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): October 14, 1999.
OWENS CORNING
(Exact name of registrant as specified in its charter)
Delaware 1-3660 34-4323452
(State or other (Commission (IRS Employer
jurisdiction File Number) Identification No.)
of incorporation)
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.
(a) October 14, 1999 Press Release. On October 14, 1999, Owens
Corning issued the press release attached hereto as Exhibit 99.
Such press release is incorporated herein by this reference.
Item 7. Financial Statements and Exhibits
(c) Exhibits
The exhibit accompanying this report is listed in
the accompanying Exhibit Index.
<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/ Steven J. Strobel
Steven J. Strobel
Vice President and Controller
Dated: October 14, 1999
<PAGE>
EXHIBIT INDEX
The following exhibit is filed herewith:
Exhibit No. 99. Press Release of Owens Corning
dated October 14, 1999.
<PAGE>
EXHIBIT 99
Contact: Jules L. Vinnedge William K. Hamilton
Investor Relations Media Relations
419-248-7377 419-248-6190
OWENS CORNING REPORTS RECORD THIRD QUARTER RESULTS
TOLEDO, OHIO, OCTOBER 14, 1999 - Owens Corning (NYSE: OWC) today
reported record net income and sales for the period ending
September 30, 1999. Results were driven by a strong performance
in the company's North American Building Materials business.
Net income for the third quarter of 1999 was up 13 percent to $89
million, or $1.53 per diluted share, compared to 1998 third
quarter results of $79 million or $1.37 per diluted share for
ongoing operations. Third quarter 1998 results exclude special
items including a gain from the transfer of the yarns business
into an unconsolidated joint venture, and restructuring and other
charges.
Sales in the third quarter of 1999 were $1.333 billion, a slight
increase from $1.324 billion during the same period of 1998.
Sales were up 6 percent quarter-over-quarter when adjusted for
1998 divestitures.
For the first nine months of 1999, net income was $209 million,
or $3.62 per diluted share, compared to net income of $144
million or $2.56 per diluted share for ongoing operations during
the same period in 1998. Year-to-date sales were $3.773 billion,
up from $3.747 billion in the comparable 1998 period. Adjusted
for divestitures, sales were up 7 percent from the first nine
months of 1998.
"We are pleased with the performance of our company during the
third quarter, particularly our Building Materials Business,"
said Glen H. Hiner, Owens Corning chairman and chief executive
officer. "We also made progress during the quarter to improve
our balance sheet and our cash flow. Debt was reduced and we are
on target to meet our goal of no more than $2 billion of debt at
year end," he said.
<PAGE>
BUILDING MATERIALS
Income from operations in Building Materials was $145 million,
which is a record for the business and a 36 percent increase from
$107 million during the same period in 1998. Building Materials
sales were $1.107 billion during the third quarter of 1999, a 4
percent increase from $1.060 billion in the prior-year period.
"We are pleased with our performance, especially in Insulating
Systems and Roofing Systems which achieved yet another quarter
of exceptional results," said Dom Cecere, president of Owens
Corning's North America Building Materials Business. "Product
and system demand was strong in the third quarter and while
demand continues to be brisk, we have not yet seen the seasonal
up-tick normal for this time of the year.
"During the quarter, we began our fall advertising campaign
starring the Pink Panther(R), and introduced our new Web site
with Do-It-For-Me Service(TM), powered by ImproveNet(R)," Cecere
said. "This new site provides homeowners with a simple, hassle-
free way to find highly qualified, pre-screened, Owens Corning
preferred building and home improvement professionals.
"One of the keys to our continued success will be our ongoing
investments in core products and high-margin architectural
systems, including our Cultured Stone(R) product line, Acoustic
Systems and our MiraVista(R) specialty roofing," Cecere added.
The company announced that it plans to build a new Cultured Stone
plant in the Southeastern United States, scheduled to open in mid-
year 2000. This plant supports Cultured Stone's growth strategy
with another regional facility to complement its existing plants
in Napa, California and Navarre, Ohio.
COMPOSITES MATERIALS
Composites Materials income from operations improved 30 percent
over the third quarter of 1998, when adjusted for the Yarns
transaction.
"Composites volume was strong during the quarter, and
productivity improved as both unit manufacturing costs and sales
and administration spending were lower compared to the second
quarter," said Heinz Otto, president of the company's Composites
Systems Business.
Adjusted for the Yarns transaction, sales were up 10 percent in
the third quarter of 1999 due to strong unit volume in the
reinforcements and roofing mat markets. Reported Composites
sales in the third quarter of 1999 were $256 million, compared to
$293 million in the prior-year period. In Europe, lower
Composites sales reflect the impact of a stronger dollar and
ongoing pricing pressure.
