SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Ended June 30, 1997
Commission File No. 1-3660
Owens Corning
One Owens Corning Parkway
Toledo, Ohio 43659
Area Code (419) 248-8000
A Delaware Corporation
I.R.S. Employer Identification No. 34-4323452
Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes / X / No / /
Shares of common stock, par value $.10 per share,
outstanding at June 30, 1997
53,338,336
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PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OWENS CORNING AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
Quarter Six Months
Ended Ended
June 30, June 30,
1997 1996 1997 1996
(In millions of dollars, except share data)
NET SALES $ 1,017 $ 956 $ 1,892 $ 1,805
COST OF SALES 778 702 1,430 1,334
Gross margin 239 254 462 471
OPERATING EXPENSES
Marketing and administrative expenses 122 115 244 242
Science and technology expenses 17 20 34 41
Provision for asbestos litigation claims - 875 - 875
Other (5) 6 2 3
Total operating expenses 134 1,016 280 1,161
INCOME (LOSS) FROM OPERATIONS 105 (762) 182 (690)
Cost of borrowed funds 23 18 42 36
INCOME (LOSS) BEFORE PROVISION
FOR INCOME TAXES 82 (780) 140 (726)
Provision (credit) for income
taxes (Note 5) 24 (304) 43 (288)
INCOME (LOSS) BEFORE EQUITY
IN NET INCOME OF AFFILIATES 58 (476) 97 (438)
Equity in net income of affiliates 5 3 8 4
NET INCOME (LOSS) $ 63 $ (473) $ 105 $ (434)
NET INCOME (LOSS) PER COMMON SHARE
Primary net income (loss) per share $ 1.17 $(9.19) $ 1.96 $(8.43)
Fully diluted net income (loss)
per share $ 1.11 $(9.19) $ 1.87 $(8.43)
Weighted average number of common
shares outstanding and common equivalent
shares during the period (in millions)
Primary 53.8 51.5 53.6 51.5
Assuming full dilution 58.5 51.5 58.2 51.5
The accompanying notes are an integral part of this statement.
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OWENS CORNING AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
June 30, December 31,
1997 1996
ASSETS (In millions of dollars)
CURRENT
Cash and cash equivalents $ 19 $ 45
Receivables 567 314
Inventories (Note 6) 541 340
Insurance for asbestos litigation
claims - current portion (Note 8 - Item A) 50 100
Deferred income taxes 147 106
VEBA trust 3 19
Income tax receivable 11 4
Other current assets (Note 3) 95 30
Total current 1,433 958
OTHER
Insurance for asbestos litigation
claims (Note 8 - Item A) 440 454
Asbestos costs to be reimbursed
- Fibreboard (Note 8 - Item B) 110 -
Deferred income taxes 394 474
Goodwill (Note 3) 704 286
Investments in affiliates 73 64
Other noncurrent assets (Note 4) 241 155
Total other 1,962 1,433
PLANT AND EQUIPMENT, at cost
Land 62 58
Building and leasehold improvements 640 614
Machinery and equipment 2,462 2,384
Construction in progress 306 285
3,470 3,341
Less--Accumulated depreciation (1,789) (1,819)
Net plant and equipment 1,681 1,522
TOTAL ASSETS $ 5,076 $ 3,913
The accompanying notes are an integral part of this statement.
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OWENS CORNING AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Continued)
June 30, December 31,
1997 1996
(In millions of dollars)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT
Accounts payable and accrued liabilities $ 694 $ 705
Reserve for asbestos litigation claims -
current portion (Note 8 - Item A) 300 300
Short-term debt 156 96
Long-term debt - current portion 23 20
Total current 1,173 1,121
LONG-TERM DEBT (Note 4) 1,854 818
OTHER
Reserve for asbestos litigation claims
(Note 8 - Item A) 1,485 1,670
Asbestos claims settlements - Fibreboard
(Note 8 - Item B) 88 -
Long-term debt associated with asbestos
- Fibreboard (Note 8 - Item B) 26 -
Other employee benefits liability 340 349
Pension plan liability 66 63
Other (Note 8 - Item B) 178 161
Total other 2,183 2,243
COMPANY OBLIGATED CONVERTIBLE
SECURITY OF SUBSIDIARY HOLDING
SOLELY PARENT DEBENTURES (MIPS) 194 194
MINORITY INTEREST 25 21
STOCKHOLDERS' EQUITY
Common stock 653 606
Deficit (980) (1,072)
Foreign currency translation adjustments (8) (1)
Other (18) (17)
Total stockholders' equity (353) (484)
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 5,076 $ 3,913
The accompanying notes are an integral part of this statement.
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OWENS CORNING AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
Quarter Six Months
Ended Ended
June 30, June 30,
1997 1996 1997 1996
(In millions of dollars)
NET CASH FLOW FROM OPERATIONS
Net income (loss) $ 63 $ (473) $ 105 $(434)
Reconciliation of net cash provided
by operating activities:
Noncash items:
Provision for depreciation and
amortization 39 35 76 68
Provision (credit) for deferred
income taxes 39 (345) 56 (345)
Provision for asbestos litigation
claims (Note 8 - Item A) - 875 - 875
Other (6) 1 (7) 2
(Increase) decrease in
receivables (56) (34) (163) (101)
(Increase) decrease in inventories (1) (18) (92) (69)
Increase (decrease) in accounts
payable and accrued liabilities (31) 2 (90) (66)
Increase (decrease) in accrued
income taxes (15) 7 (26) 55
Proceeds from insurance for
asbestos litigation claims 24 33 64 63
Payments for asbestos litigation
claims (90) (86) (185) (121)
Other (38) 23 (57) (14)
Net cash flow from operations (72) 20 (319) (87)
NET CASH FLOW FROM INVESTING
Additions to plant and equipment (57) (90) (131) (167)
Investment in subsidiaries, net
of cash acquired (Note 3) (10) (39) (30) (39)
Proceeds from the sale of affiliate - - - 55
Other (4) (6) (9) (12)
Net cash flow from investing $(71) $ (135) $ (170) $ (163)
The accompanying notes are an integral part of this statement.
