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 September 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 October 31, 1997
53,436,706
- 2 -
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OWENS CORNING AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
Quarter Nine Months
Ended Ended
September 30, September 30,
1997 1996 1997 1996
(In millions of dollars, except share data)
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 (Note 5) 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 $ 2.91 $ (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
The accompanying notes are an integral part of this statement.
- 3 -
OWENS CORNING AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
September 30, December 31,
1997 1996
ASSETS (In millions of dollars)
CURRENT
Cash and cash equivalents $ 9 $ 45
Receivables 607 314
Inventories (Note 6) 489 340
Insurance for asbestos litigation
claims - current portion (Note 9) 50 100
Deferred income taxes 147 106
VEBA trust - 19
Income tax receivable 22 4
Other current assets (Note 3) 74 30
Total current 1,398 958
OTHER
Insurance for asbestos litigation
claims (Note 9) 411 454
Asbestos costs to be reimbursed -
Fibreboard (Note 9) 95 -
Deferred income taxes 390 474
Goodwill (Note 3) 711 286
Investments in affiliates 75 64
Other noncurrent assets (Note 4) 197 155
Total other 1,879 1,433
PLANT AND EQUIPMENT, at cost 3,456 3,341
Less--Accumulated depreciation (1,774) (1,819)
Net plant and equipment 1,682 1,522
TOTAL ASSETS $ 4,959 $ 3,913
The accompanying notes are an integral part of this statement.
- 4 -
OWENS CORNING AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Continued)
September 30, December 31,
1997 1996
(In millions of dollars)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT
Accounts payable and accrued
liabilities $ 676 $ 705
Reserve for asbestos litigation claims -
current portion (Note 9) 300 300
Short-term debt 77 96
Long-term debt - current portion 22 20
Total current 1,075 1,121
LONG-TERM DEBT (Note 4) 1,887 818
OTHER
Reserve for asbestos litigation claims
(Note 9) 1,423 1,670
Asbestos claims settlements - Fibreboard
(Note 9) 73 -
Long-term debt assoc. with asbestos -
Fibreboard (Note 9) 26 -
Other employee benefits liability 335 349
Pension plan liability 61 63
Other (Note 9) 172 161
Total other 2,090 2,243
COMPANY OBLIGATED CONVERTIBLE
SECURITY OF SUBSIDIARY HOLDING
SOLELY PARENT DEBENTURES (MIPS) 194 194
MINORITY INTEREST 22 21
STOCKHOLDERS' EQUITY
Common stock 652 606
Deficit (920) (1,072)
Foreign currency translation adjustments (23) (1)
Other (18) (17)
Total stockholders' equity (309) (484)
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 4,959 $ 3,913
The accompanying notes are an integral part of this statement.
- 5 -
OWENS CORNING AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
Quarter Nine Months
Ended Ended
September 30, September 30,
1997 1996 1997 1996
(In millions of dollars)
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, excluding
Fibreboard 29 - 93 63
Payments for asbestos litigation
claims, excluding Fibreboard (62) (57) (247) (178)
Other 42 (23) (15) (37)
Net cash flow from operations 87 57 (232) (30)
NET CASH FLOW FROM INVESTING
Additions to plant and equipment (44) (57) (175) (224)
Investment in subsidiaries, net of
cash acquired (527) - (547) (39)
Proceeds from the sale of affiliate - - - 55
Other (1) (2) (10) (14)
Net cash flow from investing $ (572) $ (59) $(732) $(222)
The accompanying notes are an integral part of this statement.
- 6 -
OWENS CORNING AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Continued)
Quarter Nine Months
Ended Ended
September 30, September 30,
1997 1996 1997 1996
(In millions of dollars)
NET CASH FLOW FROM FINANCING
Net additions to long-term credit
facilities (Notes 3 and 4) $ 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 (10) 7 (36) 13
Cash and cash equivalents at
beginning of period 19 24 45 18
Cash and cash equivalents at end
of period $ 9 $ 31 $ 9 $ 31
The accompanying notes are an integral part of this
statement.
