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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 1993
Commission File No. 1-3660
Owens-Corning Fiberglas Corporation
Fiberglas Tower, Toledo, Ohio 43659
Area Code (419)248-8000
A Delaware Corporation
I.R.S. Employer Identification No. 34-4323452
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which
Registered
Common Stock - $.10 Par Value New York Stock Exchange
9-1/2% Sinking Fund Debentures New York Stock Exchange
due January 1, 2000
Rights to Purchase Series A New York Stock Exchange
Participating Preferred
Stock, no par value, of the
Registrant
Securities registered pursuant to Section 12(g) of the Act: None
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 / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
At February 22, 1994, the aggregate market value of Registrant's $.10 par
value common stock (Registrant's voting stock) held by non-affiliates was
$1,770,068,873, assuming for purposes of this computation only that all
directors and executive officers (except Controller) are considered
affiliates.
At February 22, 1994, there were outstanding 43,182,982 shares of
Registrant's $.10 par value common stock.
Parts of Registrant's definitive 1994 proxy statement filed or to be filed
pursuant to Regulation 14A (the "1994 Proxy Statement") are incorporated by
reference into Part III of this Form 10-K.
PAGE
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PART I
ITEM 1. BUSINESS
Owens-Corning Fiberglas Corporation, a Delaware corporation incorporated in
1938, is a global technology-based enterprise that develops, manufactures and
markets materials for consumers and business and industrial customers. The
Company is the world's technological leader in the science of glass
fiberization. These products are used in industries such as construction,
transportation, marine, aerospace, energy, appliance, packaging and
electronics. Many of these products are marketed under the trademark
FIBERGLAS.
Owens-Corning Fiberglas Corporation's executive offices are at Fiberglas
Tower, Toledo, Ohio 43659; telephone (419) 248-8000. Unless the context
requires otherwise, the terms "Owens-Corning" and "Company" in this report
refer to Owens-Corning Fiberglas Corporation and its subsidiaries.
The Company operates in two industry segments -- Building Products and
Industrial Materials -- divided into ten strategic business segments. As a
general rule, there is a commonality of process equipment and/or products
within each segment of the Company's business. The Company considers each of
its industry segments to be a class of similar products.
The Company also has affiliate companies in a number of countries.
Affiliated companies' sales, earnings and assets are not included in any
industry segment.
Revenue, operating profit and identifiable assets attributable to each of the
Company's industry segments and geographic areas, as well as information
concerning the dependence of the Company's industry segments on foreign
operations, for each of the years 1993, 1992 and 1991 are contained in Note
1 to Owens-Corning's Consolidated Financial Statements, entitled "Industry
Segments", on pages 31 through 35 hereof.
BUILDING PRODUCTS
- -----------------
Principal Products And Methods Of Distribution
Building Products operates primarily in North America and Europe and sells a
variety of construction products in three major categories: insulation,
roofing materials and windows/patio doors. The business segments responsible
for these products and markets include: Building Products - Europe,
Insulation - North America, Retail/Distribution, Roofing/Asphalt and Windows.
Thermal and acoustical insulation products are manufactured for use in
residential and commercial buildings, including mobile homes. These products
are sold to building materials distributors, modular and mobile home
manufacturers, contractors, wholesale and retail building supply houses, and
mass merchandise retailers.
Insulation for appliances, including ranges, ovens, water heaters,
refrigerators and air conditioners, is sold directly to manufacturers or
through fabricators/distributors. In addition, the Company's glass fiber
insulation products for piping, tanks and equipment are sold to industrial
insulation contractors and distributors. Glass fiber insulation for metal
buildings is sold to laminators. Insulation and acoustical lining for air
ducts and air-handling duct systems are sold to heating and air conditioning
wholesalers, industrial distributors and manufacturers.
Glass fiber roofing shingles are manufactured for residential roofs and sold
through building materials distributors, roofing products distributors, mass
merchandise retailers, and building materials outlets. In
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addition, the Company sells shingles directly to mobile and modular home
manufacturers.
Industrial asphalts are produced for use by the Company and other roofing
manufacturers in making residential shingles and built-up roofing products
and by roofing contractors in installing built-up roofing systems.
Industrial asphalts are also sold to paper, steel, paint and other industrial
manufacturers for corrosion and moisture resistance applications. The
Company also stores asphalt for other asphalt companies.
Windows and patio doors are manufactured for use in residential and light
commercial applications. These products are sold through distributors for
the new construction market and directly to dealers and installers for the
replacement market.
Fabrication centers fabricate and sell insulation products to original
equipment manufacturers and metal building erectors and provide fabrication
services for other Owens-Corning marketing organizations.
Glass fiber reinforced polyester underground tanks for storage of petroleum
products are manufactured and sold to end users and distributors.
Seasonality
Sales in the Building Products segment tend to follow seasonal construction,
remodelling and renovation industry patterns. Sales levels for the segment,
therefore, are typically lower in the winter months.