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OWENS CORNING AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Continued)
Quarter Six Months
Ended Ended
June 30, June 30,
1997 1996 1997 1996
(In millions of dollars)
NET CASH FLOW FROM FINANCING
Net additions to long-term credit
facilities (Note 4) $ 26 $ 86 $ 283 $ 184
Other additions to long-term debt 108 13 136 13
Other reductions to long-term debt (39) (20) (41) (32)
Net increase in short-term debt 45 47 62 88
Dividends paid (4) - (7) -
Other 2 - 21 2
Net cash flow from financing 138 126 454 255
Effect of exchange rate changes on
cash 1 - (1) 1
Opening cash balance of Fibreboard 10 - 10 -
Net increase (decrease) in cash
and cash equivalents 6 11 (26) 6
Cash and cash equivalents at
beginning of period 13 13 45 18
Cash and cash equivalents at
end of period $ 19 $ 24 $ 19 $ 24
The accompanying notes are an integral part of this
statement.
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OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Quarter Six Months
Ended Ended
June 30, June 30,
1. SEGMENT DATA 1997 1996 1997 1996
(In millions of dollars)
NET SALES
Industry Segments
Building Materials
United States $ 600 $ 570 $1,100 $1,040
Europe 72 63 146 127
Canada and other 41 30 72 54
Total Building Materials 713 663 1,318 1,221
Composite Materials
United States 161 152 299 302
Europe 103 107 200 215
Canada and other 40 34 75 67
Total Composite Materials 304 293 574 584
Intersegment sales
Building Materials - - - -
Composite Materials 29 29 56 54
Eliminations (29) (29) (56) (54)
Net sales $1,017 $ 956 $1,892 $1,805
Geographic Segments
United States $ 761 $ 722 $1,399 $1,342
Europe 175 170 346 342
Canada and other 81 64 147 121
Total $1,017 $ 956 $1,892 $1,805
Intersegment sales
United States 31 28 60 45
Europe 7 13 16 21
Canada and other 26 18 48 39
Eliminations (64) (59) (124) (105)
Net sales $1,017 $ 956 $1,892 $1,805
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OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
1. SEGMENT DATA (CONTINUED) Quarter Six Months
Ended Ended
June 30, June 30,
1997 1996 1997 1996
(In millions of dollars)
INCOME (LOSS) FROM OPERATIONS (1)
Industry Segments
Building Materials
United States $ 70 $ 70 $ 107 $ 85
Europe 3 3 8 8
Canada and other 3 - 7 (4)
Total Building Materials 76 73 122 89
Composite Materials
United States 50 36 90 68
Europe 2 20 9 39
Canada and other - 6 2 9
Total Composite Materials 52 62 101 116
General corporate expense (23) (897) (41) (895)
Income (loss) from operations 105 (762) 182 (690)
Cost of borrowed funds (23) (18) (42) (36)
Income (loss) before provision
for income taxes $ 82 $(780) $ 140 $(726)
Geographic Segments
United States $120 $ 106 $ 197 $ 153
Europe 5 23 17 47
Canada and other 3 6 9 5
General corporate expense (23) (897) (41) (895)
Income (loss) from operations 105 (762) 182 (690)
Cost of borrowed funds (23) (18) (42) (36)
Income (loss) before provision
for income taxes $ 82 $(780) $ 140 $(726)
(1) Income from operations for the quarter and six months
ended June 30, 1996 includes 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 operations for the six
months ended June 30, 1996 also includes the Company's pretax
gain of $37 million from the sale of its ownership interest
in its Japanese affiliate Asahi Fiber Glass Co. Ltd., which
was recorded as a reduction in general corporate expense.
Also included 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.
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OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
2. GENERAL
The financial statements included in this Report are
condensed and unaudited, pursuant to certain Rules and
Regulations of the Securities and Exchange Commission, but
include, in the opinion of the Company, adjustments
necessary for a fair statement of the results for the
periods indicated, which, however, are not necessarily
indicative of results which may be expected for the full
year.
In connection with the condensed financial statements and
notes included in this Report, reference is made to the
financial statements and notes thereto contained in the
Company's 1996 Annual Report on Form 10-K, as filed with the
Securities and Exchange Commission.
3. ACQUISITIONS
At the end of the second quarter of 1997, the Company
completed its cash tender offer to acquire the outstanding
shares of Fibreboard Corporation, a North American
manufacturer of vinyl siding and accessories, as well as
manufactured stone. Additionally, Fibreboard operates more
than 130 company-owned distribution centers in 32 states.
At the time of acquisition, management formulated a plan to
divest Fibreboard's calcium silicate insulation and metal
jacket business (Pabco). Pabco's assets are included in
other current assets as available for sale.
The purchase price of Fibreboard was $657 million, including
$138 million of debt assumed, the majority of which was
financed through borrowings on the Company's new long-term
credit facility early in the third quarter of 1997 (see Note
4).
The following unaudited table presents the pro forma results
of operations for the quarter and six months ended June 30,
1997 and 1996, assuming the acquisition of Fibreboard
occurred at the beginning of each period presented. These
results include certain adjustments, primarily for
depreciation and amortization, interest and other expenses
directly attributable to the acquisition and are not
necessarily indicative of what the results would have been
had the transactions actually occurred at the beginning of
the periods presented. The pro forma results do not include
operations that were discontinued by Fibreboard prior to the
acquisition, or Pabco.
Quarter Six Months
Ended Ended
June 30, June 30,
1997 1996 1997 1996
(In millions of dollars,
except share data)
Net Sales $1,197 $1,122 $2,223 $2,092
Income from continuing operations 61 (476) 99 (443)
Fully diluted earnings per share from
continuing operations $ 1.07 $(9.24) $ 1.76 $(8.59)
Excluding the Fibreboard acquisition discussed above, the
Company completed other 1997 acquisitions in the Building
Materials segment, one in Europe, the other in the U.S. and
two acquisitions in Composite Materials impacting the U.S.
and Canada and other geographic segments. The aggregate
purchase price of these acquisitions, including possible
subsequent contingent consideration, was $47 million. These
acquisitions exchanged 340,000 shares of the Company's
common stock and $30 million in cash. The pro forma effect
of these acquisitions was not material to net income for the
quarters or six months ended June 30, 1997 and 1996.