<PAGE>
HIGHLIGHTS
Owens Corning and IKO Industries announced a joint venture
to build and operate a factory that will make wet-formed glass
fiber mat used mainly in the production of roofing shingles. The
state-of-the-art factory will be capable of making about 75
million squares of mat annually, and will allow Owens Corning to
support the growing demand for high style laminate shingle
systems. The facility will be constructed at a yet-to-be-
announced location in the Midwestern United States, and will be
operational in 2001.
General Motors and Ford said they will introduce new trucks
in the 2001 model year that have pickup boxes made with advanced
composite materials. The composite boxes will resist dents,
scratches and rust - problems that have traditionally plagued
pickup truck owners. The boxes are the largest composite parts
ever made for light trucks. Owens Corning is a supplier for both
applications. The company predicts the use of composites in this
single application for light trucks will grow from zero today to
more than 30,000 metric tons annually within the next five years.
Owens Corning's proprietary Silentex(TM) muffler filling
system has been specified by Toyota for five vehicle models built
in Japan, the first applications of the technology in Asia.
Silentex muffler technology is an integrated system using high-
temperature glass fiber insulating material, patented muffler
filling machinery and a cost-effective filling process. Owens
Corning receives licensing revenue for the Silentex system as
well as sales of composite materials. First introduced in
Europe, Silentex muffler filling technology migrated to North
America on its way to being adopted by Toyota.
In September, Owens Corning launched a national advertising
campaign to increase brand awareness for the company's expanded
offering of products and systems. Featuring the Pink Panther,
the fully animated ads present "Panther Tales" based on classic
fairy tales with a new twist, as Owens Corning and the Pink
Panther provide solutions to typical homeowner problems.
OUTLOOK
"Our results during the first three quarters of the year reflect
high demand for our products and systems, as well as cost savings
from our ongoing productivity initiatives," Hiner said.
"Going forward, we will continue to focus on capital efficient
growth and on System Thinking as the major driver of our growth,"
he added. "We believe there are great opportunities for our
higher margin businesses, including architectural systems, and
for the partnerships we are forming within our Composites Systems
business."
<PAGE>
Owens Corning is a world leader in high performance building
materials systems and glass fiber composites with approximately
20,000 employees worldwide.
This news release 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. Further
information on factors that could affect the company's financial
and other results are included in the company's Form 10-Q and 10-
K, filed with the Securities and Exchange Commission.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, 1998 SEPTEMBER 30, 1998
------------------------------------------------------------
SPECIAL / SPECIAL
REPORTED ITEMS ONGOING / REPORTED ITEMS ONGOING
------------------------------------------------------------
NET SALES $1,324 0 1,324 / $3,747 3,747
COST OF SALES 1,060 60 1,000 / 2,983 65 2,918
------------------------------------------------------------
GROSS MARGIN 264 (60) 324 / 764 (65) 829
------------------------------------------------------------
OPERATING EXPENSES
MARKETING AND
ADMINISTRATIVE 138 4 134 / 419 7 412
SCIENCE AND
TECHNOLOGY 14 0 14 / 43 43
RESTRUCTURE COSTS 30 30 0 / 117 117 0
OTHER 67 54 13 / 81 54 27
------------------------------------------------------------
TOTAL OPERATING
EXPENSES 249 88 161 / 660 178 482
------------------------------------------------------------
GAIN ON SALE OF ASSETS 292 292 0 / 376 376 0
INCOME FROM
OPERATIONS 307 144 163 / 480 133 347
COST OF BORROWED FUNDS 37 0 37 / 110 0 110
