SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year ended December 30, 1999
OWENS CORNING
SAVINGS AND SECURITY PLAN
OWENS CORNING
One Owens Corning Parkway
Toledo, Ohio 43659
Commission File No. 1-3660
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REQUIRED INFORMATION
(a) Financial Statements.
1. Report of Independent Public Accountants
2. Statements of Assets Available for Benefits - as of
December 30, 1999 and December 30, 1998
3. Statements of Changes in Assets Available for Benefits -
for the years ended December 30, 1999 and December 30, 1998
4. Notes to Financial Statements
(b) Exhibit.
Consent of Arthur Andersen LLP
In accordance with the instructions to this Form 11-K, "plans subject to the
Employee Retirement Income Security Act of 1974 ("ERISA") may file plan
financial statements and schedules prepared in accordance with the financial
reporting requirements of ERISA." As the Plan is subject to the filing
requirements of ERISA, the aforementioned financial statements and schedules of
the Plan have been prepared in accordance with such requirements.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the Plan) have duly caused this annual
report to be signed on its behalf by the undersigned hereunto duly authorized.
OWENS CORNING
SAVINGS AND SECURITY PLAN
By /s/ Steven J. Strobel
-------------------------------------
Steven J. Strobel
Chairman, Investment Review Committee
Dated:
June 27, 2000
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Plan Administrator
of the Owens Corning
Savings and Security Plan:
We have audited the accompanying statements of assets available for benefits of
the OWENS CORNING SAVINGS AND SECURITY PLAN as of December 30, 1999 and 1998,
and the related statements of changes in assets available for benefits for the
years then ended. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by the Plan's management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the assets available for benefits of the Owens Corning
Savings and Security Plan as of December 30, 1999 and 1998, and the changes in
its assets available for benefits for the years then ended in conformity with
accounting principles generally accepted in the United States.
/s/ Arthur Andersen LLP
---------------------------------
ARTHUR ANDERSEN LLP
Toledo, Ohio,
April 28, 2000
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OWENS CORNING
SAVINGS AND SECURITY PLAN
STATEMENTS OF ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 30, 1999 AND DECEMBER 30, 1998
December 30, 1999 December 30, 1998
----------------- -----------------
ASSETS:
Investment in master trust (Notes 1, 2, 3 and 7) $ 99,494,444 $ 78,771,700
Due from Owens Corning (Note 1) 2,582,980 483,583
--------------- ----------------
ASSETS AVAILABLE FOR BENEFITS $ 102,077,424 $ 79,255,283
=============== ================
The accompanying notes are an integral part of these statements.
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OWENS CORNING
SAVINGS AND SECURITY PLAN
STATEMENTS OF CHANGES IN ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 30, 1999 AND DECEMBER 30, 1998
December 30, 1999 December 30, 1998
----------------- -----------------
INVESTMENT INCOME (Note 2):
Net interest in master trust investment
(loss) income $ (6,141,997) $ 5,154,927
CONTRIBUTIONS (Notes 1, 5 and 7):
Participants 14,734,157 11,604,692
Owens Corning 8,786,634 5,014,365
-------------- ----------------
23,520,791 16,619,057
-------------- ----------------
OTHER:
Distributions to participants (Note 5) (14,362,075) (10,194,396)
Transfer from Predecessor Trustee (Note 6) 20,154,605 1,766,889
Administrative expenses (Note 1) (349,987) (285,442)
Other 804 1,248,105
-------------- ----------------
5,443,347 (7,464,844)
-------------- ----------------
Net increase (Note 3) 22,822,141 14,309,140
-------------- ----------------
ASSETS AVAILABLE FOR BENEFITS - beginning of year 79,255,283 64,946,143
-------------- ----------------
ASSETS AVAILABLE FOR BENEFITS - end of year $ 102,077,424 $ 79,255,283
============== ================
The accompanying notes are an integral part of these statements.
