Document 3J6vJd4OgN6QN4J7QJ4neboB3
IINlfl
92 25 101A2
SECURITIES AND EXCHANGE COMMISSION . Washington, D. C. 2*49^
Png* I
l&ftsljo!
FORM 10-Q p^-du3l^a
WW 161992
\lkSLf, U o*f-zo*
a.
Quart y Report Pursuant to Section 13 or 15(d) I, pl^[hIbit s
of the Securities Exchange Act of 1934 |i
s.oo
Fat ge Qmatedy Period Ended September 30,1992
Oranbrinn Fife No. 1*3660
Owens-Coming Fiberglas Coriwratioj^ocEDSEB fit
3yy% p KOV Vi
nbetglas Tower, Toledo, Olfo 43dS9 ^^j
Ittephone No. (419)240-8000
A Delaware Corporation
ULS. Employer Idewtification No. 34-43134S2
Indicate by cbock merit whether the Registrwt (1) has fifed all reports required |o be filed by Section 13 or 15(d) of fee Secarittee Exchange Act of 1934 during fee preceding 12 reonfee (or for each ahoiter period flat fee Begiatreot tree required to fife web reports), and (2) bee been subject to such filing requirements for tbe put 90 days.
Yee_JL_ No
Shares of common clock, per value $.10 per chare, outstanding at October 31. 1992
42,047,158
Fit* MHl Pile 2
2
PARTL FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OWENS-COSNING FIBEKGLAS CORPORATION AND SUBSIDIARIES
vVll JDATED STATEMENT OF INCOME
V&fr, ' NBT SALES COST OP SALES
Ones anib OTHER EXPENSES
Provision for asbestos UtigRioachii* Other
Total other expenses
Ftor the Three ftUatta
Fir the Nme Months
Bided Scrtanbcffll. i99t ii
Frfiftd ym
iml
(b millions of dolan, except dure data)
$ 786 613 173
$ 749 380 169
$2,144 IASS
459
$2j096 1,659 437
79 68 225 17 14 47
a6 6 13 IS
102 103 287
212 41 18 37
308
INCOME FROM OPERATIONS OoetofbomMod feats
INCOME BEFORE PROVISION FOR INCOME TAXES
Provision for Income tarn (Note 5)
71 (27)
44 11
66 172 01) (86)
IS 86 11 27
129 (W2)
27 17
INCOME BEFORE EQUITY IN NET INCOME (LOSS) OF AFFILIATES
Equity in net income (loss) of affiliates
33 0)
24 1 "
39 l
10 %?
INCOME BEFORE EXTRAORDMABXjITBhlS AND CUMULATIVE EFFECT OF ACCOUNTING CHANGE
Extnort&oaty tons (Notes 3 and S)
Cumulative effect of accounting change far other post settlement benefits net of income tons of $117 auliioo
NET INCOME (LOSS)
wl_vuL. ... ^ ^
32 26 - *
-- ------
i___s
-
-......
kmJ
................
60 0)
14
-
(227) *----urn)
Ik eccampenying notes ut an integral pirt of this statement.
3 OWENfrCOSNlNG EUERGLAS CORPORATION AND SUBSIDIARIES
Horn 10-Q h|e 3
CONSOLIDATED STATEMENT OF MCOMB (Continued)
For the Three Months
For the Nine Months
Enhd SfflftffitWT rt.
Ended Scotapfeg-30.
_wa_
jtoi
im
jvsl.
(In million* of dollen, except due debt)
NET INCOME PER COMMON SHARE Many:
m& cuuitrtiw effect of acoonatiqf dunce
BitiMrdiiuiy items (Notes 3 and S)
S .75
$ .62
$ 1.38 (.02)
$ .36
benefits Net inoomo (ton) per due
t .75
t 1.36
(5.56) SfS.20)
Income before ettguxdicy itca Extraordinary items (Notee 3 and 5)
Net inoome (loss) per than
$ .71
$ 39
LmJl
1^22
$ 137
MB)
S .36
S 1.3$
(5.56) SfS.201
equivalent daw dorian the period (in Ihnuxxndt):
Prinuty:
Assanaag Cult elltutiaa:
41,107 48,919
42399 48,428
42.981 48,806
40,783 40,783
The accompanying rates an an integral part of this statement.
4 OWENS-COKNING FIBFJtGLAS CORPORATION AND SUBSIDIARIES
Pom 1(H) Page 4
ASSETS
CURRENT Grib ad cab equivalents RbommAAbb hreotoriea(Note6) Deferred beams team Odwcnnatamts
Total anrent
CONSOLIDATED BALANCE SHEET
September 30, Decanter 31,
1992___
___ mi___
(In Bullions of dollars)
$4 4S1 222 91 14
784
$3 308 219 76 13
619
OTHER Goodwill Investments b affiliates Defeated booms teaes Other naocaareat assets
Total other
86 47 420 . 56
609
96 4S 416 60
617
PLANT AND EQUIPMENT, at cort Lead BuMmgeaad leasehold improvements Macfcfooy and equipment Construction in progress
Lree Accnmnlilod depwiciatinn (Note 2)
Net plant and equipment
TOTAL ASSETS
48 554 1,885
46
2,533 (1^97)
836
S 2.229
51 SS5 1,880
41
2,527 (1.657)
870
8 2.106
Tbs accompanying notes are ait integral fart of this statement-
s OWENS-CORN1NG FDERGLAS CORPORATION AND SUBSIDIARIES
Font I0~Q Pag* 5
CONSOLIDATED BALANCE SBEET (Continned)
LIABILITIES AND STOCKHOIDERy EQUITY
CURRENT Acooesm piyAle and aocmed liahtfttics Accrued income taxes Shmt4mMit Lmg4ena dfot - current portion
Tbtsl current
LONG-TERM DEBT <N<*b 3)
^>eC^Slr31, (h millions ofdollars)
$ 419 10 31 52
S12
1,121
$ 409 15 6 IB
448
1,148
OTHER Reserve for ifodas litigation chums
Pension ptea liability Other
940 352 120
59 141
1.412
950 343 113 54 126
1.586
COMMITMENTS AND CONTINGENCIES (Note 8)
STOCKHOLDERS' EQUITY Preferred foci, oopervslnr; authorized 8,000,000 shares, dob outstanding Common stod, per value $. 10 per chare; .aiiwiini KX)jOOO,OOOrisues; 42,041,357 shares at September 30,1992, 41,651,754 shares at December 31.1991 Deficit Foreign currency transktkm adjustments Oder
Total stockholders' nquRy
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
294 (1.316)
15 C9>
(1.016)
5 2.229
285 (1.275)
24 (10)
(1.076)
5 2.106
The accompanying notes are nn integral part of this statement.
