Document jg72M7xy3Q2g5K8q77dpmQ37R

OWENS CORNING WORLD HEADQUARTERS ONE OWENS CORNING PARKWAY TOiEOO. OHiO 43669 419 ?40 8000 News Contact: William L Hamilton Media Relations 419/248-6190 Jules Vinmedge Investor Relations 419/248-7377 Owens Corning Announces First Quarter Results Toledo, Ohio, April 15,1998 - Owens Coming (NYSE, TSE: OWC) today announced first quailer sales and earnings for 1998. Net sales were $1,137 million, a first-quarter record and an increase of30 percent over $875 million recorded in the first quarter of 1997. Net income was $8 million, or $. 16 per diluted share in the first quarter, compared to $42 million, or $.76 per diluted share reported for the same period in 1997. Results for the first quarter of 1998 include a pre-tax charge of$95 million for restructuring and other actions, Also included is a pre-tax credit of $84 million for the gain on the sale ofthe company's 50 percent interest in Alpha/Owens Coming, and a tax credit of$13 million associated with Asia Pacific operations. Exclusive ofthese non-recurring events, net income from ongoing operations for the first quarter of 1998 was $6 million, or $.12 per diluted share. "We knew going into the year that the first quarter was going to be our most difficult quarter, based on the competitive pricing environment at the end of 1997," said Glen H. Hiner, Owens Coming chairman and chief executive officer. "However, we are pleased with the momentum with which we closed the quarter in terms ofmarket demand, improving prices and significant progress toward meeting our restructuring objectives." PLAINTIFF'S EXHIBIT WV-05129 WV-05129 Business Review Building Materials Sales in Building Materials we $856 million, up 41 percent over the year-ago quarter, primarily driven by the two major acquisitions in the Exterior Systems Business. Sales growth was also fueled by strong volumes in most U.S. Building Materials businesses, influenced by strong housing starts and accelerated customer purchases in advance of announced and implemented price increases. After adjusting for non-recurring events, Building Materials income from ongoing operations was down 70 percent from the same quarter in 1997 due to price deterioration in fiber glass insulation during the second half of 1997. Composite Materials Sales in Composite Materials were $281 million in the first quarter of 1998, up 4 percent over the same year-ago quarter, driven by double-digit volume growth. Price levels in the United States and currency impacts offset a portion ofthe benefit from volume increases. After adjusting for non-recurring events, income from ongoing operations increased 8 percent from the first quarter of 1997. "Solid productivity and cost reduction gains, coupled with strong volumes, offset a negative price comparison in Composite Materials from the first quarter of 1998 to the first quarter of 1997," Miner said. "Compared to the fourth quarter 1997, however, aggregated price levels were up/' Cost Reduction "We have made significant progress with our restructuring initiatives and are on track to achieve annualized savings of $100 million this year and an incremental $75 million in 1999, resulting in ongoing savings of $175 million per year," Miner said. At the end ofthe first quarter, job reductions as a result ofrestructuring or attrition totaled 1,900 employees, or 8 percent of the total workforce. Ofthe total planned pre-tax restructuring charge of$250 million announced January 9,1998, about $10 million remains as of the dose of the first quarter. In addition to the restructuring, the company will save an additional 530 million in 1998 in synergies from the two Exterior Systems acquisitions.' "We are on track with our efforts to close redundant facilities, improve purchasing leverage, and rationalize market channels, product lines and trade names under the Owens Coming brand," Miner said. Divestiture Update In the third quarter of 1997, the company announced that it would divest certain sonstrategic segments of its operations to reduce debt and focus its efforts on core businesses. "Two divestitures were completed in the first quarter, and we will continue to evaluate our other businesses " Miner said The first divestiture was the Pabcc business, a producer ofmolded calcium silicate insulation, fireproofing board and metal jacketing. Also in the quarter, the company closed the sale ofits 50 percent share in Alpha/Owens Coming L.L.C., a manufacturer and marketer of unsaturated polyester and vmylestcr resins. Outlook "Our restructuring and divestiture programs are providing strategic repositioning, and.our financial results am getting back on track," Miner said. "We will continue our work to increase profitability, improve our