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OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
3. ACQUISITIONS (Continued)
All of the Company's acquisitions have been accounted for
using the purchase method of accounting, whereby the assets
acquired and liabilities assumed have been recorded at their
fair values and the results of operations of the
acquisitions have been included in the Company's
consolidated financial statements subsequent to the
acquisitions' dates.
The purchase price allocations were based on preliminary
estimates of fair market value and are subject to revision.
The estimated fair value of assets acquired from Fibreboard,
including goodwill was $923 million, liabilities assumed
totaled $404 million, $138 million of which was debt. The
1997 acquisitions include goodwill of $424 million, which is
being amortized over 40 years.
4. LONG-TERM DEBT
On June 26, 1997 the Company entered into a long-term
revolving credit agreement with a maximum commitment
equivalent to $2 billion U.S., of which portions can be
denominated in Canadian dollars, Belgian francs, British
pounds or U.S. dollars. Issuance costs incurred in
conjunction with the establishment of this new credit
facility are included in other noncurrent assets and being
amortized over the term of the facility. The agreement
allows the Company to borrow under multiple options, which
provide for varying terms and interest rates. The
commitment fee, charged on the entire commitment, is a
sliding scale based on credit ratings and was .15% at June
30, 1997.
Early in the third quarter of 1997 the Company borrowed
$1.04 billion at LIBOR plus .275% under the new facility.
This new facility replaces the Company's previous U.S and
Canadian facilities, and select short term debt instruments.
The proceeds borrowed were used to pay off these instruments
and to fund the acquisition of Fibreboard, which included
the purchase of Fibreboard's outstanding shares as well as
the refinancing of substantially all of Fiberboard's
preacquisition debt.
5. INCOME TAXES
The reconciliation between the U.S. federal statutory rate
and the Company's effective income tax rate is:
Quarter Six Months
Ended Ended
June 30, June 30,
1997 1996 1997 1996
U.S. federal statutory rate 35% (35)% 35% (35)%
Adjustment of deferred tax asset allowance - - (5) (1)
State and local income taxes 3 (3) 3 (4)
Other (8) (1) (2) -
Effective tax rate 30% (39)% 31% (40)%
During the first quarter of 1996, the Company reversed
approximately $7 million of its valuation allowances on the
operating loss carryforwards of a foreign subsidiary as
management determined that the loss carryforwards would be
realizable. In 1997, the Company reversed the remaining $7
million valuation allowance on this loss carryforward.
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OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
6. INVENTORIES
June 30, December 31,
1997 1996
(In millions of dollars)
Inventories are summarized as follows:
Finished goods $ 410 $ 273
Materials and supplies 216 149
FIFO inventory 626 422
Less: Reduction to LIFO basis (85) (82)
$ 541 $ 340
Approximately $263 million and $216 million of FIFO
inventories were valued using the LIFO method at June 30,
1997 and December 31, 1996, respectively.
7. CONSOLIDATED STATEMENT OF CASH FLOWS
Cash payments for income taxes, net of refunds, and cost of
borrowed funds are summarized as follows:
Quarter Six Months
Ended Ended
June 30, June 30,
1997 1996 1997 1996
(In millions of dollars)
Income taxes $ 3 $ 8 $ 9 $(9)
Cost of borrowed funds 43 33 56 39
The Company considers all highly liquid debt instruments
purchased with a maturity of three months or less to be cash
equivalents.
The Consolidated Statement of Cash Flows does not reflect
the acquisition of Fibreboard as no cash was exchanged until
early July (see Notes 3 and 4).
8. CONTINGENT LIABILITIES
ASBESTOS LIABILITIES
ITEM A.OWENS CORNING (EXCLUDING FIBREBOARD)
Owens Corning is a co-defendant with other former
manufacturers, distributors and installers of products
containing asbestos and with miners and suppliers of
asbestos fibers (collectively, the "Producers") in personal
injury and property damage litigation. The personal injury
claimants generally allege injuries to their health caused
by inhalation of asbestos fibers from Owens Corning's
products. Most of the claimants seek punitive damages as
well as compensatory damages. The property damage claims
generally allege property damage to school, public and
commercial buildings resulting from the presence of products
containing asbestos. Virtually all of the asbestos-related
lawsuits against Owens Corning arise out of its
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OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
8. CONTINGENT LIABILITIES (Continued)
manufacture, distribution, sale or installation of an
asbestos-containing calcium silicate, high temperature
insulation product, the manufacture of which was
discontinued in 1972.
Status
As of June 30, 1997, approximately 165,700 asbestos personal
injury claims were pending against Owens Corning, of which
16,700 were received in the first six months of 1997. Owens
Corning received approximately 36,400 such claims in 1996
and 55,900 in 1995.
Many of the recent claims appear to be the product of mass
screening programs and not to involve malignancies or other
significant asbestos related impairment. Owens Corning
believes that at least 40,000 of the recent claims involve
plaintiffs whose pulmonary function tests ("PFTs") were
improperly administered or manipulated by the testing
laboratory or otherwise inconsistent with proper medical
practice, and it is investigating a number of testing
organizations and their methods. In 1996 Owens Corning
filed suit in federal court in New Orleans, Louisiana
against the owners and operators of certain pulmonary
function testing laboratories in the southeastern U.S.
challenging such improper testing practices. This matter is
now in active pre-trial discovery. In January 1997, Owens
Corning filed a similar suit in federal court in Jackson,
Mississippi against the owner of an additional testing
laboratory.
During 1996 Owens Corning engaged in discussions with a
group of approximately 30 leading plaintiffs' law firms to
explore approaches toward resolution of its asbestos
liability. Agreements with the various firms not to file
claims against Owens Corning except for those involving
malignancies, most of which agreements expired on or before
January 1, 1997, may have impacted the number of cases
received by Owens Corning during 1996 and the first two
quarters of 1997.
Through June 30, 1997, Owens Corning had resolved (by
settlement or otherwise) approximately 192,100 asbestos
personal injury claims. This number includes cases resolved
by two orders of dismissal for lack of medical proof,
covering approximately 18,900 federal maritime cases which
named Owens Corning as a defendant, resulting in a 15,600
case reduction in the backlog after reduction for duplicate
cases and cases previously settled. Of these cases,
approximately 11,700 were dismissed in 1996, with the
remaining 3,900 being dismissed in the first quarter of
1997. During 1996, 1995 and 1994, Owens Corning resolved
approximately 60,600 asbestos personal injury claims, over
99% without trial, and incurred total indemnity payments of
$626 million (an average of about $10,300 per case).
