SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 16, 1998.
OWENS CORNING
(Exact name of registrant as specified in its charter)
Delaware 1-3660 34-4323452
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
One Owens Corning Parkway 43659
Toledo, Ohio (Zip Code)
(Address of principal executive offices)
(419) 248-8000
(Registrant's telephone number, including area code)
<PAGE>
Item 5. Other Events.
July 16, 1998 Press Release. On July 16, 1998, Owens Corning
(the "Company") announced second quarter results, which are
attached hereto as Exhibit 99, which is incorporated herein by
reference.
Item 7. Financial Information and Exhibits
(c) Exhibits
The exhibits accompanying this report are listed in the
accompanying Exhibit Index.
<PAGE>
EXHIBIT INDEX
The following exhibits are filed herewith as noted below.
Exhibit No.
Exhibit 99
Certain portions of the press release of Owens Corning issued July 16, 1998.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, hereunto duly
authorized.
OWENS CORNING
Registrant
By: /s/ Domenico Cecere
Domenico Cecere
Senior Vice President and
Chief Financial Officer
Dated: July 17, 1998
<PAGE> Exhibit 99
Owens Corning, on July 16, 1998, reported sales and earnings for the
second quarter of 1998.
Net sales were $1,286 million, an increase of 26 percent over $1,017
million recorded in the second quarter of 1997. Acquisitions made in
the company's Exterior Systems Business during the second half of 1997
were the primary contributors to the sales increase.
Net income was $59 million, or $1.02 per diluted share in the second
quarter, compared to $63 million, or $1.11 per diluted share reported
for the same period in 1997.
For the first six months of 1998, sales were $2,423 million, up 28
percent from $1,892 million in the first half of 1997. Net income was
$67 million or $1.20 per diluted share, compared to $105 million or
$1.88 per diluted share in the first half of 1997. Net income for the
six months ended June 30, 1998 includes the following items from the
first quarter of 1998: a pretax charge of $95 million ($63 million
after-tax) for restructuring and other actions, a pretax gain of $84
million ($52 million after-tax) from the sale of the company's 50
percent ownership interest in Alpha/Owens-Corning, and a tax credit of
$13 million associated with Asia Pacific operations.
The company is achieving its forecast cost reductions from our
restructuring program and realizing synergies in its acquired exterior
businesses.
Business Review
Building Materials
Second quarter sales of Building Materials were $995 million, up
40 percent compared to the same quarter in 1997. Excluding the
Exterior Systems acquisitions made in the second half of 1997,
second quarter sales in Building Materials were down slightly over
the year-ago quarter due primarily to price.
Volume was basically flat in Building Materials, with an
unfavorable quarter-over-quarter price comparison in the Insulating
Systems Business. The first half price increases the company
instituted in the Insulating Systems Business are starting to have
a positive impact on our bottom line.
Income from operations in Building Materials was up 23 percent
from the second quarter of 1997, despite the unfavorable price
comparison.
While vinyl siding prices were down, margins were maintained in the
Exterior Systems Business due to lower raw material costs, higher
volume and consolidation synergies.
Composite Materials
Sales in Composite Materials were $291 million, down slightly
compared to the same period in 1997.
Most of the sales decline was due to volume decline in the United
States. Demand for electronic circuit boards slowed at the end of
the quarter and sales were impacted by some order cancellations due
to the General Motors strike.
<PAGE>
Volume was up in Europe but prices have not recovered from the
declines in 1997. Sales were down significantly in Latin
America due to a furnace problem in the company's Brazilian
operations, however Asia Pacific volumes were stable and the
company continues to grow its share in that region.
Income from operations in Composites Materials increased 18
percent, on slightly lower sales compared to the second quarter of
1997, as a result of productivity improvements and cost
reductions.
This Current Report on Form 8-K contains forward-looking
statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. These forward-looking
statements are subject to risks and uncertainties that could
cause actual results to differ materially from those projected in
these statements. Some of the important factors that may
influence possible differences are continued competitive factors
and pricing pressures, construction activity, interest rate
movements, issues involving implementation of new business
systems, achievement of expected cost reductions and asbestos
litigation. Further information on factors that could affect the
company's financial and other results are included in the
company's Forms 10-Q and 10-K, filed with the Securities and
Exchange Commission.
