As filed with the Securities and Exchange Commission on December 26, 1996
Registration No. 333-15063
______________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_________
OWENS CORNING
(Exact name of Registrant as specified in its charter)
Delaware 34-4323452
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Owens Corning World Headquarters
Toledo, Ohio 43659
(419) 248-8000
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
__________
Christian L. Campbell, Esq.
Senior Vice President, General Counsel and Secretary
Owens Corning
Owens Corning World Headquarters
Toledo, Ohio 43659
(419) 248-8000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
_________
Copy to:
Lyman F. Spitzer, Esq.
Shumaker, Loop & Kendrick
1000 Jackson
Toledo, Ohio 43624
__________
Approximate date of commencement of proposed sale to the public: As soon
as practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, please check the following box. [x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration number of the earlier effective
registration statement for the same offering.[ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier registration statement for the same
offering.[ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.[ ]
__________
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
472,250 Shares
Owens Corning
Common Stock
(par value $0.10 per share)
__________
The 472,250 shares of Common Stock, par value $0.10 per
share (the "Common Stock"), of Owens Corning, a Delaware
corporation (the "Company" or "Owens Corning"), offered
hereby are owned by Celfort Construction Materials Inc., a
Canada corporation unrelated to the Company. See "Selling
Stockholder." None of such 472,250 shares are offered by the
Company.
The Selling Stockholder will receive all proceeds from the
sale of the shares. The Company will receive none of the
proceeds from any sale of the shares offered hereby. See
"Selling Stockholder." All expenses of registration and
brokerage commissions incurred in connection herewith are
being borne, directly or indirectly, by the Company. The
Company, the Selling Stockholder and Goldman, Sachs & Co.
have agreed to certain indemnification arrangements. See
"Plan of Distribution."
The last reported sale price of the Common Stock on the New
York Stock Exchange on ________, 1996 was $______ per share.
See "Price Range of Common Stock and Dividends."
__________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
_________
The shares being offered hereby will be sold to or through
Goldman, Sachs & Co. in one or more transactions at market
prices prevailing at the time of sale or in negotiated
transactions, or otherwise, at varying prices to be
determined at the time of each sale. See "Plan of
Distribution."
Goldman, Sachs & Co.
__________
The date of this Prospectus is ____________, 1996.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and,
in accordance therewith, files reports, proxy statements and other
information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy statements and other information
filed by the Company with the Commission may be inspected and copied
at the Commission's public reference facilities at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's
regional offices at Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center,
13th Floor, New York, New York 10048. Copies of such material can be
obtained by mail from the Commission's Public Reference Section at 450
Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. Such
reports, proxy statements and other information also can be inspected
at the offices of the New York Stock Exchange, Inc., 20 Broad Street,
New York, New York 10005 on which the Common Stock is listed. The
Commission also maintains a Web site (http://www.sec.gov) that
contains reports, proxy and information statements and other
information regarding registrants (including the Company) that file
electronically with the Commission.
This Prospectus constitutes a part of a registration statement on
Form S-3 (together with all amendments and exhibits, the "Registration
Statement") filed by the Company with the Commission under the
Securities Act of 1933, as amended (the "Securities Act"). This
Prospectus does not contain all the information set forth in the
Registration Statement, certain portions of which have been omitted as
permitted by the rules and regulations of the Commission. Statements
contained herein concerning the provisions of any document are not
necessarily complete and, in each instance, reference is made to the
copy of such document filed as an exhibit to the Registration
Statement or otherwise filed with the Commission. Each such statement
is qualified in its entirety by such reference. For further
information with respect to the Company and the Common Stock,
reference is made to the Registration Statement.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed with the Commission and are
incorporated herein by reference:
(1) The Company's Annual Report on Form 10-K (File No. 1-
3660) for the year ended December 31, 1995, filed on
February 23, 1996.
(2) The Company's Annual Report on Form 10-K/A (File No.
1-3660) for the year ended December 31, 1995, filed on
February 23, 1996.
(3) The Company's Annual Report on Form 10-K/A (File No.
1-3660) for the year ended December 31, 1995, filed on
March 5, 1996.
(4) The Company's Annual Report on Form 10-K/A (File No.
1-3660) for the year ended December 31, 1995, filed on
December 23, 1996.
(5) The Company's Quarterly Report on Form 10-Q (File No.
1-3660) for the quarter ended March 31, 1996, filed on May
15, 1996.
(6) The Company's Quarterly Report on Form 10-Q/A
(File No. 1-3660) for the quarter ended March 31, 1996,
filed on May 21, 1996.
(7) The Company's Quarterly Report on Form 10-Q/A (File No.
1-3660) for the quarter ended March 31, 1996, filed on
December 23, 1996.
(8) The Company's Current Report on Form 8-K (File No. 1-3660)
dated June 20, 1996, filed on June 20, 1996.
(9) The Company's Quarterly Report on Form 10-Q (File No. 1-3660)
for the quarter ended June 30, 1996, filed on August
14, 1996.
(10) The Company's Quarterly Report on Form 10-Q/A (File No.
1-3660) for the quarter ended June 30, 1996, filed on
December 23, 1996.
(11) The Company's Quarterly Report on Form 10-Q (File
No. 1-3660) for the quarter ended September 30, 1996, filed
on October 28, 1996.
(12) The Company's Quarterly Report on Form 10-Q/A (File No.
1-3660) for the quarter ended September 30, 1996, filed on
December 23, 1996.
(13) The Company's Current Report on Form 8-K (File No. 1-
3660) dated December 12, 1996, filed on December 19, 1996.
All documents filed by the Company pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the shares
of Common Stock made by this Prospectus shall be deemed to be
incorporated by reference into this Prospectus and to be a part of
this Prospectus from the date of filing of such documents. Any
statement contained herein, or in a document all or a portion of which
is incorporated or deemed to be incorporated by reference herein,
shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that any statement contained herein or in any
other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such
<PAGE>
statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of
this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, on the written or oral request of such
person, a copy of any or all of the documents described above and
incorporated by reference herein (not including the exhibits to such
documents, unless such exhibits are specifically incorporated by
reference in such documents). Written or telephone requests should be
directed to: Owens Corning, Owens Corning World Headquarters, Toledo,
Ohio 43659, Attention: Secretary's Office (telephone: (419) 248-
8000).
THE COMPANY
Owens Corning, 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). The
Company operates in two industry segments - Building Materials and
Composite Materials - divided into eleven businesses. The Company also
has affiliate companies in a number of countries.
The following table summarizes selected information concerning the
Company's industry segments. For further information, see Note 1 of
the Notes to Consolidated Financial Statements of the Company as of
December 31, 1995, incorporated herein by reference, and Note 1 of
Notes to Consolidated Financial Statements of the Company as of
September 30, 1996, incorporated herein by reference.
<TABLE>
<S> <C> <C> <C> <C>
Nine Months Ended Years Ended
September 30, December 31,
1996(a) 1995 1995 1994(b)
(in millions)
Net Sales:
Building Materials $1,969 $1,767 $2,404 $2,273
Composite Materials 861 881 1,208 1,078
Consolidated Net Sales $2,830 $2,648 $3,612 $3,351
Income (Loss) from Operations:
Building Materials $ 181 $ 183 $ 237 $ 189
Composite Materials 176 162 225 109
General Corporate Expense (919) (36) (50) (72)
Total Income (Loss) from Operations $ (562) $ 309 $ 412 $ 226
_________________
</TABLE>
(a) Income from operations for the nine months ended September 30,
1996 includes the Company's net pretax charge of $875 million for
asbestos litigation claims that may be received after 1999 and
probable additional insurance recovery, all of which was recorded as
an increase in general corporate expense. Income from operations for
the nine months ended September 30, 1996 also includes the Company's
pretax gain of $37 million from the sale of its ownership interest
in its Japanese affiliate Asahi Fiber Glass Co. Ltd., all of which
was recorded as a reduction in general corporate expense. Also
included are special charges totaling $42 million including
valuation adjustments associated with prior divestitures, major
product line productivity initiatives and a contribution to the
Owens Corning Foundation. The impact of these special items was to
reduce income from operations for Building Materials by $22 million,
Composite Materials by $5 million, and to increase general corporate
expense by $15 million.
(b) Income from operations for the year ended December 31, 1994
includes a $117 million charge for productivity initiatives and
other actions taken during the first quarter of 1994 to improve the
Company's speed, focus, and efficiency. 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.