Tarn 1(H) Fg 6
OWENfrCORNING RBERGLAS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASS FLOWS
NETCASH FLOW FROM OPERATIONS
Net income (tan)
nfmft pfnuiiUt oy Hftffiflu iciivuiBK Noncash heme
Ctnnulalivn effect of accounting
Pragma fist asbestos Ktfeutiondaim novinniMpnctMniDiflBOfiiflDM Provistm for rcboildiiif funtaoni Piovisiou (credit) fat deferred inoome totes Bitnanfinaiy Hems Ollier Uunsumd ubosfat chins and inuennoo frihrrtiMm (Increase) decrease in receivables (Increase) decrease in inventories tnereese (decrease) in *--im*> payable and ifwt labilities Inereaw (deciease) in nocraed income essee Ote
Fortbe Three Months
For the Nine Months
, Iftnkfl SrHwlmA-
1991 J22L
(In millions of dalUn)
$ 12
$ 26
S 59
$ (213)
m -6 11 33 76 0) 04) -24
(0 12 11 Id
13 IS (2) 19 S (14)
91 21 <) 1 7
0) (M2)
-
16 <S) 10
227 18 97 21 (30) 17
1 (50) 32
IS 8 (4)
Net nh flow from opecdkms
ill 89
33 119
m CASH FLOW FROM INVESTING
Additions to plant and nqaipamt Bspendtetes for rebuilding fhmacas Other
Net each flow from investing
06) (17) (4) (4) 4 0)
06) 04)
01) (58) (11) (16)
7 (4)
07) 0S)
i The accompanying notes ue an integral part of this statement
7 OWENSCORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
Fora 10-Q Page 7
CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)
NET CASHFLOW FROM FINANCING
Net adtStinm (reductions) in kaptam cwdit todliiK*
Other nddkioas to locg-lctni debt (Note 3) Other mlucthm to bog-term debt (Note 3) Net increase (decrease) in sbort-tena debt Other
For the Three Months
POr (he Niw Months
E>iM
im
*o INmSiptwIwrMf
-il
vm
.1181.
Ob iff|ii<m f ^Iah)
* (W) -
(3)
(15) -
$ (IM) 104
<>
(4) 4
S <&> 337 (289)
24 S
* On) 436 m (134) 4
Net caA flow from financing
(W) (CT)
45 <M)
Net increase (decreaae) in caA and euh equivalents
CaA and caA equivalents at beguiling of period
GaA and caA equivalents ri end of period
<0
5 --------
i4
(2) 6 ----
1___ i
1
3 '
f_J
0) 7
1___ 2
The ooconqMnying nates ere an integral part of tins statement.
8 OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
Fora 1IH} Pago 8
i. 0) GENERAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Be financial rtatfimrets included la this Retort are condensed and unaudited, pursuant to certain Rales and Regulations of At Securities aad Eickute OooMwa, but include. in fee opinion of (be Coapaay, adjustment! Doccsssiy far fur strtnmrcl oftfae results for (be periods indicated, which, however, are oat neeesrerily iodfcativeof wadis which my be expected for (be fuU year.
Ift connection witfc fee ronrtrawri financial statements and notes included in this Report, reference is
"** **
.< iKmrmtn
<1 > *
]99| AnSOtl RcpOft
(9 CHANCE IN ACCOUNTING METHOD
Efbctiwelrenaiy 1,1992, feeOoaymyndopted fee rtnigb-finc seethedofdepredation foraUadditions to fhal ad eyipawt oo Of after (hit date. Plant and equipment placed in service prior to fiscal 1992la deprecated primarily usingdie doddodediningbalance method for (be finthalfofan amt*s ostunsted useful lifenod dmfee stmighMme method is need. llw Company bdievm Butthe dunge u depneiatioo method it pnfeobla aod ia once ooorirteot wife the method uaad hy fee majority of conpaaieo mrimilat lieeaof busmen. Tbiichange iadeptmatiooaaetbod has not had a material
0) LONG-ISM DEBT
in May 1992 fee Company uwri $300 million ofdebentures in (wo pate. The first part consisted of $150 million of debeetum due June 1,2002, with an affective interest cate of 8.897ft. lateralis accused at fee tale of 8.87511 of fee fece amount. The eeeood part conrirtcd of $1SQ tiHioai of debentures due Jane 1,2012, wife an effective interest irte of9.418%. federal iaaccnied at the nte of9.S7S8 offee faceamomt. federal iapaid eeau-eamtaBy for both kaiea. The net proceed* were need to ratine fee rememiag haltacc of (be senior subordinated debentures and other indebtedness.
During feeeooood quarter 1992fee Goaquoy called, prior to natality, Hesenior subordinateddebentures having a fece value of $240 million which melted in a uooeadi estnocdinaiy loss dae to fee reraiaiag tauance coats of approximately $2 Bullion, or $.05 pee date, net of tdaled income taxes.
During fee fefed quarter 1992 fee Company called, prior lo astturity, its 128 sinking fund debentures having a hot value of $36 miUioo which ranked io an extraordinary fees of approximately $1 or $.02 per shue, net of (dated income taxes.
t
9 OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIAItBS
Pon 10-Q
P|t S
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(4) SEGMENTS
For the Time Months
Far the Nine Months
BUSINESS SEGMENTS: NET SALES
U52-
1991 -1222(la miUiomof dolhn)
1221
United Stsles
473
4S3 $ 1,220
$1,201
72
70 189
187
United Stales
170 111 365 918
121
US 370
390
786
749 2,144
2.096
United Stales
INCOME FROM OPERATIONS Construction Product* Unitwf States kdt&trial Materials tWHUlrltt Europe and other General corporate tapwe Income fron operations Cost of borrowed fund* Income before provision for income tries
I
32 14 m
-
jm
22 6
(28)
t 749
92 37 029)
*
S 2.144
66 12 (78)
$2.096
48 7 23 4
01)
71 (27)
L-g
$ 44 7 18 14
(17)
66 (31)
j 35
$ 72 10 71 32 (20)
172 (86)
J__ 86
$ 65 7 48 52
(43)
129 (102)
L-2Z
10 OWBNSCORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
Foxa 10-Q hi 10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Coatinued)
(0 SEGMENTS (CONTINUED)
GEOGRAPHIC SEGMENTS:
NET SALES Dated Sates Europe and other Canada
Ibr the Three Months
Far the line Months
EnBtd Sentonbcr 30.