- 3 -
OWENS CORNING
SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT PROVISIONS OF THE PLAN AND ACCOUNTING POLICIES
Operations of the Plan
- ----------------------
The Owens Corning Savings and Security Plan (the Plan) principally benefits
designated groups of employees of Owens Corning and certain subsidiaries (the
Company). An eligible employee may elect to enroll in the Plan at any time.
Administrative expenses of the Plan are charged to the Plan and include
professional fees, accounting and other administrative expenses.
Certain Plan investments, included in a master trust (Note 2), are shares of
mutual funds managed by Fidelity Investments and Company Stock. Fidelity
Investments is the trustee (the Trustee) as defined by the Plan and the Company
is the plan sponsor. Therefore, these transactions qualify as party-in-interest
transactions.
The following descriptions of the Plan provide only general information.
Participants should refer to the Plan agreement for a more complete description
of the Plan's provisions.
Plan Contributions
- ------------------
Participants may contribute up to 15% of their base pay to the Plan. All or a
portion of the participants' contributions may be designated at the
participants' option as deferred income which, pursuant to Section 401(k) of the
Internal Revenue Code, is not subject to Federal income tax until such amounts
are distributed to the participants. The Plan requires remittance of participant
contributions to the Trustee as soon as deducted from the participants'
paychecks.
The Plan provides a retirement contribution equal to a specified percentage of
eligible pay (which percentage varies by employee group) for participants who
work at a plant or business unit where a defined benefit pension plan is not
available. Company contributions relating to the retirement contribution are
invested as participants direct among the Plan's investment options.
The Company matches participant contributions at various negotiated rates. The
Company may, at its discretion, make an annual profit sharing contribution to
the Plan. The Company made a profit sharing contribution of approximately
$2,583,000 and $484,000 in 1999 and 1998, respectively, included as Due from
Owens Corning in the accompanying financial statements. One-half of the
Company's annual profit sharing contribution and 100% of the matching
contributions are invested exclusively in Company stock, held by a master trust
(Note 2).
The Company may, at its option, make Company contributions in the form of cash
or an equivalent number of shares of common stock of the Company. The Company
contributed cash in 1999 and shares of stock in 1998 to satisfy the portion of
the annual profit sharing contribution invested exclusively in Company stock,
held by a master trust (Note 2).
- 4 -
OWENS CORNING
SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS
(continued)
(1) SUMMARY OF SIGNIFICANT PROVISIONS OF THE PLAN AND ACCOUNTING POLICIES
(continued)
Plan Investment Options
- -----------------------
Participants elect to have their contributions invested in 1% increments among
the investment funds made available under the Plan, which are collectively held
in a master trust (Note 2). In 1999, the Acorn Fund and the Templeton Foreign
Fund were eliminated as investment options. In 1998, the Dodge & Cox Balanced
Fund was eliminated as an investment option in the Plan and the Low-Priced Stock
Fund was added. Currently, the following ten investment options are available to
participants:
Company Stock Fund
------------------
Consists primarily of investments in Owens Corning common stock.
Spartan U.S. Equity Index Fund
------------------------------
Primarily invested in the companies whose securities are the basis for the
value of the Standard & Poor's 500 Index.
Retirement Money Market Fund
-----------------------------
Primarily invests in high-quality short-term U.S. dollar denominated money
market securities of domestic and foreign issuers. Investments include
short-term corporate obligations, U.S. government obligations and
certificates of deposit.
Low-Priced Stock Fund
---------------------
Primarily invests in stocks of smaller, less well-known companies that are
considered undervalued or out of favor with other
investors.
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OWENS CORNING
SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS
(continued)
(1) SUMMARY OF SIGNIFICANT PROVISIONS OF THE PLAN AND ACCOUNTING POLICIES
(continued)
Puritan Fund
------------
Primarily invests in high-yielding U.S. and foreign securities, common and
preferred stocks, and bonds of any quality or maturity.