Owens Corning's indemnity payments have varied considerably
over time and from case to case, and are affected by a
multitude of factors. These include the type and severity
of the disease sustained by the claimant (i.e.,
mesothelioma, lung cancer, other types of cancer, asbestosis
or pleural changes); the occupation of the claimant; the
extent of the claimant's exposure to asbestos-containing
products manufactured, sold or installed by Owens Corning;
the extent of the claimant's exposure to asbestos-containing
products manufactured, sold or installed by other Producers;
the number and financial resources of other Producer
defendants; the jurisdiction of suit; the presence or
absence of other possible causes of the claimant's illness;
the availability or not of legal defenses such as the
statute of limitations or state of the art; whether the
claim was resolved on an individual basis or as part of a
group settlement; and whether the claim proceeded to an
adverse verdict or judgment.
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OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
8. CONTINGENT LIABILITIES (Continued)
Insurance
As of June 30, 1997, Owens Corning had approximately $265
million in unexhausted insurance coverage (net of
deductibles and self-insured retentions and excluding
coverage issued by insolvent carriers) under its liability
insurance policies applicable to asbestos personal injury
claims. This insurance, which is substantially confirmed,
includes both products hazard coverage and primary level non-
products coverage. Portions of this coverage are not
available until 1998 and beyond under agreements with the
carriers confirming such coverage. All of Owens Corning's
liability insurance policies cover indemnity payments and
defense fees and expenses subject to applicable policy
limits.
In addition to its confirmed primary level non-products
insurance, Owens Corning has a significant amount of
unconfirmed potential non-products coverage with excess
level carriers. For purposes of calculating the amount of
insurance applicable to asbestos liabilities, Owens Corning
has estimated its probable recoveries in respect of this
additional non-products coverage at $225 million, which
amount was recorded in the second quarter of 1996. This
coverage is unconfirmed and the amount and timing of
recoveries from these excess level policies will depend on
subsequent negotiations or proceedings.
Reserve
The Company's financial statements include a reserve for the
estimated cost associated with Owens Corning's asbestos
personal injury claims. This reserve was established
principally through a charge to income in 1991 for the costs
of asbestos claims expected to be received through 1999 and
an additional $1.1 billion non-recurring, noncash charge to
income (before taking into account the probable non-products
insurance recoveries) during the second quarter of 1996 for
cases that may be received subsequent to 1999. In
establishing the reserve, Owens Corning took into account,
among other things, the effect of federal court decisions
relating to punitive damages and the certification of class
actions in asbestos cases, the discussions with the group of
plaintiffs' law firms referred to above, the results of its
continuing investigations of medical screening practices of
the kind at issue in the federal PFT lawsuits, recent
developments as to the prospects for federal and state tort
reform, the continued rate of case filings at historically
high levels, additional information on filings received
during the 1993-1995 period and other factors. The combined
effect of the $1.1 billion charge and the $225 million
probable additional non-products insurance recovery was an
$875 million charge in the second quarter of 1996.
Owens Corning's estimated total liabilities in respect of
indemnity and defense costs associated with pending and
unasserted asbestos personal injury claims that may be
received in the future, and its estimated insurance
recoveries in respect of such claims, are reported
separately as follows:
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OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
8. CONTINGENT LIABILITIES (Continued)
June 30, December 31,
1997 1996
(In millions of dollars)
Reserve for asbestos
litigation claims
Current $ 300 $ 300
Other 1,485 1,670
Total Reserve 1,785 1,970
Insurance for asbestos
litigation claims
Current 50 100
Other 440 454
Total Insurance 490 554
Net Owens Corning Asbestos
Liability $ 1,295 $ 1,416
Owens Corning cautions that such factors as the number of
future asbestos personal injury claims received by it, the
rate of receipt of such claims, and the indemnity and
defense costs associated with asbestos personal injury
claims, as well as the prospects for confirming additional
insurance, including the additional $225 million in non-
products coverage referenced above, are influenced by
numerous variables that are difficult to predict, and that
estimates, such as Owens Corning's, which attempt to take
account of such variables, are subject to considerable
uncertainty. Owens Corning believes that its estimate of
liabilities and insurance will be sufficient to provide for
the costs of all pending and future asbestos personal injury
claims that involve malignancies or significant asbestos-
related functional impairment. While such estimates cover
unimpaired claims, the number and cost of unimpaired claims
are much harder to predict and such estimates reflect Owens
Corning's belief that such claims have little or no value.
Owens Corning will continue to review the adequacy of its
estimate of liabilities and insurance on a periodic basis
and make such adjustments as may be appropriate.
Management Opinion
Although any opinion is necessarily judgmental and must be
based on information now known to Owens Corning, in the
opinion of management, while any additional uninsured and
unreserved costs which may arise out of pending personal
injury and property damage asbestos claims and additional
similar asbestos claims filed in the future may be
substantial over time, management believes that any such
additional costs will not impair the ability of the Company
to meet its obligations, to reinvest in its businesses or to
take advantage of attractive opportunities for growth.
ITEM B. FIBREBOARD (EXCLUDING OWENS CORNING)
Prior to 1972, Fibreboard manufactured insulation products
containing asbestos. Fibreboard has since been named as a
defendant in many thousands of personal injury claims for
injuries allegedly caused by asbestos exposure as well as in
asbestos property damage cases.
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OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
8. CONTINGENT LIABILITIES (Continued)
As of June 30, 1997, approximately 97,600 asbestos personal
injury claims were pending against Fibreboard, of which
21,200 were received in the first six months of 1997.
Fibreboard received approximately 32,900 such claims in 1996
and 20,700 in 1995. These claims and most of the pending
claims are made against the Fibreboard Global Settlement
Trust and are subject to the Global Settlement injunction
discussed below. In the first six months of 1997,
Fibreboard resolved approximately 1,800 asbestos personal
injury claims at an average cost of $22,000 per claim.
Approximately 2,700 such claims were resolved in 1996 at an
approximate average cost of $34,000 per claim and 14,500
were resolved in 1995 at an approximate average cost of
$12,000 per claim.