JUB-
1991
1991
_iai_
(la aiUiotu of dollars)
$ 593 133 60
$ $64 113
72
$1.58$ 397
162
II.S19 391
186
786
749 2.144
2j096
o|M United States
Europe and other tWil
32 22 92 66 3 26 3 11 4 31 9
(46) (28) (129) (18)
Oaesolidaed net tales
INCOME FROM OPERATIONS United States Eitrape end other fbnarta General oocpocate cxpcose
Income tram operation Outoftonomd fanda
before piovtaioo for income taxes
LJtt
*-2fi
11144
$ 71 6 5
(ID
71 07)
E-4S
$ <2 IS 6 (17)
66
(31)
$ ISO 37 S m
172
()
S 113 SS 4 (43)
129 (162)
2-J2
II OWENS-OMtMNG FBERGLAS CORPORATION AND SUB9DIARIBS
Fom 10-Q Page II
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(5) INCOME TAXES
The reconciliation between the US. Meal eMutoqr nte end the Coaapeny'a wwolidod effective bDNB<nnbic
1). S. federal statutory tale
Operating laaeae of foreign subsidiaries
umereooe docwmi lonp ibx qm
aad US. atatntory rate
Froriskm for taxes on tmdmtribated
ownings of foaqga subsidiaries
State and
----
Olhar
Fer the Three Mordhs
KmiIM Smtomber 30.
Im
.JHML
34 34* 18
2 (8)
(13) m - 0)
m (3)
For the Nine Months
EfaLStgfflfegJ$.
Ptt
JML
34* 34* 6 43
(13)
(8) (2) - (l>
(2)
Effective ten rote
24* .22*
32* -22*
At 30,1992. At Company had a emulative hook net operating loca of $120 million for certain ofthe Company's fbteign subaifiariee, dm tu benefit ofwhich has not been reflected in Ike
Provision has been made for US. Mend income Uaee to be pod on that portion of dm aofirttibuted ownings ofeertam foreign ahhddiariasaayeclcd to be ranihted tothe parent rompiny. The Company has not provided iooooe taxes on the andutributed earnings of fonafnndeidisiiea dot are deemed in pawiMwmnty wSmmiwI. Io dm event Mae caraiqg& are altiiaalely remitted to the Company, it ia anticipated diet foreign las credits will bo available to oflwt a portion of tie US. income taxes myaUe.
During the nine months ended Saptenlbcc 30, 1992, the Company nlffiM book net operating loss carryforwards which tecuHed in an cxlmotdiaaiy cmfit of ^praumtdy $2 million, or $.05 per share.
12 OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
Pom 10-Q Page 12
NOTES TO CONSOLIDATED FMANC1AL STATEMENTS (ConUnmd)
(0 INVENTORIES
Finisbod goods Materials and Btppfim
September 30^ Itaanher31,
1992
jm
(It nmjouof dollar*)
$ 208 111
$ 192 122
Leas: Rnduction toliPObaaia
319 314 m (95)
i-222
1 219
Appmiml^y $74 Ulko aaJ |99 Bullioa ofoek favmioriM mra vdood unog te UFO meiiod al September 30,1992 and December 31,1991, respectively.
(7) CONSOLIDATED STATEMENT OF CASH fU>WS
payments for income taxes tad cost of borrowed bads sis summarised as faDowc
huome taxes Cost of borrowed fends
ifcr (he Theee Months
ftDuWIMV^KBCSuSSBwBSiSiWBBkJC1X|A
1992
1991
$ 26 22
$ 19 16
For (he Nine Months
Ended ScatcwbgJSL
1991
.JUtti.
$ 44 77
$ 38 6S
(8) CONTINGENT INABILITIES
The Qnmpuy is co-defendant with femur mannfecftums and distributors of pmdnds confining atfaestot and wife miners and wppliers of efecRos fibem (collectively, fee Prodooeii) in pcnond Iqjary aod property dsnnge litigation. Thepeiaoaal hpury dsimsitejencmMyalfegn usuriesta (heir herift canned by fehelstioanfafeeatos fibers fawn fee Conapmqfs products. Many of Ihe datenants have tittle, if any, impairment to feeir hcaKh and many of (he dajom involve workers (m occupations with Kmited.ifany. exposure tothe Company's asbestosproducts. The property damage daims generally allege property damage to school, public and commercial buildings resulting from the presence ofproduct! containing itbetfor. VirtuallyaO ofthe asbestos-related lawsuits against the Company arise out of its manufactmc, distributiou, sab or jrwfthttco of on afeestas-coaftainiog calcium riBcato, high tetnpciaturo insulation product, the mnoufarturc cfwhich was discontinued in 1972.
As of Sepleofecr 30,1992, approximately 85,600 asbestos personal iqory ciatms wm pending against the Company. The Company received approximately 18,700such claims in 1992(through September 30), 20,900 in 1991 and 22,500 in 1990.