cost structure and consolidate our recent acquisitions. We made solid progress in the first quarter. We will not let up as we move forward " Owens Coming is a world leader in high performance glass fiber composites and building materials systems with approximately 22,000 employees worldwide. The company had 1997 sales of $4.4 billion, and is positioned to achieve more than $5 billion in sales in 1998. The company's website can be found at www.owenscoming.com. This news release contains forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in these statements. Some of the important factors that may influence possible differences are continued competitive factors and pricing pressures, construction activity, interest rate movements, issues involving implementation of new business systems, achievement ofexpected cost reductions and asbestos litigation. Further information on factors that could affect the company's financial and other results are included in the company's Forms 10-Q and 10-K, filed with the Securities and Exchange Commission. NET SALES COST OF SALES Gross Margin OPERATING EXPENSES Marketing and administrative Science and technology Restructure costa Other Total operating expenses INCOME FROM OPERATIONS Cost of borrowed funds INCOME BEFORE PROVISION (CREDIT) FOR INCOME TAXES Provision (credit) for income taxes INCOME BEFORE MINORITY INTEREST AND EQUITY IN NET INCOME OF AFFILIATES Minority Interest Equity In net income of affiliates NET INCOME Diluted Earnings Per Share Diluted Shares (in thousands) For the Quarter Ended March 31,1996 (In millions of dollars excluding share and per share data) Reported $1,137 936 Special Items $0 6 Ongoing $1,137 933 1997 Ongoing / As Reported $975 692 199 <5) 204 223 129 IS 87 (71) 160 39 37 a 0 87 (84) 6 (11) 0 126 15 0 13 154 59 37 122 17 0 4 143 60 19 2 (11) (7) (13) 13 6 61 20 9 (5) 4 $8 $0.16 S3,646 27 0 (5) 04 $2 $6 $0.12 S3,845 41 (2) 3 $42 $0.76 57,799 -5- OWENS CORNING AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME (unaudited) Quarter Ended March 31. 1221 122Z (In millions ofdollars. except share data) NET SALES $ 1,137 $ 875 COST OF SALES Gross margin OPERATING EXPENSES Marketing and administrative expenses Science and technology expenses Restructure costs* Other (1) Total operating expenses INCOME FROM OPERATIONS Cost of borrowed funds ____ m ____ m _652 223 129 122 IS 17 87 (ZD 4 160 _M2 39 80 37 __ 12 INCOME BEFORE PROVISION FOR INCOME TAXES Provision (credit) for income taxes 2 61 m __ 22 INCOME BEFORE MINORITY INTEREST AND EQUITY IN NET INCOME OF AFFILIATES Minority interest Equity in net income of affiliate NET INCOME NET INCOME PER COMMON SHARE Basic net income per share Diluted net income per share 9 (5) 4 t_ _ _ _ _ s 41 (2) ___ l $ 4? * 16 $___ 06 -_JQ 3L .76 Weighted average number of common shares outstanding and common equivalent shares during the period (in millions) Basic Diluted 53.4 53 <8 52.4 57.8 (!) Includes an $84 million pretax gain from the sale of the Company's 50% ownership interest in AJpha/Owens-Coming. -6- OWENS CORNING AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (unaudited) ASSETS March 31, December 31, March 31, im-- -.mi1998_____ . _____ (In millions ofdollars) CURRENT Cash and cash equivalents Receivables inventories Insurance for asbestos litigation claims - current portion (1) Deferred income taxes Assets held for sale Income tax receivable Other current assets Total current $ 115 560 533 100 140 . m 51 1.607 S 58 432 503 100 160 41 96 28 1-428 $ 13 425 430 75 106 4 54 uo? OTHER Insurance for asbestos litigation claims (1) Asbestos costs to be reimbursed - Hbreboard Deferred income taxes Goodwill Investments in affiliates Other noncunent assets Total other PLANT AND EQUIPMENT, at cost Less-Accumulated depreciation Net plant and equipment TOTAL ASSETS 340 117 394 792 53 174 1.870 3,603 H 8581 .. _.L?4J> S 5.222 357 116 328 778 52 ____ 1M 1 815 3,585 ium 1.753 S 4 996 439 - 457 30! 66 182 1.445 3,322 JUSL 1.555- * 4 107 -7- OWENS CORNING AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (Continued) (unaudited) March 31, December 31, March 31, 19981997 _ 1997 _ (In millions of dollars) LIABILITIES AND STOCKHOLDERS* EQUITY CURRENT Accounts payable and accrued liabilities Reserve for asbestos litigation claims current portion (!) Short-term debt Long-term debt - current portion Total current LONG-TERM DEBT OTHER Reserve for asbestos litigation claims (1) Asbestos - related liabilities - Fibreboard Other employee benefits liability Pension plan liability Other Total other $ 812 300 59 122 ..... Utt ......1.374 1,241 124 332 63 _____ m J 946 $ 814 350 23 _____ m 1 307 1-595 1.320 123 335 65 165 700* $ 633 275 114 22 .,,1,044 - 1.099 1,600 - 339 61 UR - 2,158 