The Company's principal executive offices are located at Owens
Corning World Headquarters, Toledo, Ohio 43659, and its telephone
number is (419) 248-8000. Unless the context indicates otherwise,
references in this Prospectus to the "Company" include Owens Corning
and its consolidated subsidiaries.
3
<PAGE>
SELLING STOCKHOLDER
All of the 472,250 shares offered hereby are being offered on behalf
of and are currently owned by Celfort Construction Materials Inc., a
Canada corporation (the "Selling Stockholder"). Such shares constitute
all of the shares of Common Stock that the Selling Stockholder owns or
has the right to acquire as of the date of this Prospectus. The
Selling Stockholder expects to sell all of such shares in this
offering.
The Selling Stockholder acquired the shares offered hereby from the
Company in connection with an Asset Purchase Agreement dated as of
August 30, 1996 by and among the Company, OC Celfortec (as defined
below), the Selling Stockholder, and a corporate affiliate of the
Selling Stockholder. Under the Agreement, OC Celfortec Inc. a Canada
corporation and an indirect wholly-owned subsidiary of the Company
("OC Celfortec"), acquired substantially all the assets of the
extruded polystyrene insulation products business of the Selling
Stockholder (the "Acquisition") in consideration of, among other
things, delivery by OC Celfortec to the Selling Stockholder of OC
Celfortec's Promissory Note, which was subsequently exchanged for the
472,250 shares of Common Stock, par value $.10 per share, of the
Company being offered hereby. The Acquisition was consummated on
August 30, 1996. Pursuant to the terms of the Acquisition, as amended,
the Selling Stockholder will receive from the Company cash
consideration equal to the excess, if any, of Canadian $29 million
over the sum of (i) the net proceeds received by the Selling
Stockholder from the sale of such shares and (ii) an interim
adjustment payment of approximately Canadian $3 million paid on
December 16, 1996.
During the past three years, the Selling Stockholder has licensed
technology from the Company and has sold manufactured goods to the
Company in the ordinary course of business. The amounts involved in
these transactions were not material to the Company.
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
The Common Stock is listed and traded on the New York Stock Exchange
(the "NYSE") and the Toronto Stock Exchange (the "TSE") under the
symbol "OWC". The following table sets forth, for the periods
indicated, the high and low sales prices in dollars per share of the
Common Stock as reported in the NYSE Composite Transactions Tape.
<TABLE>
<S> <C> <C>
High Low
1994
First Quarter 46 33-1/2
Second Quarter 36-1/8 30-1/2
Third Quarter 36-1/4 30-1/8
Fourth Quarter 33-1/2 27-3/4
1995
First Quarter 36-1/4 30-1/4
Second Quarter 40 34-5/8
Third Quarter 47-1/8 36-1/2
Fourth Quarter 46-3/4 40-3/8
1996
First Quarter 46 39-3/4
Second Quarter 43-1/8 37-5/8
Third Quarter 43 36
Fourth Quarter (through December 24, 1996) 43-1/2 36-1/4
</TABLE>
A recent closing sale price for the Common Stock as reported on the
NYSE Composite Transactions Tape is set forth on the cover page of
this Prospectus.
In June 1996, the Board of Directors of the Company approved an
annual dividend policy of $.25 per share of Common Stock and declared
a dividend of $.0625 per share of Common Stock to stockholders of
record on September 30, 1996, paid on October 15, 1996. The Company
had not previously declared any dividends since 1986. In December
1996, the Board of Directors of the Company declared a dividend of
$.0625 per share of Common Stock to stockholders of record on December
31, 1996, payable January 15, 1997.
4
<PAGE>
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of shares of
Common Stock by the Selling Stockholder.
CONDENSED CONSOLIDATED CAPITALIZATION
The following table summarizes the capitalization of the Company
and its consolidated subsidiaries at September 30, 1996, including the
issuance of 472,250 shares of Common Stock in connection with the
Acquisition. For further information, see Notes 2, 3, 4, 5, 18 and 19
of Notes to Consolidated Financial Statements of the Company as of
December 31, 1995, incorporated herein by reference, and Notes 6 and 7
of Notes to Consolidated Financial Statements of the Company as of
September 30, 1996, incorporated herein by reference.
<TABLE>
<S> <C>
At September 30, 1996
(in Millions)
Short-term debt, including current portion of long-term debt $182
Long-term debt:
Senior 983
Less: Current portion (18)
Total long-term debt 965
Company obligated convertible security of subsidiary holding
solely parent debentures 194
Stockholders' equity:
Preferred stock, no par value; 8 million shares authorized;
none issued -
Common stock, $.10 par value; 100 million shares authorized;
52,048,661 shares issued and outstanding(a) 597
Deficit (1,138)
Foreign currency translation adjustments (8)
Other (19)
Total stockholders' equity (568)
Total capitalization $ 773
_________________
</TABLE>
(a) Does not include shares of Common Stock issuable or which may be
issued pursuant to various stock compensation plans of the Company
(see Note 18 of Notes to Consolidated Financial Statements of the
Company as of December 31, 1995, incorporated herein by reference).
5
<PAGE>
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following table sets forth selected consolidated financial
information of the Company (i) for the nine months ended September 30,
1996 and 1995, which has been derived from the first, second and third
quarter 1996 and 1995 unaudited quarterly consolidated financial
statements of the Company and its subsidiaries and (ii) for each of
the five fiscal years in the period ended December 31, 1995, which has
been derived from the annual consolidated financial statements of the
Company and its subsidiaries audited by Arthur Andersen LLP,
independent public accountants. This table should be read in
conjunction with those statements, all of which have been previously
filed with the Commission. The financial information presented below
for the nine months ended September 30, 1996 and 1995 reflects all
adjustments (consisting of normal recurring accruals) necessary for a
fair presentation of the Company's results. Operating results for the
nine months ended September 30, 1996 are not necessarily indicative of
the results that may be expected for the entire year ending December
31, 1996. The following table is qualified in its entirety by, and
should be read in conjunction with, "Management's Discussion and
Analysis of Financial Condition and Results of Operations" appearing
elsewhere in this Prospectus and the consolidated financial
information and related notes of the Company included in the documents
incorporated herein by reference. See "Incorporation of Certain
Documents by Reference."
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Nine Months Ended
September 30, Year Ended December 31,
1996(a) 1995 1995(b) 1994(c) 1993(d) 1992(e) 1991(f)
(In millions of dollars, except per share data and where noted)
Income Statement Data:
Net sales $2,830 $2,648 $3,612 $3,351 $2,944 $2,878 $2,783
Gross margin 746 695 942 815 678 644 597
Income (loss) from
operations (562) 309 412 226 236 213 (628)
Cost of borrowed funds 56 69 87 94 89 110 131
Net income (loss) (354) 165 231 159 131 73 (742)
Net income (loss)
per share (primary) (6.86) 3.36 4.64 3.61 3.00 1.70 (18.13)
Net income (loss)
per share (fully
diluted) (6.86) 3.18 4.40 3.35 2.81 1.67 (18.13)
Weighted average number
of shares outstanding
(in thousands of
shares) (primary) 51,616 49,060 49,711 44,209 43,593 43,013 40,924
Cash Flow Data:
Net cash flow from
operations (30) 79 285 233 253 192 253
Capital expenditures 224 183 276 258 178 144 114
Balance Sheet Data:
Total assets 4,071 3,292 3,261 3,274 3,013 3,162 3,511
Total debt 1,147 953 893 1,212 1,004 1,099 1,172
Stockholders' equity
(deficit) (568) (295) (212) (680) (869) (1,008) (1,076)
_________________
</TABLE>
(a)As indicated in "Management's Discussion and Analysis of Financial
Condition and Results of Operations," income from operations for
the nine months ended September 30, 1996 includes the Company's net
pretax charge of $875 million for asbestos litigation claims
which may be received after 1999 and probable additional
insurance recovery. A pretax gain of $37 million from the sale of
the Company's ownership interest in its Japanese affiliate Asahi
Fiber Glass Co. Ltd is also included in income from operations for
the nine months ended September 30, 1996, as well as other one time
special charges totaling $42 million which include valuation
adjustments associated with prior divestitures, major product line
productivity initiatives and a contribution to the Owens Corning
Foundation.
(b)As indicated in "Management's Discussion and Analysis of Financial
Condition and Results of Operations," net income for 1995 of $231
million, or $4.64 per share ($4.40 per share fully diluted),
included a one time gain of $8 million or $.16 per share ($.15 per
share fully diluted), which was the result of a tax loss
carryback.
