corporation's interests which may come to their
knowledge and, on the expiration of their terms
of office, shall respectively deliver all books,
papers, money and property of the Corporation in
their hands to their successors, or to the Chief
Executive Officer, or to any person designated
by the Board to receive the same.
Section 13. Delegation of Authority.
The Board of Directors may from time to time
delegate the powers or duties of any officer to
any other officers or agents, notwithstanding
any provision hereof.
Section 14. Removal.
Any officer of the Corporation may be removed at
any time, with or without cause, by the Board of
Directors.
Section 15. Action with Respect to Securities of
Other Corporations.
Unless otherwise directed by the Board of
Directors, each of the Chairman of the Board,
the Vice Chairman of the Board, the President,
any Vice President elected by the Board of
Directors, the Treasurer and the Secretary shall
have power to vote and otherwise act on behalf
of the Corporation, in person or by proxy, at
any meeting of stockholders of, or with respect
to any action of stockholders of, any other
corporation in which this Corporation may hold
securities and otherwise to exercise any and all
rights and powers which this Corporation may
possess by reason of its ownership of securities
in such other corporation.
Section 16. Security.
The Board of Directors may require any officer,
agent or employee of the Corporation to provide
security for the faithful performance of his
duties, in such amount and of such character and
on such terms as may be determined from time to
time by the Board of Directors.
ARTICLE V
STOCK
Section 1. Certificates of Stock.
Each stockholder shall be entitled to a
certificate signed by, or in the name of the
Corporation by, the Chairman of the Board, the
Vice Chairman of the Board, the President or a
Vice President, and by the Secretary or an
Assistant Secretary, or the Treasurer or an
Assistant Treasurer, certifying the number of
shares owned by him. Any or all of the
signatures and the seal of the Corporation on
the certificate may be facsimile, engraved,
stamped or printed. In the event that any
officer or transfer agent who has signed or
whose facsimile signature has been placed upon a
stock certificate shall have ceased to be such
officer or transfer agent before such
certificate is issued, it may be issued by the
Corporation with the same effect as if the
officer or transfer agent were such at the date
of issue.
Section 2. Transfers of Stock.
Transfers of stock shall be made only upon the
transfer books of the Corporation kept at an
office of the Corporation or by a transfer agent
or agents designated to transfer shares of the
stock of the Corporation. Except where a
certificate is issued in accordance with Section
3 of Article V of these By-Laws, an outstanding
certificate for the number of shares involved
shall be surrendered for cancellation before a
new certificate is issued therefor.
Section 3. Lost, Stolen or Destroyed
Certificates.
If a person claiming to be the holder of stock
in the Corporation claims that the certificate
representing such stock has been lost, stolen or
destroyed, a duplicate certificate or written
instrument may be issued by the Corporation's
Transfer Agent for the stock upon being
furnished with an affidavit of such loss, theft
or destruction in form and substance
satisfactory to the Transfer Agent and, upon
giving to the Corporation of a bond or agreement
of indemnity executed by such holder or owner
with a surety company authorized to do business
in the State of Delaware or in the State of Ohio
as surety, in form approved by counsel for the
Corporation, for full and complete
indemnification to the Corporation of all
losses, costs and expenses of every kind and
nature whatsoever which may result to the
Corporation or any of its agents or employees by
reason of the issuance of such duplicate
certificate.
Section 4. Regulations.
The issue, transfer, conversion and registration
of certificates of stock shall be governed by
such other regulations as the Board of Directors
may establish.
ARTICLE VI
FINANCES
Section 1. Fiscal Year.
The fiscal year shall begin on the first day of
January in each year.
Section 2. Borrowings.
Any two of the following officers: the Chairman
of the Board, Vice Chairman of the Board,
President, Executive Vice President, Senior Vice
President, Vice President-Finance, Treasurer,
Assistant Treasurer, or any employee of the
Corporation designated in writing by any two of
said officers, may from time to time in the name
of the Corporation borrow money with an
obligation to repay not exceeding one year from
any bank, trust company or financial institution
in such amounts as the officers or designated
employee may deem necessary or desirable for the
current needs of the Corporation.
All obligations for moneys borrowed by the
Corporation, and guarantees by the Corporation
of moneys borrowed by subsidiaries of the
Corporation, shall bear the signatures of any
two of the following officers: the Chairman of
the Board, Vice Chairman of the Board,
President, Executive Vice President, Senior Vice
President, Vice President-Finance, Treasurer and
Assistant Treasurer, only one of which may be an
Assistant Treasurer.
Section 3. Banking Authorizations.
Except as provided in Section 2 of this Article
VI, all checks, drafts, notes, or other
obligations for the payment of money shall be
signed by such person or persons as the Board of
Directors shall direct. The Board may delegate
to any officer or officers the power to
designate a depository or depositories for the
Corporation and to appoint a signer or signers
upon such instruments in respect of the funds
held by all or any particular depositories. The
Board may authorize the use of facsimile or
mechanically applied signatures or may delegate
to an officer or officers the power to authorize
the use thereof. The Board may authorize the use
of Depository Transfer Instruments without
signature from one corporate account maintained
with a duly designated depository to any other
corporate account maintained either with the
same or some other duly designated depository.
The Board may authorize the use of other
generally accepted means of transferring funds
without signature from a corporate account
maintained with a duly designated depository to
any other corporate account or to the account of
another party at the same or some other
depository.
ARTICLE VII
NOTICES
Section 1. Notices.
Except as otherwise specifically provided herein
or required by the Certificate of Incorporation
or by law, all notices required to be given,
other than by publication in a newspaper, to any
stockholder, director, officer, employee or
agent shall be in writing and may in every
instance be effectively given by hand delivery
to the recipient thereof, by depositing such
notice in the mails, postage paid, or by sending
such notice by pre-paid telegram or mailgram.
Any such notice shall be addressed to such
stockholder, director, officer, employee or
agent at his or her last known address as the
same appears on the books of the Corporation.
The time when such notice is received, if hand
delivered, or dispatched, if delivered through
the mails or by telegram or mailgram, shall be
the time of the giving of the notice.
Section 2. Waivers.
A written waiver of any notice, signed by a
stockholder, director, officer, employee or
agent, whether before or after the time of the
event for which notice is to be given, shall be
deemed equivalent to the notice required to be
given to such stockholder, director, officer,
employee or agent. Neither the business to be
transacted nor the purpose of any meeting need
be specified in such a waiver unless so required
by the Certificate of Incorporation or as
otherwise provided in these By-Laws.
ARTICLE VIII
MISCELLANEOUS
Section 1. Facsimile Signatures.
In addition to the provisions for use of
facsimile signatures elsewhere specifically
authorized in these By-Laws, facsimile
signatures of any officer or officers of the
Corporation may be used whenever and as
authorized by the Board of Directors or a
committee thereof.
Section 2. Corporate Seal.
The corporate seal shall have inscribed thereon
the name of the Corporation, the year of its
organization and the words "Corporate Seal,
Delaware".
Section 3. Reliance upon Books, Reports and
Records.
Each director, each member of any committee
designated by the Board of Directors, and each
officer of the Corporation shall, in the
performance of his duties, be fully protected in
relying in good faith upon the books of account
or other records of the Corporation and upon
such information, opinions, reports or
statements presented to the Corporation by any
of its officers or employees, or committees of
the Board of Directors so designated, or by any
other person as to matters which such director,
committee member or officer reasonably believes
are within such other person's professional or
expert competence and who has been selected with
reasonable care by or on behalf of the
Corporation.
Section 4. Time Periods.
In applying any provision of these By-Laws which
require that an act be done or not done a
specified number of days prior to an event or
that an act be done during a period of a
specified number of days prior to an event,
calendar days shall be used, the day of the
doing of the act shall be excluded, and the day
of the event shall be included.
Section 5. Gender.
Whenever the masculine gender is used in these
By-Laws, it shall be deemed to include both the
male and female genders.
ARTICLE IX
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Corporation shall, to the fullest extent
permitted by applicable law from time to time in
effect, (but, in the case of any amendment of
such law, only to the extent that such amendment
permits the Corporation to provide broader
indemnification rights than such law permitted
the Corporation to provide prior to such
amendment) indemnify any and all persons who may
serve or who have served at any time as
directors or officers of the Corporation, or who
at the request of the Corporation may serve or
at any time have served as directors, officers,
employees or agents of another corporation
(including subsidiaries of the Corporation) or
of any partnership, joint venture, trust or
other enterprise, and any directors or officers
of the Corporation who at the request of the
Corporation may serve or at any time have served
as agents or fiduciaries of an employee benefit
plan of the Corporation or any of its
subsidiaries, from and against any and all of
the expenses, liabilities or other matters
referred to in or covered by law whether the
basis of such proceeding is alleged action in an
official capacity as a director, officer,
employee or agent or in any other capacity while
serving as a director, officer, employee or
agent. The Corporation may also indemnify any
and all other persons whom it shall have power
to indemnify under any applicable law from time
to time in effect to the extent permitted by
such law. The indemnification provided by this
Article IX shall not be deemed exclusive of any
other rights to which any person may be entitled
under any provision of the Certificate of
Incorporation, other By-Law, agreement, vote of
stockholders or disinterested directors, or
otherwise, both as to action in an official
capacity and as to action in another capacity
while holding such office, and shall be contract
rights and continue as to a person who has
ceased to be a director, officer, employee or
agent and shall inure to the benefit of the
heirs, executors and administrators of such a
person.
If a claim under this Article IX is not paid in
full by the Corporation within sixty days after
a written claim has been received by the
Corporation, except in the case of a claim for
an advancement of expenses, in which case the
applicable period shall be twenty days, the
director or officer may at any time thereafter
bring suit against the Corporation to recover
the unpaid amount of the claim. If successful in
whole or in part in any such suit, or in a suit
brought by the Corporation to recover an
advancement of expenses pursuant to the terms of
an undertaking, the director or officer shall be
entitled to be paid also the expense of
prosecuting or defending such suit. In (i) any
suit brought by the director or officer to
enforce a right to indemnification hereunder
(but not in a suit brought by the director or
officer to enforce a right to an advancement of
expenses) it shall be a defense that, and (ii)
any suit by the Corporation to recover an
advancement of expenses pursuant to the terms of
an undertaking, the Corporation shall be
entitled to recover such expenses upon a final
adjudication that, the director or officer has
not met any applicable standard for
indemnification set forth in the Delaware
General Corporation Law. Neither the failure of
the Corporation (including its Board of
Directors, independent legal counsel, or its
stockholders) to have made a determination prior
to the commencement of such suit that
indemnification of the director or officer is
proper in the circumstances because the director
or officer has met the applicable standard of
conduct set forth in the Delaware General
Corporation Law, nor an actual determination by
the Corporation (including its Board,
independent legal counsel, or its stockholders)
that the director or officer has not met such
applicable standard of conduct, shall create a
presumption that the director or officer has not
met the applicable standard of conduct or, in
the case of such a suit brought by the director
or officer, be a defense to such suit. In any
suit brought by the director or officer to
enforce a right to indemnification or to an
advancement of expenses hereunder, or by the
Corporation to recover an advancement of
expenses pursuant to the terms of an
undertaking, the burden of proving that the
director or officer is not entitled to be
indemnified, or to such advancement of expenses,
under this Article IX or otherwise shall be on
the Corporation.
The indemnification provided in this Article IX
shall inure to each person referred to herein,
whether or not the person is serving in any of
the enumerated capacities at the time such
expenses (including attorneys' fees), judgments,
fines or amounts paid in settlement are imposed
or incurred, and whether or not the claim
asserted against him is based on matters which
antedate the adoption of this Article IX. None
of the provisions of this Article IX shall be
construed as a limitation upon the right of the
Corporation to exercise its general power to
enter into a contract or understanding of
indemnity with a director, officer, employee,
agent or any other person in any proper case not
provided for herein. Each person who shall act
or have acted as a director or officer of the
Corporation shall be deemed to be doing so in
reliance upon such right of indemnification.
For purposes of this Article IX, the term
"Corporation" shall include constituent
corporations referred to in subsection (h) of
Section 145 of the General Corporation Law of
the State of Delaware (or any similar provision
of applicable law at the time in effect).
ARTICLE X
AMENDMENTS
These By-Laws may be amended by a majority vote
of the stockholders entitled to vote at any
annual or special meeting of the stockholders
provided notice of the proposed amendment shall
be included in the notice of the meeting. The
Board of Directors, by a majority vote of the
whole Board at any meeting, may amend these By-
Laws, including By-Laws adopted by the
stockholders, provided that the stockholders may
from time to time specify particular provisions
of the By-Laws which shall not be amended by the
Board of Directors.
Exhibit (4)
AMENDMENT NO. 2
Dated as of April 27, 1995
to
CREDIT AGREEMENT
dated as of November 2, 1993
OWENS-CORNING FIBERGLAS CORPORATION, a Delaware
corporation (the "Borrower"), the banks listed on the signature
pages hereof (the "Banks"), and CREDIT SUISSE, as Agent (the
"Agent") for the Banks under the Credit Agreement, dated as of
November 2, 1993 (as amended by Amendment No. 1 thereto, the
"Credit Agreement"), among the Borrower, the Banks and the Agent
hereby agree as follows (with capitalized terms used herein and not
otherwise defined having the meaning ascribed thereto in the Credit
Agreement):
1. From and after the date hereof, the Credit Agreement
shall be amended by inserting the following at the end of the
definition of "Mandatorily Redeemable Stock" contained in Section
10.01 thereof:
"For purposes of this Agreement, the MIPS (as defined in
Section 4.10) shall not constitute Mandatorily Redeemable
Stock."
2. This Amendment No. 2 shall be construed in
accordance with and governed by the law of the State of New York
(without giving effect to its choice of laws principles).
3. This Amendment No. 2 may be signed in any number of
counterparts, each of which shall be deemed to be an original, with
the same effect as if the signatures thereto and hereto were upon
the same instrument, and shall become effective as of the date
hereof upon execution and delivery by the Borrower, the Agent and
the Majority Banks.
4. From and after the date hereof, each reference in
the Credit Agreement to "this Agreement", "hereof", "hereunder" or
words of like import, and all references to the Credit Agreement in
any and all agreements, instruments, documents, notes, certificates
and other writings of every kind and nature shall be deemed to mean
the Credit Agreement as modified and amended by this Amendment No.
2.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered by their respective
authorized officers as of the date first above written.
OWENS-CORNING FIBERGLAS CORPORATION
By /s/ Michael I. Miller
Name: Michael I. Miller
Title: Vice President & Treasurer
By /s/ David W. Devonshire
Name: David W. Devonshire
Title: Chief Financial Officer
CREDIT SUISSE, as Agent and as a Bank
By /s/ Christopher J. Eldin /s/ Andrea Shkane
Name: Christopher J. Eldin / Andrea Shkane
Title: Member of Senior Management / Associate
ABN AMRO BANK, N.V.
By /s/ J. M. Janovsky /s/ Kathryn C. Toth
Name: J. M. Janovsky / Kathryn C. Toth
Title: Group Vice President / Vice President
THE BANK OF NEW YORK
By /s/ Paula M. DiPonzio
Name: Paula M. DiPonzio
Title: Vice President
THE BANK OF NOVA SCOTIA
By /s/ F. C. H. Ashby
Name: F. C. H. Ashby
Title: Senior Manager Loan Operations
BARCLAYS BANK PLC
By /s/ Kevin F. Heraty
Name: Kevin Heraty
Title: Director
CHEMICAL BANK
By /s/ Peter C. Eckstein
Name: Peter C.Eckstein
Title: Vice President
CITIBANK, N.A.
By /s/ Barbara A. Cohen
Name: Barbara A. Cohen
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By /s/ Robert L. Jackson
Name: Robert L. Jackson
Title: Authorized Agent
THE FUJI BANK, LIMITED
By /s/ Peter L. Chinnici
Name: Peter L. Chinnici
Title: Joint General Manager
MELLON BANK, N.A.
By /s/ Frederick W. Okie, Jr.
Name: Frederick W. Okie, Jr.
Title: Vice President
THE MITSUBISHI BANK, LTD.
(CHICAGO BRANCH)
By /s/ Noboru Kobayashi
Name: Noboru Kobayashi
Title: Joint General Manager
THE NORTHERN TRUST COMPANY
By /s/ S. Biff Bowman
Name: S. Biff Bowman
Title: Vice President
ROYAL BANK OF CANADA
By /s/ Gordon MacArthur
Name: Gordon MacArthur
Title: Manager
THE TORONTO-DOMINION BANK
By /s/ Lisa Allison
Name: Lisa Allison
Title: Mgr. Cr. Admin.