13 OWBNSCORNING VDERGLAS CORPORATION AND SUBSIDIARIES
Fom IO-q
rase 13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS <CootJiuicd)
(Q CONTINGENT LIABILITIES (CONTINUED)
Through Septco&er 30,1992, Rib Company had sewlved (by settlement or odicrwiscj) approximately 92,700 adboatoa personal injury dauua. 18,300 of which woe resolved in 1992. During 1991, the Coga|Miy raobwdapproiinrtoly 15,300 adtcatos personal ajaydiim and Inarmed total rndemaity piy^<f$llSriiiiiB^wayrfiHiiWM*|ytt^|M). During 1990, theCompany naotwed appmeinadcly 12^00 aedicbiroairi incurred total iniWanilypeyiDeniof|117 oiHoa(u avenge ofapptmimalaly 99,600 per tin). A of firyitctaker 30,1992, the Company had iiwcd k prinriplntn artfln afproTiewIrijffilOfWaflfliriran^ re-- (inrluriing mrrrT.lOfHl narr iknMiitni trittlnl faonnimcion wifo consolidated trial prooeedingria die Cmiait Court for Baltimore City, Maryland) which wiH be procnroed and reflected ia teulemenle during 1992 and iutitie yean. Although te predae anmmb aee subject la certain oaatio(eaeies, Ike avetafe payneoft m flew additional caeee is expected la be somewhat higher than the Company's eoUkrnant avenges in 1990 and 1991. Iliis expected taceeaae fa attributableprincipelly to die Baltimore aonfetncnti. neOoiipie^iDdcMiijr payments haiusvaried eoaeMenMyawer tine and from cew to csw,iad are effected by a rrstitiluds of bclan. Thaw include ie type aad severity of tbe dieeero aaakdaed by be daimeert (ia, mesothelioma, lung cancer, other types ofeenocr, sabcatosiaor pleural cheated; ike oocnpstioo of
nM by tbe Company; the ctteafl of the daimeat'a upoane to eebestoe-cootainiAj prodacto aanafantarnd ar aald by other Producers; Ike oanber aad financial resources of other Producer defeadaate} flejuriadtetioo ofradt; the presence or shawos of other poariblconuses ofthedaimaefa flkwn; fee svriMbility or not of kgri defenses suck a the atafcde of Brritaliour or atate of fee art; whether (he claim ww naolved oa aa individualbasis or an pad ofa group mttfemeot; and whefler fee daimwia retrieddirectlyby the Company orby theArbeetos QaimaFacilhy (the *ACF*>. Ibe A9, which bri been fo operation einoeJune 1983 to provide for thejointewduation, entHcmentand defense of asbestos personal oonapanka, diaaolvad an October 3, 1988. The Company's per caw inderaoity payaaeota have decreased siaoe tbe (Sseotutimi ofthe ACF.
Tbe courts aad litigants are engaged m various efforts todevelop suitable roethods for naolving certain of(be praMon* associated vrifl the adKstorperoood injury litigation(jncludieg the aocusndaiioo of a large backlog of oases awaiting trad ia certain federal aad state cerate; the high Innsielioo oasts, both far plaintiffs aad ikiftndaata, of Ike preparation aad trial of such lawsuits; and Ibe weakened financial condition of certain ofthe defendants). For example, on July 2$, 1991, the Judicial Panel on lfedti-diatrictLitigation issued aa order transforms asbestos pamonal iftfuy oases pending m Ibe federal coorts to die United States District Coart far Ibe Bartem District of Pcanqrlveeu, before Judge Charles K. Wdoa, for coordinated peetrid proceediDgs. The fodcnl ceaelned represents approximately ooHhird of the total number of cam peadiag against ire Coopany; Ike remaining two-thirds of the ewes are pending in aUte court sod are not affected by the had'i order. Odier develcpmoaia jnchrde the institution or consideration of so-celled 'pleural registries* or inactive dockets far plaintiffs who do not allege significant functional impairment as e result of asbestos capowimconaolidaltodtrialBinvolvingeumerouaphintiffe(inclodingacooaolidaed trialrrftkedairas offover 8,000plsutiffo in atate court in Baltimore, Maryland, which claims haws recently been settled by the Company, except for the claims of approximately 400 plaintiffs which have been severed for possible later trial); be Chapter II bankruptcy filings of delates, Eagfo-Pidier Industries and H.K. Porter, formerly co-defendants with the Cooguny in most of the pending asbestos persoaal injury lawsuits; die effort by Eagle-Picher Industries, prior to its bankruptcy, to Obtain certification of a mandatory federal limited fond class retkn involving all present and future ariiestn* personal injury
14 OWDtS-CORNING RBERCLAS CORPORATION AND SUBSIDIARIES
tons 10-Q rge 14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(ft CONTINGENT UAUUITES (CONTINUED)
cfaimt; die iffwwl by fee federal dirtrict and bankruptcy courts of a purported aimUtoiy Mcnl
limitedfond ctamairioeeetflwnealrestructuring toe MerariQeFareouilhtiury^nrtlemeotTniat, which
approval it now anappeal tofoe'United State* Court ofApperis far foa Second Circuit; and 0* Cling
by certain ptaiatiffs in Jdy 1990 of i pfpoitod national dan action afsinat ypninbly 80
ly^iww AAMlnr frcliiiB| III*
U
Ilf Tmf*
bn bean tnmftnd to be Bukn Biatrial of Nmylwnh pool to the Fad onto and k
currently inactive). Tim Company bactiudy engaged indkcuaaiona with ofocrdcfoadanl* and with
vaieui pletatifft* --a cooconday be pnarihiti nagotitakm of n cooaaaaual cettlcncnt of be
adbeetonpwaoaal injury litigation. Than nngetiationaan loan earlytangoand it Unotpomiblo to
Tbe indemnity pcymntai, de&we fees and expense* related to aabaatea pereoaal itgiay dalms are covered by Iba Ooaepany'a paoducti UdbUaty inwwnce paiktaa, adject to deductibles, codoatoas. wtaationa and policy iunita. Ha so<alledWetlia|too Agreement naolved certain dkyutas between abeerbiai Pwdocew and subscribing iaaurere and coafirrend fovunMc applicatioa of inaurenoe cavenfe to tboOtaapapyby rigmtay insurer* far adbntaa pereoaal faytoy daiins. Than inaurenoe proviahms of dto Woffington Agreement remain in effect deapile Ibe dtoolutiao of An ACF.
rntnicinnteiy damage*. Daring 1992 (through September 90), a total ofapproximately $13 reiilioa in punitive damages mas entered against tbe Oonpaqi in (bur trials JnvoMqg seven ptaintiffa (whidiag$7.5niillkmm*trid involving than plaitaiffainHKnoiaand >4 million inn trial involving a singla ptaintiff in Cktifimna). Prior to 1992. n total of $4S raitlhw in punitive dareegre vu awarded again*(be Oonpny (ududibg$25 miOkn ina trialbredviagn dngle plaintiffin tire Virgin Iabofe, which award was aabaequeatly reduced by foeemut to $1 million). Depending on insurance policy language, appficable lawand afreetrali wife its carriers, puaitivedamage awards against tire Company nay or may not be covered, in whole or in part, by tmuraaoe.