6
<PAGE>
(c) As indicated in "Management's Discussion and Analysis of
Financial Condition and Results of Operations," net income for 1994
of $159 million included the following offsetting special items: an
after-tax gain of $123 million, or $2.78 per share ($2.45 per share
fully diluted), reflecting a change to the capital method of
accounting for the rebuilding of glass melting facilities; an after-
tax charge of $85 million, or $1.92 per share ($1.69 per share fully
diluted), for productivity initiatives and other actions; a non-
cash, after-tax charge of $10 million, or $.23 per share ($.20 per
share fully diluted), to reflect adoption of Statement of Financial
Accounting Standards (SFAS) No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions" for the Company's non-
U.S. plans; and a non-cash, after-tax charge of $28 million, or $.63
per share ($.56 per share fully diluted), to reflect adoption of
SFAS No. 112, "Employers' Accounting for Postemployment Benefits."
(d) As indicated in "Management's Discussion and Analysis of
Financial Condition and Results of Operations," net income for 1993
of $131 million, or $3.00 per share ($2.81 per share fully diluted),
included a credit of $26 million, or $.60 per share ($.53 per share
fully diluted), for the cumulative effect of adopting the new
accounting standard for income taxes; a one-time gain of $14
million, or $.33 per share ($.29 per share fully diluted),
reflecting a tax benefit resulting from a revaluation of deferred
taxes necessitated by the new federal tax law; an $8 million pre-tax
charge, or $.11 per share ($.10 per share fully diluted), for the
writedown of the Company's hydrocarbon ventures; and a $23 million
charge, or $.53 per share ($.47 per share fully diluted), for the
restructuring of the Company's European operations.
(e) Net income for 1992 was $73 million, or $1.70 per share ($1.67
per share fully diluted), and included a pre-tax reorganization
charge of $16 million, or $.25 per share ($.22 per share fully
diluted).
(f) In 1991, net income was $41 million, or $1.01 per share, before
the Company recorded a non-recurring pre-tax charge of $824 million,
or $13.25 per share, for uninsured asbestos litigation claims, a
$5.55 per share charge for the cumulative effect of the accounting
change for other postretirement benefits, and a $.34 per share
charge for estimated taxes payable on the undistributed earnings of
foreign subsidiaries.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
NOTE: (All per share information in this section is on a fully
diluted basis. All references to results from ongoing operations
exclude the impact of special items reported for the relevant period.)
Results of Operations
Nine Months Ended September 30, 1996
For the third quarter of 1996, the Company reported net income of
$80 million, or $1.44 per share, an increase of 14 percent from net
income of $70 million, or $1.28 per share, for the quarter ended
September 30, 1995. The earnings growth from operations reflects
primarily the benefits of acquisitions, strong results from the
roofing and foam businesses, and a favorable litigation settlement
with a former supplier, partially offset by increased administrative
charges resulting from the Company's continuing implementation of its
global productivity initiative, Advantage 2000.
Net sales were $1,025 million for the quarter ended September 30,
1996, an 11 percent increase from the 1995 level of $927 million. The
growth is attributable to volume increases in the Building Materials
segment worldwide, particularly in the U.S., combined with the
incremental increases from acquisitions. Gross margin for the quarter
ended September 30 was 27 percent of sales in 1996, compared to 26
percent in 1995.
For the nine months ended September 30, 1996, the Company reported a
net loss of $354 million, or $6.86 per share, compared to net income
of $165 million, or $3.18 per share, for the comparable 1995 period.
The net loss was the result of a $1.1 billion charge taken during the
second quarter to quantify the Company's liability for asbestos claims
which may be received after 1999 as well as a probable $225 million
additional recovery from insurance carriers (collectively, the
"asbestos charge"), having a combined impact after taxes of $542
million. Excluding the impact of the asbestos charge and the special
items reported in the first quarter of 1996, net income for the first
nine months of 1996 was $188 million, or $3.42 per share, an increase
of 14% over the comparable prior year period. Net sales for the nine
months ended September 30, 1996 were $2.830 billion, a 7% increase
over the $2.648 billion reported in the first nine months of 1995.
This increase reflects the incremental sales from the Company's
acquisitions in combination with the improvement in the Building
Materials segment, particularly in the U.S., where increased demand
due to natural disasters in the East has required expansion of service
territories of several roofing plants.
Marketing and administrative expenses from ongoing operations for
the nine months ended September 30, 1996 increased approximately 13%
over the same period in 1995, primarily as a result of incremental
administrative expenses from the acquisitions late in 1995 and 1996 as
well as the impact of the continuing implementation of the Company's
Advantage 2000 program. Advantage 2000 is a business system designed
to accelerate the speed and simplify the processes of doing business
globally. When fully implemented, the Advantage 2000 program will
replace over 200 fragmented information systems with a fully
integrated system, leading to increased productivity and cost savings.
In the Building Materials segment, sales increased 17% and 11% for
the quarter and nine month periods ended September 30, 1996,
respectively, compared to the same periods of the prior year. This
growth reflects the incremental sales from acquisitions combined with
an increase in volume worldwide, particularly in the U.S. The third
quarter sales increase in the U.S. was largely driven by the roofing
business which benefited from an increase in demand. Additionally, the
Company continues to realize the benefits of integrating new products
into its distribution systems, improving the sales of products like
FOAMULAR(R) extruded polystyrene. The Company expects further benefits
from this integration combined with its newly introduced System
Thinking(TM) strategy, which links the Company's growing product
offering with technical expertise, to provide solution-oriented
systems.
Income from ongoing operations for Building Materials increased 23%
for the quarter and 11% for the nine months ended September 30, 1996
when compared to the same periods in 1995. The increase in the third
quarter is primarily due to productivity improvements in the roofing
business and improving profitability from Canadian operations.
8
<PAGE>
In the third quarter of 1996, the Company acquired substantially all
the assets of the foam insulation business of Celfort Construction
Materials Inc. of Canada. Renamed OC Celfortec, the Valleyfield,
Quebec business, which produces FOAMULAR(R) rigid polystyrene foam
insulation, is an important part of the Company's growth agenda into
the foam insulation business. The acquisition of Celfortec increases
the Company's foam insulation plants to six, with a seventh under
construction in China.
Additionally, at the end of the third quarter the Company reached an
agreement to acquire a majority interest in Acoustical Fibreglass
Insulation (Mnfg) (Pty) Ltd., the largest South African manufacturer
of glass fiber reinforcements and glass fiber and rock wool
insulation. The new company, headquartered in Johannesburg, South
Africa, will be known as Owens Corning South Africa (Pty) Ltd.
In the second quarter of 1996, the Company acquired certain U.S.
assets of Partek Insulation, Inc., a subsidiary of Partek North
America, Inc. Partek's rockwool-based insulation will help the Company
extend its mechanical insulation product offering into higher-
temperature applications. Additionally the Company acquired the United
Kingdom-based Linpac Insulation. With production facilities in the
U.K. and Spain, Linpac's extruded polystyrene (XPS) PolyFoam(R)
insulation will be added to the Company's European building materials
product line.
In the Composite Materials segment, sales decreased slightly for the
quarter and nine months ended September 30, 1996, compared to the same
periods of the prior year. Gains in Latin America, an identified
growth region, and in the U.S., were more than offset by declines in
Europe and Canada, attributable to a softening demand, as well as a
strengthening U.S. dollar. Composite Materials income from operations
in the third quarter of 1996 increased 9% compared to the third
quarter of 1995. For the nine months ended September 30, 1996, income
from ongoing operations increased 12% compared to the same period in
1995, primarily due to an improvement in pricing combined with
productivity initiatives, particularly in the U.S.
Fiscal Years 1995, 1994 and 1993
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 of the Company as of December 31,
1995, incorporated herein by reference.
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 of the Company as of December 31, 1995, incorporated herein
by reference.
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 of the Company
as of December 31, 1995, incorporated herein by reference.
9
<PAGE>
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 of the Company as of December 31, 1995, incorporated herein
by reference. 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.
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(TM) fiber. The Miraflex(TM) 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.
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.
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 of the Company as of December 31, 1995,
incorporated herein by reference.
10
<PAGE>
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 of the Company as of December 31,
1995, incorporated herein by reference.
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 of the Company as of December 31,
1995, incorporated herein by reference.