Growth and Income Portfolio
---------------------------
Primarily invests in U.S. and foreign stocks.
Blue Chip Growth Fund
---------------------
Primarily invests in common stocks of well-known and established companies
and companies with strong earnings and future growth potential.
Aggressive Growth Fund
----------------------
Primarily invests in stocks of small and medium-sized companies in the
developing stages of their life cycle that have the potential for
accelerated earnings or revenue growth.
Diversified International Fund
------------------------------
Primarily invests in stocks of companies located outside the U.S. that are
included in the Morgan Stanley EAFE Index.
Investment Grade Bond Fund
--------------------------
Invests in a broad variety of fixed-income obligations of any maturity that
are primarily rated medium to high quality.
The Trustee, at its sole discretion subject to the provisions in the trust
agreement, may hold any portion of any contributions in cash which it
considers necessary to meet anticipated disbursements.
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OWENS CORNING
SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS
(continued)
(1) SUMMARY OF SIGNIFICANT PROVISIONS OF THE PLAN AND ACCOUNTING POLICIES
(continued)
Participants may change their investment options and contribution rate on a
daily basis and redistribute their account balances daily. Participants may
discontinue their contributions to the Plan at any time.
Basis of Accounting
- -------------------
The accompanying financial statements have been prepared on the accrual basis.
Investments are reported at quoted market value. Participant withdrawal requests
received by the plan administrator before year end but not yet distributed to
the participants at year end are included in assets available for benefits.
Use of Estimates
- ----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Future
events could alter such estimates.
Reclassifications
- -----------------
Certain amounts in the 1998 financial statements have been reclassified to
conform with the 1999 presentation.
Income Taxes
- ------------
The Internal Revenue Service (IRS) has issued a determination letter dated March
27, 1996, stating that the Plan meets the requirements of Section 401(a) of the
Internal Revenue Code (the Code) and that the trust is exempt from taxation
under Section 501(a) of the Code. Participants generally are not subject to
Federal income tax on Company contributions or fund earnings until those amounts
are distributed to them. Participants may elect to designate all or a portion of
their contributions to the Plan as deferred income pursuant to Section 401(k) of
the Code. This election permits the participants to exclude from gross taxable
income for Federal tax purposes that portion of their contributions so
designated, subject to certain limitations, until such time as they are
withdrawn from the Plan. The Plan had several amendments throughout 1999 and
1998; however, no new tax determination letter has been issued. Management
believes that the amendments do not change the Plan's status for meeting the
requirements of Section 401(a) of the Internal Revenue Code and that the trust
is still exempt from taxation.
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OWENS CORNING
SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS
(continued)
(1) SUMMARY OF SIGNIFICANT PROVISIONS OF THE PLAN AND ACCOUNTING POLICIES
(continued)
Proceedings in the Event of Plan Termination
- --------------------------------------------
Although it has not expressed any intent to do so, the Company has the right to
terminate the Plan. In the event of termination or upon a permanent
discontinuance of Company contributions, the Plan accounts of each participant
not previously vested would fully vest. Participants would, in accordance with
the terms of the Plan, receive their contributions to the Plan as well as
Company contributions to the Plan on their behalf and the earnings on those
contributions.