Aa of DecoaAer 31.1991, be Company bed approximately $1.13 bittkm in mrathaunted iassrance oovcragefincfosveof $230nullum ofdodnclibtosdereribodbekw) under prodnets Ihtolity insurance policiee appBcable to aibeatoa pereooel aryoty claims. This amount earJnded approximately $116 millkm inoovenge nndar products liability inaurenoe polities taued by eenien Ibat were the arigea ofinsolvency pracaadiogs. In 1991,0wQ>gyrey edited dajtwsegshwt the Ohio Insurance Guaranty Ataociation in reaped offen coverage fa there insolventcarriers for $29 Million, la addition, die Company baa nihetantml vneidiaeitted kuurance coverage under certain non-products liability insureoee palicier, an h yet undetermined amount of coverage under such policies any be available for payment of ssbeetos personal injury claims and associated defease fees and expenses.
All of the Company** products liability iamreuce palicia oover defame free and expenses, and Indemnity payments. Historically, certain oftire Company's policies (so called *G* policies) covered defame fees and expenses without reducing amounts available under the policies for indemnity payments. Under other Compaay policies, the payment of defame foes end expenses reduces the amount available for indemnity payment*. The Company's C policy coverage exhausted in April 1992 end the Cotapany currently estimates Hut defense fees and expenses for the remainder of 1992 will be approximately $40-50 million.
IS
OWENS-CQRNMG FDOBGLAS CORPORATION AND SUBSIDIARIES
Fon 10-4) Figs 15
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(B) (CONTINGENT LIABILITIES (CONTINUED)
TheCompanybee filed suit again*Gettain ofita innmaoe carriers concerning the proper inleqinUtiaa of to "per occurrence" deductible provisions of certain of to products lib% insurance polidu. The Gonqiany tifcee (be position diet fee manufantuia and tale of hs asbcatofr-coctaiaiag products constituted a single oocuntoce fir purposes ofcalculation of tin wliaable deductittee, whereas the irmucn contend that eecfa adicatne personal maty cbia constitutm a apatite occurrence. If Ibe insurance camera* peaitioc is eactaiiudby tin courts, the Company would haveto pay, avera period ofyean, a told ofqfproximately $230million in deductibles ifR ware to follycooem Rs unmdrnwlod products lability msaranm applicable to asbestos personal ipjoty claims. If the Company's position is sustained, die Company wfll obtain an additional $71 mfllioa in products liability insutance coverage sad would be required to pay approximately $80 mfflion in dedoetiUes if it were to felly
TheQunpapyPapeete additional efeeatoapersonal jqjetydaimatolm filed in toefuture. TheCompany took a noo-reonriug charge to eamings of $800 million in 1991 to reflect (he Company** heal n+imritr iifffcft vnlnTTirtl indwityaort linfhniw) roiti tint may hr sBii iatul wirti mmni(c<1 ailaiiftw pemonal afury elaime that may be received by toe Company daring the yean 1992 through 1999. The Company cannot estimate and is not providing Cor tin cost of aaumrted claims which may be roocived by the Company after die year 1999 because management it unable to predim the camber crfcUiras to be received after 1999, toe severity of disease which may be involved and other factors which would affcet the coat of snefa ctaime.
The Coopaqr cautions dial anefa bam as the aoafecr of future aabeatas personal iqjuty claims motived by it, the rale ofrecent of such claims and dm indemnifyand defense casta associated with each claims, aawdl as dmpwqwcts for confirming additional, ayptrcdilcinauwacc coverage beyond the $1.13 billion (inclusive of $230 nuUmn of deductible^ referenced above, are influenced by numerous variables dial are difficult to predict, mid that estimates, such as dm Company's, which attempt to lake account of such variables are street to considerable uncertainly. Acoan&igly, the actual uninsuredooals assoeialad wifeasbestos personal iqjuty daims received by IkeCompany during dm yarn 1992 through 1999 may be higher or lower than (hose provided for by die $600 edition charge to earnings in 1991.
Prior to year and 1991, the Company charged earnings on aa acciual basis for the uninsured costs of pending admatoc pemonal injury daims, iecluding a $24 rattlna accrual daring 1991. Because ofthe $800 million (barge in 1991 described above, in 1992 dm Company discontinued accruing for dm costa of asbestos personal iqjury chums as they are received.
As a result of its charges for arfmatim litigation, the Company had related reserves of $950 million, $955 milliooand $131 million (including $10 million, $5 million and $3 minion in current liabilities) asofSeptember 30.1992 and December 31,1991 and 1990, respectively. Tbe Company will review dm adequacy of Rs provision for the uninsured costs of pending and unasserted claims on a periodic baric and make such adjustments to its reserves as may then he appropriate.
16 OWENS-GOBNING VDERGLAS CORPORATION AND SUBSIDIARIES
Fora 1(H) fage 16
NOTES TO CONSOLIDATED fMANOAL STATEMENTS (Coitfiaucd)
comwcmrm uABiifliES (Contwded)
Altoaq^itoe Ocopany hat aoaued an estimate for toe utoaand costa of both tatted and uoenerted atoeaka pecaooal injury darae, m described atom, sodi dri-- are aot typically seaolvaJ, aor toe related cash oatfays made, uadKmnlysniibinoNfL AnoonBn^y, tie Coaymy* products ad nonprodurta liability faaoraacc potictea tooold cower majority of 6a Corapmy*i cadi expcodUmea for Indemnity end defense coals for atoeatoa pnrannri lajary clairaa toroogfa 1996 or 1997. Thifit in|ifMiriMW In wiart nf611 writinil ddia onmmnrt tij flm fflw rallliim rtiitfn to 1991 earnings arcexpected tobefacancdowccapcrindofappawinimriyacMtn yean, cormrancuig fa 1996 or 1997 and cootbafag until 2003 or 20M.