TRUST COMPANY BANK
By /s/ Jennifer P. Harrelson
Name: Jennifer P. Harrelson
Title: Group Vice President
By /s/ Kim Coleman
Name: Kim Coleman
Title: Banking Officer
KREDIETBANK, N.V.
By /s/ Michael V. Curran /s/John E. Thierfelder
Name: Michael V. Curran John E. Thierfelder
Title: Vice President Assistant Vice President
Exhibit (4)
AMENDMENT NO. 3
dated as of January 19, 1996
to
CREDIT AGREEMENT
dated as of November 2, 1993
THIS AMENDMENT NO. 3 (this "Amendment"), dated as of
January 19, 1996, among OWENS CORNING (formerly known as Owens-
Corning Fiberglas Corporation), a Delaware corporation (the
"Borrower"), the banks listed on the signature pages hereof (the
"Banks"), and CREDIT SUISSE, as Agent (the "Agent") (with
capitalized terms used herein and not otherwise defined herein
having the meanings ascribed thereto in the Credit Agreement
hereafter referred to),
W I T N E S S E T H:
WHEREAS, the Borrower, the Banks and the Agent have
entered into a Credit Agreement dated as of November 2, 1993 (the
"Credit Agreement");
WHEREAS, the Borrower has requested, and the Banks and
the Agent have agreed to, the amendments to the Credit Agreement
set forth in this Amendment;
NOW, THEREFORE, in consideration of the premises and for
other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the Borrower, the Banks and the
Agent agree as follows:
1. Amendments. Upon and after this Amendment becomes
effective, the Credit Agreement shall be amended as follows:
(a) Section 4.06(e) shall be amended by deleting
"$42,000,000" and inserting in lieu thereof "$82,000,000".
(b) Section 4.06(g) shall be amended by deleting
"$85,000,000" and inserting in lieu thereof "$135,000,000".
(c) Section 4.08 shall be amended by inserting the
following after the end of clause (j) thereof and prior to the
word "and":
", (k) Investments consisting of Debt to which
Section 4.06 does not apply by reason of the provisions
of such Section or Guaranties to which Section 4.10 does
not apply by reason of the provisions of such Section".
(d) Section 4.08 shall be further amended by relettering
the last clause thereof, presently clause (k), as clause (l).
(e) The Credit Agreement shall be further amended by
replacing all references therein to Section 4.08(k) with
references to Section 4.08(l).
(f) Section 4.10(h) shall be amended (i) by deleting
"$40,000,000" and inserting in lieu thereof "$80,000,000" and
(ii) by deleting the following clause appearing at the end of
such Section 4.10(h):
"in each case in accordance with the terms and
provisions of such Notes as in effect on the Amendment
Effective Date of Amendment 1 to the Credit Agreement,"
and inserting in lieu thereof the following:
"in each case in accordance with the terms and
provisions of certain of such Notes as in effect on the
Amendment Effective Date of Amendment No. 1 to this
Agreement and other of such Notes as issued after the
Effective Date of Amendment No. 3 to this Agreement in
order to further consummate the Jackson Transaction, as
applicable,"
(g) Section 4.10 shall be further amended by inserting
the following after clause (h) thereof and prior to the word
"and":
"(i) Guaranties of (i) obligations of Affiliated
Entities to manufacture and deliver goods in the ordinary
course of business, or (ii) obligations of Affiliated
Entities that are product warranties given in the
ordinary course of business with respect to such goods,
or are in the nature of, and not exceeding in general
scope, product warranties that would otherwise be given
in the ordinary course of business with respect to such
goods, (j) Guaranties of up to $25,000,000 in aggregate
outstanding principal amount of the India Project Debt,"
(h) Section 4.10 shall be further amended by re-
lettering the last clause thereof, presently clause (i), as
clause (k).
(i) The Credit Agreement shall be further amended by
replacing all references therein to Section 4.10(i) with
references to Section 4.10(k).
(j) Section 4.10(k) (as relettered in accordance with
this Amendment) shall be amended by deleting "$75,000,000" and
inserting in lieu thereof "$100,000,000".
(k) Section 10.01 shall be amended to add the following
new definition in the appropriate alphabetical location:
"'Affiliated Entity' means a Subsidiary, an
Affiliate, or a Person that uses technology supplied by,
or whose operations are supervised by, the Borrower or
its Subsidiaries or Affiliates".
(l) Section 10.01 shall be further amended by amending
the definition of "Commitment Fee Rate" to read in its
entirety as follows:
"'Commitment Fee Rate' means (a) if the S&P Rating
is not lower than BBB+ and the Moody's Rating is not
lower than Baa1, 0.125%, (b) if the S&P Rating is lower
than BBB+ or the Moody's Rating is lower than Baa1, but
the S&P Rating is not lower than BBB and the Moody's
Rating is not lower than Baa2, 0.150%, (c) if the S&P
Rating is lower than BBB or the Moody's Rating is lower
than Baa2, but the S&P Rating is not lower than BBB- and
the Moody's Rating is not lower than Baa3, 0.200%, (d) if
the S&P Rating is lower than BBB- or the Moody's Rating
is lower than Baa3, but the S&P Rating is not lower than
BB+ and the Moody's Rating is not lower than Ba1, 0.350%
and (e) if the S&P Rating is lower than BB+ or the
Moody's Rating is lower than Ba1, 0.500%."
(m) Section 10.01 shall be further amended by adding the
following definitions in the appropriate alphabetical
location:
"'India Joint Venture' means the entity or entities
established in India by the Borrower and its joint
venture partners to construct, own and operate a facility
for the manufacture of glass fiber reinforcement products
and of which the Borrower, directly or indirectly, owns
at least 49% of the outstanding equity."
"'India Project Debt' means Debt consisting of
construction or term Debt incurred by the India Joint
Venture in connection with the development, construction,
and placement in service of a glass fiber reinforcement
plant to be located in India."
(n) Section 10.01 shall be further amended by amending
the definition of "Letter of Credit Fee Rate" to read in its
entirety as follows:
"'Letter of Credit Fee Rate' means the sum of (a)
(i) if the S&P Rating is not lower than BBB+ and the
Moody's Rating is not lower than Baa1, 0.375%, (ii) if
the S&P Rating is lower than BBB+ or the Moody's Rating
is lower than Baa1, but the S&P Rating is not lower than
BBB and the Moody's Rating is not lower than Baa2,
0.450%, (iii) if the S&P Rating is lower than BBB or the
Moody's Rating is lower than Baa2, but the S&P Rating is
not lower than BBB- and the Moody's Rating is not lower
than Baa3, 0.500%, (iv) if the S&P Rating is lower than
BBB- or the Moody's Rating is lower than Baa3, but the
S&P Rating is not lower than BB+ and the Moody's Rating
is not lower than Ba1, 0.875% or (v) if the S&P Rating is
lower than BB+ or the Moody's Rating is lower than Ba1,
1.250%, plus (b) the applicable Utilization Fee."
(o) Section 10.01 shall be further amended by amending
the definition of "LIBOR Margin" to read in its entirety as
follows:
"'LIBOR Margin' means the sum of (a) (i) if the S&P
Rating is not lower than BBB+ and the Moody's Rating is
not lower than Baa1, 0.375%, (ii) if the S&P Rating is
lower than BBB+ or the Moody's Rating is lower than Baa1,
but the S&P Rating is not lower than BBB and the Moody's
Rating is not lower than Baa2, 0.450%, (iii) if the S&P
Rating is lower than BBB or the Moody's Rating is lower
than Baa2, but the S&P Rating is not lower than BBB- and
the Moody's Rating is not lower than Baa3, 0.500%, (iv)
if the S&P Rating is lower than BBB- or the Moody's
Rating is lower than Baa3, but the S&P Rating is not
lower than BB+ and the Moody's Rating is not lower than
Ba1, 0.875% or (v) if the S&P Rating is lower than BB+ or
the Moody's Rating is lower than Ba1, 1.250%, plus (b)
the applicable Utilization Fee."
(p) Section 10.01 shall be further amended (i) by
amending clause (j) of the definition of "Permitted Lien" to
read in its entirety as follows:
"(j) a Lien on accounts receivable (and proceeds
thereof) constituting the interest of, or securing the
obligations of the Borrower or any Subsidiary to, a
purchaser of such accounts receivable or undivided
interests therein;"
(ii) by inserting after clause (s) of the definition of
"Permitted Lien" and prior to the word "and" a new clause (t)
to read in its entirety as follows:
"(t) a Lien constituting a pledge, for purposes of
securing the India Project Debt, of the stock or other
equity interests owned by the Borrower, a Subsidiary or
an Affiliate in (i) the India Joint Venture and/or (ii)
any entity established for the sole purpose of owning all
or any portion of the India Joint Venture;"
and (iii) by re-lettering the last clause of such definition,
currently clause (t), as clause (u).
(q) The Credit Agreement shall be further amended by
replacing all references therein to clause (t) of the
definition of "Permitted Lien" with references to clause (u)
of such definition.
(r) Section 10.01 shall be further amended by deleting
"October 31, 1997" from the definition of "Termination Date"
and inserting in lieu thereof "February 1, 1999".
(s) Section 10.01 shall be further amended by amending
the definition of "Utilization Fee" to read in its entirety as
follows:
"'Utilization Fee' means, at any time, (a) if the
aggregate principal amount of Loans and Letter of Credit
Participations outstanding exceeds 50% of the aggregate
amount of Commitments at such time, (i) if the S&P Rating
is greater than or equal to BBB- and the Moody's Rating
is greater than or equal to Baa3, 0%, (ii) if the S&P
rating is lower than BBB- or the Moody's Rating is lower
than Baa3, but the S&P Rating is not lower than BB+ and
the Moody's Rating is not lower than Ba1, 0.125% and
(iii) if the S&P Rating is lower than BB+ or the Moody's
Rating is lower than Ba1, 0.25% or (b) if the aggregate
principal amount of Loans and Letter of Credit
Participations outstanding does not exceed 50% of the
aggregate amount of Commitments at such time, 0%."
(t) Section 10.02 shall be amended by inserting the
following at the end thereof:
"Without limiting the generality of the foregoing,
for purposes of establishing compliance with the
financial covenants set forth in Article 4 hereof, if the
Borrower or a Subsidiary makes a borrowing the proceeds
of which are intended to be used for the repayment, on
the same day, of another borrowing, the Borrower shall
not be deemed to be not in compliance with a financial
covenant solely by reason of the fact that for some
period of time during such day both borrowings are
outstanding, so long as the Borrower or such Subsidiary
has irrevocably directed such repayment on such day, and
such repayment actually occurs on such day."
2. Effective Date. This Amendment shall become
effective as of the date first above written upon the date (the
"Effective Date") that the Agent shall have received (a) executed
counterparts to this Amendment from the Borrower, the Agent and the
Banks, (b) a certificate of the Secretary or an Assistant Secretary
of the Borrower, dated the Effective Date, substantially in the
form of Annex A hereto, to which shall be attached copies of the
resolutions and by-laws referred to in such certificate, (c) a copy
of the certificate of incorporation of the Borrower, certified as
of a recent date by the Secretary of State or other appropriate
official of the Borrower's jurisdiction of incorporation, (d) a
good standing certificate with respect to the Borrower, issued as
of a recent date by the Secretary of State or other appropriate
official of the jurisdiction of the Borrower's incorporation,
together with a telegram from such Secretary of State or other
official, updating the information in such certificate; and (e) an
opinion of the General Counsel of the Borrower, dated the Effective
Date, in the form of Annex B hereto.
3. Representations and Warranties. The Borrower
represents and warrants to the Agent and the Banks as follows:
(a) Power; Authorization. The Borrower has the
corporate power, and has taken all necessary corporate action
to authorize it, to execute, deliver and perform in accordance
with its terms this Amendment and to perform in accordance
with its terms the Credit Agreement as amended by this
Amendment. This Amendment has been duly executed and
delivered by the Borrower and is, and the Credit Agreement as
amended by this Amendment is, a legal, valid and binding
obligation of the Borrower enforceable in accordance with its
terms.
(b) Required Approvals; Compliance with Law, etc. The
execution, delivery and performance in accordance with its
terms of this Amendment, and the performance in accordance
with its terms of the Credit Agreement as amended by this
Amendment, do not and will not (i) require any Governmental
Approval or any consent or approval of the stockholders of the
Borrower or of any Subsidiary other than consents and
approvals that have been obtained and are listed on Schedule
3.02 to the Credit Agreement, (ii) violate or conflict with,
result in a breach of, or constitute a default under, (A) any
Contract to which the Borrower or any Subsidiary is a party or
by which any of them or any of their respective properties may
be bound or (B) any Applicable Law or (iii) result in or
require the creation of any Lien upon any assets of the
Borrower or any Consolidated Subsidiary except for Liens, if
any, in favor of the Agent and the Banks arising under
Sections 1.12 and 8.06 of the Credit Agreement.
4. Survival. Each of the foregoing representations and
warranties shall be made at and as of the Effective Date. Each of
the representations and warranties made under the Credit Agreement
as amended by this Amendment (and including those made herein)
shall survive to the extent provided in the Credit Agreement and
not be waived by the execution and delivery of this Amendment, or
any investigation by the Agent or the Banks or any of them.
5. Governing Law. This Amendment shall be construed in
accordance with and governed by the law of the State of New York
(without giving effect to its choice of laws principles).
6. Counterparts. This Amendment may be signed in any
number of counterparts, each of which shall be deemed to be an
original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.
7. Reference to Agreement. From and after the Effective
Date, each reference in the Credit Agreement to "this Agreement",
"hereof", "hereunder" or words of like import, and all references
to the Credit Agreement in any and all agreements, instruments,
documents, notes, certificates and other writings of every kind and
nature shall be deemed to mean the Credit Agreement as modified and
amended by this Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered by their respective
authorized officers as of the date first above written.
OWENS CORNING (formerly known as
Owens-Corning Fiberglas
Corporation)
By /s/ Michael I. Miller
Name: Michael I. Miller
Title: Vice President & Treasurer
By /s/ C. Jackson Snyder
Name: C. Jackson Snyder
Title: Assistant Treasurer
CREDIT SUISSE, as Agent and as a
Bank
By /s/ Christopher J. Eldin /s/ Thomas G. Muoio
Name: Christopher J. Eldin Thomas G. Muoio
Title: Member of Senior Mgmt./ Associate
ABN AMRO BANK, N.V.,
BY ABN AMRO NORTH AMERICA, INC., AS
AGENT
By /s/ J. M. Janovsky
Name: J. M. Janovsky
Title: Group Vice President
By /s/ Kathryn C. Toth
Name: Kathryn C. Toth
Title: Vice President
THE BANK OF NEW YORK
By /s/ Douglas Ober
Name: Douglas Ober
Title: Vice President
THE BANK OF NOVA SCOTIA
By /s/ F. C. H. Ashby
Name: F. C. H. Ashby
Title: Senior Manager Loan Operations
BARCLAYS BANK PLC
By /s/ Kevin Heraty
Name: Kevin Heraty
Title: Director
CHEMICAL BANK
By /s/ Timothy J. Storms
Name: Timothy J. Storms
Title: Managing Director
CITIBANK, N.A.
By /s/ Marjorie Futornick
Name: Marjorie Futornick
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By /s/ Robert L. Jackson
Name: Robert L. Jackson
Title: Authorized Agent
THE FUJI BANK, LIMITED
By /s/ Peter L. Chinnici
Name: Peter L. Chinnici
Title: Joint General Manager
MELLON BANK, N.A.
By /s/ Mark F. Johnston
Name: Mark F. Johnston
Title: Assistant Vice President
THE MITSUBISHI BANK, LTD.
(CHICAGO BRANCH)
By /s/ Noboru Kobayashi
Name: Noboru Kobayashi
Title: Joint General Manager
THE NORTHERN TRUST COMPANY
By /s/ S. Biff Bowman
Name: S. Biff Bowman
Title: Vice President
ROYAL BANK OF CANADA
By /s/ Shelley Browne
Name: Shelley Browne
Title: Senior Manager
THE TORONTO-DOMINION BANK
By /s/ Frederic B. Hawley
Name:
Title:
SUNTRUST BANK, ATLANTA (formerly
Trust Company Bank)
By /s/ Christina T. LaVoy
Name: Christina T. LaVoy
Title: Banking Officer
By /s/ Charles J. Johnson
Name: Charles J. Johnson
Title: Vice President
KREDIETBANK, N.V.