(2) INVESTMENTS
The Owens Corning Savings Plans Master Trust (the Master Trust) was established
for the investment of the assets of the Plan and another savings plan of the
Company. Each participating plan has an undivided interest in the Master Trust,
which is based on beginning of year plan interest adjusted for transactions
attributable to each plan and a proportionate share of income and expenses
attributable to the Master Trust as a whole. Quoted market prices are used to
value investments in the Master Trust. A summary of the net assets of the Master
Trust as of December 30, 1999 and 1998 is as follows:
1999 1998
---- ----
ASSETS:
Investments:
Common Stock* $ 116,012,854 $154,873,515
Mutual Funds 358,124,204 244,617,866
Loans to Participants (Note 4) 12,923,914 11,665,663
------------- ------------
Total Assets $ 487,060,972 $411,157,044
PLAN INTEREST .204 .192
============= ============
*Nonparticipant-directed
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OWENS CORNING
SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS
(continued)
(2) INVESTMENTS (continued)
A summary of investment income for the Master Trust for the years ended December
30, 1999 and 1998, is as follows:
1999 1998
---- ----
Investment (Loss) Income:
Net (depreciation) appreciation in
fair value of investments:
Common Stock $ (68,861,570) $ 8,843,733
Mutual Funds 43,711,008 10,859,683
--------------- ---------------
(25,150,562) 19,703,416
Interest 876,577 350,651
Dividends 20,235,160 15,205,828
--------------- ---------------
Total investment (loss) income $ (4,038,825) $ 35,259,895
=============== ===============
Unrealized appreciation (depreciation) of investments is reflected currently as
a change in assets available for benefits. Purchases and sales are recorded on
the trade date basis. Realized gain or loss on disposition of investments is
computed using average cost.
(3) NONPARTICIPANT-DIRECTED INVESTMENTS
Information about the significant components of the assets and changes in assets
available for benefits relating to the nonparticipant-directed investment option
within the Master Trust (the Company Stock Fund) is as follows:
- 9 -
OWENS CORNING
SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS
(continued)
(3) NONPARTICIPANT-DIRECTED INVESTMENTS (continued)
1999 1998
---- ----
Assets Available for Benefits:
Plan interest in Company Stock Fund $ 29,299,463 $ 34,794,790
Contribution receivable 1,339,121 48,496
------------ ------------
$ 30,638,584 $ 34,843,286
============ ============
Changes in Total Assets Available for Benefits:
Plan interest in:
Interest $ (26,059) $ (23,843)
Dividends 323,163 294,348
Net (depreciation) appreciation (16,125,355) 1,332,063
------------- ------------
(15,828,251) 1,602,568
Contributions 9,374,772 8,161,101
Transfers from (to) participant -
directed investments 5,844,154 (3,360,108)
Distributions and other (3,595,377) (4,670,086)
------------- ------------
$ (4,204,702) $ 1,733,475
============= ============
(4) LOANS
Loan balances largely represent rollovers from acquisitions made by the Company.
No new loans were made to active participants during January 1, 1998 through
August 31, 1998, as there was no provision in the Plan to do so. Effective
September 1, 1998, non-union employees and union employees at the Hebron, Ohio
location may obtain loans from the Plan. Other union employees may obtain loans
from the Plan following the first re-negotiation of their applicable collective
bargaining agreement after September 1, 1998.
The maximum amount participants may borrow is the lesser of $50,000 or 50% of
their total vested account balance, limited to the total of contributions
designated as deferrals and related earnings. The minimum amount available for a
loan is $1,000. The loan limit is reduced by the highest loan balance
outstanding in the prior 12 months.
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OWENS CORNING
SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS
(continued)
(4) LOANS (continued)
Loans advanced are repaid through regular payroll deductions with interest equal
to the prime rate in effect on the last business day of the month prior to the
employee's loan application.
A loan can be requested for any reason. A borrower has from one to five years to
repay the loan. Repayments of principal and interest are invested in one of the
ten investment funds in accordance with the borrower's election.
(5) VESTING, FORFEITURES AND DISTRIBUTIONS
Participants become 100% vested in Company contributions and earnings thereon
after five years of completed service at a rate of 20% per year. Certain
participants become 100% vested after three years of service. Such amounts also
become fully vested upon the participant attaining 65 years of age with five
years of service, 55 years of age with 10 years of service, termination of the
participant's employment due to retirement, disability or death, involuntary
termination of the participant's employment (other than for cause), termination
of the Plan, or permanent discontinuance of the prescribed Company contributions
to the Plan. Such vested contributions and earnings thereon are automatically
distributable after termination and upon attaining 65 years of age or death,
whichever is earlier. If termination of employment occurs for any reason other
than attaining 65 years of age or death, the participant's account will become
distributable at 65 years of age or death unless an election for immediate
distribution is filed within 90 days of termination with the plan administrator.