Financial Tables Follow:
<PAGE>
OWENS CORNING AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(unaudited)
<TABLE>
<S> <C> <C> <C> <C>
Quarter Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
(In millions of dollars, except share data)
NET SALES $1,286 $1,017 $2,423 $1,892
COST OF SALES 985 778 1,923 1,430
Gross margin 301 239 500 462
OPERATING EXPENSES
Marketing and administrative
expenses 152 122 281 244
Science and technology expenses 14 17 29 34
Restructure costs - - 87 -
Other (1) 1 (8) (70) (4)
Total operating expenses 167 131 327 274
INCOME FROM OPERATIONS 134 108 173 188
Cost of borrowed funds 36 23 73 42
INCOME BEFORE PROVISION
FOR INCOME TAXES 98 85 100 146
Provision for income taxes 34 25 27 45
INCOME BEFORE MINORITY
INTEREST AND EQUITY
IN NET INCOME OF AFFILIATES 64 60 73 101
Minority interest (5) (2) (10) (4)
Equity in net income of affiliates - 5 4 8
NET INCOME $ 59 $ 63 $ 67 $ 105
NET INCOME PER COMMON SHARE
Basic net income per share $1.09 $1.19 $1.25 $1.99
Diluted net income per share $1.02 $1.11 $1.20 $1.88
Weighted average number of
common shares outstanding
and common equivalent shares
during the period (in millions)
Basic 53.6 52.9 53.5 52.6
Diluted 58.9 58.2 58.7 57.9
</TABLE>
(1) Includes an $84 million pretax gain from the sale of the Company's 50%
ownership interest in Alpha/Owens-Corning during the first quarter of 1998.
<PAGE>
OWENS CORNING AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(unaudited)
<TABLE>
<S> <C> <C> <C>
June 30, December 31, June 30,
1998 1997 1997
ASSETS (In millions of dollars)
CURRENT
Cash and cash equivalents $ 42 $ 58 $ 19
Receivables 597 432 567
Inventories 535 503 541
Insurance for asbestos litigation
claims - current portion (1) 125 100 50
Deferred income taxes 137 160 147
Assets held for sale - 41 41
Income tax receivable 27 96 11
Other current assets 64 38 57
Total current 1,527 1,428 1,433
OTHER
Insurance for asbestos
litigation claims (1) 310 357 440
Asbestos costs to be reimbursed
- Fibreboard 131 116 110
Deferred income taxes 356 328 394
Goodwill 788 778 704
Investments in affiliates (2) 50 52 73
Other noncurrent assets 181 184 241
Total other 1,816 1,815 1,962
PLANT AND EQUIPMENT, at cost 3,647 3,585 3,470
Less--Accumulated depreciation (1,888) (1,832) (1,789)
Net plant and equipment 1,759 1,753 1,681
TOTAL ASSETS $5,102 $4,996 $5,076
</TABLE>
<PAGE>
OWENS CORNING AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (Continued)
(unaudited)
<TABLE>
<S> <C> <C> <C>
June 30, December 31, June 30,
1998 1997 1997
(In millions of dollars)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT
Accounts payable and accrued liabilities $ 793 $ 814 $ 694
Reserve for asbestos litigation claims -
current portion (1) 325 350 300
Short-term debt 119 23 156
Long-term debt - current portion 128 120 23
Total current 1,365 1,307 1,173
LONG-TERM DEBT 1,761 1,595 1,854
OTHER
Reserve for asbestos litigation
claims (1) 1,121 1,320 1,485
Asbestos - related liabilities -
Fibreboard 138 123 114
Other employee benefits liability 340 335 340
Pension plan liability 61 65 66
Other 174 165 178
Total other 1,834 2,008 2,183
COMPANY OBLIGATED SECURITIES
OF ENTITIES HOLDING SOLELY
PARENT DEBENTURES 503 503 194
MINORITY INTEREST 21 24 25
STOCKHOLDERS' EQUITY
Common stock 669 657 653
Deficit (987) (1,041) (980)
Accumulated other comprehensive income (48) (40) (11)
Other (16) (17) (15)
Total stockholders' equity (382) (441) (353)
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $5,102 $4,996 $5,076
</TABLE>
(1) As of June 30, 1998, the current portion of the reserve for
asbestos litigation claims, net of insurance, is $200 million.
Excluding Fibreboard activity, the total reserve, net of
insurance, is $1,011 million.
(2) At the end of the first quarter of 1998, the Company sold
its 50% ownership interest in Alpha/Owens-Corning for
approximately $103 million and recorded a pretax gain of
approximately $84 million.