By /s/ Robert Snauffer
Name: Robert Snauffer
Title: Vice President
Exhibit (10)
OWENS CORNING
Corporate Incentive Plan Terms Applicable to Certain Executive
Officers
1. Application
Set forth below are the annual incentive plan terms applicable to
those employees of Owens-Corning Fiberglas Corporation (the
"Company") and its subsidiaries who are executive officers of the
Company and whose annual incentive compensation for any taxable
year of the Company commencing on or after January 1, 1995 the
Committee (as hereafter defined) anticipates would not be
deductible by the Company in whole or in part but for compliance
with section 162(m)(4)(C) of the Internal Revenue Code of 1986 as
amended ("162(m) Covered Employee"), including members of the
Board of Directors who are such employees. Such terms are
hereafter referred to as the "Plan" or "Corporate Incentive
Plan".
2. Eligibility
All 162(m) Covered Employees shall be eligible to be selected to
participate in this Corporate Incentive Plan. The Committee shall
select the 162(m) Covered Employees who shall participate in this
Plan in any year no later than 90 days after the commencement of
the year (or no later than such earlier or later date as may be
the applicable deadline for the compensation payable to such 162(m)
Covered Employee for such year hereunder to qualify as
"performance-based" under section 162(m)(4)(C) of the Internal
Revenue Code of 1986 as amended (the "Code")). Selection to
participate in this Plan in any year does not require the
Committee to, or imply that the Committee will, select the
same person to participate in the Plan in any subsequent year.
3. Administration
The Plan shall be administered by the Compensation Committee of
the Board of Directors (the "Board"), or by another committee
appointed by the Board consisting of not less than two (2)
Directors who are not Employees (the "Committee"). The Committee
shall be comprised exclusively of Directors who are not Employees
and who are "outside directors" within the meaning of Section
162(m)(4)(C) of the Code. The Committee shall, subject to the
provisions herein, select employees to participate herein;
establish and administer the performance goals and the award
opportunities applicable to each participant and certify whether
the goals have been attained; construe and interpret the Plan and
any agreement or instrument entered into under the Plan;
establish, amend, or waive rules and regulations for the Plan's
administration; and make all other determinations which may be
necessary or advisable for the administration of the Plan. Any
determination by the Committee pursuant to the Plan shall be
final, binding and conclusive on all employees and participants
and anyone claiming under or through any of them.
4. Establishment of Performance Goals and Award Opportunities
No later than 90 days after the commencement of each year
commencing on or after January 1, 1995 (or than such earlier or
later date as may be the applicable deadline for compensation payable
hereunder for such year to qualify as "performance-based" under
section 162(m)(4)(C) of the Code), the Committee shall establish
in writing the method for computing the amount of compensation
which will be payable under the Plan to each participant in the
Plan for such year if the performance goals established by the
Committee for such year are attained in whole or in part and if
the participant's employment by the Company, its subsidiaries and
affiliates continues without interruption during that year. Such
method shall be stated in terms of an objective formula or
standard that precludes discretion to increase the amount of the
award that would otherwise be due upon attainment of the goals.
No provision hereof is intended to preclude the Committee from exercising
negative discretion with respect to any award hereunder, within the
meaning of the Treasury regulations under Code section 162(m).
No later than 90 days after the commencement of each year commencing
on or after January 1, 1995 (or than such earlier or later date as may
be the applicable deadline for compensation payable hereunder for such
year to qualify as "performance-based" under section 162(m)(4)(C) of
the Code), the Committee shall establish in writing the performance goals
for such year, which shall be based on any of the following performance
criteria, either alone or in any combination, and on either a consolidated
or business unit level, as the Committee may determine: sales, net asset
turnover, earnings per share, cash flow, cash flow from operations,
operating profit, net income, operating margin, net income margin, return
on net assets, return on total assets, return on common equity, return on
total capital, and total shareholder return. The foregoing criteria shall
have any reasonable definitions that the Committee may specify, which
may include or exclude any or all of the following items as the
Committee may specify: extraordinary, unusual or non-recurring items;
effects of accounting changes; effects of currency fluctuations; effects
of financing activities (e.g., effect on earnings per share of issuance
of convertible debt securities); expenses for restructuring or
productivity initiatives; other non-operating items; spending for
acquisitions; effects of divestitures; and effects of asbestos activities
and settlements. Any such performance criterion or combination of such
criteria may apply to the participant's award opportunity in its
entirety or to any designated portion or portions of the award
opportunity, as the Committee may specify. Unless the Committee
determines otherwise at any time prior to payment of a participant's
award hereunder for any year, extraordinary items, such as capital
gains and losses, which affect any performance criterion applicable
to the award (including but not limited to the criterion of net income)
shall be excluded or included in determining the extent to which the
corresponding performance goal has been achieved, whichever will produce
the higher award.
5. Maximum Award
The maximum dollar amount that may be paid to any participant
under the Plan for any year is equal to the excess of (a) an
amount equal to 200% of the participant's annual rate of salary at the
time the performance goal is established by the Committee for such
year or, if later, on January 1 of such year, over (b) the amount of
any annual incentive compensation to which the participant is
contractually entitled for such year pursuant to any employment
agreement with the Company.
6. Attainment of Performance Goals Required
Awards shall be paid under this Plan for any year solely on
account of the attainment of the performance goals established by
the Committee with respect to such year, within the meaning of
applicable Treasury regulations. Awards shall also be
contingent on continued employment by the Company, its
subsidiaries and affiliates during such year. The only
exceptions to these rules apply in the event of termination of
employment by reason of death or Disability, or in the event of a
Change of Control of the Company (as such terms are defined in the
Company's Stock Performance Incentive Plan as amended on June 15,
1995 ("SPIP")), during such year, in which case the following
provisions shall apply. In the event of termination of employment
by reason of death or Disability during a Plan year, an award shall
be payable under this Plan to the participant or the participant's
estate for such year, which shall be adjusted, pro-rata, for the
period of time during the Plan year the participant actually worked.
In the event of a Change of Control during a Plan year and prior
to any termination of employment, incentive awards shall be paid
under the Plan at the higher of (a) one half of participating
salary for such year (as determined by the Committee), or (b)
projected performance for the year, determined at the time the
Change of Control occurs. An additional exception shall apply in
the event of termination of employment by reason of Retirement
(as defined in the SPIP) during a Plan year, but only if and to
the extent it will not prevent any award payable hereunder
(other than an award payable in the event of death, Disability,
Change of Control or Retirement) from qualifying as
"performance-based compensation" under section 162(m)(4)(C) of
the Code. Subject to the preceding sentence, in the event of
termination of employment by reason of Retirement during a Plan
year an award may but need not (as the Committee may determine)
be payable under this Plan to the participant, which shall be
adjusted, pro-rata, for the period of time during the Plan year
the participant actually worked. A participant whose employment
terminates prior to the end of a Plan year for any reason not
excepted above shall not be entitled to any award under the Plan
for that year.
7. Shareholder Approval and Committee Certification
Contingencies; Payment of Awards
Payment of any awards under this Plan shall be contingent upon
shareholder approval, prior to payment, of the material terms of
the performance goals under which the awards are to be paid, in
accordance with applicable Treasury regulations under Code
section 162(m). Unless and until such shareholder approval is
obtained, no award shall be paid pursuant to this Plan. Subject
to the provisions of paragraph 6 above relating to death, Disability,
Change of Control and Retirement, payment of any award under this
Plan shall also be contingent upon the Compensation Committee's
certifying in writing that the performance goals and any other
material terms applicable to such award were in fact satisfied,
in accordance with applicable Treasury regulations under Code
section 162(m). Unless and until the Committee so certifies,
such award shall not be paid. Unless the Committee provides
otherwise, (a) earned awards shall be paid promptly following
such certification, and (b) such payment shall be made in cash
(subject to any payroll tax withholding the Company may determine
applies). Any amount payable to a participant hereunder shall be
in addition to any annual incentive compensation to which the
participant may be contractually entitled for such year pursuant
to an employment agreement with the Company, unless such
employment agreement provides otherwise.
8. Amendment or Termination
The Committee may amend, modify or terminate this Plan at any
time, provided that a termination or modification shall only
become effective 30 days after written notice thereof is given to
each participant. Each participant shall be eligible to receive
the incentive compensation to which the participant would have
been otherwise entitled but for such termination or modification,
pro-rata for the period of the Plan year prior to the termination
or modification.
9. Interpretation and Construction
Any provision of this Plan to the contrary notwithstanding, (a)
awards under this Plan are intended to qualify as performance-
based compensation under Code Section 162(m)(4)(C), and (b) any
provision of the Plan that would prevent an award under the Plan
from so qualifying shall be administered, interpreted and
construed to carry out such intention and any provision that
cannot be so administered, interpreted and construed shall to
that extent be disregarded. No provision of the Plan, nor the
selection of any eligible employee to participate in the Plan,
shall constitute an employment agreement or affect the duration
of any participant's employment, which shall remain "employment
at will" unless an employment agreement between the Company and
the participant provides otherwise. Both the participant and the
Company shall remain free to terminate employment at any time to
the same extent as if the Plan had not been adopted.
10. Governing Law
The terms of this Plan shall be governed by the laws of the State
of Delaware, without reference to the conflicts of laws
principles of that state.
Exhibit (10)
OWENS CORNING
Corporate Incentive Plan Terms Applicable to Key Employees Other
Than Certain Executive Officers
1. Application
Set forth below are the annual incentive plan terms applicable to
those employees of Owens-Corning Fiberglas Corporation (the
"Company") and its subsidiaries who in the opinion of the
Committee (as hereafter defined) are key employees of the Company
or a subsidiary, including members of the Board of Directors who
are such employees, but excluding any such employees who are
executive officers of the Company and whose annual incentive
compensation for any taxable year of the Company commencing on or
after January 1, 1995 the Committee anticipates would not be
deductible by the Company in whole or in part but for compliance
with section 162(m)(4)(C) of the Internal Revenue Code of 1986 as
amended ("162(m) Covered Employee"). Such terms are hereafter
referred to as the "Incentive Plan".
2. Eligibility
All employees of the Company and its subsidiaries who in the
opinion of the Committee are key employees of the Company or a
subsidiary, including members of the Board of Directors who are
such employees, but excluding 162(m) Covered Employees, shall be
eligible to be selected to participate in this Incentive Plan.
The Committee may select the eligible employees who shall
participate in this Incentive Plan in any year at any time before
or during such year. Selection to participate in this Incentive
Plan in any year does not require the Committee to, or imply that
the Committee will, select the same person to participate in the
Incentive Plan in any subsequent year.
3. Administration
The Plan shall be administered by the Compensation Committee of
the Board of Directors (the "Board"), or by another committee
appointed by the Board consisting of not less than two (2)
Directors who are not Employees (the "Committee"). To the extent
permitted by law, the Committee may delegate its administrative
authority with respect to the Incentive Plan and, in the event of
any such delegation of authority, the term "Committee" as used in
this Incentive Plan shall be deemed to refer to the Committee's
delegate as well as to the Committee. The Committee shall,
subject to the provisions herein, select employees to participate
herein; establish and administer the performance goals and the
award opportunities applicable to each participant and determine
whether the goals have been attained; construe and interpret the
Incentive Plan and any agreement or instrument entered into under
the Incentive Plan; establish, amend, or waive rules and
regulations for the Incentive Plan's administration; and make all
other determinations which may be necessary or advisable for the
administration of the Incentive Plan. Any determination by the
Committee pursuant to the Incentive Plan shall be final, binding
and conclusive on all employees and participants and anyone
claiming under or through any of them.
4. Establishment of Performance Goals and Award Opportunities
At any time before or during each year, the Committee shall
establish the method for computing the amount of compensation
which will be payable under the Incentive Plan to each
participant in the Incentive Plan for such year if the
performance goals established by the Committee for such year are
attained in whole or in part and if the participant's employment
by the Company, its subsidiaries and affiliates continues without
interruption during that year. The Committee shall also establish
the performance goals for such year, which may be based on any of
the following performance criteria (either alone or in any
combination, and on either a consolidated or business unit level),
as the Committee may determine, or such other
criteria as the Committee may select: sales, net asset turnover,
earnings per share, cash flow, cash flow from operations,
operating profit, net income, operating margin, net income
margin, return on net assets, return on total assets, return on
common equity, return on total capital, and total shareholder
return. The foregoing criteria shall have any definitions that the
Committee may specify, which may include or exclude any or all of the
following items as the Committee may specify: extraordinary, unusual
or non-recurring items; effects of accounting changes; effects of
currency fluctuations; effects of financing activities (e.g., effect
on earnings per share of issuance of convertible debt securities);
expenses for restructuring or productivity initiatives; other non-
operating items; spending for acquisitions; effects of divestitures;
and effects of asbestos activities and settlements. Any such
performance criterion or combination of such criteria may apply to
the participant's award opportunity in its entirety or to any
designated portion or portions of the award opportunity, as the
Committee may specify. At any time prior to payment of an award
under this Incentive Plan, the Committee may determine whether
extraordinary items, such as capital gains and losses, which affect
any performance criterion applicable to such award (including but
not limited to the criterion of net income) shall be excluded or
included in determining the extent to which the corresponding performance
goal has been achieved.
5. Maximum Awards
Aggregate awards under the Incentive Plan for any year may not
exceed 100% of the participating salaries of participants in the
Incentive Plan for such year, as determined by the Committee.
6. Employment Requirement
A participant's award under this Incentive Plan for any year
shall be contingent on continued employment by the Company, its
subsidiaries and affiliates during such year. The only
exceptions to this rule apply in the event of termination of
employment by reason of death, disability, retirement or job
elimination (all as determined by the Committee), or in the event
of a change of control of Owens-Corning (as determined by the
Committee), during such year, in which case the following
provisions shall apply. In the event of termination of
employment by reason of death, disability, retirement or job
elimination during a year (as determined by the Committee), an
award shall be payable under this Incentive Plan to the
participant or the participant's estate for such year, which
shall be adjusted, pro-rata, for the period of time during the
year the participant actually worked. In the event of a change
of control of Owens-Corning during a year and prior to any
termination of employment, incentive awards shall be paid under
the Incentive Plan at the higher of (a) one half of participating
salary for such year (as determined by the Committee), or (b)
projected performance for the year, determined at the time the
change of control occurs. A participant whose employment
terminates prior to the end of a year for any reason not excepted
above shall not be entitled to any award under the Incentive Plan
for that year.
7. Payment of Awards
Except as provided otherwise in this Incentive Plan or by the
Committee, payment of each award under this Incentive Plan for
any year shall be contingent upon a determination by the
Committee that the performance goals and employment conditions
applicable to such award have been satisfied. Unless and until
the Committee so determines, such award shall not be paid.
Unless the Committee provides otherwise, (a) earned awards shall
be paid promptly following such determination, and (b) such
payment shall be made in cash (subject to any payroll tax
withholding the Company may determine applies).
8. Amendment or Termination
The Committee may amend, modify or terminate this Incentive Plan
at any time, provided that a termination or modification shall
only become effective 30 days after written notice thereof is
given to each participant. Each participant shall be eligible to
receive the incentive compensation to which the participant would
have been otherwise entitled but for such termination or
modification, pro-rata for the period of the year prior to the
termination or modification.
9. Interpretation and Construction
Any provision of this Incentive Plan to the contrary
notwithstanding, (a) no provision of this Incentive Plan shall
apply to any 162(m) Covered Employee, and (b) any provision of
this Incentive Plan that would prevent an award to any 162(m)
Covered Employee under any plan or arrangement other than this
Incentive Plan from qualifying as performance-based compensation
under Code Section 162(m)(4)(C) shall be administered, interpreted and
construed to enable such award to so qualify and any provision
that cannot be so administered, interpreted and construed shall
to that extent be disregarded. No provision of the Incentive
Plan, nor the selection of any eligible employee to participate
in the Incentive Plan, shall constitute an employment agreement
or affect the duration of any participant's employment, which
shall remain "employment at will" unless an employment agreement
between the Company and the participant provides otherwise. Both
the participant and the Company shall remain free to terminate
employment at any time to the same extent as if the Incentive
Plan had not been adopted.
10. Governing Law
The terms of this Incentive Plan shall be governed by the laws of
the State of Delaware, without reference to the conflicts of laws
principles of that state.