Participants may make certain withdrawals from their accounts. Participants may
elect to receive their distribution from the Company Stock Fund in the form of
cash or Company stock. After-tax contributions and the related earnings are
eligible for withdrawal up to two times each calendar year, once between January
1 and June 30 of the year, and again between July 1 and December 31 of the year.
Participants over age 65 may make withdrawals of Company contributions during
the same periods. No other withdrawals of Company contributions can be made
during employment. Participants who voluntarily terminate or are terminated for
cause will forfeit the non-vested portion of the Company contributions and
related earnings which are applicable. Forfeitures are applied to reduce
subsequent Company contributions to the Plan. The market value forfeited by
employees withdrawing from the Plan was approximately $35,000 in 1999, and
$50,000 in 1998.
Participants aged 59-1/2, or older, may withdraw all or a portion of their
before-tax contributions and earnings. Otherwise, before-tax contributions may
be withdrawn only under serious financial hardship. Earnings credited to the
before-tax contributions before 1989, if any, are not available for withdrawal.
- 11 -
OWENS CORNING
SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS
(continued)
(5) VESTING, FORFEITURES AND DISTRIBUTIONS (continued)
Included in 1999 distributions to participants in the accompanying financial
statements is approximately $2,500,000 of transfers to a salaried savings plan
maintained by the Company.
(6) PLAN MERGERS
Effective January 1, 1999, the following subsidiaries' plans merged into the
Plan: AmeriMark Building Products, Inc. Hourly Employees Retirement Plan;
Employees' Savings Plan for AmeriMark Building Products, Inc. and Subsidiaries;
Fabwel, Inc. 401(k) Plan; Falcon Foam Corporation Retirement Savings Plan
(Falcon of California only) and the Fibreboard Corporation 401(k) Retirement
Plan. Employees were 100% vested in the amounts transferred under the prior
plans. During 1999, in connection with these mergers, assets totaling
approximately $20,000,000 were transferred into the Plan.
In 1998, three subsidiary plans merged into the Plan. Effective January 1, 1998,
the Partek Insulations, Inc. 401(k) Plan merged into the Plan. The OCFL 401(k)
Savings Plan (Hebron location) and the OCFL Money Purchase Pension Plan merged
into the Plan effective July 1, 1998. On each of the effective dates, all
amounts were transferred to the Plan and each employee was 100% vested in the
amounts under the prior plan.
Effective September 30, 1998, the Plan was revised in connection with the
transfer of Owens Corning's business of manufacturing and selling glass fiber
yarns and specialty materials to Advanced Glassfiber Yarns LLC ("AGY"). Those
eligible, salaried employees in the Plan as of September 30, 1998, that were
transferred to AGY are fully vested in their accounts under the Plan. Matching
contributions received after September 30, 1998, are made in cash rather than
Owens Corning stock.
(7) SUBSEQUENT EVENT
Effective January 1, 2000, the Company's match will increase from 35% to 50% of
the participants' contributions up to 10% of eligible compensation at certain
locations. Beginning January 1, 2000, participants may transfer all prospective
Company match and profit sharing contributions to the investment option of their
choice, and beginning February 1, 2000 can redirect 1/3 of such contributions
made prior to December 31, 1999. As of January 1, 2001, 1/2 of the remaining
restricted Company match and profit sharing contributions may be redirected with
the balance becoming unrestricted January 1, 2002.
During 1998, the Company sold its business of manufacturing and selling glass
fiber yarns and specialty materials to Advanced Glassfiber Yarns, LLC ("AGY").
As a result, effective January 1, 2000, employees of AGY will no longer
participate in the Plan. AGY employee account balances totaling approximately
$10 million were transferred into a new plan, which is administered by the
management of AGY.