------------------------------------------------------------
INCOME BEFORE PROVISION
FOR INCOME TAXES 270 144 126 / 370 133 237
PROVISION FOR
INCOME TAXES 132 88 44 / 159 75 84
------------------------------------------------------------
INCOME BEFORE MINORITY
INTEREST AND EQUITY IN
NET INCOME (LOSS) OF
AFFILIATES 138 56 82 / 211 58 153
MINORITY INTEREST (4) 0 (4) / (14) 0 (14)
EQUITY IN NET INCOME
(LOSS) OF AFFILIATES 1 0 1 / 5 0 5
------------------------------------------------------------
INCOME BEFORE
EXTRAORDINARY ITEM 135 56 79 / 202 58 144
EXTRAORDINARY LOSS (39) (39) 0 / (39) (39) 0
NET INCOME $96 $17 $79 / $163 $19 $144
============================================================
DILUTED EARNINGS
PER SHARE $1.66 $1.37 / $2.87 $2.56
DILUTED SHARES
(IN THOUSANDS) 59,177 59,177 / 58,829 58,829
</TABLE>
TABLES FOLLOW
<TABLE>
OWENS CORNING AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(unaudited)
<S> <C> <C> <C> <C>
Quarter Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
---- ---- ---- ----
(In millions of dollars, except
share data)
NET SALES $ 1,333 $ 1,324 $ 3,773 $ 3,747
COST OF SALES (1)
986 1,060 2,844 2,983
------- ------- ------- --------
Gross margin 347 264 929 764
------- ------- ------- --------
OPERATING EXPENSES
Marketing and administrative
expenses 153 138 441 419
Science and technology
expenses 14 14 42 43
Restructure costs (1) - 30 - 117
Other (1) (3) 67 (2) 81
------- ------- ------- -------
Total operating expenses 164 249 481 660
------- ------- ------- -------
Gain on sale of assets (2) - 292 - 376
INCOME FROM OPERATIONS 183 307 448 480
Cost of borrowed funds 40 37 112 110
------- ------- ------- -------
INCOME BEFORE PROVISION FOR
INCOME TAXES 143 270 336 370
Provision for income taxes 50 132 118 159
------- ------- ------- -------
INCOME BEFORE MINORITY
INTEREST AND EQUITY IN NET
INCOME (LOSS) OF AFFILIATES 93 138 218 211
Minority Interest (2) (4) (5) (14)
Equity in net income (loss)
of affiliates (2) 1 (4) 5
------- ------ ------- ------
INCOME BEFORE EXTRAORDINARY
ITEM 89 135 209 202
Extraordinary loss (3) - (39) - (39)
------- ------ ------- -------
NET INCOME $ 89 $ 96 $ 209 $ 163
======= ======= ======= =======
</TABLE>
<TABLE>
OWENS CORNING AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME (continued)
(unaudited)
<S> <C> <C> <C> <C>
Quarter Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
---- ---- ---- ----
(In millions of dollars, except
share data)
NET INCOME (LOSS) PER COMMON
SHARE
Basic:
Income before extraordinary
item $ 1.64 $ 2.51 $ 3.87 $ 3.76
Extraordinary loss - (.72) - (.72)
------ ------- ------ ------
Net income per share $ 1.64 $ 1.79 $ 3.87 $ 3.04
====== ======= ====== ======
Diluted:
Income before extraordinary
item $ 1.53 $ 2.32 $ 3.62 $ 3.53
Extraordinary loss - (.66) - (.66)
------ ------- ------ ------
Net income per share $ 1.53 $ 1.66 $ 3.62 $ 2.87
====== ======= ====== ======
Weighted average number of
common shares outstanding and
common equivalent shares during
the period (in millions)
Basic 54.3 53.8 54.1 53.6
Diluted 59.5 59.2 59.5 58.8
</TABLE>
(1) During the third quarter of 1998, the Company recorded a pre-
tax charge of $148 million for restructuring and other actions,
of which $30 million was recorded as restructure costs, $60
million as costs of sales, $4 million as marketing and
administrative expenses, and $54 million as other operating
expenses.
(2) During the first quarter of 1998, the Company sold its 50%
ownership interest in Alpha/Owens-Corning and recorded a pre-tax
gain of approximately $84 million. During the third quarter of
1998, the Company sold 51% of its interest in its specialty
yarns business and recorded a pre-tax gain of approximately $312
million. This gain was partially offset by losses associated
with other divestitures.
(3) During the third quarter of 1998, the Company called, prior
to maturity, $360 million of certain debt securities and
recorded an extraordinary loss of $39 million, or $.66 per
diluted share, net of taxes of $25 million.