Exhibit (10)
OWENS CORNING
Long-Term Performance Incentive Plan Terms Applicable to Certain
Executive Officers
Set forth below are the Rules and Regulations of the Compensation
Committee, promulgated under the Stock Performance Incentive Plan
as amended on June 15, 1995, that constitute the long-term
performance incentive plan terms applicable to those employees of
the Company and its Subsidiaries who are executive officers of
the Company and whose remuneration for any performance period
hereunder the Committee anticipates would not be deductible by
the Company in whole or in part but for compliance with section
162(m)(4)(C) of the Internal Revenue Code of 1986 as amended
("162(m) Covered Employee"), including members of the Board of
Directors who are such employees. Such long-term performance
incentive plan terms are hereafter referred to as the "Long-Term
Performance Incentive Plan", the "Plan" or the "LTPIP".
1. All 162(m) Covered Employees shall be eligible to be
selected to participate in this Long-Term Performance
Incentive Plan. The Committee shall select the 162(m)
Covered Employees who shall participate in this Plan in any
performance period no later than 90 days after the
commencement of the performance period (or no later than
such earlier or later date as may be the applicable deadline for any
compensation payable to such 162(m) Covered Employee
hereunder for such performance period to qualify as
"performance-based" under section 162(m)(4)(C) of the
Internal Revenue Code of 1986 as amended (the "Code")).
Selection to participate in this Plan in any performance
period does not require the Committee to, or imply that the
Committee will, select the same person to participate in the
LTPIP in any subsequent performance period.
2. Being selected to participate in the Long-Term Performance
Incentive Plan in any performance period means that the
individual is being granted the opportunity to earn a cash
award equal to the Fair Market Value of up to a specified
number of shares of Company common stock if the Company
attains performance goals established by the Committee for
such performance period and the participant's employment by
the Company, its Subsidiaries and Affiliates continues
without interruption during that period ("phantom
performance shares"). Payment for each phantom performance
share that is earned shall be based on the Fair Market Value
of a share of Company common stock on the date on which the
Committee certifies (in accordance with paragraph 10 below)
that the performance goals and any other material terms
applicable to such phantom performance share were in fact
satisfied. Phantom performance shares may be redeemed only
for cash and may not be redeemed for equity securities in
lieu of cash, and are not transferable by the participant
other than by will or the laws of descent and distribution
(within the meaning of SEC Rule 16b-3(a)(2)). If (and only
if) the Committee expressly so provides at the time an
eligible employee is selected to participate in the LTPIP in
any performance period, the participant's award for such
performance period may be paid in the form of shares of
Company common stock rather than cash, in which case all
provisions of this LTPIP applicable to phantom performance
shares (other than the preceding sentence) shall likewise
apply to the participant's opportunity to earn such shares
of Company common stock.
3. No later than 90 days after the commencement of each
performance period (or than such earlier or later date as
may be the applicable deadline for compensation payable hereunder for
such performance period to qualify as "performance-based"
under section 162(m)(4)(C) of the Code), the Committee shall
establish in writing the method for computing the number of
phantom performance shares which each participant in the
Plan for such performance period will earn under the Plan
for such performance period if the performance goals
established by the Committee for such performance period are
attained in whole or in part and if the participant's
employment by the Company, its subsidiaries and affiliates
continues without interruption during that performance
period. Such method shall be stated in terms of an
objective formula or standard that precludes discretion to
increase the amount of the award that would otherwise be due
upon attainment of the goals. No provision hereof is intended
to preclude the Committee from exercising negative discretion
within the meaning of the Treasury regulations under Code
section 162(m).
No later than 90 days after the commencement of each
performance period (or than such earlier or later date as
may be the applicable deadline for compensation payable hereunder for
such performance period to qualify as "performance-based"
under section 162(m)(4)(C) of the Code), the Committee shall
establish in writing the performance goals for such
performance period, which shall be based on any of the
following performance criteria, either alone or in any
combination, and on either a consolidated or business unit
level, as the Committee may determine: sales growth,
earnings per share growth, cash flow, cash flow from
operations, operating profit growth, net income growth,
operating margin, net income margin, return on net assets,
return on total assets, return on common equity, return on
total capital, and total shareholder return. The foregoing
criteria shall have any reasonable definitions that the
Committee may specify, which may include or exclude any or
all of the following items as the Committee may specify:
extraordinary, unusual or non-recurring items; effects of
accounting changes; effects of currency fluctuations; effects
of financing activities (e.g., effect on earnings per share
of issuance of convertible debt securities); expenses for
restructuring or productivity initiatives; other non-operating
items; spending for acquisitions; effects of divestitures;
and effects of asbestos activities and settlements. Any such
performance criterion or combination of such criteria may
apply to the participant's award opportunity in its entirety
or to any designated portion or portions of the award opportunity,
as the Committee may specify. Unless the Committee determines
otherwise at any time prior to payment of a participant's award
for any performance period hereunder, extraordinary items, such
as capital gains and losses, which affect any performance
criterion applicable to the award (including but not limited to
the criterion of net income) shall be excluded or included
in determining the extent to which the corresponding performance
goal has been achieved, whichever will produce the higher award.
4. The first performance period under the LTPIP shall be the
period commencing on July 1, 1995 and ending on December 31,
1997. New performance periods of three years' duration each
shall commence on January 1, 1996 and on each subsequent
anniversary of that date.
5. No later than 90 days after the commencement of a
performance period (or than such earlier or later date as
may be the applicable deadline for compensation hereunder for such
performance period to qualify as "performance-based" under
section 162(m)(4)(C) of the Code), the Committee shall
establish in writing the number of phantom performance
shares which each person selected to participate in the
LTPIP in such performance period shall be granted the
opportunity to earn if the performance goals applicable to
such performance period are achieved in whole or in part.
In no event shall any participant be granted the opportunity
to earn more than 50,000 shares (or the cash equivalent
thereof) with respect to any performance period hereunder.
(The foregoing amount represents the highest number of
shares (or equivalent amount of cash) which any participant
may be granted the opportunity to earn hereunder for any
performance period if the maximum performance objectives for
such performance period are attained). The foregoing amount
shall be appropriately adjusted to reflect a change in
corporate capitalization, such as a stock split or dividend,
or a corporate transaction, such as any merger,
consolidation, separation (including a spinoff or other
distribution of property), reorganization, or partial or
complete liquidation.
6. Any phantom performance shares granted under this Plan shall
be paid solely on account of the attainment of the
performance goals established by the Compensation Committee
with respect to such phantom performance shares, within the
meaning of applicable Treasury regulations. Payment of any
such phantom performance shares shall also be contingent on
continued employment by the Company, its Subsidiaries and
Affiliates during the performance period to which such
phantom performance shares relate. The only exceptions to
these rules apply in the event of termination of employment by
reason of death or Disability (within the meaning of the
Stock Performance Incentive Plan as amended by the Board of
Directors on June 15, 1995 (SPIP)), or in the event of a
Change of Control of the Company (within the meaning of the
SPIP), during a performance period, in which case the
following provisions shall apply. In the event that the
employment of a participant who has been granted phantom
performance shares with respect to a performance period
terminates by reason of death or Disability during such
performance period, the participant shall be paid the cash
value of the number of phantom performance shares, if any,
that the participant would have earned for such performance
period if the participant's employment had not terminated
prior to the end of the performance period, multiplied by a
fraction the numerator of which shall be the number of full
calendar months elapsed in the performance period prior to the
termination of employment and the denominator of which shall
be 30, in the case of the first performance period, or 36,
in the case of subsequent performance periods. Such
fractional amount shall be paid at the time payment would
have been made if the participant's employmment had not
terminated prior to the end of the performance period.
In the case of a Change of Control during a performance period,
all phantom performance shares then outstanding shall become
fully vested, earned and payable as if maximum performance
levels were attained and shall be cashed out by the Company as
of the date the Change of Control occurs, if and to the extent
so provided in Article 8 of the SPIP. An additional exception
shall apply in the event of termination of employment by reason
of Retirement during a performance period, but only if and to the
extent it will not prevent any award payable hereunder (other than
an award payable in the event of death, Disability, Change of Control
or Retirement) from qualifying as "performance-based
compensation" under section 162(m)(4)(C) of the Code.
Subject to the preceding sentence, in the event that the
employment of a participant who has been granted phantom
performance shares with respect to a performance period
terminates by reason of Retirement during such performance
period, the participant may but need not (as the Committee
may determine) be paid the cash value of the number of phantom
performance shares, if any, that the participant would have
earned for such performance period if the participant's employment
had not terminated prior to the end of the performance period,
multiplied by a fraction the numerator of which shall be the
number of full calendar months elapsed in the performance period
prior to termination of employment and the denominator of which shall
be 30, in the case of the first performance period, or 36,
in the case of subsequent performance periods. Any such payment
shall be made at the time payment would have been made if the
participant's employment had not terminated prior to the end
of the performance period. A participant whose employment
terminates prior to the end of a performance period for any reason
not excepted above shall not be entitled to any payment for
phantom performance shares granted to such participant for that
performance period.
7. With respect to any phantom performance share granted
hereunder, in no event shall the Committee have discretion
to increase the amount of compensation payable that would
otherwise be due upon attainment of the performance goals
applicable to such phantom performance share. This
provision shall be administered in accordance with any
applicable Treasury regulations under Code section 162(m).
8. Payment and vesting of any awards granted under this LTPIP
shall be contingent upon stockholder approval at the 1996
Annual Meeting of Stockholders of the amendments to the Stock
Performance Incentive Plan that were adopted by the Board of
Directors on June 15, 1995. Unless and until such shareholder
approval is obtained, no LTPIP award shall vest or be paid.
9. Payment of any awards granted under this LTPIP shall be
contingent upon shareholder approval, prior to payment, of
the material terms of the performance goals under which such
awards are to be paid, in accordance with applicable
Treasury regulations under Code section 162(m). Unless and
until such shareholder approval is obtained, no such award
shall be paid.
10. Subject to the provisions of paragraph 6 above relating to death,
Disability, Change of Control and Retirement, payment of any award
granted under this LTPIP shall also be contingent upon the
Compensation Committee's certifying in writing that the performance
goals and any other material terms applicable to such award were in
fact satisfied, in accordance with applicable Treasury regulations
under Code section 162(m). Unless and until the Committee so
certifies, such award shall not be paid.
11. Any amount payable to a participant hereunder shall be in
addition to any other compensation to which the participant
may be contractually entitled for such performance period
pursuant to an employment agreement with the Company, unless
such employment agreement provides otherwise.
12. All phantom performance shares are intended to constitute
Stock Bonus Awards within the meaning of the SPIP, and are
granted under and subject to the terms and conditions of the
SPIP, which shall control in the event of any conflict. All
phantom performance shares shall be documented by a written
instrument issued to the participant and signed by a duly
authorized representative of the Company. The Plan is not
intended to confer any rights upon any individual to any
phantom performance share or with respect to any phantom
performance share. All such rights, if any, shall be
governed by and determined exclusively in accordance with
the written instrument issued to the participant in
accordance with the foregoing provisions of this paragraph.
13. Capitalized terms which are used but not defined in the Plan
shall have the meanings ascribed to such terms in the SPIP,
unless the context requires otherwise.
14. The Committee may amend or terminate the Plan at any time,
provided that no such amendment or termination shall
adversely affect any outstanding phantom performance share
without the written consent of the participant.
15. Any provision of this Plan to the contrary notwithstanding,
(a) awards under this Plan are intended to qualify as
performance-based compensation under Code Section
162(m)(4)(C), and (b) any provision of the Plan that would
prevent an award under the Plan from so qualifying shall be
administered, interpreted and construed to carry out such
intention and any provision that cannot be so administered,
interpreted and construed shall to that extent be
disregarded.
Exhibit (10)
OWENS CORNING
Long-Term Performance Incentive Plan Terms Applicable to Officers
Other Than Certain Executive Officers
Set forth below are the Rules and Regulations of the Compensation
Committee, promulgated under the Stock Performance Incentive Plan
as amended on June 15, 1995, that constitute the long-term
performance incentive plan terms applicable to those employees of
the Company and its Subsidiaries who are elected or appointed
officers of the Company, including members of the Board of
Directors who are such employees, other than any such employees
who are executive officers of the Company and whose remuneration
for any performance period hereunder the Committee anticipates
would not be deductible by the Company in whole or in part but
for compliance with section 162(m)(4)(C) of the Internal Revenue
Code of 1986 as amended ("162(m) Covered Employee"). Such long-
term performance incentive plan terms are hereafter referred to
as the "LT Plan".
1. All employees of the Company and its Subsidiaries who are
elected or appointed officers of the Company, including
members of the Board of Directors who are such employees,
other than 162(m) Covered Employees, shall be eligible to be
selected to participate in this LT Plan. The Committee may
select the eligible employees who shall participate in this
LT Plan in any performance period at any time before or
during the first half of the performance period. Selection
to participate in this LT Plan in any performance period
does not require the Committee to, or imply that the
Committee will, select the same person to participate in the
LT Plan in any subsequent performance period.
2. Being selected to participate in this LT Plan in any
performance period means, in the case of eligible executive
officers of the Company, that the individual is being
granted the opportunity to earn a cash award equal to the
Fair Market Value of up to a specified number of shares of
Company common stock if the Company attains performance
goals established by the Committee for such performance
period and the participant's employment by the Company, its
Subsidiaries and Affiliates continues without interruption
during that period ("phantom performance shares"). Payment
for each phantom performance share that is earned shall be
based on the Fair Market Value of a share of Company common
stock on the date on which the Committee determines that the
performance goals and any other material terms applicable to
such phantom performance share were in fact satisfied.
Phantom performance shares may be redeemed only for cash and
may not be redeemed for equity securities in lieu of cash,
and are not transferable by the participant other than by
will or the laws of descent and distribution (within the
meaning of SEC Rule 16b-3(a)(2)). If (and only if) the
Committee expressly so provides at the time an eligible
executive officer is selected to participate in this LT Plan
in any performance period, the participant's award for such
performance period may be paid in the form of shares of
Company common stock rather than cash, in which case all
provisions of this LT Plan applicable to phantom performance
shares (other than the preceding sentence) shall likewise
apply to the participant's opportunity to earn such shares
of Company common stock. Being selected to participate in
this LT Plan in any performance period means, in the case of
participants other than executive officers of the Company,
that the individual is being granted a combination of
restricted shares of Company common stock and performance
shares. The restricted shares shall entitle the participant
to vote and receive dividends, but shall be non-transferable
by the participant and shall be forfeited to the Company
unless either (a) the Company achieves performance goals
specified for such performance period and the participant's
employment by the Company, its Subsidiaries and Affiliates
continues without interruption during that period, or (b)
the participant's employment by the Company, its
Subsidiaries and Affiliates continues for seven years (or
such shorter period as the Committee may specify) after the
close of the performance period. The performance shares
shall represent the opportunity to earn up to a specified
number of shares of Company common stock in excess of the
number of restricted shares, or their cash value (as the
Committee may determine), if the Company achieves specified
performance goals during the performance period that exceed
the performance goals which must be achieved to earn the
restricted shares and if the participant's employment by the
Company, its Subsidiaries and Affiliates continues without
interruption during that period.
3. At any time before or during the first half of each
performance period, the Committee shall establish the method
for computing the number of phantom performance shares,
restricted shares and performance shares (as applicable)
which each participant in the LT Plan for such performance
period will earn under the LT Plan for such performance
period if the performance goals established by the Committee
for such performance period are attained in whole or in part
and if the participant's employment by the Company, its
subsidiaries and affiliates continues without interruption
during that performance period. At any time before or during
the first half of each performance period, the Committee shall
also establish the performance goals for such performance period,
which may be based on any of the following performance criteria,
either alone or in any combination, and on either a consolidated
or business unit level, as the Committee may determine, or on
such other criteria as the Committee may select: sales growth,
earnings per share growth, cash flow, cash flow from operations,
operating profit growth, net income growth, operating margin, net
income margin, return on net assets, return on total assets,
return on common equity, return on total capital, and total
shareholder return. The foregoing criteria shall have any
definitions that the Committee may specify, which may include or
exclude any or all of the following items as the Committee may
specify: extraordinary, unusual or non-recurring items;
effects of accounting changes; effects of currency fluctuations;
effects of financing activities (e.g., effect on earnings per
share of issuance of convertible debt securities); expenses for
restructuring or productivity initiatives; other non-operating
items; spending for acquisitions; effects of divestitures; and
effects of asbestos activities and settlements. Any such
performance criterion or combination of such criteria may apply
to the participant's award opportunity in its entirety or to
designated portion or portions of the award opportunity, as the
Committee may specify.
