Andrew, from the most recent Q report, 10/97:
Owens Corning Announces Third Quarter Financial Results
PR Newswire - October 21, 1997 09:48
OWC %CST %HOU %ERN V%PRN P%PRN
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TOLEDO, Ohio, Oct. 21 /PRNewswire/ -- Owens Corning (NYSE: OWC; TSE) today
reported third quarter 1997 sales of $1.238 billion. This represents an
increase of 21 percent over 1996 third quarter sales of $1.025 billion, and
includes the contribution of Fibreboard Corporation, an acquisition completed
at the end of the second quarter.
Net income declined 26 percent to $59 million, or $1.04 per fully diluted
share, including one-time favorable tax adjustments totaling $0.22 per share.
Third quarter 1996 net income was $80 million or $1.44 per fully diluted
share.
"Excluding acquired businesses, results were severely impacted by the
factors mentioned in our earnings advisory last month, including continued
pricing pressures in our Insulation business, delayed improvement in
Composites pricing, and lower volume in the Roofing Systems business due to
the calm East Coast hurricane season," said Glen H. Hiner, Owens Corning
chairman and CEO.
"In response to the current pricing environment we continue to
aggressively pursue cost reductions including manufacturing productivity
programs and the implementation of Advantage 2000 in our Building Materials
business, which will positively impact logistics and inventory management,"
Hiner added.
Net sales for the nine months ended September 30, 1997 increased
11 percent to $3.130 billion, compared to $2.830 billion for the same period
in 1996.
Net income in the first three quarters was $164 million, or $2.92 per
fully diluted share. This compares to a loss of $354 million, or negative
$6.86 per share, for the equivalent 1996 time frame. The 1996 loss included a
$542 million after-tax asbestos charge.
Business Review
Building Materials
In Building Materials, 1997 third quarter sales increased 27 percent over
the prior year, while income from operations was down 8 percent. The
contribution of acquisitions was tempered by Insulation pricing pressures and
lower volume in Roofing Systems.
"While pricing in residential insulation has fallen," Hiner said, "volume
has remained firm throughout the insulation business. Mechanical insulation,
which makes up about one-third of our insulation business, is a bright spot --
reporting improved earnings for the third quarter."
The Norandex and Vytec vinyl siding businesses showed minor softness in
price compared to third quarter 1996, with strong volume growth coming from an
expansion of new distribution centers.
Composite Materials
Sales in the Composite Materials business increased 4 percent over the
third quarter of 1996, driven by sustained volume growth. Income from
operations, however, was down 43 percent from the third quarter of 1996 due to
global price weakness and adverse currency effects in Europe.
"We are pleased by the world-wide volume growth in our Composites
business," Hiner said. "The depression of price levels stayed within the
range of our expectations, and we expect fourth quarter pricing to be at the
same level as that experienced in the third quarter."
Highlights
On October 1, Owens Corning completed the asset acquisition of AmeriMark
Building Products Corp., a specialty building products company serving the
exterior residential housing industry. With the acquisition of AmeriMark and
Norandex, Vytec and Fabwel, Owens Corning has become the leader in the vinyl
siding market.
"We are now diversified into fast-growing markets, products and systems
that support the System Thinking strategy for the exterior of the home, and
the acquisitions form the core of our new Exterior System business," Hiner
said. In 1998, the Exterior System business is expected to account for more
than $1 billion in sales.
Owens Corning introduced two new insulation products in the quarter aimed
at the professional insulation contractors and independent insulation dealers.
-- A new loosefill product, ProPink(TM) insulation is a pink, unbonded
blowing wool designed for the professional insulation contractor.
"With this product, Owens Corning will be able to deliver quality
unbonded blowing wool to its customers in 1998," Hiner said.
-- A new line of insulation was introduced for independent building
materials dealers who want to differentiate their offering from
competitors. Yellow Jacket(TM) insulation is focused on the needs of
independent building materials dealers and their professional
customers.