The average cost per claim has increased recently from the
historical average cost of $11,000 per claim. This is due
to the absence of group settlements, where large numbers of
low value cases are traditionally settled along with higher
value cases, and due to the fact that in 1996 and 1997 a
relatively small number of individual cases involving more
seriously injured plaintiffs were settled as exigent claims
(all of which are malignancy claims) during the pendency of
the Global Settlement injunction discussed below.
As of June 30, 1997, amounts payable under various asbestos
claim settlement agreements were $88 million. These amounts
are payable either from the Settlement Trust discussed below
or directly by the insurers. Amounts due from insurers in
payment of these or past claims paid directly by Fibreboard,
as of June 30, 1997 are $110 million.
The asbestos-related long-term debt of $26 million consists
of amounts advanced under a reimbursement agreement;
interest accrues at prime minus 2%.
Fibreboard has unique insurance coverage of personal injury
claims. During 1993, Fibreboard and its insurers,
Continental Casualty Company (Continental) and Pacific
Indemnity Company (Pacific), entered into the Insurance
Settlement, and Fibreboard, its insurers and
representatives of a nationwide class of future asbestos
plaintiffs entered into the Global Settlement. These
agreements are interrelated and require final court
approval. On July 26, 1996, the U.S. Fifth Circuit Court of
Appeals affirmed the Global Settlement by a majority
decision and the Insurance Settlement by a unanimous
decision.
The parties opposing the Global Settlement filed petitions
seeking review with the U.S. Supreme Court. On June 27,
1997, the Supreme Court granted the petition, vacated the
judgment and remanded the case to the Fifth Circuit for
further consideration in light of the Supreme Court's
decision in the Georgine class action involving asbestos
claims filed against members of the Center for Claims
Resolution. In light of this ruling, final resolution of
the Global Settlement may not be known until 1998 or later.
On October 24, 1996, the statutory time period for objectors
to seek further judicial review of the Insurance Settlement
lapsed with no petition for review having been filed with
the U.S. Supreme Court. Therefore, the Insurance
Settlement is now final and not subject to further appeal.
- 16 -
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
8. CONTINGENT LIABILITIES (Continued)
The parties will continue to seek approval of the Global
Settlement. If the Global Settlement becomes effective, all
asbestos-related personal injury liabilities of Fibreboard
will be resolved through insurance funds and existing
corporate reserves. A permanent injunction barring the
filing of any further claims against Fibreboard or its
insurers is included as part of the Global Settlement. Upon
final approval, Fibreboard's insurers are required to pay
existing settlements and assume full responsibility for any
claims filed before August 27, 1993, the date the settling
parties reached agreement on the terms of the Global
Settlement. A court-supervised claims processing trust
("Settlement Trust") will be responsible for resolving
claims which were not filed against Fibreboard before August
27, 1993, and any further claims that might otherwise be
asserted against Fibreboard in the future.
The Settlement Trust will be funded principally by
Continental and Pacific. These insurers have placed $1,525
million in an interest-bearing escrow account pending court
approval of the settlements. Fibreboard is responsible for
contributing $10 million plus accrued interest toward the
Settlement Trust, which it will obtain from other remaining
insurance sources and existing reserves. The Home Insurance
Company has already paid $9.9 million into the escrow
account on behalf of Fibreboard, in satisfaction of an
earlier settlement agreement. The balance of the escrow
account was $1,691 million at June 30, 1997, after payment
of interim expenses and exigent claims associated with the
Global Settlement.
If the Global Settlement becomes effective, Fibreboard would
have no on-going or future liabilities for asbestos personal
injury claims in excess of the $10 million currently
reserved in other long term liabilities.
The Insurance Settlement is structured as an alternative
solution in the event the Global Settlement fails to receive
final approval. Under the Insurance Settlement, Continental
and Pacific will pay in full settlements reached as of
August 27, 1993 and provide Fibreboard with the remaining
balance of the Global Settlement escrow account for claims
filed after August 27, 1993, plus an additional $475 million
for claims which were pending but not settled at August 27,
1993, less amounts paid for those claims since August 27,
1993. Under the Insurance Settlement, Fibreboard will
manage the defense and resolution of asbestos-related
personal injury claims and will remain subject to suit by
asbestos personal injury claimants.
The Insurance Settlement will not be fully implemented or
funded until such time as the Global Settlement has been
finally resolved. In the event the Global Settlement is
finally approved, the Insurance Settlement will not be
implemented.
While there are various uncertainties regarding whether the
Global Settlement or the Insurance Settlement will be in
effect, and these may ultimately impact Fibreboard's
liability for asbestos personal injury claims, the Company
believes the amounts available under the Insurance
Settlement will be adequate to fund the ongoing defense and
indemnity costs associated with asbestos-related personal
injury claims for the foreseeable future.
The Company anticipates reevaluating and updating its
estimates of the Fibreboard liability for asbestos personal
injury claims once it is determined which of the Global
Settlement or the Insurance Settlement is ultimately
implemented.
- 17 -
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
8. CONTINGENT LIABILITIES (Continued)
NON-ASBESTOS LIABILITIES
Various other lawsuits and claims arising in the normal
course of business are pending against the Company, some of
which allege substantial damages. Management believes that
the outcome of these lawsuits and claims will not have a
materially adverse effect on the Company's financial
position or results of operations.
- 18 -
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(All per share information in Item 2 is on a fully diluted basis.)
RESULTS OF OPERATIONS
Net sales were $1,017 million for the quarter ended June 30,
1997, a six percent increase from the 1996 level of $956
million. The growth is attributable to increased volumes in
the Building Materials and Composite Materials segments,
worldwide. In Building Materials, niche acquisitions and
the integration of their products into the Company's
existing channels of distribution continue to grow the
Company's volumes, particularly in the U.S. and Europe.
These volume increases were offset in large part by a
decline in worldwide composites pricing, most notably in
Europe, the effects of a stronger dollar on sales made in
foreign currencies, and a decline in insulation prices in
North America. Gross margin for the quarter ended June 30,
1997 was 24%, a decline from the second quarter 1996 level
of 27%, primarily resulting from declining prices and a
change in the mix of product sales in Building Materials to
lower margin products.
