SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 15, 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)
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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
Date: April 15, 1998 By: /s/ Domenico Cecere
Domenico Cecere
Senior Vice President and
Chief Financial Officer
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Owens Corning ( the "company") announced first quarter sales
and earnings for 1998 on April 15, 1998.
Net sales were $1,137 million, a first-quarter record and an
increase of 30 percent over $875 million recorded in the first
quarter of 1997.
Net income was $8 million, or $.16 per diluted share in the first
quarter, compared to $42 million, or $.76 per diluted share
reported for the first quarter of 1997.
Results for the first quarter of 1998 include a pre-tax charge of
$95 million for restructuring and other actions. Also included
is a pre-tax credit of $84 million for the gain on the sale of
the company's 50 percent interest in Alpha/Owens Corning, and a
tax credit of $13 million associated with Asia Pacific
operations.
Building Materials
Sales in Building Materials were $856 million for the first
quarter of 1998, up 41 percent over the first quarter of 1997,
primarily driven by the two major acquisitions (Fibreboard
Corporation and AmeriMark Building Products, Inc.) made in
1997 in the Exterior Systems Business. Sales growth was also
fueled by strong volumes in most U.S. Building Materials
businesses, influenced by strong housing starts and
accelerated customer purchases in advance of announced and
implemented price increases.
Building Materials income from operations was a loss of $16
million in the first quarter of 1998 compared to income of $44
million in the first quarter of 1997 due to price
deterioration in fiber glass insulation during the second half
of 1997 and the 1998 restructuring charge.
Recent Pricing Actions
In the first quarter of 1998, the company announced price
increases effective in March 1998 applicable to its
residential insulation products of approximately 8 percent and
price increases applicable to its industrial insulation
products of approximately 4 percent. The Company also
announced price increases of 5 to 7 percent affecting certain
residential roofing products, effective in April 1998.
Composite Materials
Sales in Composite Materials were $281 million in the first
quarter of 1998, up 4 percent over the first quarter of 1997,
driven by double-digit volume growth. Lower price levels in
the United States and currency impacts offset a portion of the
benefit from volume increases. Compared to the fourth quarter
of 1997, however, aggregate price levels were up.
Composites income from operations declined to $19 million in
the first quarter of 1998 from $51 million in the first
quarter of 1997 due to the 1998 restructure charge.
Cost Reduction
At the end of the first quarter, job reductions as a result of
restructuring or attrition totaled 1,900 employees, or 8
percent of the total workforce. Of the total planned pre-tax
restructuring and other charge of $250 million announced
January 9, 1998, approximately $10 million remains as of the
close of the first quarter.
In addition to the restructuring savings of $100 million, the
company expects to achieve an additional $30 million in 1998
in synergies and cost savings from integrating the Fibreboard
and AmeriMark acquisitions.
Divestiture Update
In the first quarter of 1998, the company completed the sale
of the assets of Pabco, a producer of molded calcium silicate
insulation, fireproofing board and metal jacketing, acquired
as part of the Fibreboard acquisition in 1997, and its 50
percent interest in Alpha/Owens Corning L.L.C., a manufacturer
and marketer of unsaturated polyester and vinylester resins,
for approximately $140 million. The company continues to
evaluate other divestiture opportunities.
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OWENS CORNING AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(unaudited)
<TABLE>
<S> <C> <C>
Quarter Ended
March 31,
1998 1997
(In millions of dollars,
except share data)
NET SALES $1,137 $ 875
COST OF SALES 938 652
Gross margin 199 223
OPERATING EXPENSES
Marketing and administrative expenses 129 122
Science and technology expenses 15 17
Restructure costs 87 -
Other (1) (71) 4
Total operating expenses 160 143
INCOME FROM OPERATIONS 39 80
Cost of borrowed funds 37 19
INCOME BEFORE PROVISION
FOR INCOME TAXES 2 61
Provision (credit) for income taxes (7) 20
INCOME BEFORE MINORITY
INTEREST AND EQUITY
IN NET INCOME OF AFFILIATES 9 41
Minority interest (5) (2)
Equity in net income of affiliates 4 3
NET INCOME $ 8 $ 42
NET INCOME PER COMMON SHARE
Basic net income per share $ .16 $ .80
Diluted net income per share $ .16 $ .76
Weighted average number of common
shares outstanding and common equivalent
shares during the period (in millions)
Basic 53.4 52.4
Diluted 53.8 57.8
</TABLE>
(1) Includes an $84 million pretax gain from the sale of the Company's
50% ownership interest in Alpha/Owens-Corning.