Owens Corning is a world leader in high performance glass fiber composites
and building materials systems. The Toledo, Ohio-based company had 1996 sales
of $3.8 billion and employs 24,000 people in more than 30 countries. The
company's Web site can be found at owenscorning.com
OWENS CORNING AND SUBSIDIARIES
Consolidated Statement of Income
(In millions of dollars, except share data)
(unaudited)
Quarter Ended Nine Months Ended
Sept. 30, Sept. 30,
1997 1996 1997 1996
NET SALES $1,238 $1,025 $3,130 $2,830
COST OF SALES 953 754 2,383 2,088
Gross margin 285 271 747 742
OPERATING EXPENSES
Marketing and administrative expenses 162 126 406 368
Science and technology expenses 16 22 50 63
Provision for asbestos
litigation claims -- -- -- 875
Other 12 (5) 14 (2)
Total operating expenses 190 143 470 1,304
INCOME (LOSS) FROM OPERATIONS 95 128 277 (562)
Cost of borrowed funds 36 20 78 56
INCOME (LOSS) BEFORE PROVISION
FOR INCOME TAXES 59 108 199 (618)
Provision (credit) for income taxes 5 31 48 (257)
INCOME (LOSS) BEFORE EQUITY
IN NET INCOME OF AFFILIATES 54 77 151 (361)
Equity in net income of affiliates 5 3 13 7
NET INCOME (LOSS) $59 $80 $164 $(354)
NET INCOME (LOSS) PER COMMON SHARE
Primary net income (loss) per share $1.09 $1.53 $3.05 $(6.86)
Fully diluted net income
(loss) per share $1.04 $1.44 $2.92 $(6.86)
Weighted average number of common
shares outstanding and common equivalent
shares during the period (in millions)
Primary 53.9 52.4 53.7 51.6
Assuming full dilution 58.5 57.0 58.3 51.6
OWENS CORNING AND SUBSIDIARIES
Consolidated Balance Sheet
(In millions of dollars)
(unaudited)
Sept. 30, Dec. 31, Sept. 30,
1997 1996 1996
ASSETS
CURRENT
Cash and cash equivalents $12 $45 $31
Receivables 607 314 475
Inventories 489 340 350
Insurance for asbestos litigation
claims - current portion (1) 50 100 100
Deferred income taxes 147 106 87
VEBA trust -- 19 38
Income tax receivable 22 4 16
Other current assets 74 30 30
Total current 1,401 958 1,127
OTHER
Insurance for asbestos litigation
claims (1) 411 454 493
Asbestos costs to be reimbursed - Fibreboard
(Note 8 - Item B) 92 -- --
Deferred income taxes 390 474 519
Goodwill 711 286 276
Investments in affiliates 75 64 61
Other noncurrent assets 197 155 158
Total other 1,876 1,433 1,507
PLANT AND EQUIPMENT, at cost 3,456 3,341 3,258
Less--Accumulated depreciation (1,774) (1,819) (1,821)
Net plant and equipment 1,682 1,522 1,437
TOTAL ASSETS $4,959 $3,913 $4,071
OWENS CORNING AND SUBSIDIARIES
Consolidated Balance Sheet
(In millions of dollars)
(unaudited)
Sept. 30, Dec. 31, Sept. 30,
1997 1996 1996
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT
Accounts payable and
accrued liabilities $676 $705 $586
Reserve for asbestos litigation claims -
current portion (1) 300 300 325
Short-term debt 77 96 164
Long-term debt - current portion 22 20 18
Total current 1,075 1,121 1,093
LONG-TERM DEBT 1,887 818 965
OTHER
Reserve for asbestos
litigation claims (1) 1,423 1,670 1,735
Asbestos claims settlements
- Fibreboard 73 -- --
Long-term debt assoc.
with asbestos - Fibreboard 26 -- --
Other employee benefits liability 335 349 355
Pension plan liability 61 63 67
Other 172 161 230
Total other 2,090 2,243 2,387
COMPANY OBLIGATED CONVERTIBLE
SECURITY OF SUBSIDIARY HOLDING
SOLELY PARENT DEBENTURES (MIPS) 194 194 194
MINORITY INTEREST 22 21 --
STOCKHOLDERS' EQUITY
Common stock 652 606 597
Deficit (920) (1,072) (1,138)
Foreign currency translation adjustments (23) (1) (8)
Other (18) (17) (19)
Total stockholders' equity (309) (484) (568)
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $4,959 $3,913 $4,071
(1) During the second quarter of 1996, the Company recorded a $1.1 billion
charge relating to unasserted asbestos personal injury claims that may be
received after 1999 and a probable $225 million recovery from excess level
non-products insurance carriers, having a combined after tax impact of
$542 million. As of September 30, 1997, the current portion of the reserve
for asbestos litigation claims, net of insurance, is $250 million. Excluding
Fibreboard activity, the total reserve, net of insurance, is $1,262 million.