COMPANY OBUGATED SECURITIES OF ENTITIES HOLDING SOLELY PARENT DEBENTURES MINORITY INTEREST _____as 24 _____ m 24 194 76 STOCKHOLDERS' EQUITY Common stock Deficit Foreign currency translation adjustments Other Total stockholders' equity 662 (1,035) m _____ m (423) 657 0.041) (37) ___ m mu 647 (1,035) (7) ____ 02) ..... TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 5.222 $ 4.996 $ 4.107 <1) As of March 31, 1998. the current portion of the reserve for asbestos litigation claims, net of insurance, is $200 million. Excluding Fibreboard activity, the total reserve, net of insurance, is $1,101 million. -8- OWENS CORNING AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited) NBT CASH FLOW FROM OPERATIONS Net income Reconciliation of net cash provided by operating activities: Noncash items: Provision for depreciation and amortization Provision (credit) for deferred income taxes Other (Increase) decrease in receivables (Increase) decrease in inventories Increase (decrease) in accounts payable and accrued liabilities Increase (decrease) in accrued income taxes Proceeds from insurance for asbestos litigation claims, excluding Fibreboard Payments for asbestos litigation claims, excluding Fibreboard Other Net cash flow from operations NET CASH FLOW FROM INVESTING Additions to plant and equipment Investment in subsidiaries, net of cash acquired Proceeds from the sale of affiliate or business Other Net cash flow from investing Quarter Ended March 31. im mi (In millions of dollars) $ $ $ 42 52 (45) (91) (129) (36) (12) (2) 17 (129) 17 37 17 (1) (107) (91) (59) (ID 40 (95) ____ OS) (247> (47) _ 134 ____ 02) s____fiS (74) (20) (5) X..... (22) -9- OWENS CORNING AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited) NET CASH FLOW FROM FINANCING Quarter Ended MarcklL-- im mt (In millions of dollars) Net additions to long-term credit facilities Other additions lo long-term debt Net increase in sborwerm debt Dividends paid Other $ 285 $ 257 3 26 36 17 (4) (3) : 19 Net cash flow from financing 320 316 Effect of exchange rate changes on cash 0) 2) Net increase (decrease) in cash and cash equivalents 57 (32) Cash and cash equivalents at beginning of period JL -------- Cash and cash equivalents at end of period & $ *3 -10- OWENS CORNING AND SUBSIDIARIES QUARTERLY INFORMATION ON INDUSTRY AND GEOGRAPHIC SEGMENTS (unaudited) NET SALES Quarter Ended March3k im 1997 (In millions of dollars MmaScmenfe Building Materials United States Europe Canada and other Total Building Materials $ 739 65 52 S 500 74 ____ 21 856 605 Composite Materials United States Europe Canada and other Total Composite Materials 00 151 138 97 97 33 ____ 2 770 Intersegment sales Building Materials Composite Materials Eliminations Net sales 31 ____ 01) 27 (22) S 1 137 S_SZS Geographic Segments United States Europe Canada and other Total $ 890 162 85 3 638 371 66 $ LI37 s 875 Intersegment sales United States Europe Canada and other Eliminations Net sales 32 29 99 12 22 (53) (60) S 1,137 S 875 -11- OWENS CORNING AND SUBSIDIARIES QUARTERLY INFORMATION ON INDUSTRY AND GEOGRAPHIC SEGMENTS (Continued) (unaudited) ' Quarter Ended INCOME (LOSS) FROM ONGOING OPERATIONS (1) 12SS 1222 (In millions of dollars) Industry Segments Building Materials United States Europe Canada and other $ 19 (4) (2\ $ 37 5 ____ 2 Total Building* Materials 13 --M Composite Materials United States Europe Canada and other 45 42 50 7 - ____ 2 Total Composite Materials 51 General corporate expense n*> (15) Income from operations 50 SO Cost of borrowed funds _ (3.7) .....0.9) Income before provision for income taxes S 13 _! Geoeraohic Setrmenis United States Europe Canada and other General corporate expense Income from operations S 64 6 m S 79 12 4 50. 80 Cost of borrowed hinds --AT) ... 02) Income before provision for income taxes S__13 $ 61 -12- OWENS CORNING AND SUBSIDIARIES QUARTERLY INFORMATION ON INDUSTRY AND GEOGRAPHIC SEGMENTS (Continued) (Unaudited) <S) Income from ongoing operations for the quarter ended March 31, 1998 excludes a pretax charge of $95 million tor restructuring and other actions. The impact of these special Hems was to reduce income from operations for Building Materials in the United States, Europe, and Canada and other by $17 million, SI l million and $! million, respectively; Composite Materials in the United States, Europe, and Canada and other by $8 million, $27 million and $1 million, respectively; and to increase general corporate expose by $30 million. Income from ongoing operations for the quarter ended March 31,1998 also excludes a pretax gain of $84 million from the sale of the Company's 50% ownership interest in Alpha/Owens-Coming. The impact of this gain was to decrease general corporate expense by $84 million. ###