fee ability oftoe Oampoqr tomoetiU<riHplinMflrtocaryolita|daaatoaiiiianHrilye(facetlt |QCMHMt| MW* it tt MMMMMg Mfl Bu IMHIip u MUMQKB flppQRHHItt wf By 6 tine aay cudi uainaurrd coals wotdd be paid to cafe (neqX for tie cash expenditures daKtibcd above), toeOompnsyaspects tobase substantiallyaedaoad MsouMaadiag indebtednessand asaoefatod fatetari coats and to bme facoaamd its opentiog ebb flaw from 1991 kvefa wfckfc were
Accordingly, edtam^b spy opinioa U paccaaiiily judgments! and nod be baaed rat iaforxMtson now kaoaatofeoCompany, fattnopinionofmanagement, baaedon fenOaavony'ooxperieooowife feme dafaaa to dale, toe Company's aaeoasmtnt of die amber, oaten aad awedQr of Ac pandmg dams and of (fee treads fa tie filial of aucb claime, and of offer fedora afledtot fits Wigtown, aad tie Oapa/a aa^b of ila fanwaoe wapp and mining wwwi aad of (be Compsny'a future
p--ntteg ynwl t^jniy --I ptyMy Aamtaj* AinAit^ aUitiM.1 JnlW filed ia tie fotaro will oat have a modally advene effect on (be Caapaoy*t financial position.
to October 1991, the Company and certain of its officers aad directors were 1
IU
a towsmtcapdopcdfictotni lavsibY, OwM-Oonit
.fatfe United
StelmDirtrict Court forfeeNorthers Districtof Ohio. Jjy^jaupQris to beaoccuritieB class action
oabtbdfafd poach--mm of toe Company's rosaran stock during foe period Nonobo 1,I98S
(hmugh October II, 1991. Tin oonqdaitoolltitm feat fee OompMy'afefatoauma daring toe alleged
L yifWlflli^l IteMMliyl
ca the theory dal nek alleged miastetemento aad oiaiaeinng artificially faflated die price of d Company's stock. Various other lawsuit! aad daises arising in foe normal eoune of business are peodingagaiiistfeeCoaapeny,aoa--ofwhich aUcgc subtoaatial damages. Management believes that toe outcome oftkeae laanuita and claim will aot have a materially adverse effect oa the Company's finaacial position or results of operations.
Fbm l(MJ h|> 17
17
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND KESDLT8 OF ORSAHONS
results or oierahons
The cworoc nptera foil began h the United Statca earlier flu* year is contifliung, though more slowly dun wtwrillibi Attiiriii^y, e m seeing u improvement in mo of oar U.8. Construction Products sad
Chanda, Europe, iid Biril -- mitiwh b>wnk wi iwBotwndiltofafiiiw mop. Net isooot 100c
7Sfarjhai(>ferfcn
aainer--mfMpamantlimmtMmaipB.oriAgpgriituwi
in the AM quarter of 1991. Net nice wan $786 milliou, compand to $749 million a year ago.
For the lot non mcafos, net moome vm $$9 miUhn, or $1.36 per foan, compand to net loan of $213 million, or ($5.20) per rime in Che fiat mfnw wmnfoa of 1991. The 1991 wnltt iadadt 1 yciil cUty of <227mBfiotum($S.S6)pnfoarT, tad were watatnri to reflect adqptionof Financial Accounting Standard No. 106 an of January 1, 1091. Net alee wen $2 billion in be fiat nine months of 1992, nn incanae of $48
Helm in mat i--lelic jpimVet unitnfi Inrmaand nonpareil to flm third queilnr find jnar While hculation prices jnenneed during Ibe quarter, flay contiaoe io be toner then year ego hwela. Beeideatiel roofing eehe mcRuaedatroqg|y,iefkctiBgdmiapaatafatom inTcua, Loutaoia, end Florida. Proaad hfiwini hfie United Stata far industrial mWnriil*. Am# priciaf oantuwed at lamer tben yarugo level*. In Europe, dnuoi marina caeotiaBy flatbutmia|iat henbeen infected by prioeeroaioe. Tholower prion then an die leaalt offin weaker U.S. doUer and enoom induatry capacity la Europe.
fliraa --uln rraa Til for On tihd ipmitnr 1TTT nnayanrt In 711 inlbnunr ijnitnr nfOr prior jeer The chsago primarily rcflecta a reUthwlT hi#** proportion of miilnariil roofiqg products sales daring the third
Mata<iiigBialadiiilitranatimereiBcrirnaw1 $11 maiinointhethirdquarter 1992. primarilyforadvertising
$3 saffian coeapnied In the prior year, and $6 million far dm mao moaiha, due to increased product developiaeol cfioits. Reduction! in wpeaue for product liabilalgr. abide appreciation rights, and foreign exdiaage foam are rofleoted in foe dediaee of $9 trillion for the quarter and $22 miMkm for foenine (Bcmdis io `Other Hapeowe*. The Oonpauy'eooa ofborrowed foods lor foe third waiter was $4 millioo lower foan dm prior year due to iaiaieat aaringa from thowfiaancingof $300 million in long-termdebt in May and lower interest cates on bank borrowings.
General oorpooUe capenaa*, aeported oa a segment bans, decreased by $6 pnlliaa for dm third quarter 1992, compared to the same quarter lot year, reflecting a $( trillion provisiao for adbestaa claims in 1991. See Nate 8 to dm Cbneofidalod Fiaaacial ttinrawnfs.
LIQUIDITY, CAPITAL RESOURCES AND OTHER RELATED MATTERS
Net mveatories increased oo|y (tightly, Iran $219 million at year-ead 1991, to $222 million at foe cad of the third tpmrter 1992. Inventories at Septeaober 30,1992, as a percentage of the third quvter's annualised sales were 1 >, a one percentage point decnaae from December 31.1991.
Font ltHJ Fog 18
Total receivables worn $451 maiioont September 30, 1992, compared to $30SoriUin at year-ad, primarily
Virruimt -rrf Ihrntnivd an-rrr1 ir ir
--;i^*w rmr-H- fitf irrvmrpf iri^H-ir-ili
primarily from Lfaydaof London far aeMtomeal of ribato IMptiw eapanam. The wUribuncBmot from
Ueyds ofLondon b expected lo be received by the cad of the you-.