Net income for the quarter ended June 30, 1997 was $63
million, or $1.11 per share, compared to a net loss of $473
million, or $9.19 per share, for the quarter ended June 30,
1996. Income from operations of $105 million in the second
quarter of 1997 was negatively impacted by the price
declines described above. This impact was partially offset
by volume increases experienced in the Company's roofing,
foam and composites businesses. Additionally, income from
operations benefited by $15 million from the modification of
certain employee benefits in the U.S. Earnings in the
second quarter of 1997 were also affected by increased cost
of borrowed funds resulting from increased borrowing to fund
working capital and certain acquisitions, and the improved
performance of the Company's unconsolidated affiliates.
Included in the quarter ended June 30, 1996 was the net
after-tax charge of $542 million, or $10.53 per share, for
asbestos litigation claims that may be received after 1999
and probable additional insurance recovery. The net loss
created by this item caused common stock equivalents and
convertible securities to be excluded from the number of
fully diluted shares reported in the second quarter of 1996
due to their anti-dilutive effect. Had these anti-dilutive
shares been included in the calculation of earnings per
share, such amount for the second quarter of 1996 would have
been $.09 lower.
Net sales for the six months ended June 30, 1997, were
$1,892 million, a five percent increase over the $1,805
million reported for the first six months of 1996. This
increase reflects the strength of the Company's roofing and
foam businesses in the Building Materials segment, coupled
with the Company's continued expansion through strategic
niche acquisitions.
For the six months ended June 30, 1997, the Company reported
net income of $105 million, or $1.87 per share, compared to
a net loss of $434 million, or $8.43 per share, for the
comparable period in 1996. When compared to the earlier
year period, net income for the six months ended June 30,
1997 was negatively impacted by price declines, partially
offset by the benefit of increased volumes and productivity
gains, particularly in the insulation business, .
In addition to the net asbestos charge recorded in the
second quarter of 1996, results for the six months ended
June 30, 1996 included a $37 million pretax gain from the
sale of the Company's minority interest in Asahi Fiber Glass
Co. Ltd. in Japan and several one-time special charges,
including valuation adjustments associated with prior
divestitures, major product line productivity initiatives
and a contribution to the Owens-Corning Foundation. The
impact of the gain on net income was reduced to near zero by
these special items.
- 19 -
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
Marketing and administrative expenses were $122 million for
the quarter ended June 30, 1997, compared to $115 million in
the same period in 1996. The increase is primarily the
result of incremental administrative expenses from
acquisitions.
Building Materials
In the Building Materials segment, sales increased 8% for
the quarter and six months ended June 30, 1997 compared to
1996. This growth reflects the incremental sales from
acquisitions as well as an increase in volume, particularly
in the roofing and foam businesses. Income from operations
for Building Materials increased to $122 million for the six
months ended June 30, 1997. This improvement is primarily
the result of volume increases, productivity gains and
incremental amounts derived from acquisitions offset in part
by the continuing costs of the Company's expansion program
in the Asia Pacific region.
On June 27, the Company acquired 92% of the outstanding
stock of Fibreboard Corporation through a cash tender offer
commenced in May for all of the outstanding shares of
Fibreboard at $55 per share. In early July, Fibreboard
became a wholly owned subsidiary as a result of a short form
merger consummated at the same price. The purchase price of
Fibreboard was $657 million, including $138 million of debt
assumed, the majority of which was financed through
borrowings under the Company's new long-term credit facility
early in the third quarter of 1997. Fibreboard is one of
the five largest producers in North America of vinyl siding
and accessories, marketing products under the brand names
Norandex and Vytec. The business has plants in the U.S. and
Canada and also operates more than 130 company-owned
distribution centers in 32 states. Fibreboard is also the
leading producer of manufactured stone used in home building
construction. On July 15, the Company announced plans to
sell the Pabco business of Fibreboard. Pabco is a producer
of calcium silicate insulation used for industrial pipe
applications and metal jacketing for pipe insulation.
As the acquisition was completed at the end of the quarter,
the reported results do not include the results of
operations of Fibreboard. To enhance comparability, certain
information below is presented on a "pro forma" basis and
reflects the acquisition of Fibreboard (excluding Pabco and
operations that were discontinued by Fibreboard prior to the
acquisition) as though it had occurred at the beginning of
the respective periods presented. The pro forma results
include certain adjustments, primarily for depreciation and
amortization, interest and other expenses directly
attributable to the acquisition and are not necessarily
indicative of the combined results that would have occurred
had the acquisition occurred at the beginning of those
periods.
PRO FORMA AS REPORTED
Six Months Six Months
Ended Ended
June 30, June 30,
1997 1996 1997 1996
(In millions of dollars,
except share data)
Net Sales $2,223 $2,092 $1,892 $1,805
Income from continuing operations 99 (443) 105 (434)
Fully diluted earnings per share
from continuing operations $ 1.76 $(8.59) $ 1.87 $(8.43)
Additionally, during the first quarter of 1997, the Company
acquired Polypan Nord S.P.A., a manufacturer of extruded
polystyrene foam (XPS) insulation products based in Italy
and Falcon Manufacturing of California, Inc., a U.S.
producer of expanded polystyrene (EPS) foam insulation
products.
- 20 -
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
Composite Materials
In the Composite Materials segment, sales increased four
percent for the quarter ended June 30, 1997, but were down
two percent for the six months then ended, when compared to
the comparable 1996 periods. While composites sales showed
improvement in overall volume, the business continued to
experience significant price decline during the quarter,
particularly in Europe where weakening currencies compounded
the sales decline. Composite Materials income from
operations in the quarter and six months ended June 30,
1997, of $52 and $101 million, respectively, declined from
the equivalent prior year periods. The declines are
primarily attributable to the pricing weakness being
experienced in Europe. The Company does not expect to see
significant improvement in the Composite Materials segment
in 1997. However, the Company now believes pricing is
stabilizing in both the U.S. and Europe and has implemented
a price increase effective during the second half of the
year.
During the second quarter of 1997, the Company completed the
acquisition of the assets of The Stewart Group, Inc., a
manufacturer and marketer of a composite central strength
member for telecommunication cable using a proprietary
technology. With this addition, the Company now markets a
complete line of glass fiber products that protect and
reinforce fiber optic and copper telecommunications cable.