At any time prior to payment of an award for a performance
period hereunder, the Committee may determine whether
extraordinary items, such as capital gains and losses, which
affect any performance criterion applicable to the award
(including but not limited to the criterion of net income)
shall be excluded or included in determining the extent to
which the corresponding performance goal has been achieved.
4. The first performance period under this LT Plan shall be the
period commencing on July 1, 1995 and ending on December 31,
1997. New performance periods of three years' duration each
shall commence on January 1, 1996 and on each subsequent
anniversary of that date.
5. At any time before or during the first half of each
performance period, the Committee shall establish the number
of phantom performance shares which each eligible executive
officer selected to participate in this LT Plan in such
performance period, and the number of restricted shares and
performance shares which each other eligible officer
selected to participate in this LT Plan in such performance
period, shall be granted the opportunity to earn if the
performance goals applicable to such performance period are
achieved in whole or in part. In no event shall any
participant who is an executive officer be granted the
opportunity to earn more than 50,000 shares (or the cash
equivalent thereof) with respect to any performance period,
and in no event shall any participant who is not an
executive officer be granted the opportunity to earn more
than 8,000 restricted shares and 4,000 performance shares
with respect to any performance period. (The foregoing
amounts represent the highest number of shares (or
equivalent amount of cash) which the participants in
question may be granted the opportunity to earn hereunder if the
maximum performance objectives are achieved with respect to
any performance period). The foregoing amounts shall be
appropriately adjusted to reflect a change in corporate
capitalization, such as a stock split or dividend, or a
corporate transaction, such as any merger, consolidation,
separation (including a spinoff or other distribution of
property), reorganization, or partial or complete
liquidation.
6. Payment of any phantom performance shares shall be
contingent on continued employment by the Company, its
Subsidiaries and Affiliates during the performance period to
which such phantom performance shares relate. The only
exceptions to this rule apply in the event of termination of
employment by reason of death, Disability or Retirement
(within the meaning of the Stock Performance Incentive Plan
as amended by the Board of Directors on June 15, 1995
(SPIP)), or in the event of a Change of Control of the
Company (within the meaning of the SPIP), during a
performance period, in which case the following provisions
shall apply. In the event that the employment of a
participant who has been granted phantom performance shares
with respect to a performance period terminates by reason of
death or Disability during such performance period, the
participant shall be paid the cash value of the number of
phantom performance shares, if any, that the participant would have
earned for such performance period if the participant's
employment had not terminated prior to the end of the
performance period, multiplied by a fraction the numerator
of which shall be the number of full calendar months elapsed
in the performance period prior to the termination of
employment and the denominator of which shall be 30, in the
case of the first performance period, or 36, in the case of
subsequent performance periods. Such fractional amount
shall be paid at the time payment would have been made if the
participant's employment had not terminated prior to the end
of the performance period. In the case of a Change of Control
during a performance period, all phantom performance shares then
outstanding shall become fully vested, earned and payable as
if maximum performance levels were attained and shall be
cashed out by the Company as of the date the Change of Control
occurs, if and to the extent so provided in Article 8 of the SPIP.
In the event that the employment of a participant who has been
granted phantom performance shares with respect to a
performance period terminates by reason of Retirement during
such performance period, the participant may (but need not,
as the Committee may determine) be paid the cash value of
the number of phantom performance shares, if any, that the participant
would have earned for such performance period if the
participant's employment had not terminated prior to the end
of the performance period, multiplied by a fraction the
numerator of which shall be the number of full calendar
months elapsed in the performance period prior to
termination of employment and the denominator of which shall
be 30, in the case of the first performance period, or 36,
in the case of subsequent performance periods. Any such payment
shall be made at the time payment would have been made if the
participant's employment had not terminated prior to the end of the
performance period. A participant whose employment terminates
prior to the end of a performance period for any reason not
excepted above shall not be entitled to any payment for phantom
performance shares granted to such participant for that performance
period.
7. In the event that the employment of a participant who has
been granted restricted shares and performance shares with
respect to a performance period terminates by reason of
death or Disability during such performance period, the
participant shall vest in that number of the restricted
shares, if any, and shall be issued that number of
performance shares, if any, that the participant would have
vested in or been issued at the end of the performance period if the
participant's employment had not terminated prior to the end
of the performance period, multiplied by a fraction the
numerator of which shall be the number of full calendar
months elapsed in the performance period prior to the
termination of employment and the denominator of which shall
be 30, in the case of the first performance period, or 36,
in the case of subsequent performance periods. Such
fractional number of shares shall be issued free of
restrictions at the time shares would have vested or been issued
if the participant's employment had not terminated prior to the
end of the performance period. In the case of a Change of Control
during a performance period, all restricted shares and performance
shares granted with respect to such performance period that
are then outstanding shall become fully vested, earned and
distributable as if maximum performance levels were attained
and shall be cashed out by the Company as of the date the Change of
Control occurs, if and to the extent so provided in Article 8 of the
SPIP. In the event that the employment of a participant
who has been granted restricted shares and performance
shares with respect to a performance period terminates by
reason of Retirement during such performance period, the
participant may (but need not, as the Committee may
determine) vest in the number of restricted shares and be
issued the number of performance shares, if any, that
the participant would have earned for such performance period
if the participant's employment had not terminated prior to the end
of the performance period, multiplied by a fraction the
numerator of which shall be the number of full calendar
months elapsed in the performance period prior to
termination of employment and the denominator of which shall
be 30, in the case of the first performance period, or 36,
in the case of subsequent performance periods. Any such shares
shall be issued free of restrictions at the time shares would have
vested or been issued if the participant's employment had not
terminated prior the end of the performance period. A
participant whose employment terminates prior to the end of
a performance period for any reason not excepted above shall
not be entitled to vest in any restricted shares or be
issued any performance shares granted to such participant
for that performance period. In the case of a Change of
Control after a performance period, vesting of any
restricted shares granted with respect to such performance
period that are then outstanding shall continue to be
contingent on the participant's continued employment for
seven years (or such shorter period as the Committee may
specify) after the close of such performance period, in
accordance with paragraph 2 above. If any termination of
employment (whether by reason of death, Disability,
Retirement or otherwise) occurs at any time after the
conclusion of a performance period, any restricted shares
that were granted with respect to such performance period
and that are outstanding on the date of such termination of
employment shall be forfeited.
8. Payment and vesting of any awards granted under this LT Plan
shall be contingent upon stockholder approval at the 1996
Annual Meeting of Stockholders of the amendments to the Stock
Performance Incentive Plan that were adopted by the Board of
Directors on June 15, 1995. Unless and until such stockholder
approval is obtained, no LT Plan award shall vest or be paid.
9. Except as provided otherwise in this LT Plan or by the
Committee, payment and vesting of any award granted under
this LT Plan shall be contingent upon satisfaction of the
performance goals and employment conditions applicable to
such award.
10. At any time during a performance period, and without the
consent of any participant, the Committee may change the
performance criteria and/or performance goals applicable to
phantom performance shares, restricted shares and
performance shares granted under this LT Plan for such
performance period. Any such change may operate to the
detriment or advantage of the affected participants.
11. All awards granted under this LT Plan, whether phantom
performance shares, restricted shares or performance shares,
are intended to constitute Stock Bonus Awards within the
meaning of the SPIP, and are granted under and subject to
the terms and conditions of the SPIP, which shall control in
the event of any conflict. All such awards shall be
documented by a written instrument issued to the participant
and signed by a duly authorized representative of the
Company. This LT Plan is not intended to confer any rights
upon any individual to any award or with respect to any
award. All such rights, if any, shall be governed by and
determined exclusively in accordance with the written
instrument issued to the participant in accordance with the
foregoing provisions of this paragraph.
12. Capitalized terms which are used but not defined in this LT
Plan shall have the meanings ascribed to such terms in the
SPIP, unless the context requires otherwise.
13. The Committee may amend or terminate this LT Plan at any
time, provided that no such amendment or termination shall
adversely affect any outstanding award without the written
consent of the participant.
14. Any provision of this LT Plan to the contrary
notwithstanding, (a) no provision of this LT Plan shall
apply to any 162(m) Covered Employee, and (b) any provision
of this LT Plan that would prevent an award to any 162(m)
Covered Employee under any plan or arrangement other than this LT
Plan from qualifying as "performance-based compensation" under section
162(m)(4)(C) of the Code shall be administered, interpreted
and construed to enable such award to so qualify and any
provision that cannot be so administered, interpreted and
construed shall to that extent be disregarded.
Exhibit (10)
OWENS-CORNING FIBERGLAS CORPORATION
STOCK PERFORMANCE INCENTIVE PLAN
(as amended on June 15, 1995)
ARTICLE 1. Establishment, Purpose, and Duration
1.1 Establishment of the Plan. Owens-Corning Fiberglas
Corporation, a Delaware corporation (hereinafter referred to as the
"Company"), hereby establishes an incentive compensation plan to be
known as the "Owens-Corning Fiberglas Corporation Stock Performance
Incentive Plan" (such Plan as amended from time to time being
hereinafter referred to as the "Plan"), as set forth in this
document. The Plan permits the grant of Nonqualified Stock
Options, Incentive Stock Options, and Stock Bonuses (including Phantom
Stock Bonuses and Restricted Stock).
The Board of Directors of the Company approved the Plan on January
23, 1992, subject to ratification by an affirmative vote of a
majority of Shares of Common Stock present and entitled to vote at
the 1992 Annual Stockholders Meeting. Following such ratification,
the Plan became effective May 1, 1992 (the "Effective Date"). The
Board of Directors of the Company thereafter amended the Plan on
June 15, 1995, subject to stockholder approval of the amendments at
the 1996 Annual Stockholders Meeting. Provided such approval is
obtained, the Plan as so amended is effective as of June 15, 1995,
and shall remain in effect as provided in Section 1.3 herein.
1.2 Purpose of the Plan. The purpose of the Plan is to promote
the success and enhance the value of the Company by linking the
personal interests of Participants to those of Company
stockholders. The Plan is further intended to provide flexibility
to the Company in its ability to motivate, attract, and retain the
services of Participants upon whose judgment, interest, and special
effort the successful conduct of its operation largely is
dependent.
1.3 Duration of the Plan. The Plan shall commence on the
Effective Date, as described in Section 1.1 herein, and shall
remain in effect, subject to the right of the Board of Directors to
terminate the Plan at any time pursuant to Article 9 herein, until
all Shares subject to it shall have been purchased or acquired
according to the Plan's provisions. However, in no event may an
Award be granted under the Plan on or after the tenth anniversary
of the Plan's Effective Date.
ARTICLE 2. Definitions and Construction
2.1 Definitions. Whenever used in the Plan, the following terms
shall have the meanings set forth below and, when the meaning is
intended, the initial letter of the word is capitalized:
(a) "Affiliates" means any corporation (other than a
Subsidiary), partnership, joint venture, or any other entity in
which the Company owns, directly or indirectly, at least a ten
percent (10%) Beneficial Ownership interest.
(b) "Award" means, individually or collectively, a grant under
this Plan of Nonqualified Stock Options, Incentive Stock Options or
Stock Bonuses (including Phantom Stock Bonuses and Restricted
Stock).
(c) "Beneficial Owner" shall have the meaning ascribed to such
term in Rule 13d-3 of the General Rules and Regulations under the
Exchange Act.
(d) "Board" or "Board of Directors" means the Board of Directors
of Owens-Corning Fiberglas Corporation.
(e) "Cause" means a felony conviction of a Participant or the
failure of a Participant to contest prosecution for a felony, or a
Participant's willful misconduct or dishonesty, any of which is
directly and materially harmful to the business or reputation of
the Company, including any Subsidiary, Parent, or Affiliate.
(f) "Change of Control" of the Company shall be deemed to have
occurred as of the first day any one or more of the following
conditions shall have been satisfied:
(i) Any Person (other than the Company, any Company employee
benefit plan (including its trustee), any Person acting on
behalf of the Company in a distribution of stock to the
public, or any entity owned directly or indirectly by the
stockholders (immediately prior to such transaction) of the
Company in substantially the same proportions as their
ownership of the Company) is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company
representing fifteen percent (15%) or more of the combined
voting power of the then outstanding securities of the Company
entitled to vote generally in the election of Directors; or
(ii) The occurrence of any transaction or event relating to
the Company that is required to be reported in response to the
requirements of Item 5(f) of Schedule 13E-3 of Regulation 13A
of the Exchange Act; or
(iii) When, during any period of two (2) consecutive years
during the existence of the Plan, the individuals who, at the
beginning of such period, constitute the Board of Directors of
the Company, cease for any reason other than death to
constitute at least a majority thereof, unless each Director
who was not a Director at the beginning of such period was
elected by, or on the recommendation of, at least two-thirds
(2/3rds) of the Directors at the beginning of such period,
provided that any Director elected by or on the recommendation
of at least two-thirds (2/3rds) of the Directors at the
beginning of any such two (2) year period shall be treated as
if he or she had been a Director at the beginning of such
period; or
(iv) The occurrence of a transaction requiring stockholder
approval for the acquisition of the Company by an entity other
than the Company or a Subsidiary through purchase of assets,
or by merger, or otherwise.
(g) "Change-of-Control Price" means the highest price per Share of
Company Common Stock paid in any transaction reported on the New
York Stock Exchange Composite Tape, or paid in any transaction
related to a Potential or actual Change of Control of the Company
at any time during the preceding sixty (60) calendar day period, as
determined by the Committee.
(h) "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
(i) "Committee" means the committee of two (2) or more Directors
appointed by the Board to administer the Plan, as further provided
in Article 3 herein. When used herein, "Committee" shall also
include any person or persons to whom the Committee's authority has
been lawfully delegated pursuant to Article 3.
(j) "Company" means Owens-Corning Fiberglas Corporation, a
Delaware corporation, and any successor thereto as provided in
Article 14 herein.
(k) "Director" means any individual who is a member of the Board
of Directors of the Company.
(l) "Disability" or "Disabled" means disability as determined
under the long-term disability program of the Company, a Subsidiary
or Affiliate applicable to the Employee.
(m) "Employee" means any employee of the Company or a Subsidiary,
including part-time employees and employees who are represented by a
collective bargaining agent with respect to such employment.
(n) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor Act thereto.
(o) "Fair Market Value" means, as of any given date, (i) with
respect to Incentive Stock Options, the closing sale price of the
Stock on such date on the New York Stock Exchange Composite Tape;
and (ii) with respect to Nonqualified Stock Options and any other
Awards under the Plan not related to Incentive Stock Options, the
closing sale price of the Stock on such date on the New York Stock
Exchange Composite Tape, or, if (and only if) the Committee in its
discretion so specifies, the average on such date of the closing
price of the Stock on each day on which the Stock is traded over a
period of up to 20 trading days immediately prior to such date.
However, if the foregoing method of determining Fair Market Value
is not consistent with any then applicable regulations of the U.S.
Secretary of the Treasury, then Fair Market Value shall be
determined in accordance with those regulations.
(p) "Incentive Stock Options" or "ISO" means an option to purchase
Shares, granted under Article 6 herein, which the Committee
designates as an Incentive Stock Option and is intended by the
Committee to qualify for the tax treatment applicable to incentive
stock options under Section 422 of the Code.
(q) "Insider" shall mean an Employee whose transactions in equity
securities of the Company are, at the time an Award is made under
this Plan, subject to Section 16 of the Exchange Act.
(r) "Nonqualified Stock Option" or "NQSO" means an option to
purchase Shares, granted under Article 6 herein, which is not
intended by the Committee to qualify for the tax treatment
applicable to incentive stock options under Section 422 of the
Code.
(s) "Option" or "Stock Option" means an Incentive Stock Option or
a Nonqualified Stock Option granted under Article 6 herein.
(t) "Option Price" means the price at which a Share may be
purchased by a Participant pursuant to an Option, as determined by
the Committee, and as further described in Section 6.3 herein.
(u) "Parent" shall have the meaning ascribed to such term in Rule
12b-2 of the General Rules and Regulations under the Exchange Act.
(v) "Participant" means a current or former eligible Employee who
has outstanding an Award granted under the Plan.
(w) "Period of Restriction" means the period during which the
transfer of Shares of Restricted Stock is limited in some way
(based on the passage of time, the achievement of performance
goals, or upon the occurrence of other events as determined by the
Committee, at its discretion), and the Shares are subject to a
substantial risk of forfeiture, as provided in Article 7 herein.
(x) "Person" shall have the meaning ascribed to such term in
Section 3(a)(9) of the Exchange Act and used in Sections 13(d)(3)
and 14(d)(2) thereof, including a "group" as defined in Section
13(d).