Liquidity, Capital Resources and Other Related Matters
Nine Months Ended September 30, 1996
In June 1996 the Company announced that its Board of Directors had
approved an annual dividend policy of 25 cents per share and declared
a quarterly dividend of 6-1/4 cents per share payable on October 15,
1996 to shareholders of record as of September 30, 1996. Please see
Note 7 to the Consolidated Financial Statements of the Company as of
September 30, 1996, incorporated herein by reference.
Cash flow from operations, excluding asbestos-related activities,
was $114 million for the third quarter of 1996, compared to $135
million for the third quarter of 1995. The decrease is attributable
in part to an increase in working capital, particularly receivables,
due to strong September sales, coupled with increased composites
inventories, where short-term capacity is being modified as the
Company's customers adjust their inventory levels.
At September 30, 1996, the Company's net working capital was $34
million and its current ratio was 1.03, compared to negative $9
million and .99, respectively, at December 31, 1995. The increase in
1996 is in part due to an increased sales volume driving receivables
as well as incremental receivables from acquisitions, offset in large
part by increased short-term borrowings. Inventories at September 30,
1996 increased 38% over December 31, 1995 levels due to anticipated
fourth quarter demand together with the incremental inventories of
acquisitions as well as the item discussed in the preceding paragraph.
Inventories as a percent of sales for the nine months ended September
30, 1996 and 1995 remained relatively unchanged at approximately 12%.
Please see Notes 4 and 5 to the Consolidated Financial Statements of
the Company as of September 30, 1996, incorporated herein by
reference.
The Company's total borrowings at September 30, 1996 were $1.147
billion, $254 million higher than at year-end 1995. The Company's
increased borrowings in 1996 are being driven by the build of
inventories for anticipated fourth quarter demand as well as other
working capital requirements.
As of September 30, 1996, the Company had unused lines of credit of
$231 million available under long-term bank loan facilities and an
additional $137 million under short-term facilities, compared to $358
million and $239 million, respectively, at year-end 1995. The decrease
in available lines of credit is primarily the result of increased
borrowings. Letters of credit issued under the Company's long-term
U.S. loan facility, most of which support appeals from asbestos
trials, reduce credit availability of that facility. The impact of
such reduction is reflected in the unused lines of credit discussed
above.
Capital spending for property, plant and equipment, excluding
acquisitions and investments in affiliates, was $57 million and $224
million for the quarter and nine months ended September 30, 1996,
respectively. For the year 1996, the Company anticipates capital
spending, exclusive of acquisitions and investments in affiliates, to
be approximately $285 million. The Company expects that funding for
these expenditures will be from the Company's operations and external
sources as required.
11
<PAGE>
Gross payments for asbestos litigation claims during the third
quarter of 1996, including $13 million in defense costs and $3 million
for appeal bond and other costs, were $57 million or $34 million after-
tax. During the third quarter of 1996, the Company received
approximately 5,400 new asbestos personal injury cases and closed
approximately 2,100 cases. Over the next twelve months, the Company's
total payments for asbestos litigation claims, including defense
costs, are expected to be approximately $325 million. Proceeds from
insurance of $100 million are expected to be available to cover these
costs, resulting in a net pretax cash outflow of $225 million, or $135
million after-tax. Please see Note 8 to the Consolidated Financial
Statements of the Company as of September 30, 1996, incorporated
herein by reference.
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.
In June 1996 the Company filed a lawsuit in federal court in New
Orleans alleging a massive scheme to defraud the Company in connection
with asbestos litigation cases. The suit alleges that medical test
results in tens of thousands of asbestos claims were falsified by the
owners and operators of certain pulmonary function testing
laboratories. The Company believes that as many as 40,000 claims in
its current backlog involve plaintiffs whose pulmonary function tests
were improperly administered or manipulated by the testing laboratory
or otherwise inconsistent with proper medical practice.
Fiscal Years 1995, 1994 and 1993
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 of
the Company as of December 31, 1995, incorporated herein by reference.
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 of the Company as of December 31, 1995,
incorporated herein by reference.
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.
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.
12
<PAGE>
Gross payments for asbestos litigation claims during 1995, including
$48 million in defense costs and $6 million for appeal bond and other
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. Please see Note 21 to the
Consolidated Financial Statements of the Company as of December 31,
1995, incorporated herein by reference.
General Matters - as of September 30, 1996
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 the third quarter of 1996, the Company was designated a PRP in
such federal, state, local or private proceedings for five additional
sites. At September 30, 1996, a total of 43 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
an $18 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.
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.
ASBESTOS AND OTHER LITIGATION
The following is a discussion of the status of the asbestos and
other litigation as of September 30, 1996; see also "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity, Capital Resources and Other Related Matters."
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 September 30, 1996, approximately 155,500 asbestos personal
injury claims were pending against the Company, of which 29,700 were
received in the first nine months of 1996. The Company received
approximately 55,900 such claims in 1995, 29,100 in 1994, and 32,400
in 1993.
13
<PAGE>
Many of the recent claims appear to be the product of mass screening
programs and not to involve malignancies or other significant asbestos
related impairment. The Company believes that as many as 40,000 of the
recent claims involve plaintiffs whose pulmonary function tests (PFTs)
were improperly administered or manipulated by the testing laboratory
or otherwise inconsistent with proper medical practice, and it is
investigating a number of testing organizations and their methods. On
June 19, 1996 the Company filed suit in federal court in New Orleans
against the owners and operators of certain pulmonary function testing
laboratories in the southeastern US challenging such improper testing
practices. This matter is now in active pre-trial discovery.
The Company is engaging in discussions with a group of approximately
30 leading plaintiffs' law firms to explore approaches toward
resolution of its asbestos liability. The discussions involve the
possible resolution of both pending claims and claims that may be
filed in the future. While discussions are ongoing, the law firms
involved in the talks have agreed to refrain from serving any further
asbestos claims on the Company unless they involve malignancies.
This agreement, which expired as to certain of the firms on November
1, 1996, has been extended at least until January 1, 1997, by firms
representing a substantial majority of the cases historically
filed by the group. This agreement may have impacted the number of
cases received by the Company during the second and third quarters
of 1996.
Through September 30, 1996, the Company had resolved (by settlement
or otherwise) approximately 179,000 asbestos personal injury claims,
including the dismissal in May 1996, for lack of medical proof, of
approximately 15,000 maritime cases which named Owens Corning as a
defendant, resulting in an 11,700 case reduction in the backlog after
reduction for duplicate cases and cases previously settled. During
1993, 1994, and 1995, the Company resolved approximately 60,000
asbestos personal injury claims, over 99% without trial, 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 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 September 30, 1996, the Company had approximately $368 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 primary level non-products insurance,
the Company has a significant amount of unconfirmed potential non-
products coverage with excess level carriers. For purposes of
calculating the amount of insurance applicable to asbestos
liabilities, the Company has estimated its probable recoveries in
respect of this additional non-products coverage at $225 million,
which amount was recorded in the second quarter of 1996. This coverage
is unconfirmed and the amount and timing of recoveries from these
excess level policies will depend on subsequent negotiations or
proceedings.
14
<PAGE>
Reserve
The Company's 1995 financial statements included a reserve for the
estimated cost associated with asbestos personal injury claims that
may be received through the year 1999. Such financial statements did
not include any provision for the cost of unasserted claims which
might be received in years subsequent to 1999 because management was
unable to predict the number of such claims and other factors which
would affect the cost of such claims. Throughout 1996, the Company
continued to review the feasibility of making provision for the cost
of unasserted asbestos personal injury claims with respect to claims
which may be received by the Company during and after the year 2000.
In conducting such review the Company took into account, among other
things, the effect of recent federal court decisions relating to
punitive damages and the certification of class actions in asbestos
cases, the pendency of the discussions with the group of plaintiffs'
law firms referred to above, the results of its continuing
investigations of medical screening practices of the kind at issue in
the New Orleans PFT law suit, recent developments as to the prospects
for federal and state tort reform, the continued rate of case filings
at historically - high levels, additional information on filings
received during the 1993-1995 period and other factors. As a result of
the review, the Company took a non-recurring, noncash charge to
earnings of $1.1 billion in the second quarter of 1996. This charge
represented the Company's estimate of the indemnity and defense costs
associated with unasserted asbestos personal injury claims that may be
received by the Company in years subsequent to 1999.
The combined effect of the $1.1 billion charge and the $225 million
probable additional non-products insurance recovery was an $875
million charge in the second quarter of 1996.