In the first quarter of 1997, the Company completed the
previously announced acquisition of Knytex Company, a
manufacturer of specialty glass fiber fabrics.
The Company's cost of borrowed funds for the quarter ended
June 30, 1997 was $5 million higher than during second
quarter 1996, due to increased borrowings used to fund
growth in working capital and certain acquisitions.
LIQUIDITY, CAPITAL RESOURCES AND OTHER RELATED MATTERS
Cash flow from operations, excluding asbestos-related
activities, was negative $6 million for the second quarter
of 1997, compared to $73 million for second quarter 1996.
The decline from 1996 to 1997 is primarily attributable to a
reduction in accounts payable and accrued liabilities, and
an increase in accounts receivable. Excluding Fibreboard
inventories of approximately $110 million, inventories at
June 30, 1997 increased 26% over December 31, 1996 levels
due to the Company's seasonal inventory build in the first
half of the year. Please see Notes 6 and 7 to the
Consolidated Financial Statements.
At June 30, 1997, the Company's net working capital was $260
million and its current ratio was 1.22, as compared to
negative $163 million and .85, respectively at December 31,
1996. The increase in 1997 is the result of increased
working capital, driven by higher seasonal inventories and
receivables, as well as a decline in accounts payable and
accrued liabilities.
The Company's total borrowings at June 30, 1997 were $2,033
million, $1,099 million higher than at year-end 1996. The
June 30, 1997 long-term debt balance includes $519 million
payable, as well as $138 million of debt assumed, for the
acquisition of Fibreboard. The acquisition amounts were
drawn from the Company's new credit facility in early July.
Since the cash was not exchanged until July, the
Consolidated Statement of Cash Flows, for the quarter and
six months ended June 30, 1997, does not reflect the
acquisition of Fibreboard. Typically, the Company reports
greater cash usage during the first half of the year as the
Company builds inventories and other working capital.
- 21 -
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
As of June 30, 1997, the Company had unused lines of credit
of $736 million available under long-term bank loan
facilities and an additional $37 million under short-term
facilities, after the exclusion of the amount utilized in
early July to fund the acquisition of Fibreboard, compared
to $440 million and $195 million, respectively, at year-end
1996. The increase in available lines of credit is the
result of the new $2 billion credit facility established to
fund the acquisition of Fibreboard. Letters of credit
issued under the Company's new long-term loan facility, most
of which support appeals from asbestos trials, reduce the
available credit of that facility. The impact of such
reduction is reflected in the unused lines of credit
discussed above. See Notes 3 and 4 of the Consolidated
Financial Statements.
Capital spending for property, plant and equipment,
excluding acquisitions and investments in affiliates, was
$131 million for the first six months of 1997. For the year
1997, the Company anticipates capital spending, exclusive of
acquisitions and investments in affiliates, to be
approximately $250 million, the majority of which is
committed. The Company expects that funding for these
expenditures will be from the Company's operations and
external sources as required.
Gross payments for asbestos litigation claims against Owens
Corning during the second quarter of 1997, including $11
million in defense costs and $2 million for appeal bond and
other costs, were $90 million. Proceeds from insurance were
$24 million, resulting in a net pretax cash outflow of $66
million, or $40 million after-tax. During the second
quarter of 1997, Owens Corning received approximately 9,700
new asbestos personal injury cases and closed approximately
3,200 cases. Over the next twelve months, Owens Corning's
total payments for asbestos litigation claims, including
defense costs, are expected to be approximately $300
million. Proceeds from insurance of $50 million are
expected to be available to cover Owens Corning's costs,
resulting in a net pretax cash outflow of $250 million, or
$150 million after-tax. Please see Note 8 Item A to the
Consolidated Financial Statements.
During the next twelve months, any payments for asbestos
claims against Fibreboard are expected to be paid by
Fibreboard's insurers. Please see Note 8 Item B to the
Consolidated Financial Statements.
The Company expects funds generated from operations,
together with funds available under long and short term bank
loan facilities, to be sufficient to satisfy its debt
service obligations under its existing indebtedness, as well
as its contingent liabilities for uninsured asbestos
personal injury claims.
The Company has been deemed by the Environmental Protection
Agency (EPA) to be a potentially responsible party (PRP)
with respect to certain sites under the Comprehensive
Environmental Response, Compensation and Liability Act
(Superfund). The Company has also been deemed a PRP under
similar state or local laws, including two state Superfund
sites where the Company is the primary generator. In other
instances, other PRPs have brought suits or claims against
the Company as a PRP for contribution under such federal,
state or local laws. During the second quarter of 1997, the
Company was designated a PRP in such federal, state, local
or private proceedings for one additional site. At June 30,
1997, a total of 42 such PRP designations remained
unresolved by the Company, some of which designations the
Company believes to be erroneous. The Company is also
involved with environmental investigation or remediation at
a number of other sites at which it has not been designated
a PRP. The Company has established a $30 million reserve,
of which $15 million relates to Fibreboard, for its
Superfund (and similar state, local and private action)
contingent liabilities. Based upon information presently
available to the Company, and without regard to the
- 22 -
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
application of insurance, the Company believes that,
considered in the aggregate, the additional costs associated
with such contingent liabilities, including any related
litigation costs, will not have a materially adverse effect
on the Company's results of operations, financial condition
or long-term liquidity.
The 1990 Clean Air Act Amendments (Act) provide that the EPA
will issue regulations on a number of air pollutants over a
period of years. Until these regulations are developed, the
Company cannot
determine the extent to which the Act will affect it. The
Company anticipates that its sources to be regulated will
include glass fiber manufacturing and asphalt processing
activities. The EPA's announced schedule is to issue
regulations covering glass fiber manufacturing by late 1997
and asphalt processing activities by late 2000, with
implementation as to existing sources up to three years
thereafter. Based on information now known to the Company,
including the nature and limited number of regulated
materials it emits, the Company does not expect the Act to
have a materially adverse effect on the Company's results of
operations, financial condition or long-term liquidity.