<PAGE>
OWENS CORNING AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
<TABLE>
<S> <C> <C> <C> <C>
Quarter Ended Six Months Ended
June 30 June 30,
1998 1997 1998 1997
(In millions of dollars)
NET CASH FLOW FROM OPERATIONS
Net income $ 59 $ 63 $ 67 $ 105
Reconciliation of net cash
provided by operating
activities:
Noncash items:
Provision for depreciation
and amortization 47 39 99 76
Provision (credit) for
deferred income taxes 40 39 (5) 56
Other 4 (6) (87) (7)
(Increase) decrease in
receivables (40) (56) (169) (163)
(Increase) decrease in
inventories (4) (1) (40) (92)
Increase (decrease) in accounts
payable and accrued
liabilities (12) (31) (24) (90)
Increase (decrease) in accrued
income taxes 77 (15) 75 (26)
Proceeds from insurance for
asbestos litigation claims,
excluding Fibreboard 5 24 22 64
Payments for asbestos litigation
claims, excluding Fibreboard (95) (90) (224) (185)
Other (26) (38) 11 (57)
Net cash flow from
operations 55 (72) (275) (319)
NET CASH FLOW FROM INVESTING
Additions to plant and equipment (74) (57) (121) (131)
Investment in subsidiaries, net
of cash acquired - - - (20)
Proceeds from the sale of
affiliate or business - - 134 -
Other - (4) (19) (9)
Net cash flow from
investing $(74) $(61) $ (6) $(160)
</TABLE>
<PAGE>
OWENS CORNING AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
<TABLE>
<S> <C> <C> <C> <C>
Quarter Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
(In millions of dollars)
NET CASH FLOW FROM FINANCING
Net additions (reductions) to
long-term credit facilities $(659) $ 26 $(374) $ 283
Other additions to long-term debt 565 108 570 136
Other reductions to long-term debt (11) (39) (13) (41)
Net increase in short-term debt 60 45 96 62
Dividends paid (4) (4) (8) (7)
Other (6) 2 (6) 21
Net cash flow from financing (55) 138 265 454
Effect of exchange rate changes on
cash 1 1 - (1)
Net increase (decrease) in cash
and cash equivalents (73) 6 (16) (26)
Cash and cash equivalents at
beginning of period 115 13 58 45
Cash and cash equivalents at end
of period $ 42 $ 19 $ 42 $ 19
</TABLE>
<PAGE>
OWENS CORNING AND SUBSIDIARIES
QUARTERLY INFORMATION ON INDUSTRY AND GEOGRAPHIC SEGMENTS
(unaudited)
<TABLE>
<S> <C> <C> <C> <C>
Quarter Six Months
Ended Ended
June 30, June 30,
1998 1997 1998 1997
(In millions of dollars)
NET SALES
Industry Segments
Building Materials
United States $ 872 $ 600 $1,611 $1,100
Europe 70 72 135 146
Canada and other 53 41 105 72
Total Building Materials 995 713 1,851 1,318
Composite Materials
United States 155 161 306 299
Europe 100 103 197 200
Canada and other 36 40 69 75
Total Composite Materials 291 304 572 574
Intersegment sales
Building Materials - - - -
Composite Materials 27 29 58 56
Eliminations (27) (29) (58) (56)
Net sales $1,286 $1,017 $2,423 $1,892
Geographic Segments
United States $1,027 $ 761 $1,917 $1,399
Europe 170 175 332 346
Canada and other 89 81 174 147
Total $1,286 $1,017 $2,423 $1,892
Intersegment sales
United States 38 31 70 60
Europe 1 7 10 16
Canada and other 17 26 29 48
Eliminations (56) (64) (109) (124)
Net sales $1,286 $1,017 $2,423 $1,892
</TABLE>
<PAGE>
OWENS CORNING AND SUBSIDIARIES
QUARTERLY INFORMATION ON INDUSTRY AND GEOGRAPHIC SEGMENTS
(Continued)
(unaudited)
<TABLE>
<S> <C> <C> <C> <C>
Quarter Six Months
Ended Ended
June 30, June 30,
1998 1997 1998 1997
(In millions of dollars)
INCOME (LOSS) FROM OPERATIONS (1)
Industry Segments
Building Materials
United States $ 88 $ 70 $ 90 $107
Europe 2 2 (13) 7
Canada and other 1 2 (2) 4
Total Building Materials 91 74 75 118
Composite Materials
United States 53 52 90 94
Europe 3 (1) (14) 6
Canada and other 3 (1) 2 1
Total Composite Materials 59 50 78 101
General corporate expense (16) (16) 20 (31)
Income from operations 134 108 173 188
Cost of borrowed funds (36) (23) (73) (42)
Income before provision
for income taxes $ 98 $ 85 $100 $146
Geographic Segments
United States $141 $122 $180 $201
Europe 5 1 (27) 13
Canada and other 4 1 - 5
General corporate expense (16) (16) 20 (31)
Income from operations 134 108 173 188
Cost of borrowed funds (36) (23) (73) (42)
Income before provision
for income taxes $ 98 $ 85 $100 $146
</TABLE>
<PAGE>
OWENS CORNING AND SUBSIDIARIES
QUARTERLY INFORMATION ON INDUSTRY AND GEOGRAPHIC SEGMENTS
(Continued)
(unaudited)
(1) Income from operations for the six months ended June 30,
1998 includes a pretax charge of $95 million for
restructuring and other actions. The impact of these
special items was to reduce income from operations for
Building Materials in the United States, Europe, and Canada
and other by $17 million, $11 million and $1 million,
respectively; Composite Materials in the United States,
Europe, and Canada and other by $8 million, $27 million and
$1 million, respectively; and to increase general corporate
expense by $30 million. Income from operations for the six
months ended June 30, 1998 also includes a pretax gain of
$84 million from the sale of the Company's 50% ownership
interest in Alpha/Owens-Corning. The impact of this gain
was to decrease general corporate expense by $84 million.
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