<TABLE>
OWENS CORNING AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(unaudited)
<S> <C> <C> <C>
September 30, December 31, September 30,
1999 1998 1998
---- ---- ----
(In millions of dollars)
ASSETS
- ------
CURRENT
Cash and cash equivalents $ 99 $ 54 $ 540
Receivables 584 451 542
Inventories 532 437 495
Insurance for asbestos
litigation claims -
Current portion (1) 25 150 125
Deferred income taxes 264 293 146
Income tax receivable - 117 115
Other current assets 28 27 44
-------- --------- ---------
Total current 1,532 1,529 2,007
-------- --------- ---------
OTHER
Insurance for asbestos
litigation claims (1) 206 260 286
Asbestos costs to be
reimbursed-Fibreboard 41 74 85
Deferred income taxes 551 608 257
Goodwill 747 762 764
Investments in affiliates 50 45 39
Other noncurrent assets 243 205 218
-------- --------- ---------
Total other 1,838 1,954 1,649
-------- --------- ---------
PLANT AND EQUIPMENT, at cost 3,642 3,498 3,417
Less-accumulated depreciation (1,962) (1,880) (1,808)
-------- --------- ---------
Net plant and equipment 1,680 1,618 1,609
-------- --------- ---------
TOTAL ASSETS $ 5,050 $ 5,101 $ 5,265
======== ========= ==========
</TABLE>
<TABLE>
OWENS CORNING AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (continued)
(unaudited)
<S> <C> <C> <C>
September 30, December 31, September 30,
1999 1998 1998
---- ---- ----
(In millions of dollars)
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT
Accounts payable and accrued
liabilities $ 784 $ 942 $ 832
Reserve for asbestos litigation
claims - current portion (1) 1,050 850 350
Short-term debt 103 69 77
Long-term debt - current portion 84 22 13
--------- --------- ----------
Total current 2,021 1,883 1,272
--------- --------- ----------
LONG-TERM DEBT 1,994 1,535 2,193
--------- --------- ----------
OTHER
Reserve for asbestos litigation
claims (1) $ 958 $ 1,780 $ 1,026
Asbestos-related liabilities -
Fibreboard 67 79 92
Other employee benefits liability 324 326 320
Pension plan liability 46 55 56
Other 331 364 351
--------- --------- ----------
Total other 1,726 2,604 1,845
--------- --------- ----------
COMPANY OBLIGATED SECURITIES OF
ENTITIES HOLDING SOLELY PARENT
DEBENTURES 195 194 194
--------- --------- ----------
MINORITY INTEREST 43 19 21
--------- --------- ----------
STOCKHOLDERS' EQUITY
Common stock 698 679 678
Deficit (1,565) (1,762) (891)
Accumulated other comprehensive
income (41) (37) (32)
Other (21) (14) (15)
--------- --------- ----------
Total stockholders' equity (929) (1,134) (260)
--------- --------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 5,050 $ 5,101 $ 5,265
========= ========= ==========
</TABLE>
(1) As of September 30, 1999, the current portion of the reserve for
asbestos litigation claims, net of insurance, is $1.025 billion.
Excluding Fibreboard activity, the total reserve, net of insurance,
is $1.777 billion.
<TABLE>
OWENS CORNING AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
<S> <C> <C> <C> <C>
Quarter Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
---- ---- ---- ----
(In millions of dollars)
NET CASH FLOW FROM OPERATIONS
Net income $ 89 $ 96 $ 209 $ 163
Reconciliation of net cash
provided by operating
activities
Noncash items:
Provision for
depreciation
and amortization 55 48 160 147
Provision (credit) for
deferred income taxes 44 90 83 85
Extraordinary loss from early
retirement of debt - 39 - 39
Gain on sale of assets - (292) - (376)
Other 6 115 11 112
(Increase) decrease in
receivables 29 18 (113) (151)
(Increase) decrease in
inventories (29) 10 (89) (30)
Increase (decrease) in
accounts payable and accrued
liabilities 65 40 (161) 16
(Increase) decrease in
income tax receivable - (65) 104 10
Proceeds from insurance for
asbestos litigation
claims, excluding
Fibreboard 147 24 179 46
Payments for asbestos
litigation claims,
excluding Fibreboard (252) (70) (622) (294)
Other (15) 86 (25) 97
-------- ------ ------- -------
Net cash flow from
operations $ 139 $ 139 $ (264) $ (136)
-------- ------ ------- -------
NET CASH FLOW FROM INVESTING
Additions to plant and
equipment (39) (59) (138) (180)
Proceeds from the sale
of affiliate or
business - 528 - 662
Other 14 - (13) (19)
------- ------- -------- ------
Net cash flow from
investing $ (25) $ 469 $ (151) $ 463
------- ------- -------- ------
</TABLE>
<TABLE>
OWENS CORNING AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (continued)
(unaudited)
<S> <C> <C> <C> <C>