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 in the future (the
"Liabilities"), and its estimated insurance recoveries in respect of
such claims (the "Insurance"), are reported separately as follows:
<TABLE>
<S> <C> <C>
September 30, December 31,
1996 1995
(In millions of dollars)
Reserve for asbestos
litigation claims
Current $ 325 $ 250
Other 1,735 887
Total Reserve 2,060 1,137
Insurance for asbestos
litigation claims
Current
100 100
Other 493 330
Total Insurance 593 430
Net Asbestos Liability $1,467 $ 707
</TABLE>
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 insurance, including the additional $225 million
in non-products coverage 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. The Company believes that its
estimate of Liabilities and Insurance will be sufficient to provide
for the costs of all pending and future asbestos personal injury
claims that involve malignancies or significant asbestos-related
functional impairment. While such estimates cover unimpaired claims,
the number and cost of unimpaired claims are much harder to predict
and such estimates reflect the Company's belief that such claims have
little or no value. The Company 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.
15
<PAGE>
Management Opinion
Although any opinion is necessarily judgmental and must be based
on information now known to the Company, in the opinion of management,
while any 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 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.
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.
DESCRIPTION OF CAPITAL STOCK
The Company's Certificate of Incorporation, as amended (the
"Charter"), currently authorizes the issuance of two classes of stock:
(i) 100 million shares of Common Stock, par value $0.10 per share, of
which 52,048,661 shares were issued and outstanding as of September
30, 1996 and (ii) 8 million shares of Preferred Stock, without par
value, of which no shares were issued and outstanding on such date.
The following descriptions of the classes of the Company's capital
stock are summaries, do not purport to be complete, and are subject,
in all respects, to the applicable provisions of the General
Corporation Law of Delaware, the Charter, the Certificate of
Designation of Series A Participating Preferred Stock (and the
Certificate of Increase of Designation of Series A Participating
Preferred Stock (the "Certificate of Increase")) and the 1986 Rights
Agreement and 1996 Rights Agreement (both as hereinafter defined)
which, in the case of the Charter, the Certificate of Designation (and
the Certificate of Increase) and the 1986 Rights Agreement and 1996
Rights Agreement, are included as Exhibits to the Registration
Statement of which this Prospectus forms a part.
Common Stock
Each holder of Common Stock is entitled to one vote for every share
standing in his or her name on the books of the Company. The Common
Stock does not have cumulative voting rights for the election of
directors, which means that holders of more than 50% of the shares
voting for the election of directors can elect 100% of the directors
if they choose to do so, and, in such event, the holders of the
remaining shares voting for the election of directors will not be able
to elect any person or persons to the Board of Directors.
Subject to the limitations contained in the Company's debt
instruments and after provision for the payment of dividends on any
series of Preferred Stock which might be issued and which has a
preference with respect to the payment of dividends, holders of Common
Stock are entitled to receive such dividends as may be declared by the
Board. See "Price Range of Common Stock and Dividends" above.
The Common Stock has no conversion rights and is not redeemable. No
holder of Common Stock has any preemptive right to subscribe for any
stock or other securities of the Company which may be issued.
In the event of dissolution, liquidation or winding up of the
Company, or upon any distribution of its assets, the holders of Common
Stock are entitled to receive pro rata all of the assets available for
distribution to stockholders, subject to any preferential right which
may be accorded to any series of Preferred Stock which might be
issued.
The Company's Common Stock is listed on the NYSE and the TSE. The
outstanding shares of Common Stock are validly issued, fully paid and
non-assessable.
<PAGE>
16
Preferred Stock
The Board of Directors of the Company has the authority, without
further action by stockholders, to determine the principal rights,
preferences and privileges of any unissued Preferred Stock. Provisions
may be included in the shares of Preferred Stock, such as
extraordinary voting, dividend, redemption or conversion rights, which
could discourage an unsolicited tender offer or takeover proposal.
Out of the authorized Preferred Stock, the Company has designated
750,000 shares of Series A Participating Preferred Stock ("Series A
Preferred Stock"), the terms of which are summarized below under
"Series A Preferred Stock." Each outstanding share of Common Stock
includes a right, which expires December 30, 1996, to purchase one one-
hundredth of a share of Series A Preferred Stock ("1986 Preferred
Share Purchase Rights"), which Rights are registered on the New York
Stock Exchange and the terms of which are summarized below under "1986
Preferred Share Purchase Rights." On December 12, 1996, the Board of
Directors of the Company declared a dividend of one right to purchase
one one-hundredth of a share of Series A Preferred Stock ("1996
Preferred Share Purchase Rights") on each outstanding share of Common
Stock. The 1996 Preferred Share Purchase Rights will be issued on
December 30, 1996 to stockholders of record on that date. The terms
of the 1996 Preferred Share Purchase Rights are summarized below under
"1996 Preferred Share Purchase Rights."
Series A Preferred Stock
Dividends
Holders of shares of Series A Preferred Stock are entitled to
receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, dividends, payable in cash
quarterly in arrears on January 1, April 1, July 1 and October 1 of
each year (each a "Quarterly Dividend Payment Date"), at an annual
rate per share of the greater of (i) $10.00 or (ii) 100 times the
aggregate per share amount of all cash and non-cash dividends or other
distributions (other than dividends payable in Common Stock or
subdivisions of outstanding shares of Common Stock) declared on the
Common Stock since the last Quarterly Dividend Payment Date. Accrued
but unpaid dividends accumulate but do not bear interest.
The Series A Preferred Stock will be junior as to dividends to any
series or class of Preferred Stock (or any similar stock) that ranks
senior as to dividends to the Series A Preferred Stock. The Series A
Preferred Stock has priority as to dividends over the Common Stock and
any other series or class of the Company's stock thereafter issued
that ranks junior as to dividends to the Series A Preferred Stock. If
dividends or distributions payable on the Series A Preferred Stock are
in arrears, the Company (i) may not declare or pay dividends or other
distributions on the Common Stock (or any other stock of the Company
that ranks junior to the Series A Preferred Stock) and (ii) is
restricted in its declaration and payment of dividends or other
distributions on any stock of the Company that ranks on a parity with
the Series A Preferred Stock except for dividends paid ratably in
accordance with the respective preferential amounts payable on the
Series A Preferred Stock and all such parity stock.
Liquidation Rights
In the case of the voluntary or involuntary liquidation, dissolution
or winding-up of the Company, holders of shares of Series A Preferred
Stock are entitled to receive the liquidation preference of the higher
of (i) $100.00 per share, plus an amount equal to the accrued and
unpaid dividends to the payment date, or (ii) 100 times the aggregate
per share amount to be distributed to holders of shares of Common
Stock, before any payment or distribution is made to the holders of
shares of Common Stock (or any other stock of the Company that ranks
junior to the Series A Preferred Stock). The holders of shares of
Series A Preferred Stock and of any other stock of the Company that
ranks on a parity with the Series A Preferred Stock are entitled to
share ratably, in accordance with the respective preferential amounts
payable on such stock, in any distribution that is not sufficient to
pay in full the aggregate of the amounts payable thereon.
Consolidation and Merger Rights
In case the Company enters into any consolidation, merger,
combination or other transaction in which the shares of Common Stock
are changed into or exchanged for other stock or securities, cash
and/or any other property, each share of Series A Preferred stock at
the same time will be similarly changed into or exchanged for an
amount per share equal to 100 times the aggregate amount of stock or
securities, cash and/or any other property into which or for which
each share of Common Stock is changed or exchanged.
Limitation on Share Repurchase
If dividends or distributions payable on the Series A Preferred
Stock are in arrears, the Company may not redeem, purchase or
otherwise acquire for consideration (i) any stock of the Company that
ranks on a parity with the Series A Preferred Stock, except in
exchange for shares of any stock of the Company ranking junior to the
Series A Preferred Stock or (ii) any shares of Series A Preferred
Stock or any stock of the Company that ranks on a parity with the
Series A Preferred Stock, except through a purchase offer made in
writing or by publication to all holders of such shares on terms that
the Board of Directors determines will result in fair and equitable
treatment among the respective series or classes of shares.
17
<PAGE>
Voting Rights
Each share of Series A Preferred Stock entitles the holder thereof
to 100 votes on all matters submitted to a vote of the Company's
stockholders, and the holders of the shares of Series A Preferred
Stock and the holders of shares of Common Stock and any other capital
stock of the Company having general voting rights will vote together
as one class on all matters submitted to a vote of the Company's
stockholders.