(y) "Phantom Stock Bonus Award" means an amount of cash that is
determined by reference to the Fair Market Value of a designated
number of Shares, which is paid to an Employee or which the
Committee agrees to pay to an Employee in the future in lieu of,
or as a supplement to, any other compensation that may have been
earned by services rendered prior to the payment date, subject to
such terms and conditions (if any) as the Committee may impose.
Phantom Stock Bonus Awards are a specific type of Stock Bonus
Award.
(z) "Potential Change of Control" of the Company shall mean the
occurrence of one or more of the following:
(i) The entering into an agreement by the Company, the
consummation of which would result in a Change of Control; or
(ii) The acquisition of Beneficial Ownership, directly or
indirectly, by any Person (other than the Company, any Company
employee benefit plan (including its trustee), any Person
acting on behalf of the Company in a distribution of stock to
the public, or any entity owned directly or indirectly by the
stockholders (immediately prior to the acquisition) of the
Company in substantially the same proportions as their
ownership of the Company) of securities of the Company
representing five percent (5%) or more of the combined voting
power of the Company's then outstanding securities, and the
adoption by the Board of Directors of a resolution to the
effect that a Potential Change of Control of the Company has
occurred for purposes of this Plan.
(aa) "Restricted Stock" means an Award granted to a Participant
pursuant to Article 7 herein.
(bb) "Retirement" means termination of employment with the
Company, its Subsidiaries and Affiliates at or after attainment of
age 55 with a vested retirement benefit under a pension plan of the
Company, a Subsidiary or Affiliate.
(cc) "Share(s)" or "Stock" means the Shares of common stock, $0.10
par value, of Owens-Corning Fiberglas Corporation.
(dd) "Stock Bonus Award" means Shares, or an amount of cash that is
determined by reference to the Fair Market Value of Shares, which
is distributed or paid to an Employee or which the Committee agrees
to distribute or pay in the future in lieu of, or as a supplement
to, any other compensation that may have been earned by services
rendered prior to the distribution or payment date, subject to such
terms and conditions (if any) as the Committee may impose. The
amount of any Stock Bonus Award payable in Shares may but need not
be determined by reference to the Fair Market Value of Stock.
Phantom Stock Bonus Awards and Restricted Stock Awards are specific
types of Stock Bonus Awards.
(ee) "Subsidiary" means any corporation in which the Company owns,
directly or indirectly, at least fifty percent (50%) of the total
combined voting power of all classes of stock, or any other entity
(including, but not limited to, partnerships and joint ventures) in
which the Company owns at least fifty percent (50%) of the combined
equity thereof.
(ff) "Year" or "Plan Year" means each consecutive twelve (12)
month period beginning January 1 and ending December 31.
2.2 Gender and Number. Except where otherwise indicated by the
context, any masculine term used herein also shall include the
feminine, the plural shall include the singular, and the singular
shall include the plural.
2.3 Severability. In the event any provision of the Plan shall be
held illegal or invalid for any reason, the illegality or
invalidity shall not affect the remaining parts of the Plan, and
the Plan shall be construed and enforced as if the illegal or
invalid provision had not been included.
ARTICLE 3. Administration
3.1 The Committee. The Plan shall be administered by the
Compensation Committee of the Board, or by any other Committee
appointed by the Board consisting of not less than two (2)
Directors who are not Employees. Unless the Board determines
otherwise, the Committee shall be comprised exclusively of
Directors who are not Employees and who (i) qualify to administer
the Plan under Rule 16b-3 under the Exchange Act as such Rule may
be in effect from time to time ("SEC Rule 16b-3"), and (ii) are
"outside directors" within the meaning of Section 162(m)(4)(C) of
the Code. The members of the Committee shall be appointed from time
to time by, and shall serve at the discretion of, the Board of
Directors.
3.2 Authority of the Committee. The Committee shall have full
power, subject to the provisions herein, to select Employees to
whom Awards are granted; to determine the size, types, and
frequency of Awards granted hereunder; to determine the terms and
conditions of such Awards in a manner consistent with the Plan; to
establish and administer any performance goals applicable to awards
hereunder and to certify that any such goals are attained; to
construe and interpret the Plan and any agreement or instrument
entered into under the Plan; to establish, amend, or waive rules
and regulations for the Plan's administration; and to amend the
terms and conditions of any outstanding Award to the extent such
terms and conditions are within the discretion of the Committee as
provided in the Plan. Further, the Committee shall make all other
determinations which may be necessary or advisable for the
administration of the Plan. To the extent permitted by law, and to
the extent allowable by SEC Rule 16b-3, the Committee may delegate
its authorities as identified hereunder.
3.3 Rule 16b-3 Requirements; Code Section 162(m). Any provision
of the Plan to the contrary notwithstanding: (i) the Committee may
impose such conditions on any Award as it may determine, on the
advice of counsel, are necessary or desirable to satisfy any
exemption from Section 16 of the Exchange Act for which the Company
intends transactions by Insiders to qualify, including without
limitation SEC Rule 16b-3; (ii) transactions by or with respect to
Insiders shall comply with any applicable conditions of SEC Rule
16b-3 unless the Committee determines otherwise; (iii) transactions
with respect to persons whose remuneration would not be deductible
by the Company but for compliance with the provisions of Section
162(m)(4)(C) of the Code shall conform to the requirements of
Section 162(m)(4)(C) of the Code unless the Committee determines
otherwise; (iv) the Plan is intended to give the Committee the
authority to grant awards that qualify as performance-based
compensation under Code Section 162(m)(4)(C) as well as awards that
do not so qualify; and (v) any provision of the Plan that would
prevent the Committee from exercising the authority referred to in
clause (iv) above or that would prevent an award that the Committee
intends to qualify as performance-based compensation under Code
Section 162(m)(4)(C) from so qualifying or that would prevent any
transaction by or with respect to an Insider from complying with
any applicable condition of SEC Rule 16b-3 with which the Committee
intends such transaction to comply, or that would prevent any
transaction by or with respect to an Insider from qualifying for
any exemption from Section 16 of the Exchange Act for which the
Company intends such transaction to qualify (including SEC Rule 16b-
3), shall be administered, interpreted and construed to carry out
such intention and any provision that cannot be so administered,
interpreted and construed shall to that extent be disregarded.
3.4 Decisions Binding. All determinations and decisions made by
the Committee pursuant to the provisions of the Plan and all
related orders or resolutions of the Board of Directors shall be
final, conclusive, and binding on all persons, including the
Company, its stockholders, Employees, Participants, and their
estates and beneficiaries.
ARTICLE 4. Shares Subject to the Plan
4.1 Number of Shares. Subject to adjustment as provided in
Section 4.2 herein, the total number of Shares available for grant
under the Plan in each calendar year, during any part of which the
Plan is effective, shall be two percent (2%) of the total
outstanding Shares as of the first day of such calendar year;
provided, however, that Shares not granted in any calendar year may
be carried forward and granted in any of the three immediately
subsequent calendar years (in addition to the new Shares made
available in those years). The maximum number of Shares with
respect to which Options may be granted to any Employee in any
calendar year shall be twenty-five percent( 25%) of the total
number of Shares available for grant under the Plan in such
calendar year.
No more than 500,000 Shares may be issued or transferred pursuant
to Incentive Stock Options granted under this Plan. No more than
one-half percent (.5%) of the total outstanding Shares as of the
first day of any calendar year may be granted in that year in the
form of Stock Bonuses (including Phantom Stock Bonuses and
Restricted Stock). However, unused Shares carried forward from
previous years shall retain their character such that this one-half
percent (.5%) limitation shall increase in direct relationship to
those unused Shares reserved for Stock Bonuses in the prior three
years.
The Company may increase the Shares available for Awards in any
calendar year through an advance of up to twenty-five percent (25%)
of the subsequent year's allocation (determined by using twenty-
five percent (25%) of the current year's allocation), with such
Shares retaining their character as to Stock Bonus grant
availability. Any Shares granted hereunder may consist, in whole,
or in part, of authorized and unissued Shares or Treasury Shares or
Shares purchased in the open market or in private transactions for
purposes of the Plan.
4.2 Adjustments in Authorized Shares. In the event of any merger,
reorganization, consolidation, recapitalization, separation,
liquidation, stock dividend, stock split, Share combination, or
other change in the corporate structure of the Company affecting
the Shares, a substitution or adjustment shall be made in the
number and class of Shares which may be delivered under the Plan,
and in the number and class of and/or price of Shares subject to
outstanding Options and Stock Bonus awards (including any
Restricted Stock granted hereunder), as may be determined to be
appropriate and equitable by the Committee, in its sole discretion,
to prevent dilution or enlargement of rights; and further provided
that the number of Shares subject to any Award shall always be a
whole number.
4.3 Charging of Shares. If any Shares subject to
an Award or, in the case of a Phantom Stock Bonus Award, the cash
value of any Shares on which such Award is based, shall not be
issued, transferred or paid to an Employee and shall cease to be
issuable, transferable or payable to an Employee because of the
termination, expiration or cancellation, in whole or in part, of
such Award or for any other reason, or if any such Shares shall,
after issuance or transfer, be reacquired by the Company because of
an Employee's failure to comply with or satisfy the terms and
conditions of an Award, the Shares not so issuable or transferable
or, in the case of a Phantom Stock Bonus Award, the Shares the cash
value of which has ceased to be payable, or the Shares so
reacquired by the Company, as the case may be, shall no longer be
charged against the limitations provided for in section 4.1 above,
may again be made subject to Awards, and shall be added to the
number of Shares available for grant under the Plan in the calendar
year in which the Shares cease to be issuable or transferable, the
cash value ceases to be payable or the Shares are reacquired (as
the case may be).
ARTICLE 5. Eligibility and Participation
5.1 Eligibility. All Employees shall be eligible to be selected
to participate in this Plan, including Employees who are Directors
but excluding Directors who are not Employees.
5.2 Actual Participation. Subject to the provisions of the Plan,
the Committee may, from time to time, select from all eligible
Employees, those to whom Awards shall be granted and shall
determine the nature and amount of each Award. Awards may be made
on a stand-alone basis or in conjunction with other Awards
hereunder. Except as provided otherwise in Section 6.1 below, the
grant of any award may be effective on the date on which the
Committee acts to grant the award or on any earlier or subsequent
date specified by the Committee, and the effective date specified
by the Committee shall be considered the date of grant of the award
for all purposes of this Plan.
ARTICLE 6. Stock Options
6.1 Grant of Options. Subject to the terms and provisions of the
Plan, the Committee may grant Options under this Plan to eligible
Employees at any time and from time to time, whether or not they
are eligible to receive similar or dissimilar incentive
compensation under any other plan or arrangement of the Company.
Options may be granted in the form of ISOs, NQSOs or a combination
thereof. Nothing in this Article 6 shall be deemed to prevent the
grant of NQSOs in excess of the maximum established by Section 422
of the Code. The grant of any option may be effective on the date
on which the Committee acts to grant the option or on any
subsequent date specified by the Committee, and the effective date
specified by the Committee shall be considered the date of grant of
the option for all purposes of this Plan.
6.2 Options to be in Writing. Each Option grant shall be
evidenced in a writing signed by a representative of the Company
duly authorized to do so, that shall specify or incorporate by
reference the Option Price, the duration of the Option, the number
of Shares to which the Option pertains, and such other provisions
as are provided hereunder and any other terms and conditions that
may be imposed by the Committee. The Option instrument also shall
specify whether the Option is an Incentive Stock Option or a
Nonqualified Stock Option.
6.3 Option Price. In no case shall the Option Price of any Option
granted under this Plan be less than one hundred percent (100%) of
the Fair Market Value of a Share on the date the Option is granted.
6.4 Duration of Options. Each Option shall expire at such time as
determined at the time of grant; provided, however, that no Option
shall be exercisable later than the tenth (10th) anniversary date
of its grant.
6.5 Exercise of Options. Options granted under the Plan shall be
exercisable at such times and be subject to such restrictions,
terms and conditions as the Committee shall in each instance
approve, which need not be the same for each grant or for each
Participant. However, except as provided in Article 8 herein, in
no event may any Option granted under this Plan become exercisable
prior to six (6) months following the date of its grant.
Options shall be exercised by the delivery of a written notice of
exercise to the Company, or by giving the Company notice of such
exercise by such other means as the Company may permit in
accordance with applicable law, setting forth the number of Shares
with respect to which the Option is to be exercised, accompanied
by full payment.
The Option Price upon exercise of any Option shall be payable to
the Company in full either: (a) in cash or its equivalent; or (b)
by tendering previously acquired Shares having a Fair Market Value
at the time of exercise equal to the total Option Price (provided
that the Shares which are tendered must have been held by the
Participant for at least six (6) months prior to their tender or
for such other period of time, if any, as the Committee may
direct); or (c) by a combination of (a) and (b).
The Option Price shall also be deemed fully paid if and when the
Company receives documentation that it determines satisfies the
cashless exercise provisions of the Federal Reserve Board's
Regulation T, or when the Option Price is paid by any other means
which the Committee determines to be consistent with the Plan's
purpose and applicable law.
As soon as practicable after receipt of notification of exercise
acceptable to the Company and full payment (including tax
withholding requirements, if any, as further provided in Article 12
herein), the Company shall deliver to the Participant, in the
Participant's name, in the name of the Participant and another
person as joint tenants with rights of survivorship, or in nominee
or street name on behalf of the Participant (as the Participant may
direct and the Committee may permit) Share certificates in an
appropriate amount based upon the number of Shares purchased under
the Option(s).
6.6 Restrictions. At the time of grant, restrictions may be
imposed on any Shares acquired pursuant to the exercise of an
Option under the Plan, including, without limitation, restrictions
under applicable Federal securities laws, under the requirements of
any stock exchange or market upon which such Shares are then listed
and/or traded, and under any blue sky or state securities laws
applicable to such Shares.
6.7 Termination of Employment Due to Death, Disability, or
Retirement.
(a) Termination by Death. In the event the employment of a
Participant with the Company and its Subsidiaries is terminated by
reason of death, any outstanding Options may thereafter be
immediately exercised, to the extent then exercisable (or on such
accelerated basis as the Committee shall determine at or after grant),
by the legal representative of the estate or by the legatee of the
optionee under the will of the optionee, for a period of three
years and six months (or such shorter period as the Committee shall
specify at or after grant) from the date of such death or until the
expiration of the stated term of such Option, whichever period is shorter.
(b) Termination by Disability. If a Participant's employment with
the Company and its Subsidiaries terminates by reason of
Disability, any Stock Option held by such Participant may thereafter
be exercised, to the extent it was exercisable at the time of
termination due to Disability (or on such accelerated basis as the
Committee shall determine at or after grant), but may not be
exercised after (i) three years and six months (or such shorter
period as the Committee shall specify at or after grant) from the
date of such termination of employment, or (ii) the expiration of
the stated term of such Stock Option, whichever period is shorter;
provided, however, that, if the Participant dies within such three-
year-and-six-month period (or such shorter period as the Committee
shall specify at or after grant), any unexercised Stock Option held
by such Participant shall thereafter be exercisable to the extent to
which it was exercisable at the time of death for a period of
twelve months (or such shorter period as the Committee shall
specify at or after grant) from the date of such death or for the
stated term of such Stock Option, whichever period is shorter. If
an Incentive Stock Option is exercised after the expiration of the
exercise periods that apply for purposes of Section 422 of the
Code, such Stock Option shall thereafter be treated as a
Nonqualified Stock Option.
(c) Termination by Retirement. If a Participant's employment with
the Company and its Subsidiaries is terminated by reason of
Retirement, any Stock Option held by such Participant may thereafter
be exercised to the extent it was exercisable at the time of such
Retirement (or on such accelerated basis as the Committee shall
determine at or after grant), but may not be exercised after five
years (or such shorter period as the Committee shall specify at or
after grant) from the date of such termination of employment or the
expiration of the stated term of such Stock Option, whichever
period is shorter; provided, however, that, if the Participant dies
within such five year period (or such shorter period as the
Committee may specify at or after grant), any unexercised Stock
Option held by such Participant shall thereafter be exercisable, to
the extent to which it was exercisable at the time of death, for
the shorter of (i) and (ii) where (i) is a period of twelve months
(or such shorter period as the Committee shall specify at or after
grant) from the date of such death or, if longer, the remainder of
such five year (or shorter) period from the date of such
termination of employment, and (ii) is the expiration of the stated
term of the Stock Option. In the event of termination of
employment by reason of Retirement, if an Incentive Stock Option is
exercised after the expiration of the exercise periods that apply
for purposes of Section 422 of the Code, such Stock Option shall
thereafter be treated as a Nonqualified Stock Option.