Total bomnriqga i Septerihw 30, 1992, weee $32 mitlinn higher than ywrad, due to aeoaonal wotting piMlaeedafarmoaMbleaand ioMBtofy. At feeendoffeefeMquarter,wohadunused Unasofcreditof $209 ariBkm wider longtermhank loan bcUittea and mi oddfcfand $167 miniaauadmduiMetmfacilitiee.
Aft September 3(t 1992L out waitingcapital mm $272 ariUknaodoarcurant fatioma L5, compared to $171 sriffionmid 1.4, nreecdvcly, at Daoetohcr 31,1991.
Cadi flow fan opantkmaana $111 oritioo for the feted qmtter 1992, contend to $89 ariBfan for die aame <pnrtar oflast year. Bor faofini pine meatha, the $106 mfflhm redaction ofoath flour was primarily due to
Qptdqandiagfarproperty,pUatandaquipaeotwas$26minimdoriagfeethudquarter. At fee end of he quarto, approved capital projects, eadwling femeoc rebulda, were $$7 mfflioc. The Company repectc toSric^itriapcndiafofapprmieulriy $115-125 mfllioBfa 1991, wclufaigliiamcewhoflds, compered Co $96
TheCongueyettpecfe finite generated Cron C|<retiona,to|pvWwith foodsaveifabte coder tocg sad toort term
hank baafacilitiBe. to Iwurffiriam to retisfy its debteorviocoMifsriontunderitsexisting tedwkridnrw as well
t t* ntii>|Ml MliiliAi hy mJ--il AiAitpKiul
Imh IW|
tfrfr rVmytiy** yftw
o MOBUflifll mwot pflranw muy cittmt ucrami n vu mow qb fu& ox MMMfNmoi m CboraanyTs availtote Inaganom The Company fa maaaniai a strategy fat wqMm figure sebcrtoe cteims
TheCcmpauyhtabcendceaedby fee Bnvimmnritit Protection Agency (BPA) to boapotmriaHyrrapnftsibto party (PRP)wifewqrarttooertain nitre uodor the OornpwhrnriveBavicouuiCBaBllteBpmao.Oorapnnralion and liabilityAct (Soperfeod). Paring feethird qasrter, toe Company was dcrigairrdae a FRP fartwo additional aitea, itnamiaf toa total to 39 (right h 1992), aonm of whkh dcrignatioos toe Company bdkre* to he etroBBoua. The Cbapmy hea eattolitoed smarms fat Ha Sqperfaad mntingrut liriiiliUfa which are reflected in toe financial atatcimtoti The Company heliovm feres iwbivm ore ndegates to cover tome BtoHilim and am not materia] lo toe finanrisl position or results of operations of toe Coaprasy. fa addition, based upon information pmaeatfy nvaihhle to the Company, aod wifeout regard to the application of insurance, toa Ctmyany hdiem dial, considered fa toe aggregate, toa additional coats taaocfatcri with such Suporfuad contingent litoitire farfadfag aey edited litigation costa, will not have a materidfy advene effect on toe Oompony*e financial positionor tenilta of operation.
FUTTRE REQUIRED ACCOUNTING CHANGE
fa Ftenuary 1992, fee Finnacfal Accounting Standards Boaed(FASB) issued Statement No. 109,'Accounting for Income Tkxee." The Company is Beguiled to adopt toa new teandinfno latat than 1993. The Oompany is currently aaeljifaf toenewatandaid and enpccta that prior periods will nothe restated. The current estimate of fee cumulativeeffect offee aocmmtfag change will be an increase fa reported net income of$20-25 million.
The Oompany has edimated that the forejga portion of Fieancid Accounting Standard Ho. 106, "Employers* Accounting for Postretiremen! Benefits Other Than Pensions*, will be n charge of less fean $30 miUinri. Adoption of the foreign portion is required far 1993 financial reporting.
19 PART II. OTHER INFORMATION
Fora 1(H) Vugo 19
FTEMl. LEGAL PROCEEDINGS
See te pmgafhi in Mote t, CanSugent mhiitirt. to the Coosotidated Finaada) Statements, on pigs 12 daough 16 above. trinA are incorporated hew by reference.
Environmental Pntecikia Aftaqr (BVA) to cooArt aTosic Sehetence Coated Ad (TSCA) Audit Program In ilHiuiirian nnuqilianrr after rnlnr TTTfi irrtina flfr) The agreoanct provides that fto Cbmpeay will audit ite acorfi and nport to (he EPA iqf wpotteble nritm uUtb mb ad reported or afckb were reported bAo. The Company will pay atqwilateri ptaaltire of op to $15,000 far each sutler ad timely reported, widi a maximum penalty of $1 milliao fa the aggregate The find report to (he EPA ia due rix aoondm after dm EPA piMifaecfiad refined guiduee on auefc reporting.
TTBUZ CHANGES IN SECURITIES
None of the coortitaeBtinatnBnBnti defining fas rights of dm holdcra of aay clam of (he Company*s registered earnridwane materially modified ja (he paito faded September 3Q. 1992.
(b) Noao of dm rights ovideooed by aay darn of the Company** regmtewd ancuritina mi materially Hailed or qariifiad la the quarter ended September 90t 1992 by dm imaieee or amdUieeliea rtf aay
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
($ During dm quarter ended Sipteadicr dO, 1992. them wee m material default ia (he payment of principal, talanat, sinking or purchase foad miteHaimte, or any other material default ad cured wifain 30 dqi, with reqpect to aay indebtedness of the Cbaqaoy or any of ha rignificut anhriiSawea owwndiag S pence! of fa total eaaets of dm Goaapaey and ite consolidated
(b) Daring dm quarter coded September 30,1992, m> atiuial anearage ia the payment of dividends oceunod, nod them was on other material delinquency not cured within 30 day*, with leaped to any dare of preferred stock of dm Company which ia registered or whidi arts prior to any eku of rrgietrrTtd securities, or with respect to any daas of prefund slock of aay significant subsidisiy of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No natter was eubmittod to a vote ofsecurity holders during the quarter ended Scptcatber 30, 1992.