- 7 -
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Quarter Nine Months
Ended Ended
September 30, September 30,
1. SEGMENT DATA 1997 1996 1997 1996
(In millions of dollars)
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
- 8 -
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Quarter Nine Months
Ended Ended
September 30, September 30,
1. SEGMENT DATA (Continued) 1997 1996 1997 1996
(In millions of dollars)
INCOME (LOSS) FROM OPERATIONS (1)
Industry Segments
Building Materials
United States $ 75 $ 75 $ 179 $ 161
Europe 1 7 6 15
Canada and other 8 9 14 5
Total Building Materials 84 91 199 181
Composite Materials
United States 37 50 132 118
Europe (2) 7 5 46
Canada and other (1) 3 (2) 12
Total Composite Materials 34 60 135 176
General corporate expense (23) (23) (57) (919)
Income from operations 95 128 277 (562)
Cost of borrowed funds (36) (20) (78) (56)
Income before provision
for income taxes $ 59 $ 108 $ 199 $ (618)
Geographic Segments
United States $ 112 $ 125 $ 311 $ 279
Europe (1) 14 11 61
Canada and other 7 12 12 17
General corporate expense (23) (23) (57) (919)
Income from operations 95 128 277 (562)
Cost of borrowed funds (36) (20) (78) (56)
Income before provision
for income taxes $ 59 $ 108 $ 199 $ (618)
(1) Income from operations for the quarter and nine months
ended September 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
nine months ended September 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., all of 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.
- 9 -
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 at $55 per share.
Fibreboard, a North American manufacturer of vinyl siding
and accessories, as well as manufactured stone, 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 $660 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 nine months ended
September 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 Nine Months
Ended Ended
September 30, September 30,
1997 1996 1997 1996
(In millions of dollars,
except share data)
Net sales $1,238 $1,207 $3,461 $3,299
Income from continuing operations 59 81 158 (362)
Fully diluted earnings per share
from continuing operations $ 1.04 $ 1.46 $ 2.81 $(7.00)
The Company completed additional acquisitions during 1997 in
the Building Materials segment in the U.S. and Europe. The
Company also completed two acquisitions in Composite
Materials impacting the U.S. and Canada and other geographic
segments. The aggregate purchase price of these
acquisitions was $47 million. These acquisitions exchanged
340,000 shares of the Company's common stock and $34 million
in cash. The pro forma effect of these acquisitions was not
material to net income for the quarters or nine months ended
September 30, 1997 and 1996.
- 10 -
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
respective dates of acquisition.
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 $912 million; liabilities assumed
totaled $390 million, $138 million of which was debt. The
1997 acquisitions include goodwill of $436 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, of which portions can be
denominated in Canadian dollars, Belgian francs or British
pounds. 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 September 30, 1997.
Early in the third quarter of 1997 the Company borrowed
$1.04 billion at LIBOR plus .275% under the new facility.
The proceeds borrowed were used to pay off the Company's
previous U.S. and Canadian facilities and select short term
debt 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
Fibreboard'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 Nine Months
Ended Ended
September 30, September 30,
1997 1996 1997 1996
U.S. federal statutory rate 35% 35% 35% (35)%
State and local income taxes 3 (7) 3 (5)
Adjustment of deferred tax asset
valuation allowance - - (4) (1)
Foreign tax credits (4) - (2) -
Conclusion of prior year tax audits (10) - (2) -
Effect of change in state tax rates (9) - (3) -
Other (7) 1 (3) (1)
Effective tax rate 8% 29% 24% (42)%
During the third quarter of 1997, the Company recorded one-
time tax benefits of approximately $13 million. These
benefits primarily resulted from a revaluation of deferred
state income taxes based on a historical weighted average of
statutory state tax rates and the conclusion of certain
prior year tax audits with the IRS.
During the first quarter of 1996, the Company reversed
approximately $7 million of its deferred tax asset valuation
allowances on the operating loss carryforwards of a foreign
subsidiary as management determined that the loss
carryforwards would be realizable. In the first quarter of
1997, the Company reversed the remaining $7 million
valuation allowance on this loss carryforward.
- 11 -
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
6. INVENTORIES
September 30, December 31,
1997 1996
(In millions of dollars)
Inventories are summarized as follows:
Finished goods $ 356 $ 273
Materials and supplies 211 149
FIFO inventory 567 422
Less: Reduction to LIFO basis (78) (82)
$ 489 $ 340
Approximately $306 million and $216 million of FIFO
inventories were valued using the LIFO method at September
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 Nine Months
Ended Ended
September 30, September 30,
1997 1996 1997 1996
(In millions of dollars)
Income taxes $ 9 $ 3 $ 18 $ (6)
Cost of borrowed funds 18 12 64 51
The Company considers all highly liquid debt instruments
purchased with a maturity of three months or less to be cash
equivalents.