Quarter Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
---- ---- ---- ----
(In millions of dollars)
NET CASH FLOW FROM FINANCING
Net additions (reductions)
to long-term Credit
facilities $ (14) $ 365 $ 247 $ (9)
Other additions to long-term
debt 2 423 253 993
Other reductions to long-
term debt (4) (480) (37) (493)
Net increase (decrease) in
short-term debt (18) (48) 10 48
Repurchase of Trust
Preferred Hybrid Securities - (309) - (309)
Premium payments on early
retirement of debt - (62) - (62)
Dividends paid (4) (4) (12) (12)
Other (1) 5 (1) (1)
-------- -------- -------- -------
Net cash flow from
financing (39) (110) 460 155
-------- -------- -------- -------
Effect of exchange rate
changes on cash (2) - - -
-------- -------- -------- -------
Net increase (decrease) in
cash and cash equivalents 73 498 45 482
Cash and cash equivalents at
beginning of period 26 42 54 58
-------- -------- -------- -------
Cash and cash equivalents at
end of period $ 99 $ 540 $ 99 $ 540
======== ======== ======== =======
</TABLE>
<TABLE>
OWENS CORNING AND SUBSIDIARIES
QUARTERLY INFORMATION ON REPORTABLE OPERATING SEGMENTS
(unaudited)
<S> <C> <C> <C> <C>
Quarter Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
---- ---- ---- ----
(In millions of dollars)
NET SALES
REPORTABLE OPERATING SEGMENTS
- -----------------------------
Building Materials
United States $ 989 $ 942 $ 2,749 $ 2,553
Europe 54 63 175 198
Canada and other 64 55 175 160
-------- ------- -------- ---------
Total Building Materials 1,107 1,060 3,099 2,911
-------- ------- -------- ---------
Composite Materials
United States 145 172 423 536
Europe 75 85 243 282
Canada and other 36 36 99 105
-------- ------- -------- ---------
Total Composite Materials 256 293 765 923
-------- ------- -------- ---------
Total Reportable
Operating Segments $ 1,363 $ 1,353 $ 3,864 $ 3,834
RECONCILIATION TO CONSOLIDATED NET SALES
- ----------------------------------------
Composite Materials U.S.
Sales to Building Materials
U.S. (30) (29) (91) (87)
--------- ------- -------- ---------
Net sales $ 1,333 $ 1,324 $ 3,773 $ 3,747
========= ======= ======== =========
EXTERNAL CUSTOMER SALES BY
GEOGRAPHIC REGION
- --------------------------
United States $ 1,104 $ 1,085 $ 3,081 $ 3,002
Europe 129 148 418 480
Canada and other 100 91 274 265
-------- ------- -------- ---------
Net Sales $ 1,333 $ 1,324 $ 3,773 $ 3,747
======== ======= ======== =========
</TABLE>
<TABLE>
OWENS CORNING AND SUBSIDIARIES
QUARTERLY INFORMATION ON REPORTABLE OPERATING SEGMENTS (continued)
(unaudited)
<S> <C> <C> <C> <C>
Quarter Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
---- ---- ---- ----
(In millions of dollars)
INCOME (LOSS) FROM OPERATIONS
REPORTABLE OPERATING SEGMENTS
- -----------------------------
Building Materials
United States $ 136 $ 98 $ 322 $ 158
Europe 1 4 5 2
Canada and other 8 5 24 6
------- ------ ------ --------
Total Building
Materials 145 107 351 166
------- ------ ------ --------
Composite Materials
United States 39 33 100 126
Europe (4) 6 (8) 22
Canada and other 4 5 11 10
------- ------ ------ --------
Total Composite
Materials 39 44 103 158
------- ------ ------ --------
Total Reportable
Operating Segments $ 184 $ 151 $ 454 $ 324
------- ------ ------ --------
Geographic Regions
- ------------------
United States $ 175 $ 131 $ 422 $ 284
Europe (3) 10 (3) 24
Canada and other 12 10 35 16
------- ------ ------ --------
Total Reportable
Operating Segments $ 184 $ 151 $ 454 $ 324
------- ------ ------ --------
RECONCILIATION TO CONSOLIDATED INCOME
- -------------------------------------
BEFORE PROVISION FOR INCOME TAXES
- ---------------------------------
Restructuring and other
charges - (148) - (243)
Gain on sale of affiliate
or business - 292 - 376
General corporate income
(expense) (1) 12 (6) 23
Cost of borrowed funds (40) (37) (112) (110)
------- ------ ------ -------
Consolidated Income
Before Provision for
Income Taxes $ 143 $ 270 $ 336 $ 370
======= ====== ====== =======
</TABLE>
ADDENDUM TO OWENS CORNING'S THIRD QUARTER PRESS RELEASE:
The company's Board of Directors announced today that it has
authorized the redemption of all outstanding rights under the Rights
Agreement established in December, 1996. The redemption will be
effective as of December 31, 1999. The redemption price for the
rights is $0.01 per right, and will be payable in cash on January
14, 2000, to stockholders of record as of the close of business on
December 31, 1999.