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OWENS CORNING AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(unaudited)
<TABLE>
<S> <C> <C> <C>
March 31, December 31, March 31,
1998 1997 1997
ASSETS (In millions of dollars)
CURRENT
Cash and cash equivalents $ 115 $ 58 $ 13
Receivables 560 432 425
Inventories 533 503 430
Insurance for asbestos litigation
claims - current portion (1) 100 100 75
Deferred income taxes 140 160 106
Assets held for sale - 41 -
Income tax receivable 108 96 4
Other current assets 51 38 54
Total current 1,607 1,428 1,107
OTHER
Insurance for asbestos litigation
claims (1) 340 357 439
Asbestos costs to be reimbursed -
Fibreboard 117 116 -
Deferred income taxes 394 328 457
Goodwill 792 778 301
Investments in affiliates (2) 53 52 66
Other noncurrent assets 174 184 182
Total other 1,870 1,815 1,445
PLANT AND EQUIPMENT, at cost 3,603 3,585 3,322
Less--Accumulated depreciation (1,858) (1,832) (1,767)
Net plant and equipment 1,745 1,753 1,555
TOTAL ASSETS $5,222 $4,996 $4,107
</TABLE>
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OWENS CORNING AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (Continued)
(unaudited)
<TABLE>
<S> <C> <C> <C>
March 31, December 31, March 31,
1998 1997 1997
(In millions of dollars)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT
Accounts payable and accrued liabilities $ 812 $ 814 $ 633
Reserve for asbestos litigation claims -
current portion (1) 300 350 275
Short-term debt 59 23 114
Long-term debt - current portion 127 120 22
Total current 1,298 1,307 1,044
LONG-TERM DEBT 1,874 1,595 1,099
OTHER
Reserve for asbestos litigation claims (1) 1,241 1,320 1,600
Asbestos - related liabilities - Fibreboard 124 123 -
Other employee benefits liability 332 335 339
Pension plan liability 63 65 61
Other 186 165 158
Total other 1,946 2,008 2,158
COMPANY OBLIGATED SECURITIES
OF ENTITIES HOLDING SOLELY
PARENT DEBENTURES 503 503 194
MINORITY INTEREST 24 24 26
STOCKHOLDERS' EQUITY
Common stock 662 657 647
Deficit (1,035) (1,041) (1,035)
Foreign currency translation adjustments (30) (37) (7)
Other (20) (20) (19)
Total stockholders' equity (423) (441) (414)
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $5,222 $4,996 $4,107
</TABLE>
(1) As of March 31, 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 $1,101 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.
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OWENS CORNING AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
<TABLE>
<S> <C> <C>
Quarter Ended
March 31,
1998 1997
(In millions of dollars)
NET CASH FLOW FROM OPERATIONS
Net income $ 8 $ 42
Reconciliation of net cash provided
by operating activities:
Noncash items:
Provision for depreciation and amortization 52 37
Provision (credit) for deferred income taxes (45) 17
Other (91) (1)
(Increase) decrease in receivables (129) (107)
(Increase) decrease in inventories (36) (91)
Increase (decrease) in accounts
payable and accrued liabilities (12) (59)
Increase (decrease) in accrued income taxes (2) (11)
Proceeds from insurance for asbestos
litigation claims, excluding Fibreboard 17 40
Payments for asbestos litigation claims,
excluding Fibreboard (129) (95)
Other 37 (19)
Net cash flow from operations (330) (247)
NET CASH FLOW FROM INVESTING
Additions to plant and equipment (47) (74)
Investment in subsidiaries, net of
cash acquired - (20)
Proceeds from the sale of affiliate or business 134 -
Other (19) (5)
Net cash flow from investing $ 68 $ (99)
</TABLE>
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OWENS CORNING AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
<TABLE>
<S> <C> <C>
Quarter Ended
March 31,
1998 1997
(In millions of dollars)
NET CASH FLOW FROM FINANCING
Net additions to long-term
credit facilities $ 285 $ 257
Other additions to long-term debt 3 26
Net increase in short-term debt 36 17
Dividends paid (4) (3)
Other - 19
Net cash flow from financing 320 316
Effect of exchange rate changes on cash (1) (2)
Net increase (decrease) in cash
and cash equivalents 57 (32)
Cash and cash equivalents at
beginning of period 58 45
Cash and cash equivalents at end
of period $ 115 $ 13
</TABLE>
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OWENS CORNING AND SUBSIDIARIES
QUARTERLY INFORMATION ON INDUSTRY AND GEOGRAPHIC SEGMENTS
(unaudited)
<TABLE>
<S> <C> <C>
Quarter Ended
March 31,
1998 1997
(In millions of dollars)
NET SALES
Industry Segments
Building Materials
United States $ 739 $ 500
Europe 65 74
Canada and other 52 31
Total Building Materials 856 605
Composite Materials
United States 151 138
Europe 97 97
Canada and other 33 35
Total Composite Materials 281 270
Intersegment sales
Building Materials - -
Composite Materials 31 27
Eliminations (31) (27)
Net sales $ 1,137 $ 875
Geographic Segments
United States $ 890 $ 638
Europe 162 171
Canada and other 85 66
Total $ 1,137 $ 875
Intersegment sales
United States 32 29
Europe 9 9
Canada and other 12 22
Eliminations (53) (60)
Net sales $ 1,137 $ 875
</TABLE>
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OWENS CORNING AND SUBSIDIARIES
QUARTERLY INFORMATION ON INDUSTRY AND GEOGRAPHIC SEGMENTS
(Continued)
(unaudited)
<TABLE>
<S> <C> <C>
Quarter Ended
March 31,
1998 1997
(In millions of dollars)
INCOME (LOSS) FROM OPERATIONS)
Industry Segments
Building Materials
United States $ 2 $ 37
Europe (15) 5
Canada and other (3) 2
Total Building Materials (16) 44
Composite Materials
United States 37 42
Europe (17) 7
Canada and other (1) 2
Total Composite Materials 19 51
General corporate expense 36 (15)
Income from operations 39 80
Cost of borrowed funds (37) (19)
Income before provision for income taxes $ 2 $ 61
Geographic Segments
United States $ 39 $ 79
Europe (32) 12
Canada and other (4) 4
General corporate expense 36 (15)
Income from operations 39 80
Cost of borrowed funds (37) (19)
Income before provision
for income taxes $ 2 $ 61
</TABLE>