OWENS CORNING AND SUBSIDIARIES
Consolidated Statement of Cash Flows
(In millions of dollars)
(unaudited)
Quarter Ended Nine Months Ended
Sept. 30, Sept. 30,
1997 1996 1997 1996
Net Cash Flow from Operations
Net income (loss) $59 $80 $164 $(354)
Reconciliation of net
cash provided
by operating activities:
Noncash items:
Provision for depreciation and
amortization 45 39 121 107
Provision (credit) for
deferred income taxes 4 60 60 (285)
Provision for asbestos
litigation claims -- -- -- 875
Other (5) (1) (12) 1
(Increase) decrease in receivables (40) (48) (203) (149)
(Increase) decrease in inventories 47 (18) (45) (87)
Increase (decrease) in accounts
payable and accrued liabilities (30) 50 (120) (16)
Increase (decrease) in
accrued income taxes (2) (25) (28) 30
Proceeds from insurance for asbestos
litigation claims 46 -- 110 63
Payments for asbestos
litigation claims (76) (57) (261) (178)
Other 42 (23) (15) (37)
Net cash flow from operations 90 57 (229) (30)
NET CASH FLOW FROM INVESTING
Additions to plant and equipment (44) (57) (175) (224)
Investment in subsidiaries, net of
cash acquired (517) -- (547) (39)
Proceeds from the sale of
affiliate -- -- -- 55
Other (1) (2) (10) (14)
Net cash flow from investing $(562) $(59) $(732) $(222)
OWENS CORNING AND SUBSIDIARIES
Consolidated Statement of Cash Flows
(In millions of dollars)
(unaudited)
Quarter Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
NET CASH FLOW FROM FINANCING
Net additions to long-term
credit facilities $709 $(5) $992 $179
Other additions to long-term debt 21 5 157 18
Other reductions to long-term debt (147) (1) (188) (33)
Net increase in short-term debt (91) 12 (29) 100
Dividends paid (3) -- (10) --
Other (13) (2) 8 --
Net cash flow from financing 476 9 930 264
Effect of exchange rate
changes on cash (1) -- (2) 1
Net increase (decrease) in cash
and cash equivalents 3 7 (33) 13
Cash and cash equivalents at
beginning of period 9 24 45 18
Cash and cash equivalents
at end of period $12 $31 $12 $31
OWENS CORNING AND SUBSIDIARIES
Quarterly Information on Industry and Geographic Segments
(In millions of dollars)
(unaudited)
Quarter Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
NET SALES
Industry Segments
Building Materials
United States $807 $637 $1,907 $1,677
Europe 74 76 220 203
Canada and other 73 40 145 94
Total Building Materials 954 753 2,272 1,974
Composite Materials
United States 150 151 449 453
Europe 91 87 291 302
Canada and other 43 34 118 101
Total Composite Materials 284 272 858 856
Intersegment sales
Building Materials -- -- -- --
Composite Materials 28 30 83 84
Eliminations (28) (30) (83) (84)
Net sales $1,238 $1,025 $3,130 $2,830
Geographic Segments
United States $957 $788 $2,356 $2,130
Europe 165 163 511 505
Canada and other 116 74 263 195
Total $1,238 $1,025 $3,130 $2,830
Intersegment sales
United States 28 27 88 72
Europe 9 8 25 29
Canada and other 18 19 66 58
Eliminations (55) (54) (179) (159)
Net sales $1,238 $1,025 $3,130 $ 2,830
OWENS CORNING AND SUBSIDIARIES
Quarterly Information On Industry And Geographic Segments (Continued)
(In millions of dollars)
(unaudited)
Quarter Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
INCOME (LOSS) FROM
ONGOING OPERATIONS (1)
Industry Segments
Building Materials
United States $75 $75 $179 $180
Europe 1 7 6 16
Canada and other 8 9 14 7
Total Building Materials 84 91 199 203
Composite Materials
United States 37 50 132 121
Europe (2) 7 5 48
Canada and other (1) 3 (2) 12
Total Composite Materials 34 60 135 181
General corporate expense (23) (23) (57) (66)
Income from operations 95 128 277 318
Cost of borrowed funds (36) (20) (78) (56)
Income before provision
for income taxes $59 $108 $199 $262
Geographic Segments
United States $112 $125 $311 $301
Europe (1) 14 11 64
Canada and other 7 12 12 19
General corporate expense (23) (23) (57) (66)
Income from operations 95 128 277 318
Cost of borrowed funds (36) (20) (78) (56)
Income before provision
for income taxes $59 $108 $199 $262
(1) Income from ongoing operations for the quarter and nine months ended
September 30, 1996 excludes the Company's pretax charge of $875 million for
asbestos litigation claims to be received after 1999 all of which was recorded
as an increase in general corporate expense. Income from ongoing operations
for the nine months ended September 30, 1996 also excludes 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 excluded 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 in the United States,
Europe, and Canada and other by $19 million, $1 million and $2 million,
respectively, Composite Materials in the United States and Europe by
$3 million and $2 million, respectively, and to increase general corporate
expense by $15 million.
SOURCE Owens Corning
CONTACT: William K. Hamilton, Media, 419-248-6190, or Rhonda L. Brooks,
Investors, 419-248-8485, both of Owens Corning
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