During the third quarter of 1997, gross payments for asbestos
litigation claims against Fibreboard were approximately $31
million, all of which was paid directly by Fibreboard's
insurers or from the escrow account to claimants on
Fibreboard's behalf. During the third quarter,
Fibreboard also reached settlement agreements with plaintiffs
for amounts totaling approximately $16 million. Fibreboard
settlement agreements are reflected on the Company's
consolidated balance sheet as an increase to both the
Fibreboard asbestos costs to be reimbursed and asbestos
claims settlements when the agreements are reached.
8. SUBSEQUENT EVENTS
Early in the fourth quarter, Owens Corning completed the
asset acquisition of AmeriMark Building Products, Inc., a
specialty building products company which serves the
exterior residential housing industry. The acquisition was
completed for a purchase price of $309 million in trust
preferred hybrid securities, plus a cash adjustment for
changes in net working capital. The securities will be
recorded as minority interest on the Company's balance
sheet.
- 12 -
9. CONTINGENT LIABILITIES
ASBESTOS LIABILITIES
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 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 September 30, 1997, approximately 170,400 asbestos
personal injury claims were pending against Owens Corning,
of which 28,000 were received in the first nine 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. 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 September 30, 1997, Owens Corning had resolved (by
settlement or otherwise) approximately 198,800 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. The total resolutions also include approximately 4,000
cases dismissed during the third quarter 1997 in Texas.
These cases were dismissed under that state's newly enacted
forum non conveniens law. 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).
- 13 -
9. CONTINGENT LIABILITIES (Continued)
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.
Insurance
As of September 30, 1997, Owens Corning had approximately
$236 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:
- 14 -
9. CONTINGENT LIABILITIES (Continued)
September 30, December 31,
1997 1996
(In millions of dollars)
Reserve for asbestos
litigation claims
Current $ 300 $ 300
Other 1,423 1,670
Total Reserve 1,723 1,970
Insurance for asbestos
litigation claims
Current 50 100
Other 411 454
Total Insurance 461 554
Net Owens Corning Asbestos Liability $ 1,262 $ 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.
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.
As of September 30, 1997, approximately 106,200 asbestos
personal injury claims were pending against Fibreboard, of
which 30,300 were received in the first nine 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 nine months of 1997,
Fibreboard resolved approximately 2,300 asbestos personal
injury claims at an average cost of $35,000 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.
- 15 -
9. CONTINGENT LIABILITIES (Continued)
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 September 30, 1997, amounts payable under various
asbestos claim settlement agreements were $73 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 September 30, 1997 are $95
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 Amchem Products, Inc. V. Windsor case.
Amchem involved a proposed nationwide class action
settlement of future asbestos personal injury claims against
the members of the Center for Claims Resolution. The
Supreme Court, affirming the intermediate appellate court,
disapproved and vacated the Amchem class action settlement,
determining that the Amchem class action failed to meet the
requirements of Federal Rule of Civil Procedure 23. In
light of the remand to the Fifth Circuit, 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.
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.
- 16 -
9. CONTINGENT LIABILITIES (Continued)
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 $1,696 million at September 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. Upon fulfillment of their obligations under the
Insurance Settlement, Continental and Pacific will be
discharged from any further obligations to Fibreboard under
their insurance policies and will be protected by an
injunction against any claims of asbestos personal injury
claimants based upon those insurance policies. 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.
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.
- 17 -
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 $1.238 billion for the quarter ended
September 30, 1997, a 21% increase from the 1996 level of
$1.025 billion. The third quarter 1997 growth is
attributable to the benefits of acquisitions, most notably
the acquisition of Fibreboard Corporation that was completed
at the end of the second quarter. Continued volume increases
in composites were more than offset by declines in worldwide
composites pricing. The decline in composites pricing was
most notable in Europe and primarily reflects an overall
weak economic climate. Additionally, the sales results
reflect the adverse impact of a stronger U.S. dollar on
sales in foreign currencies as well as a decline in
insulation prices in the U.S. and Canada. Gross margin for
the quarter ended September 30, 1997 was 23%, a decline from
the third quarter 1996 level of 26%, primarily resulting
from lower prices.
Net income for the quarter ended September 30, 1997 was $59
million, or $1.04 per share, compared to net income of $80
million, or $1.44 per share, for the quarter ended September
30, 1996. The lower earnings reflect the factors discussed
above as well as increased cost of borrowed funds. The
increase in cost of borrowed funds primarily reflects the
financing of the Fibreboard acquisition and working capital
requirements. Net income for the quarter ended September
30, 1997 also reflects one-time tax benefits of $13 million.