6.8 Termination of Employment for Other Reasons. Unless otherwise
determined by the Committee at or after grant, if a Participant's
employment with the Company and its Subsidiaries terminates
voluntarily (other than by reason of Retirement or under
circumstances constituting Cause), the Stock Option shall thereupon
terminate, except that such Stock Option may be exercised to the
extent it was exercisable at the time of termination of employment
for the lesser of one year (or such shorter period as the Committee
may specify at or after grant) from the date of employment
termination or the balance of such Stock Option's term. If a
Participant's employment with the Company and its Subsidiaries is
involuntarily terminated by the Company without Cause, the Option
shall thereupon terminate, except that it may thereafter be
exercised to the extent it was exercisable at the time of
termination of employment (or on such accelerated basis as the
Committee shall determine at or after grant) for the lesser of
three years and six months (or such shorter period as the Committee
may specify at or after grant) from the date of employment
termination or the balance of such Stock Option's term.
If the employment of a Participant shall terminate for Cause, all
outstanding Options held by the Participant immediately shall be
forfeited to the Company and no additional exercise period shall be
allowed, regardless of the vested status of the Options.
6.9 Nontransferability of Options. No Option granted under the
Plan may be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated, other than by will or by the laws of
descent and distribution. Further, all Options granted to a
Participant under the Plan shall be exercisable during his or her
lifetime only by such Participant. Notwithstanding the foregoing
and any other provision of the Plan to the contrary, if the
Committee so permits, Options may be transferred, following the
death of a Participant, to a beneficiary designated by the
Participant in accordance with Article 10 below.
6.10 Hardship Withdrawal Provision. No Employee shall make any
elective contribution or employee contribution to the Plan (within
the meaning of Treasury Regulation section 1.401(k)-
1(d)(2)(iv)(B)(4)) during the balance of the calendar year after
the Employee's receipt of a hardship distribution from a plan of
the Company or a related party within the provisions of Code
sections 414(b), (c), (m) or (o) containing a cash or deferred
arrangement under section 401(k) of the Code, or during the
following calendar year. The preceding sentence shall not apply if
and to the extent that the Company determines it is not necessary
to qualify any such plan as a cash or deferred arrangement under
section 401(k) of the Code.
ARTICLE 7. Restricted Stock
7.1 Grant of Restricted Stock. Subject to the terms and
provisions of the Plan, Restricted Stock may be granted to eligible
Employees at any time and from time to time, whether or not they
are eligible to receive similar or dissimilar incentive
compensation under any other plan or arrangement of the Company.
The purchase price for Shares of Restricted Stock shall be equal to
their par value per Share.
7.2 Restricted Stock Agreement. Each Restricted Stock grant shall
be evidenced by a Restricted Stock Agreement that shall specify the
Period of Restriction, or Periods, the number of Restricted Stock
Shares granted, and such other provisions as provided hereunder or
as the Committee may impose.
7.3 Nontransferability of Restricted Stock. Except as provided in
this Article 7, the Shares of Restricted Stock granted hereunder
may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated until the end of the applicable Period of
Restriction as specified in the Restricted Stock Agreement and the
satisfaction of any conditions determined at the time of grant and
specified in the Restricted Stock Agreement. However, except as
provided in Article 8 herein, in no event may any Restricted Stock
granted under the Plan become vested in a Participant prior to six
(6) months following the date of its grant. All rights with
respect to the Restricted Stock granted to a Participant under the
Plan shall be available during his or her lifetime only to such
Participant.
7.4 Other Restrictions. The Committee shall impose such other
restrictions on any Shares of Restricted Stock granted pursuant to
the Plan as it may deem advisable including, without limitation, a
required purchase price imposed upon Participants, restrictions
based upon the achievement of specific performance goals (Company-
wide, divisional, and/or individual), and/or restrictions under
applicable Federal or state securities laws; and may legend the
certificates representing Restricted Stock to give appropriate
notice of such restrictions. Further, the Committee at its
discretion, may require that the Shares evidencing such Restricted
Stock grants be held in custody by the Company until any or all
restrictions thereon shall have lapsed.
7.5 Certificate Legend. In addition to any legends placed on
certificates pursuant to Section 7.4 herein, each certificate
representing Shares of Restricted Stock granted pursuant to the
Plan shall bear the following legend:
"The sale or other transfer of the Shares of Stock represented
by this certificate, whether voluntary, involuntary, or by
operation of law, is subject to certain restrictions on
transfer as set forth in the Owens-Corning Fiberglas
Corporation Stock Performance Incentive Plan, and in the
related Restricted Stock Agreement. A copy of the Plan and
such Restricted Stock Agreement may be obtained from the
Secretary of Owens-Corning Fiberglas Corporation."
7.6 Removal of Restrictions. Except as otherwise provided in this
Article 7, Shares of Restricted Stock covered by each Restricted
Stock grant made under the Plan shall become freely transferable by
the Participant after the last day of the Period of Restriction,
provided the applicable conditions to vesting of such Shares have
been fulfilled. Once the Shares are released from the
restrictions, the Participant shall be entitled to have the legend
required by Section 7.5 removed from his or her Share certificate.
7.7 Voting Rights. During the Period of Restriction and prior to
any forfeiture of the Shares, Participants holding Shares of
Restricted Stock granted hereunder may exercise full voting rights
with respect to those Shares.
7.8 Dividends and Other Distributions. During the Period of
Restriction and prior to any forfeiture of the Shares, Participants
holding Shares of Restricted Stock granted hereunder shall be
entitled to receive all dividends and other distributions paid with
respect to those Shares while they are so held. If any such
dividends or distributions are paid in Shares, the Shares shall be
subject to the same restrictions on transferability and
forfeitability as the Shares of Restricted Stock with respect to
which they were paid.
7.9 Termination of Employment. The Committee may but need not provide
at or after the grant of Restricted Stock for the restrictions on all or
any disignated portion of the Shares of Restricted Stock to lapse in
the event of death, Disability, Retirement or other designated
termination of employment.
ARTICLE 7A. Stock Bonuses
7A.1 Except as otherwise provided in section 15.3, Stock Bonus
Awards shall be subject to the following provisions:
(a) An eligible Employee may be granted a Stock Bonus Award
whether or not he is eligible to receive similar or dissimilar
incentive compensation under any other plan or arrangement of the
Company.
(b) Shares subject to a Stock Bonus Award (other than a Phantom
Stock Bonus Award) may be issued or transferred to an Employee,
and the cash value of the Shares on which a Phantom Stock Bonus
Award is based may be paid to an Employee, at the time such Award
is granted, or at any time subsequent thereto, or in installments
from time to time, and subject to such terms and conditions, as the
Committee shall determine. In the event that any such issuance,
transfer or payment shall not be made to the Employee at the time
such Award is granted, the Committee may but need not provide for
payment to such Employee, either in cash or Shares, from time to
time or at the time or times such Shares shall be issued or
transferred or cash shall be paid to such Employee, of amounts not
exceeding the dividends which would have been payable to such
Employee in respect of such Shares (as adjusted under section 4.2)
if such Shares had been issued or transferred to such Employee at
the time such Award was granted.
(c) Any Stock Bonus Award may, in the discretion of the Committee,
be settled in cash, on each date on which Shares would otherwise
have been delivered or become unrestricted, in an amount equal to
the Fair Market Value on such date of the Shares which would
otherwise have been delivered or become unrestricted. A Phantom
Stock Bonus Award shall be payable only in the form of cash.
Subject to Section 4.3 above, the Shares subject to a Stock Bonus
Award (including a Phantom Stock Bonus Award) shall be deducted
from the number of Shares available for grant under the Plan,
whether the Award is settled in the form of cash or Shares.
(d) Stock Bonus Awards shall be subject to such terms and
conditions, including, without limitation, restrictions on the sale
or other disposition of any Shares to be issued or transferred
pursuant to such Award, and conditions calling for forfeiture of
the Award or the Shares issued or transferred or cash paid pursuant
thereto in designated circumstances, as the Committee shall
determine; provided, however, that upon the issuance or transfer of
Shares to an Employee pursuant to any such Award, the recipient
shall, with respect to such Shares, be and become a shareholder of
the Company fully entitled to receive dividends, to vote and to
exercise all other rights of a stockholder except to the extent
otherwise provided in the Award. All or any portion of a Stock
Bonus Award may but need not be made in the form of a Restricted
Stock Award or a Phantom Stock Bonus Award.
(e) Each Stock Bonus Award shall be evidenced in a writing, signed
by a representative of the Company duly authorized to do so, which shall
be consistent with and subject to this Plan.
ARTICLE 8. Change of Control
8.1 Acceleration and Cashout. Subject to the provisions of
Section 8.2 herein, upon the occurrence of a Change of Control of
the Company, or, if and to the extent so determined by the
Committee in writing at or after grant (subject to any right of
approval expressly reserved by the Committee at the time of such
determination), in the event of a Potential Change of Control of
the Company, unless specifically prohibited by the terms of Article
15 herein:
(a) Any Stock Options awarded under the Plan immediately shall
become fully vested and exercisable;
(b) Any restrictions and other conditions pertaining to
outstanding Stock Bonuses (including Phantom Stock Bonuses and
Restricted Stock), including but not limited to vesting
requirements, immediately shall lapse; and
(c) The value of all outstanding Stock Options and Stock Bonuses
(including Phantom Stock Bonuses and Restricted Stock) shall, to
the extent determined by the Committee at or after grant, be cashed
out by the Company on the basis of the Change-of-Control Price (or,
in the case of Incentive Stock Options, Fair Market Value) as of
the date the Change of Control occurs, or Potential Change
of Control is determined to have occurred, or such other date as
the Committee may determine prior to the occurrence of the Change
of Control or Potential Change of Control.
Notwithstanding the foregoing provisions of this Section 8.1, the
Committee may determine, in its sole discretion, that no Change of
Control or Potential Change of Control shall be deemed to have
occurred with respect to a Participant (i) by reason of any actions
or events ("Interested Actions") in which the Participant acts in a
capacity other than as a director, officer, or employee of the Company
(or a Subsidiary or Affiliate, where applicable), or (ii) with
respect to any such action or event occurring within 90 days
following the public announcement of any Interested Actions,
regardless of whether the director, officer, or Participant is
interested in such action or event.
8.2 Award Replacement. Notwithstanding Section 8.1 herein, no
acceleration of vesting and exercisability, nor lapse of
restrictions and other conditions, nor cashout shall occur
(pursuant to Sections 8.1(a), (b), and (c) herein) for outstanding
Awards granted hereunder if the Committee reasonably determines in
good faith, prior to the Change of Control or Potential Change of
Control, that such Awards shall be honored or assumed, or new
rights substituted therefor (such honored, assumed, or substituted
award hereinafter called an "Alternative Award") by a Participant's
employer (or the parent or a subsidiary of such employer)
simultaneous with or immediately following the Change of Control or
Potential Change of Control, provided, however, that any such
Alternative Award must:
(a) In the event of Stock Options and Stock Bonuses:
(i) Be based on stock which is traded on an established
securities market, or which will be so traded within thirty
(30) days of the Change of Control or Potential Change of
Control; or
(ii) Have a value based directly upon an objective standard of
valuation (including, but not limited to, a publicly reported
stock index) acceptable to the Committee under the
circumstances and provide each Participant, subject to
requirements as to vesting or lapse of restrictions, with an
opportunity to put the Shares or other securities covered by
the Award to his or her employer (or the parent, general
partner, or a subsidiary of such employer) for purchase with
payment to be made in cash within ten (10) business days of
receipt of such employee's put;
(b) For all Awards:
(i) Provide such Participant (or each Participant in a class
of Participants) with rights and entitlements substantially
equivalent to or better than the rights, terms, and conditions
applicable under such Awards, including, but not limited to,
an identical or better vesting schedule and identical or
better timing and methods of payment;
(ii) Have substantially equivalent economic value to such
Awards (determined at the time of the Change of Control or
Potential Change of Control);
(iii) Have terms and conditions which provide that in the
event the Participant's employment is involuntarily terminated
without Cause or constructively terminated:
(A) Any conditions on a Participant's rights under, or
any restrictions on transfer or exercisability applicable
to, each such Alternative Award shall be waived or shall
lapse, as the case may be; and
(B) Each Participant shall have the right to surrender
such Alternative Awards within thirty (30) days following
such termination in exchange for a payment in cash equal
to the excess of the Fair Market Value of the stock
subject to the Alternative Award over the price, if any,
that a Participant would be required to pay to exercise
such Alternative Award.
For this purpose, a constructive termination shall mean a
termination by a Participant following a material reduction in the
Participant's compensation, a reduction in the Participant's
responsibilities, or the relocation of the Participant's principal
place of employment to another location, in each case without the
Participant's advance written consent.
8.3 Excise Tax Reimbursement. In the event that any
accelerations, lapse of restrictions, cashouts, Award replacements,
and/or any other event under this Plan will cause a Participant to
be subject to the tax (the "Excise Tax") imposed by Section 4999 of
the Code (or any similar tax that may hereafter be imposed), the
Company shall pay to the Participant at the time specified below an
additional amount (the "Gross-up Payment") such that the net amount
retained by the Participant, after deduction of any Excise Tax on
the Total Payments (as hereinafter defined) and any Federal, state,
and local income tax and Excise Tax upon the Gross-up Payment
provided for by this Section 8.3, but before deduction for any
Federal, state, or local income tax on the Total Payments, shall be
equal to the Total Payments.
For purposes of determining whether any Participant will be subject
to the Excise Tax and the amount of such Excise Tax:
(a) Any other payments or benefits received or to be received by a
Participant in connection with a Change of Control of the Company
or a Participant's termination of employment (whether pursuant to
the terms of this Plan or any other plan, arrangement, or agreement
with the Company, any Person whose actions result in a Change of
Control of the Company or any Person affiliated with the Company or
such Person) (which together with the benefits and/or payments
provided hereunder, shall constitute the "Total Payments") shall be
treated as "parachute payments" within the meaning of Section
280G(b)(2) of the Code, and all "excess parachute payments" within
the meaning of Section 280G(b)(1) of the Code shall be treated as
subject to the Excise Tax unless, in the opinion of tax counsel
selected by the Committee, such other payments or benefits (in
whole or in part) do not constitute parachute payments, or such
excess parachute payments (in whole or in part) represent
reasonable compensation for services actually rendered within the
meaning of Section 280G(b)(4) of the Code in excess of the base
amount within the meaning of Section 280G(b)(3) of the Code or are
otherwise not subject to the Excise Tax;
(b) The amount of the total Payments which shall be treated as
subject to the Excise Tax shall be equal to the lesser of: (A) the
total amount of the Total Payments; or (B) the amount of excess
parachute payments within the meaning of Section 280G(b)(1) of the
Code (after applying clause (a) above); and
(c) The value of any noncash benefits or any deferred payment or
benefit shall be determined by the Company's independent auditors
in accordance with the principles of Section 280G(d)(3) of the
Code.
For purposes of determining the amount of the Gross-Up Payment, a
Participant shall be deemed to pay Federal income taxes at the
highest marginal rate of Federal income taxation for the calendar
year in which the Gross-Up Payment is to be made and the applicable
state and local income taxes at the highest marginal rate of
taxation for the calendar year in which the Gross-Up Payment is to
be made, net of the maximum reduction in Federal income taxes which
could be obtained from deduction of such state and local taxes. In
the event that the Excise Tax is subsequently determined to be less
than the amount taken into account hereunder at the time the Gross-
Up Payment is made, a Participant shall repay to the Company at the
time that the amount of such reduction in Excise Tax is finally
determined the portion of the Gross-Up Payment attributable to such
reduction (plus the portion of the Gross-Up Payment attributable to
the Excise Tax and Federal, state and local income tax imposed on
the portion of the Gross-Up Payment being repaid by a Participant
if such repayment results in a reduction in Excise Tax and/or a
Federal, state, and local income tax deduction), plus interest on
the amount of such repayment at the rate provided in Section
1274(b)(2)(B) of the Code. In the event that the Excise Tax is
determined to exceed the amount taken into account hereunder at the
time the Gross-Up Payment is made (including by reason of any
payment the existence or amount of which cannot be determined at
the time of the Gross-Up Payment), the Company shall make an
additional Gross-Up Payment in respect of such excess (plus any
interest payable with respect to such excess) at the time that the
amount of such excess is finally determined.