FUTURE REQUIRED ACCOUNTING CHANGES
On June 30, 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 130,
Reporting Comprehensive Income (SFAS No. 130). This
statement establishes standards for reporting and display of
comprehensive income and its components in financial
statements. The adoption of this standard will not impact
results from operations, financial condition, or long-term
liquidity, but will require the Company to classify items of
other comprehensive income by their nature in a financial
statement and display the accumulated balance of other
comprehensive income separately in the equity section of the
balance sheet. The Company is required to adopt the new
standard for periods beginning after December 15, 1997.
In February 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 128,
Earnings per Share (SFAS No.128). This statement introduces
new methods for calculating earnings per share. The
adoption of this standard will not impact results from
operations, financial condition, or long-term liquidity, but
will require the Company to restate earnings per share
reported in prior periods to conform with this statement.
The Company is required to adopt the new standard for
periods ending after December 15, 1997. The Company
believes that the adoption of this standard will result in
essentially the same earnings per share when comparing the
current fully diluted earnings per share calculation to the
calculation of diluted earnings per share required by SFAS
No. 128.
- 23 -
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See the paragraphs in Note 8, Contingent Liabilities, to the
Company's Consolidated Financial Statements above, which are
incorporated here by reference.
ITEM 2. CHANGES IN SECURITIES
(a) None of the constituent instruments defining the rights
of the holders of any class of the Company's registered
securities was materially modified in the quarter ended
June 30, 1997.
(b) None of the rights evidenced by any class of the
Company's registered securities was materially limited or
qualified in the quarter ended June 30, 1997 by the issuance
or modification of any other class of securities.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
(a) During the quarter ended June 30, 1997, there was no
material default in the payment of principal, interest,
sinking or purchase fund installments, or any other
material default not cured within 30 days, with respect
to any indebtedness of the Company or any of its
significant subsidiaries exceeding 5 percent of the total
assets of the Company and its consolidated subsidiaries.
(b) During the quarter ended June 30, 1997, no material
arrearage in the payment of dividends occurred, and there
was no other material delinquency not cured within 30
days, with respect to any class of preferred stock of the
Company which is registered or which ranks prior to any
class of registered securities, or with respect to any
class of preferred stock of any significant subsidiary of
the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Company's annual meeting of stockholders was held
April 17, 1997.
(c) The matters voted upon at the meeting, and the votes
cast with respect to each, were:
1. Election of four directors for a term expiring
in 2000: Norman P. Blake, Jr. - 43,939,578 shares
cast for election and 1,517,001 shares withheld;
Leonard S. Coleman, Jr. - 43,721,727 shares cast for
election and 1,734,852 shares withheld; Jon M.
Huntsman, Jr. - 43,931,194 shares cast for election
and 1,525,385 shares withheld; and W. Ann Reynolds -
43,926,804 shares cast for election and 1,529,775
shares withheld.
2. Approval of amendment of the Certificate of
Incorporation to increase the maximum size of the
Board of Directors to fourteen persons: 42,178,715
shares cast for the proposal; 2,900,332 shares cast
against; and 377,532 shares abstained.
3. Approval of amendments to the 1987 Stock Plan for
Directors: 32,930,218 shares cast for the proposal;
12,061,885 shares cast against; and 464,476 shares
abstained.
- 24 -
PART II. OTHER INFORMATION (Continued)
4. Approval of the action of the Board of Directors in
selecting Arthur Andersen LLP as independent public
accountants for the Company for the year 1997:
44,608,152 shares cast for the proposal; 599,035
shares cast against; and 249,392 shares abstained.
There were no broker nonvotes on any matter.
ITEM 5. OTHER INFORMATION
The Company does not elect to report any information under
this item.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
See Exhibit Index below, which is incorporated here by reference.
(b) Reports on Form 8-K.
During the quarter ended June 30, 1997, the Company filed
the following current reports on Form 8-K:
- Filed May 14, 1997, under Item 7.
- Filed May 28, 1997, under Items 5 and 7.
- 25 -
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Company has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly
authorized.
OWENS CORNING
Registrant
Date: July 23, 1997 By: /s/ David W. Devonshire
David W. Devonshire
Senior Vice President and
Chief Financial Officer
(as duly authorized officer)
Date: July 23, 1997 By: /s/ Steven J. Strobel
Steven J. Strobel
Vice President and Controller
- 26 -
EXHIBIT INDEX
Exhibit
Number Document Description
(2) Plan of Acquisition, Reorganization, Arrangement,
Liquidation or Succession.
Agreement and Plan of Merger, dated as of May 27,
1997, among Owens Corning, Sierra Corp. and
Fibreboard Corporation (incorporated herein by
reference to Exhibit 2(a) to the Company's current
report on Form 8-K (File No. 1-3660), filed May 28,
1997).
(3) Articles of Incorporation and By-Laws.
(i) Certificate of Incorporation of Owens Corning, as
amended (incorporated herein by reference to
Exhibit (3)(i) to the Company's quarterly report
on Form 10-Q (File No. 1-3660) for the quarter
ended March 31, 1997).
(ii) By-Laws of Owens Corning, as amended
(incorporated herein by reference to Exhibit (3)
to the Company's annual report on Form 10-K (File
No. 1-3660) for 1995).
(4) Instruments Defining the Rights of Security Holders,
Including Indentures.
Credit Agreement, dated as of June 26, 1997, among
Owens Corning, other Borrowers and Guarantors, the
Banks listed on Annex A thereto, and Credit Suisse
First Boston, as Agent (filed herewith).
(10) Material Contracts.
Credit Agreement, dated as of June 26, 1997, among
Owens Corning, other Borrowers and Guarantors, the
Banks listed on Annex A thereto, and Credit Suisse
First Boston, as Agent (filed as Exhibit (4) to this
quarterly report on Form 10-Q).
Agreement and Plan of Merger, dated as of May 27,
1997, among Owens Corning, Sierra Corp. and
Fibreboard Corporation (incorporated herein by
reference to Exhibit 2(a) to the Company's current
report on Form 8-K (File No. 1-3660), filed May 28,
1997).
Owens Corning 1987 Stock Plan for Directors, as
amended (filed herewith).
(11) Statement re Computation of Per Share Earnings
(filed herewith).
(27) Financial Data Schedule (filed herewith).
(99) Additional Exhibits.
Subsidiaries of Owens Corning, as amended (filed
herewith).