If, at the time of any annual stockholders' meeting for the election
of directors, the equivalent of at least six quarterly dividends
payable on any shares of Series A Preferred Stock are in default, the
number of members of the Company's Board of Directors will be
increased by two, and the holders of the Series A Preferred Stock,
voting separately as a class, will be entitled at such meeting (and
each subsequent annual stockholders' meeting) to elect such two
additional directors. Such voting rights will terminate when all such
dividends in arrears have been paid or declared and set apart for
payment. Upon the termination of such voting rights, the terms of
office of all directors so elected will terminate immediately and the
number of members of the Company's Board of Directors will be reduced
by two.
Other Features
The shares of Series A Preferred Stock are not redeemable. Unless
otherwise provided in the Company's Restated Certificate of
Incorporation or the designation of a subsequent series of Preferred
Stock, the Series A Preferred Stock will rank junior to all of the
Company's other series of Preferred Stock as to the payment of
dividends and the distribution of assets on liquidation, dissolution
or winding-up, and senior to the Company's Common Stock. 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).
1986 Preferred Share Purchase Rights
Under a Rights Agreement, dated as of December 18, 1986 (the "1986
Rights Agreement"), between the Company and The Chase Manhattan Bank
(as successor by merger to Manufacturers Hanover Trust Company), as
Rights Agent, each outstanding share of Common Stock is coupled with a
1986 Preferred Share Purchase Right. Each right entitles the holder
to buy from the Company one one-hundredth of a share of Series A
Preferred Stock at a price of $50.
The 1986 Preferred Share Purchase 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. Until the 1986 Preferred Share
Purchase Rights detach from the Common Stock (or the earlier
termination or redemption of the 1986 Preferred Share Purchase
Rights), an additional 1986 Preferred Share Purchase right will be
issued with every share of newly issued Common Stock.
1996 Preferred Share Purchase Rights
On December 12, 1996, the Board of Directors of the Company declared
a dividend of one 1996 Preferred Share Purchase Right on each
outstanding share of Common Stock. The 1996 Preferred Share Purchase
Rights will be issued on December 30, 1996, to stockholders of record
on that date. Under a Rights Agreement, dated as of December 12, 1996
(the "1996 Rights Agreement"), between the Company and The Chase
Manhattan Bank, as Rights Agent, each outstanding share of Common
Stock will be coupled with a 1996 Preferred Share Purchase Right after
the rights are issued. Each right will entitle the holder to buy from
the Company one one-hundredth of a share of Series A Preferred Stock
at a price of $190.
The 1996 Preferred Share Purchase Rights become exercisable and
detach from the Common Stock ten business days after a person or group
acquires, or announces a tender offer for, 15% or more of the
Company's outstanding shares of Common Stock. The rights will expire
on December 30, 2006, unless redeemed earlier by the Company. The
rights are redeemable by the Company at one cent each at any time
prior to public announcement or notice to the Company that an
acquiring person or group has purchased 15% or more of the Company's
outstanding Common Stock (an "Acquisition Event"). At any time after
an Acquisition Event and prior to the acquisition by such person or
group of 50% or more of the outstanding Common Stock, the Board of
Directors of the Company may exchange one share of Common
Stock for each right outstanding, other than the rights held by the
acquiring person or group. At any time after an Acquisition Event
and the rights become exercisable, each right, other than rights held
by the acquiring person or group, would entitle its holder to buy
Common Stock of the Company having a market value of twice the
exercise price of the right or, if the Company is subsequently
acquired in a merger or other business combination, such shares of
the acquiring or surviving company. Until the 1996 Preferred Share
Purchase Rights detach from the Common Stock (or the earlier
termination or redemption of the 1996 Preferred Share Purchase Rights),
an additional 1996 Preferred Share Purchase Right will be issued with
every share of Common Stock issued after December 30, 1996.
18
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Delaware Law and Certain Charter Provisions
The Company is subject to the provisions of Section 203 of the
General Corporation Law of Delaware. In general, this statute
prohibits a publicly held Delaware corporation from engaging in a
"business combination" with an "interested stockholder" for a period
of three years after the date of the transaction in which the person
becomes an interested stockholder, unless the business combination is
approved in a prescribed manner. An "interested stockholder" is a
person who, together with affiliates and associates, owns (or within
the prior three years did own) 15% or more of the corporation's voting
stock.
In addition to Section 203 of the General Corporation Law of
Delaware and the Preferred Share Purchase Rights, the Charter contains
several provisions that may discourage certain transactions involving
an actual or threatened change of control of the Company.
For example, the Charter requires that certain business combinations
and other combinations involving the Company and a holder of 10% or
more of its voting securities be approved by at least 66-2/3% of all
shares having voting rights.
The foregoing provisions of the General Corporation Law of Delaware
and the Charter are intended to encourage persons seeking to acquire
control of the Company to consult first with the Board of Directors to
permit negotiation of the terms of any proposed business combination
or offer. They may, however, also have the effect of discouraging a
third party from attempting to acquire control of the Company. In
addition, since these provisions are designed to discourage
accumulations of large blocks of stock by third parties who wish to
gain control of the Company, such provisions may reduce the temporary
market price fluctuations caused by such accumulations.
Transfer Agent and Registrar
The primary Transfer Agent and Registrar for the Common Stock is
ChaseMellon Shareholder Services, located in New York, New York.
PLAN OF DISTRIBUTION
The distribution of the shares offered hereby by the Selling
Stockholder may be effected promptly after the effective date of the
Registration Statement of which this Prospectus is a part in one or
more transactions at market prices prevailing at the time of sale or
in negotiated transactions, or otherwise, at varying prices to be
determined at the time of each sale, in each case in accordance with
the terms of the Common Stock Registration Rights Agreement among the
Company, the Selling Stockholder and a corporate affiliate of the
Selling Stockholder, as amended by Letter Agreement dated December 12,
1996. Such transactions may be effected on a stock exchange or the
over-the-counter market. The Selling Stockholder will effect such
transactions by selling shares to or through Goldman, Sachs & Co. The
Company has agreed to indemnify the Selling Stockholder and certain
control and other related persons in certain circumstances against
certain liabilities, including liabilities under the Securities Act.
The Selling Stockholder has agreed to indemnify the Company and
certain control and related persons against certain liabilities,
including liabilities under the Securities Act, but only in limited
circumstances arising out of such Selling Stockholder having furnished
incorrect written information to the Company for use in the
Registration Statement. The Company and the Selling Stockholder have
also agreed to indemnify Goldman, Sachs & Co. from certain
liabilities, including liabilities under the Securities Act.
The Company is directly or indirectly bearing all costs relating to
the registration of the shares offered hereby, including any
underwriting discounts or commissions directly attributable to the
sale of the shares offered hereby by or on behalf of the Selling
Stockholder. Goldman, Sachs & Co. may be deemed to be an "underwriter"
within the meaning of the Securities Act, and any commissions and
discounts received by Goldman, Sachs & Co. and any profit on the
resale of the shares offered hereby by Goldman, Sachs & Co. might be
deemed to be underwriting discounts and commissions under the
Securities Act.
VALIDITY OF SHARES
The validity of the shares of Common Stock offered hereby and of the
related Preferred Share Purchase Rights will be passed upon by
Christian L. Campbell, Esq., Senior Vice President, General Counsel
and Secretary of the Company. Mr. Campbell is a direct or indirect
owner of 7,483 shares of Common Stock and 44,500 options to buy shares
of Common Stock, 10,833 of which are currently exercisable.
19
<PAGE>
EXPERTS
The financial statements and schedules incorporated in this
Prospectus by reference to the Annual Report on Form 10-K of the
Company for the year ended December 31, 1995 have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in
their report with respect thereto, and are incorporated in this
Prospectus by reference in reliance upon the authority of said firm as
experts in giving said reports.
The consolidated financial statements of the Company included in
any subsequent Annual Report of the Company on Form 10-K and
incorporated by reference in the Prospectus will have been examined by
the independent public accountants whose report thereon appears in
such Annual Report. Such consolidated financial statements of the
Company shall be deemed to be incorporated herein from the date of
filing of the applicable report on Form 10-K in reliance on the
reports of such independent public accountants, given on the authority
of such firm as experts in auditing and accounting.
20
<PAGE>
No person has been authorized to give any information or to 472,250 Shares
make any representations other than those contained in this
Prospectus and, if given or made, such information or
representations must not be relied upon as having been
authorized. This Prospectus does not constitute an offer to
sell or the solicitation of an offer to buy any securities
other than the securities described in this Prospectus or
an offer to sell or the solicitation of an offer to buy
such securities in any circumstances in which such offer or
solicitation is unlawful. Neither the delivery of this
Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that there has been
no change in the affairs of the Company since the date of
this Prospectus or that the information contained herein is Owens Corning
correct as of any time subsequent to the date of such
information.