Please see Note 5 to the Consolidated Financial Statements.
Net sales for the nine months ended September 30, 1997, were
$3.130 billion, an 11% increase over the $2.830 billion
reported for the first nine months of 1996. This increase
reflects the integration of acquisitions as well as volume
increases, offset by declines in pricing and the stronger
U.S. dollar.
For the nine months ended September 30, 1997, the Company
reported net income of $164 million, or $2.91 per share,
compared to a net loss of $354 million, or $6.86 per share,
for the comparable period in 1996. Net income for 1997
reflects the impact of higher volume and the tax benefits
described above, offset by lower prices in composites
worldwide and insulation in North America as well as
increased cost of borrowed funds. Included in the nine
months ended September 30, 1996 was the net after-tax charge
of $542 million for asbestos litigation claims that may be
received after 1999 and probable additional insurance
recovery. Also included in the nine months ended September
30, 1996 were a $37 million pretax gain ($27 million after-
tax) from the sale of the Company's minority interest in
Asahi Fiber Glass Co. Ltd. in Japan and several one-time
special charges totaling approximately $42 million pretax
($27 million after-tax), including valuation adjustments
associated with prior divestitures, major product line
productivity initiatives and a contribution to the Owens-
Corning Foundation.
Marketing and administrative expenses were $162 million for
the quarter ended September 30, 1997, compared to $126
million in the same period in 1996. The increase is
primarily the result of incremental expenses from
acquisitions.
- 18 -
Building Materials
In the Building Materials segment, sales increased 27% for
the quarter and 15% for the nine months ended September 30,
1997 compared to 1996. This growth primarily reflects the
incremental sales from acquisitions. Income from operations
for Building Materials decreased 8% for the quarter but
increased 10% for the nine months ended September 30, 1997
compared to 1996. Income from operations in 1997 reflects
insulation pricing pressures and lower volume in Roofing
Systems. The results for the nine months ended September
30, 1996 include $22 million of special charges recorded
during the first quarter. Please see Note 1 to the
Consolidated Financial Statements.
At the end of the second quarter, the Company completed the
acquisition of Fibreboard Corporation. The purchase price
for all of the outstanding stock of Fibreboard was $660
million, including $138 million of debt assumed, the
majority of which was financed through borrowings under the
Company's long-term credit facility.
The consolidated results of the Company include the results
of operations of Fibreboard beginning with the third quarter
of 1997. 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
Nine Months Nine Months
Ended Ended
September 30, September 30,
1997 1996 1997 1996
(In millions of dollars,
except share data)
Net sales $ 3,461 $ 3,299 $ 3,130 $ 2,830
Income from continuing operations 158 (362) 164 (354)
Fully diluted earnings per share
from continuing operations $ 2.81 (7.00) $ 2.91 (6.86)
Early in the fourth quarter, Owens Corning completed the
asset acquisition of AmeriMark Building Products, Inc., a
specialty building products company which serves the
exterior residential housing industry. With the acquisition
of AmeriMark and Fibreboard, Owens Corning has become a
leader in the vinyl siding market in North America. The
acquisition was completed for a purchase price of $309
million in trust preferred hybrid securities, plus a cash
adjustment for changes in net working capital. The
securities will be recorded as minority interest on the
Company's balance sheet.
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.
- 19 -
Composites
In the Composite Materials segment, sales increased 4
percent for the quarter and were flat for the nine months
ended September 30, 1997, versus 1996. The sales results
for both periods of 1997 reflect volume increases globally
offset by pricing weakness and the strength of the U.S.
dollar. Composite Materials income from operations in the
third quarter and the first nine months of 1997 reflects a
43% and 23% decline, respectively, when compared to income
from operations in the same periods of 1996. The decline is
primarily attributable to the pricing weakness being
experienced in Europe. The results for the nine months
ended September 30, 1996 include $5 million of special
charges recorded during the first quarter. Please see Note
1 to the Consolidated Financial Statements.
LIQUIDITY, CAPITAL RESOURCES AND OTHER RELATED MATTERS
Cash flow from operations, excluding asbestos-related
activities, was $120 million for the third quarter of 1997,
compared to $114 million for third quarter 1996. The slight
increase from 1996 to 1997 is primarily attributable to a
decrease in inventories offset by a decline in accounts
payable and accrued liabilities and an increase in
receivables. Inventories and receivables at September 30,
1997, including $116 million of inventories and $99 million
of receivables acquired during 1997, increased 44% and 93%,
respectively, over December 31, 1996 levels. Please see
Notes 6 and 7 to the Consolidated Financial Statements.