ITEM 5. OTHER INFORMATION
The Company does noi elect to npoit my information under this item.
20 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Fora 1(H) Fog* 20
(a) Buhiliite.
(4) Form of Motile bedwecn Own Owing Fibeqjbn Caoponfioa and Tbs Bank of Naur Yak, aa Twain, nbthg I* Ike Coapay'i ME Pebaaturaa doe 2002 aad SKS Pnbeamm doe 2012 (latorpoalod beitia by wfcwwr lo Bdiihil 4 to the Qwnpany'e Htfiatndra fragment <n Fora S4 (Rcfotaation No. 2M6849)).
Foma of Debentuma reUtiag la (be Oeopiqr't &lk% Debeotuna doe 2002 aad MS Debedona da 2012 (iacocponted Wnio by nfcteatt la EaMMl (4) la die Company1* yatedy report ca fae 10-Q far die filter eaded Jaac 30,1992).
(11) fratoniat w Ctaiprt<ion ofPer Share Bamiaga (filed berowidi).
(19) Pmvioody Unfiled DocaneaU.
bmariwcfOaiii Owning Bbaglaa Corpocatioa, as arnoaded (filed herewith).
(b) Reports oaFOaaS-K.
The Gompaqr did oat filoaqr reports on Fone Ml dung die quarter radeiSeptodber SO, 1992.
Form 10-Q Page 21
SIGNATURES
Pursuant to die requirements of iie Securities Enduqge Act of 1934* the Couqtany has duly caused tUs repeat to be signed an Its behalf by the undenfened, thereunto duly aufexbed.
OWENS-OORNING FIBERGLAS CORPORATION Registrant
Date Nov. 13. 1992 Date Nov. 13, 1992
Paul V. Davcrio Senior Vke President
-GLlf &U ttflriesR. Bland Vice President and Contaotlsr
Extfbit Nairihar (4)
OD m
22 EXHIBIT INDEX
Fibetg)ss Cupacetioa end The Bade of New Yoik, as Tones, vahtiqg to Aw Cta^piqf'i Mottv due 2002 sad 9%% DdIimAmm Am 2012 facotpoBUd hereto by wfewooe to Ednbit 4 lo Ibe Ompay'i RcfuCntioa Atonal ea Fona S-3 (Rogiatnlioo No. 3M6M9)).
8K1I Debentures due 2002 ud 9%% Debentures due 2012 fmoorponld taenia by ecftreace lo EaHbit (4)loAt Convoy's qaertwfr Mpod ee
glrtunuil n OonyoUtioo of Per Shan Eanfa^p (filed herewith). FMvaoair Vafiled Dactunoto. Subsidiaries of Owens-Coraing Fiberglaa Gorpnrsrton. as amended (filed herewith).
Fora 10-Q Fage 22 SequeaAetty
33
i
msmmum.
Information Sarvlcas, Inc.
SI 61 Rlvir Road Bethaada, MD 20616
(301) 0SM300
Fora 10-Q Page 23 Exhibit (11)
OWBNS-OORNING F1BERGLAS CORPORATION AND SUBSIDIARIES COMPUTATION OF PER SHARE EARNINGS
fmnmp
Net Income (Loss)
Weighted average number of sham outstftndkK (uousnib)
Weighted range common eqimunt sura ((bounds): Deferred awards Sadnadtoswagnentt . market pace
Primary weighted avenge aomber of
eommon equivalent shares (tboasacds)
Far the Three Maaths
Far the Niue Months
Ended Sentemher 30.
. ftdcdjSwtflfff,3ft.
im. JL. _1SB_
_152L_
(la milGoas of dollars, except share data)
S__ 32 42*10
649 448
41107
i_B 40,995
1,084 520
41999
j 99 41*79
672 430
42-981
1 013) 40,783
-
40.783
Primary per ihare aasoont (1)
LJi
LM
1 136
1(530)
BfflyPfltftB*
Net Income (Lou)
Weighted average number of shares
Weighted range common equivalent stares (thousands) Deterred awards Stock opticas Bsing the higher of average aurket price or market pries at cod of period
Shares from assamod conversion of debt
Fally dilated weighted average number of common shares outstandiqg sad common equivalent shares (thousands)
FuUy d'riuted per dare amount (1)
S 35 42*10
650 461 5,798
48.919 3 .71
2--22 40,995
1*85 550
1798
48.428 1--iSS
L-ft 41*79
672 457 1798
48.806 S 1.35
t (2131 41783
"
40.783
(1) For the nioo moaths coded September 30,1991 the deferred awards, stock options and shares assumed from ooaversioa of defat are aati-dliitivc, so they ate cxdudcd from the calculation.
'
Sohaitoki of Owtas-Cnrnfag KhergUs Oecpamtiae (9/WM)
Bdbooip, Ioc. Danric-SvMfc Qlacfiber A/S DeatacfaeCteraon-OMning OUbnkmI GufcH BricCowpny
VMhs. Mamptbc. NanfeGbafiber A/S N. V. OweafrOanUg &A. O/OFIKST CORPORATION OCFOGO.be. OCFSC.be. O.C. Funding B.V. OK7SBCOND CORPORATION Owen*Comiqg daymen Uerftad
OmmtOomogKbet^baFamee, SJL OmapCmmag Fibe^tas (03.) Ui. CNmia Owning Bbetglm (My) &r.L
Oww CnwjiiBhqb(PX)lJl
0ra4baiigledlttk>a France S.A.
nmy Miit Vane Technology AA Wilbo^bc. Wrexham A.R. Qhn lid.
Fora 10-Q Page 24
Exhibit (19)
State or Other Juredkfioa Under die Laws of Which Oesaomd
Ddmm Deoawt Qcnmj Otkwin
DeUwue DeUwue Nanny Belgium
Olio
Dataware
U.8. VUgmUeadi The Nedteriende Delaware Ceynum Idands
France tinted Kingdom Italy The Netherlands Uruguay
mkii
United Kingdom Fnoee Btud Ohio Delaware United Kingdom Sweden United Kingdom Nonary DeUwue United Kingdom