Common Stock
(par value $0.10 per share)
<TABLE>
<S> <C>
TABLE OF CONTENTS
Page
Available information 2
Incorporation of Certain Documents by Reference 2
The Company 3
Selling Stockholder 4
Price Range of Common Stock and Dividends 4
Use of Proceeds 5
Condensed Consolidated Capitalization 5
Selected Consolidated Financial Information 6
Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
Asbestos and Other Litigation 13
Description of Capital Stock 16
Plan of Distribution 19 Goldman, Sachs & Co.
Validity of Shares 19
Experts 20
</TABLE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.*
The following table sets forth the expenses (other than brokerage
fees and commissions) expected to be incurred in connection with the
offering described in this Registration Statement. All amounts are
estimated except the Securities and Exchange Commission filing fee and
the New York Stock Exchange and Toronto Stock Exchange listing fees.
<TABLE>
<S> <C>
Securities and Exchange Commission filing fee $ 5,438
New York Stock Exchange listing fee 1,653
Toronto Stock Exchange listing fee 1,263
Printing and engraving expenses -
Accountant's fees and expenses 15,000
Legal fees and expenses 7,000
Miscellaneous expenses 2,500
Total $32,854
</TABLE>
___________
* No portion of these expenses will be borne by the Selling
Stockholder.
Item 15. Indemnification of Directors and Officers.
A. Reference is made to Section 102(b)(7) of the General Corporation
Law of the State of Delaware as to the limitation of personal
liability of directors and officers and to Section 145 of the General
Corporation Law of the State of Delaware as to indemnification by the
Registrant of its directors and officers.
B. Article FOURTEENTH of the Registrant's Certificate of
Incorporation, as amended, provides as follows with respect to the
indemnification of the Registrant's directors and officers and the
limitation of personal liability of its directors and officers:
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.
C. Article IX of the Registrant's By-Laws provides as follows with
respect to the indemnification of the Registrant's directors and
officers:
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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 the 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 companies 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).
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<PAGE>
D. The Registrant has entered into an Indemnity Agreement with each
member of the Registrant's Board of Directors. Each Indemnity
Agreement provides, among other things, that in the event the director
was, is or becomes a party, witness or other participant in a Claim
(as defined in the Indemnity Agreement) by reason of (or arising in
part out of) an Indemnifiable Event (as defined in the Indemnity
Agreement), the Registrant is required to indemnify the director to
the fullest extent authorized by the Registrant's By-Laws as in effect
on the date of the Indemnification Agreement notwithstanding any
subsequent amendment, repeal or modification of such By-Laws, against
any and all expenses, judgments, fines, penalties and amounts paid in
settlement of such Claim. The Indemnity Agreement requires that the
Registrant advance to the director all expenses relating to Claims and
contains an undertaking by the director to reimburse the Registrant
for any such advances that are subsequently determined in a final
judicial determination to have been impermissible under applicable
law.
E. The directors and officers of the Registrant are covered by
insurance policies, maintained by the Registrant at its expense,
insuring the directors and officers against certain liabilities which
might be incurred by them in such capacities, including liabilities
arising under the Securities Act of 1933.
Item 16. Exhibits.
Exhibit
No. Description
1 - Form of agreement between Goldman, Sachs & Co.,
the Registrant and Celfort Construction Materials Inc.*
4(a) - Certificate of Incorporation of the Registrant, as
amended (incorporated by reference to Exhibit 3 to
Registrant's annual report on Form 10-K (File No. 1-3660)
for the fiscal year ended December 31, 1995).
4(b) - By-laws of the Registrant, as amended
(incorporated by reference to Exhibit 3 to Registrant's
annual report on Form 10-K (File No. 1-3660) for the fiscal
year ended December 31, 1995).
4(c) - Specimen Certificate of Common Stock of the
Registrant (incorporated by reference to Exhibit 4(c) to
Registrant's Registration Statement on Form S-8,
Registration No. 333-09367).
4(d) - Rights Agreement, dated as of December 18, 1986
(incorporated by reference to Exhibit 1 to Registrant's
Registration Statement on Form 8-A (File No. 1-3660), dated
December 19, 1986).
4(e) - Copy of Certificate of Designation of Series A
Participating Preferred Stock (incorporated by reference to
Exhibit B to the Rights Agreement, which is Exhibit 1 to
Registrant's Registration Statement on Form 8-A (File No. 1-
3660), dated December 23, 1986).
4(f) - Copy of Certificate of Increase of Designation of
Series A Participating Preferred Stock (incorporated by
reference to Exhibit 4(f) to Registrant's Registration
Statement on Form S-3, Registration No. 33-55163).
4(g) - Common Stock Registration Rights Agreement, dated
as of August 30, 1996, among the Registrant and the parties
thereto.*
4(h) - Letter Agreement, dated as of December 12, 1996.
4(i) - Rights Agreement, dated as of December 12, 1996
(incorporated by reference to Exhibit 1 to Registrant's
Registration Statement on Form 8-A (File No. 1-3660), dated
December 19, 1996).
5 - Opinion of counsel as to the legality of the
securities being registered.*
23(a) - Consent of Arthur Andersen LLP, independent public
accountants.
23(b) - Consent of counsel (included in Exhibit 5).*
24 - Powers of Attorney.*
- ------------------
*Previously filed
Item 17. Undertakings.
(a) Rule 415 Offering.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required in Section 10(a)(3) of
the Securities Act of 1933;
II-3
<PAGE>
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if
the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
(b) Filings Incorporating Subsequent Exchange Act Documents by
Reference.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each
filing of the Registrant's annual report pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) Policy Regarding Indemnification.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
(d) Registration Statements Permitted by Rule 430A.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed
as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be part of this registration statement as of the time it was
declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly
caused this Amendment No. 2 to Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City
of Toledo, State of Ohio, on December 26, 1996.
OWENS CORNING
By: /s/ David W. Devonshire
(David W. Devonshire)
Senior Vice President and Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 2 to the Registration Statement has been signed by the
following persons in the capacities and on the dates indicated:
SIGNATURES TITLE DATE
/s/ GLEN H. HINER * Chairman of the Board, December 26, 1996
(Glen H. Hiner) Chief Executive Officer,
and Director (principal
executive officer)
/s/ David W. Devonshire Senior Vice President and December 26, 1996
(David W. Devonshire) Chief Financial Officer
(principal financial officer)
/s/ Steven J. Strobel Vice President and Controller December 26, 1996
(Steven J. Strobel)
/s/ NORMAN P. BLAKE, JR.* Director December 26, 1996
(Norman P. Blake, Jr.)
________________________ Director December , 1996
(Leonard S. Coleman, Jr.)
/s/ WILLIAM W. COLVILLE * Director December 26, 1996
(William W. Colville)
/s/ JOHN H. DASBURG * Director December 26, 1996
(John H. Dasburg)
/s/ LANDON HILLIARD * Director December 26, 1996
(Landon Hilliard)
/s/ SIR TREVOR HOLDSWORTH * Director December 26, 1996
(Sir Trevor Holdsworth)
/s/ JON M. HUNTSMAN, JR.* Director December 26, 1996
(Jon M. Huntsman, Jr.)
/s/ ANN IVERSON * Director December 26, 1996
(Ann Iverson)
/s/ W. WALKER LEWIS * Director December 26, 1996
(W. Walker Lewis)
/s/ FURMAN C. MOSELEY, JR.* Director December 26, 1996
(Furman C. Moseley, Jr.)
/s/ W. ANN REYNOLDS * Director December 26, 1996
(W. Ann Reynolds)
*BY:/s/ David W. Devonshire
Attorney-in-fact
II-5
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description Page
1 - Form of agreement between Goldman, Sachs & Co., the Registrant and
Celfort Construction Materials Inc.*
4(a) - Certificate of Incorporation of the Registrant, as amended
(incorporated by reference to Exhibit 3 to Registrant's annual
report on Form 10-K (File No. 1-3660) for the fiscal year ended
December 31, 1995).
4(b) - By-laws of the Registrant, as amended (incorporated by reference
to Exhibit 3 to Registrant's annual report on Form 10-K (File No.
1-3660) for the fiscal year ended December 31, 1995).