At September 30, 1997, the Company's net working capital was
$326 million and its current ratio was 1.30, 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 inventories and
receivables as discussed above, as well as a decline in
accounts payable and accrued liabilities.
The Company's total borrowings at September 30, 1997 were
$1.986 billion, $1.052 billion higher than at year-end 1996.
At the beginning of the third quarter of 1997, the Company
borrowed approximately $660 million to finance the
acquisition of Fibreboard. The remainder of the total
borrowings reflects seasonal increases in the Company's
working capital.
As of September 30, 1997, the Company had unused lines of
credit of $761 million available under long-term bank loan
facilities and an additional $129 million under short-term
facilities, compared to $440 million and $195 million,
respectively, at year-end 1996. The net increase in
available lines of credit is primarily the result of the
establishment of the Company's $2 billion credit facility at
the end of the second quarter. Letters of credit issued
under the facility, most of which support appeals from
asbestos trials, reduce the available credit. The impact of
such reduction is reflected in the unused lines of credit
discussed above.
Capital spending for property, plant and equipment,
excluding acquisitions and investments in affiliates, was
$44 million during the third quarter of 1997. For the year
1997, the Company anticipates capital spending, exclusive of
acquisitions and investments in affiliates, to be
approximately $220 million. The Company expects that funding
for these expenditures will be from the Company's operations
and external sources as required.
- 20 -
Gross payments for asbestos litigation claims against Owens
Corning (excluding Fibreboard throughout this paragraph)
during the third quarter of 1997, including $13 million in
defense costs and $2 million for appeal bond and other
costs, were $62 million. Proceeds from insurance were $29
million, resulting in a net pretax cash outflow of $33
million, or $20 million after-tax. During the third quarter
of 1997, Owens Corning received approximately 11,400 new
asbestos personal injury cases and closed approximately
6,700 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
during this period, resulting in a net pretax cash outflow
of $250 million, or $150 million after-tax. For all of 1998,
total payments for asbestos litigation claims are expected
to approximate $350 million and it is estimated that
insurance proceeds will be approximately $100 million.
Please see Note 9-A to the Consolidated Financial
Statements.
Gross payments for asbestos litigation claims against
Fibreboard during the third quarter of 1997 were
approximately $31 million, all of which was paid directly by
Fibreboard's insurers or from the escrow account to
claimants on Fibreboard's behalf. During the third quarter,
Fibreboard received approximately 9,100 new asbestos
personal injury claims, and resolved approximately 500
claims. During the next twelve months, any payments for
asbestos claims against Fibreboard are expected to be paid
by Fibreboard's insurers or from the escrow account. Please
see Notes 7 and 9-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 third quarter of 1997, the
Company was designated a PRP in such federal, state, local
or private proceedings for no additional sites. At
September 30, 1997, a total of 40 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 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 wool fiberglass, mineral wool,
asphalt roofing and processing, and metal coil coating. The
EPA's currently announced schedule is to issue regulations
covering wool fiberglass and mineral wool in 1998, asphalt
roofing and processing in 1999, and metal coil coating in
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.
- 21 -
FUTURE REQUIRED ACCOUNTING CHANGES
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
slightly higher 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.
- 22 -
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See the paragraphs in Note 9, Contingent Liabilities, to the
Company's Consolidated Financial Statements above, which are
incorporated here by reference.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(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
September 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 September 30, 1997 by
the issuance or modification of any other class of
securities.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
(a) During the quarter ended September 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 September 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
No matter was submitted to a vote of security holders during
the quarter ended September 30, 1997.
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 September 30, 1997, the Company
filed the following current reports on Form 8-K:
- Filed July 15, 1997, under Item 2.
- Filed August 8, 1997, under Items 5 and 7.
- 23 -
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: November 14, 1997 By: /s/ David W. Devonshire
David W. Devonshire
Senior Vice President and
Chief Financial Officer
(as duly authorized officer)
Date: November 14, 1997 By: /s/ Steven J. Strobel
Steven J. Strobel
Vice President and Controller
- 24 -
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 as Exhibit (4) to the
Company's quarterly report on Form 10-Q (File No. 1-
3660) for the quarter ended June 30, 1997).
(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 the
Company's quarterly report on Form 10-Q (File No. 1-
3660) for the quarter ended June 30, 1997).
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).
(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).