The Gross-Up Payment or portion thereof provided for in this
Section 8.3 shall be paid no later than the thirtieth (30th)
calendar day following payment of any amounts under this section,
provided, however, that if the amount of such Gross-Up Payment or
portion thereof cannot be finally determined on or before such day,
the Company shall pay to a Participant on such day an estimate, as
determined in good faith by the Company, of the minimum amount of
such payments and shall pay the remainder of such payments
(together with interest at the rate provided in Section
1274(b)(2)(B) of the Code) as soon as the amount thereof can be
determined, but in no event later than the forty-fifth (45th)
calendar day after payment of any amounts under this Section 8.3.
In the event that the amount of the estimated payments exceeds the
amount subsequently determined to have been due, such excess shall
constitute a loan by the Company to each Participant, payable on
the fifth (5th) calendar day after demand by the Company (together
with interest at the rate provided in Section 1274(b)(2)(B) of the
Code).
ARTICLE 9. Amendment, Modification and Termination
9.1 Amendment and Termination. The Board may, at any time and
from time to time, amend or modify the Plan in any respect without
stockholder approval, unless stockholder approval of the amendment
or modification in question is required under Delaware law, the
Code (including without limitation Code section 162(m)(4) and Code
Section 422 and Treasury regulations issued or proposed thereunder),
any applicable exemption from Section 16 of the
Exchange Act (including without limitation SEC Rule 16b-3) for
which the Company intends transactions by Insiders to qualify, any
national securities exchange or system on which the Stock is then
listed or reported, by any regulatory body having jurisdiction with
respect to the Plan, or under any other applicable laws, rules or
regulations. The Board may also terminate the Plan at any time.
The Committee may amend the terms of any Award granted under the
Plan, prospectively or retroactively, but no such amendment shall
impair the rights of any Participant without such Participant's
consent.
9.2 Awards Previously Granted. No termination, amendment or
modification of the Plan shall in any manner adversely affect any
Award previously granted under the Plan, without the written
consent of the Participant holding such Award
ARTICLE 10. Beneficiary Designation
The Committee may (but need not) permit a Participant, from time to
time and subject to such terms and conditions as it may impose, to
name a beneficiary or beneficiaries (who may be named contingently
or successively) to whom any benefit under the Plan is to be paid
in case of his or her death before he or she receives any or all of
such benefit. Each such designation shall revoke all prior
designations by the same Participant, shall be in a form prescribed
by the Company, and will be effective only when filed by the
Participant in writing with the Human Resource Department of the
Company during the Participant's lifetime. In the absence of any
such designation, benefits remaining unpaid at the Participant's
death shall be paid to the Participant's estate.
ARTICLE 11. Rights of Employees; Other Plans and Arrangements
11.1 Employment. Nothing in the Plan shall interfere with or limit
in any way the right of the Company to terminate any Participant's
employment at any time, nor confer upon any Participant any right
to continue in the employ of the Company.
For purposes of the Plan, transfer of employment of a Participant
between the Company and any one of its Subsidiaries or Affiliates
(or between Subsidiaries and Affiliates) shall not be deemed a
termination of employment.
11.2 Participation. No Employee shall have the right to be
selected to receive an Award under this Plan, or, having been so
selected, to be selected to receive a future Award.
11.3 Transferability Restriction. Any derivative security issued
under this Plan (within the meaning of SEC Rule 16b-3(a)(2)) is not
transferable by the participant other than by will or the laws of
descent and distribution. Notwithstanding the foregoing and any
other provision of the Plan to the contrary, if the Committee so
permits, an award under this Plan may be transferred, following the
death of a Participant, to a beneficiary designated by the
Participant in accordance with Article 10 above.
11.4 Other Plans and Arrangements. Nothing in this Plan is
intended to be a substitute for, or shall preclude or limit the
establishment or continuation of, any other plan, practice or
arrangement for the payment of compensation or fringe benefits to
directors, officers, or employees generally, or to any class or
group of such persons, which the Company or any Subsidiary now has
or may hereafter lawfully put into effect, including, without
limitation, any incentive compensation, retirement, pension, group
insurance, restricted stock, stock purchase, stock bonus, stock
incentive or stock option plan.
ARTICLE 12. Withholding
12.1 Tax Withholding. A Participant shall remit to the Company an
amount sufficient to satisfy any taxes the Company determines are
required by law to be withheld with respect to any grant, exercise,
or payment made under or as a result of this Plan.
12.2 Share Withholding. With respect to withholding required upon
the exercise of Options, upon the lapse of restrictions on
Restricted Stock, or upon any other taxable event hereunder, the
Committee may permit or require Participants, subject to such terms
and conditions as it may impose, to satisfy the withholding
requirement, in whole or in part, by having the Company withhold
Shares having a Fair Market Value on the date the tax is to be
determined equal to the maximum marginal total tax which could be
imposed on the transaction or such greater or lesser amount as the
Committee may permit. If the Committee so provides, such Shares
withheld may be already owned Shares which the Participant tenders
in satisfaction of the withholding requirement or Shares issuable
by the Company in connection with the exercise of Options, the
lapse of restrictions on Restricted Stock or the other taxable
event hereunder, or Shares from any other source.
ARTICLE 13. Indemnification
No member of the Board or the Committee, nor any officer or
employee of the Company acting on behalf of the Board or the
Committee, shall be personally liable for any action,
determination, or interpretation taken or made in good faith with
respect to the Plan, and all members of the Board or the Committee
and each and any officer or employee of the Company acting on their
behalf shall, to the extent permitted by law, be fully indemnified
and protected by the Company in respect of any such action,
determination or interpretation.
ARTICLE 14. Successors
All obligations of the Company under the Plan, with respect to
Awards granted hereunder, shall be binding on any successor to the
Company, whether the existence of such successor is the result of a
direct or indirect purchase, merger, consolidation, or otherwise,
of all or substantially all of the business and/or assets of the
Company.
ARTICLE 15. Requirements of Law
15.1 Requirements of Law. The granting of Awards and the issuance
of Shares under the Plan shall be subject to all applicable laws,
rules, and regulations, and to such approvals by any governmental
agencies or national securities exchanges, as the Company may
determine apply.
15.2 Governing Law. To the extent not preempted by Federal law,
the Plan, and all agreements hereunder, shall be construed in
accordance with and governed by the laws of the State of Delaware,
without reference to the principles of conflicts of laws of that
State.
15.3 Non-U.S. Laws. In the event the laws of a foreign country,
in which the Company, a Subsidiary or Affiliate has Employees,
prescribe certain requirements for stock incentives to qualify for
advantageous treatment under the tax or other laws or regulations
of that country, the proper officers of the Company, may restate,
in whole or in part, this Plan and may include in such restatement
additional provisions for the purpose of qualifying the restated
plan and stock incentives granted thereunder under such laws and
regulations; provided, however, that (a) the terms and conditions
of any stock-based incentive granted under such restated plan may
not be more favorable to the recipient than would be permitted if
such stock-based incentive had been granted under the Plan as
herein set forth, (b) all Shares allocated to or utilized for the
purposes of such restated plan shall be subject to the limitations
of Article 4, and (c) the provisions of the restated plan may give
the Board less but not more discretion to amend or terminate such
restated plan than is provided with respect to this Plan by the
provisions of Article 9 hereof.
Exhibit (10)
December 2, 1994
Mr. Christian Campbell
2483 West Branch Court
Naperville, IL. 60565
Dear Christian:
This letter will confirm the offer made to you for the
position of Senior Vice President, General Counsel and
Secretary for Owens-Corning reporting to me starting January
1, 1995. The specifics of the employment offer are as
follows:
Your starting annual base salary will be $275,000 subject
to regular review by the Board Compensation Committee.
You will participate in the Annual Corporate Incentive
Compensation Plan which is presently based upon corporate
earnings per share, cash flow and sales growth. Your
participation in this plan will be 100% of your base salary
and your target award will be 50% of base salary. Obviously,
corporate business results will determine actual payments but
you will be guaranteed $137,500 for 1995, which is target
bonus. This payment will be made at the same time as our
annual incentive payments are normally made, which is the last
day in February of 1996.
You will be awarded 15,000 stock options and 3,000
restricted stock shares upon your initial day of employment.
The price of the options will be based on the closing price of
Owens-Corning stock on the date of your hire. The options
will vest one third each year for three years. The restricted
shares will vest 50% in five years and the remaining 50% in
ten years from date of grant. These restricted shares will be
valued at vesting based upon their market value at that time.
You will be given a one time "sign-on" bonus of $50,000
(net of applicable taxes) on your first day of employment.
This will address certain perquisites in which you currently
participate, such as car allowances, club memberships, etc.
You will have four weeks of vacation with Owens-Corning.
You will be eligible for tax preparation/planning
assistance, financial counseling, personal liability insurance
and other benefits accorded Leadership council participants.
In addition, you will be given a membership in the Toledo Club
(or equivalent) which is a prestigious downtown dining and
exercise club which can be utilized for business entertainment
associated with your position.
For relocation purposes, you will be treated as a
transferring employee, which means that we will purchase your
home if you are unable to sell it. Specifics of our plan
would be communicated upon acceptance of our offer.
In addition to the above items, you will also be entitled
to Owens-Corning's full benefits package, which includes a
health care plan, Savings and Deferral Investment Plan
(401(k)), life insurance plan, salary continuation and long-
term disability plan.
Employment is contingent upon successful completion of a
physical examination (which includes a drug screening) and
reference checking. You may contact Juanita Kesler (in
Corporate Human Resources) at (419) 248-7414 to arrange a
physical examination. The enclosed severance agreement should
be executed upon your acceptance of this offer.
If you have any questions regarding the above offer or any
benefits, please call me at (419) 248-6518 or Greg Thomson at
(419) 248-6310.
Yours truly,
Glen H. Hiner
AGREED TO AND ACCEPTED:
/s/ Christian L. Campbell
Christian Campbell
12/13/94
Date
Exhibit (11)
OWENS CORNING AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
Primary:
1995 1994 1993
(In millions of dollars, except share data)
Net income $ 231 $ 159 $ 131
Weighted average number of
shares outstanding
(thousands) 49,152 43,647 42,734
Weighted average common
equivalent shares
(thousands):
Deferred awards 16 21 264
Stock options using
weighted average
market price 543 541 595
Primary weighted average
number of common shares
outstanding and common
equivalent shares
(thousands) 49,711 44,209 43,593
Primary per share amount $ 4.64 $ 3.61 $ 3.00
Fully Diluted:
Net income $ 238 $ 168 $ 139
Weighted average number
of shares outstanding
(thousands) 49,152 43,647 42,734
Weighted average common
equivalent shares
(thousands):
Deferred awards 16 21 265
Stock options using the
higher of average
market price or market
price at end of period 566 559 613
Shares from assumed
conversion of debt 1,562 5,798 5,798
Shares from assumed conversion
of preferred securities 2,810 - -
Fully diluted weighted average
number of common shares
outstanding and common
equivalent shares
(thousands) 54,106 50,025 49,410
Fully diluted per share
amount $ 4.40 $ 3.35 $ 2.81
<TABLE>
Exhibit (21)
<S> <C>
State or Other
Jurisdiction
Under the Laws of
Subsidiaries of Owens Corning Which Organized
(12/31/95)
Barbcorp, Inc. Delaware
Crown Mfg. Inc. Canada
Dansk-Svensk Glasfiber A/S Denmark
Deutsche Owens-Corning Glasswool GmbH Germany
Eric Company Delaware
European Owens-Corning Fiberglas, S.A. Belgium
Falcon Manufacturing Acquisition
Corporation Delaware
FALOC Holdings L.P. Delaware
FALOC, Inc. Delaware
Fiber-flex Co., Inc. New Jersey
Fiberflex Incorporated Georgia
Fiber-Lite Corporation Delaware
IPM, Inc. Delaware
Kitsons Insulation Products Ltd. United Kingdom
Matcorp, Inc. Delaware
N.V. Owens-Corning S.A. Belgium
O/C/FIRST CORPORATION Ohio
OCFOGO, Inc. Delaware
O.C. Funding B.V. The Netherlands
O/C/SECOND CORPORATION Delaware
OC Utah Four Corporation Utah
OCW Corporation (dba, Delsan) Delaware
Owens-Corning A/S Norway
Owens-Corning Building Products (U.K.)
Ltd. United Kingdom
Owens-Corning Canada Inc. Canada
Owens-Corning Capital Holdings I, Inc. Delaware
Owens-Corning Capital Holdings II, Inc. Delaware
Owens-Corning Capital L.L.C. Delaware
Owens-Corning Cayman Limited Cayman Islands
Owens-Corning Changchun Guan Dao Company
Ltd. PRC China
Owens-Corning Fiberglas A.S. Limitada Brazil
Owens-Corning Fiberglas Deutschland GmbH Germany
Owens-Corning Fiberglas Espana, S.A. Spain
Owens-Corning Fiberglas France S.A. France
Owens-Corning Fiberglas (G.B.) Ltd. United Kingdom
Owens-Corning Fiberglas (Italy) S.r.l. Italy
Owens-Corning Fiberglas Norway A/S Norway
Owens-Corning Fiberglas S.A. Uruguay
Owens-Corning Fiberglas Sweden AB Sweden
Owens-Corning Fiberglas Sweden Inc. Delaware
Owens-Corning Fiberglas Technology Inc. Illinois
Owens-Corning Fiberglas (U.K.) Ltd. United Kingdom
Owens-Corning Finance (U.K.) plc United Kingdom
Owens-Corning FSC, Inc. Barbados
State or Other
Jurisdiction
Under the Laws of
Subsidiaries of Owens Corning Which Organized
(12/31/95)
Owens-Corning Funding Corporation Delaware
Owens-Corning (Guangzhou) Fiberglas
Co., Ltd. PRC China
Owens-Corning Holdings Limited Cayman Islands
Owens-Corning Isolation France S.A. France
Owens-Corning Ontario Holdings Inc. Canada
Owens-Corning Overseas Holdings, Inc. Delaware
Owens-Corning (Overseas) Management
Limited Cyprus
Owens-Corning Real Estate Corporation Ohio
Owens-Corning Trading, Ltd. British Virgin Islands
Owens-Corning UK Holdings Limited United Kingdom
Owens-Corning Veil Netherlands B.V. The Netherlands
Owens-Corning Veil U.K. Ltd. United Kingdom
Owens-Corning Vertriebs GmbH Germany
Palmetto Products, Inc. Delaware
Scanglas Ltd. United Kingdom
SFF Acquisition Corp. Tennessee
SFF2 Acquisition Corp. Kentucky
Soltech, Inc. Kentucky
UC Industries, Inc. Delaware
WD s.a. Belgium
Western Fiberglass, Inc. Utah
Western Fiberglass of Arizona Utah
Western Fiberglass of Texas, Inc. Utah
Willcorp, Inc. Delaware
Wrexham A.R. Glass Ltd. United Kingdom
Zola Castor Holding Corporation Delaware
1053051 Ontario Inc. Canada
1086269 Ontario Inc. Canada
</TABLE>
Exhibit (23)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference of our report dated January 20,
1996, included in Owens Corning's annual report on Form 10-K
for the year ended December 31, 1995, into the Company's
previously filed Registration Statements, File Nos. 33-9563,
33-9986, 33-9987, 33-18262, 33-20997, 33-27209, 33-31687, 33-
48707, 33-57886 and 33-60487.
ARTHUR ANDERSEN LLP
Toledo, Ohio
February 20, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
SEC form 10-K and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 18
<SECURITIES> 0
<RECEIVABLES> 333
<ALLOWANCES> 19
<INVENTORY> 253
<CURRENT-ASSETS> 927
<PP&E> 3,067
<DEPRECIATION> 1,761
<TOTAL-ASSETS> 3,261
<CURRENT-LIABILITIES> 936
<BONDS> 794
<COMMON> 579
0
0
<OTHER-SE> (791)
<TOTAL-LIABILITY-AND-EQUITY> 3,261
<SALES> 3,612
<TOTAL-REVENUES> 3,612
<CGS> 2,670
<TOTAL-COSTS> 2,670
<OTHER-EXPENSES> 514
<LOSS-PROVISION> 4
<INTEREST-EXPENSE> 87
<INCOME-PRETAX> 337
<INCOME-TAX> 106
<INCOME-CONTINUING> 231
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 231
<EPS-PRIMARY> 4.64
<EPS-DILUTED> 4.40
</TABLE>