4(c) - Specimen Certificate of Common Stock of the Registrant (incorporated
by reference to Exhibit 4(c) to Registrant's Registration Statement
on Form S-8, Registration No. 333-09367).
4(d) - Rights Agreement , dated as of December 18, 1986 (incorporated by
reference to Exhibit 1 to Registrant's Registration Statement on Form
8-A (File No. 1-3660), dated December 19, 1986).
4(e) - Copy of Certificate of Designation of Series A Participating
Preferred Stock (incorporated by reference to Exhibit B to the Rights
Agreement, which is Exhibit 1 to Registrant's Registration Statement
on Form 8-A (File No. 1-3660), dated December 23, 1986).
4(f) - Copy of Certificate of Increase of Designation of Series A
Participating Preferred Stock (incorporated by reference to Exhibit
4(f) to Registrant's Registration Statement on Form S-3, Registration
No. 33-55163).
4(g) - Common Stock Registration Rights Agreement, dated as of August 30,
1996, among the Registrant and the parties thereto.*
4(h) - Letter Agreement, dated as of December 12, 1996.
4(i) - Rights Agreement, dated as of December 12, 1996 (incorporated by
reference to Exhibit 1 to Registrant's Registration Statement on Form
8-A (File No. 1-3660), dated December 19, 1996).
5 - Opinion of counsel as to the legality of the securities being
registered.*
23(a) - Consent of Arthur Andersen LLP, independent public accountants.
23(b) - Consent of counsel (included in Exhibit 5).*
24 - Powers of Attorney.*
- ------------------
*Previously filed
Exhibit 4(h)
December 12, 1996
Celfort Construction Materials Inc.
c/o Jannock Limited
Suite 5205, Scotia Plaza
P.O. Box 1012
40 King Street West
Toronto, Ontario M5H 3Y2
Attention: Mr. Victor Hepburn
- -and-
Jannock Limited
Suite 5205, Scotia Plaza
P.O. Box 1012
40 King Street West
Toronto, Ontario
M5H 3Y2
Attention: Mr. Victor Hepburn
Re: Purchase of Celfortec Division of Celfort Construction
Materials Inc.
We refer to the Asset Purchase Agreement dated as of
August 30, 1996 between OC Celfortec Inc. as Purchaser, Owens
Corning as Purchaser's Guarantor, Celfort Construction
Materials Inc. as Vendor and Jannock Limited as Vendor's
Guarantor (the "Purchase Agreement"). We also refer to the
Common Stock Registration Rights Agreement dated as of August
30, 1996 between Owens Corning, Jannock Limited and Celfort
Construction Materials Inc. (the "Registration Rights
Agreement"). Capitalized terms used but not defined herein
shall have the meanings given to them in the Purchase Agreement
or the Registration Rights Agreement, as applicable.
Section 4.4 of the Purchase Agreement sets out the
obligations of the Purchaser with respect to the payment of the
Purchase Price. Pursuant to Section 2(c) of the Registration
Rights Agreement, Owens Corning agreed to ensure that the net
proceeds from the sale of the Registrable Securities shall have
been remitted to the Vendor by December 15, 1996. For good and
valuable consideration, the receipt and sufficiency of which
are acknowledged, Owens Corning, the Purchaser, the Vendor and
Jannock Limited have agreed to amend these obligations on the
terms set out below:
<PAGE>
1. Owens Corning shall continue to use reasonable
efforts to have the registration statement contemplated by the
Registration Rights Agreement declared effective by the SEC as
soon as possible after the date hereof so that the Vendor shall
receive the Share Proceeds Amount and the Share Proceeds
Adjustment Amount by December 15, 1996.
2. In the event that any of the Registrable Securities
have not been sold and the net proceeds received by the Vendor
in accordance with Section 2 of the Registration Rights
Agreement (other than as a result of a breach by the Holder(s))
by December 15, 1996 (the "Agreed Date"), then, in lieu of
compliance by the Purchaser with Section 4.4(a)(2) of the
Purchase Agreement and of compliance by Owens Corning with
Section 2 of the Registration Rights Agreement, Owens Corning
shall:
(a) cause the Purchaser on December 16, 1996 to wire
transfer to the Vendor the following amounts:
(i) an amount (the "Interim Adjustment Amount") on
account of the Share Proceeds Adjustment Amount equal
to the Share Proceeds Adjustment Amount calculated:
(A) as if the Registrable Securities had been
sold at the closing price per share (stated in
Canadian Dollars on the basis of the Exchange
Rate on the Business Day immediately preceding
the Agreed Date) of Owens Corning Common Stock
at the close of business on the Business Day
immediately preceding the Agreed Date, and
(B) with an estimate of brokerage commissions
payable by the Vendor of Cdn.$32,008;
(ii) interest on Cdn.$29,000,000 at the Prime Rate
(determined on the Closing Date) from the Closing
Date to and including the Agreed Date; and
(iii) Cdn.$500,000.00 in consideration for the
accommodation made by the Vendor hereunder; and
(b) continue to use reasonable efforts to have the
registration statement contemplated by the Registration
Rights Agreement declared effective by the SEC as soon as
possible after the Agreed Date so that the Vendor shall
receive the Share Proceeds Amount by January 15, 1997; and
(c) cause the Purchaser to pay to the Vendor within 4
Business Days of the receipt of the Notice of Sale
Proceeds an amount equal to the amount, if any, by which
the Share Proceeds Adjustment Amount exceeds the Interim
Adjustment Amount.
(d) cause the Purchaser to pay to the Vendor within 4
Business Days of the receipt of the Notice of Sale
Proceeds an amount equal to the sum of
<PAGE>
(i) interest on the difference between
Cdn.$29,000,000 and the Interim Adjustment Amount at
the Prime Rate (established on the Business Day
immediately preceding the Agreed Date) from the
Agreed Date to the date on which the Share Proceeds
Amount is received by the Vendor, and
(ii) interest on the amount, if any, by which the
Share Proceeds Adjustment Amount exceeds the Interim
Amount at the Prime Rate (established on the Business
Day immediately preceding the Agreed Date) from the
date on which the Share Proceeds Amount is received
by the Vendor to the Share Proceeds Adjustment Date.
3. In the event that any of the Registrable Securities
have not been sold in accordance with Section 2 of the
Registration Rights Agreement (other than as a result of a
breach by the Holder(s)) by January 15, 1997, then Owens
Corning shall
(a) cause a Person which is not an Affiliate of Owens
Corning (an "Unaffiliated Purchaser") to forthwith
purchase on commercially reasonable terms for its own
account, in cash in immediately available funds, any and
all of the Registrable Securities then remaining unsold;
and
(b) cause the Purchaser to pay to the Vendor the amounts
contemplated by Sections 2(c) and 2(d) hereof where the
aggregate net proceeds received by the Holder(s) from the
Unaffiliated Purchaser and from any sales of Registrable
Securities sold by the Holder(s) pursuant to Section 2 of
the Registration Rights Agreement (net of all brokerage
commissions) shall be deemed to be the Share Proceeds
Amount.
4. For greater certainty, for the purposes of Section
2(c) hereof, if the Interim Adjustment Amount is greater than
the Share Proceeds Adjustment Amount, the Vendor shall be
entitled to retain the entire Interim Adjustment Amount.
5. The provisions of the Purchase Agreement and the
Registration Rights Agreement are hereby amended to the extent
necessary to conform to the provisions hereof.
Please indicate your acceptance of the terms of this
letter by signing and returning the enclosed duplicate hereof.
Yours truly,
OWENS CORNING
/s/ Michael I. Miller
Name: Michael I. Miller
Title: Vice President & Treasurer
<PAGE>
AGREED AND ACCEPTED this
12th day of December, 1996
OC CELFORTEC INC.
/s/ Jeffrey R. Osborn
Name: Jeffrey R. Osborn
Title: Vice President
CELFORT CONSTRUCTION MATERIALS INC.
/s/ Victor C. Hepburn
Name: Victor C. Hepburn
Title: Chairman of the Board
JANNOCK LIMITED
/s/ Victor C. Hepburn
Name: Victor C. Hepburn
Title: Executive Vice-President
Exhibit (23)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to
the incorporation by reference in this Registration Statement
of our report dated January 20, 1996, included in Owens
Corning's Form 10-K, as amended, for the year ended December
31, 1995, and to all references to our Firm included in this
Registration Statement.
ARTHUR ANDERSEN LLP
Toledo, Ohio
December 26, 1996