Major Customers
No customer in the Building Products segment accounts for more than three
percent of the segment's sales.
INDUSTRIAL MATERIALS
- --------------------
Principal Products and Methods of Distribution
Industrial Materials comprises several major product categories: fiber glass
reinforcements, fiber glass textile yarns, wet-process chopped strands/mats
and veils and polyester resins. In addition to its substantial operations in
North America, the Company serves expanding markets through subsidiaries in
Europe and Brazil, and affiliates and licensees around the world. The
business segments responsible for these products include: Composites and
Latin America.
Glass fiber reinforcements are manufactured in continuous filament, chopped
strand, mat and heavy woven fabric forms. These reinforcements are used with
thermoset and thermoplastic polymers in a variety of reinforced composite
applications in the transportation, industrial, marine, corrosion,
construction, consumer and recreational, appliance and equipment, and
aircraft and aerospace markets. In addition, wet-process chopped strand mats
and veils and specialty mats are manufactured using paper-making technology
and wet-process chopped strands are used to produce roofing shingle and
commercial roofing mats.
Continuous filament glass fiber textile yarns are manufactured and sold as
reinforcements in paper and tape products, electrical and industrial fabrics,
wire and cable insulation, and decorative draperies, insect screening, and
fabrics used to reinforce printed circuit boards.
Reinforcement, yarn and wet chop products are used by the Company and are
sold directly or through independent distributors to molders, fabricators,
convertors and manufacturers.
The Company's industrial materials plant in Jackson, Tennessee, which was
mothballed in 1987, will reopen in the spring of 1994, employing fewer than
100 individuals in a state-of-the-art facility with
PAGE
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advanced environmental systems to minimize waste and other air and water
emissions. The plant will manufacture the same amount of product as in 1986,
when it had about 500 employees.
Advanced polyester resins are produced for use in the manufacture of
reinforced composite products. These resins are sold directly or through
distributors to molders and fabricators and are used in applications in the
transportation, appliance and equipment, corrosion, construction, and
consumer markets.
Major Customers
No customer in the Industrial Materials segment accounts for more than four
percent of the segment's sales.
GENERAL
- -------
Raw Materials And Patents
Owens-Corning considers the sources and availability of raw materials,
supplies, equipment and energy necessary for the conduct of its business in
each industry segment to be adequate.
The Company has numerous U.S. and foreign patents issued and applied for
relating to its products and processes in each industry segment resulting
from research and development efforts. The Company has issued royalty-
bearing patent licenses to companies in several foreign countries. The
licenses cover technology relating to each industry segment.
Including the registered trademark Fiberglas, the Company has approximately
80 trademarks registered in the United States and approximately 290
trademarks registered in other countries.
The Company considers its patent and trademark positions to be adequate for
the present conduct of its business in each of its industry segments.
Working Capital
Owens-Corning's manufacturing operations in each of its industry segments are
generally continuous in nature and it warehouses much of its production prior
to sale since it operates primarily with short delivery cycles. Inventories
of finished goods, materials and supplies were within historical ranges at
year-end 1993, when expressed as a percentage of fourth quarter annualized
sales.
Research And Development
During 1993, 1992 and 1991, the Company spent approximately $61 million, $55
million and $47 million, respectively, for research and development
activities. Customer sponsored research and development was not material in
any of the last three years.
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Environmental Control
Owens-Corning's capital expenditures relating to compliance with
environmental control requirements were approximately $6 million in 1993.
The Company currently estimates that such capital expenditures will be
approximately $20 million in 1994 and $20 million in 1995.
The Company does not consider that it has experienced a material adverse
effect upon its capital expenditures or competitive position as a result of
environmental control legislation and regulations. Operating costs of
environmental control equipment, however, were approximately $54 million in
1993. Owens-Corning continues to invest in equipment and process
modifications to remain in compliance with applicable environmental laws and
regulations.
The 1990 Clean Air Act Amendments (Act) provide that the United States
Environmental Protection Agency 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 the Act will affect it. The Company
anticipates that its sources to be regulated will include glass fiber
manufacturing, resin manufacturing and asphalt processing activities. The
Company currently expects glass fiber manufacturing to be regulated by 1997.
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 material adverse effect on the Company's results of
operations, financial condition, or long-term liquidity.
Number Of Employees
During 1993 Owens-Corning averaged approximately 16,600 employees. The
Company had approximately 16,200 employees at December 31, 1993.
Competition
Owens-Corning's products compete with a broad range of products made from
numerous basic, as well as high-performance, materials.
The Company competes with a number of manufacturers in the United States of
glass fibers in primary forms, not all of which produce a broad line of glass
fiber products. Approximately one-half of these producers compete with the
Company's Building Products industry segment in the sale of glass fibers in
primary form. A similar number compete with the Company's Industrial
Materials industry segment. Companies in other countries, primarily Japan,
export glass fiber products to the United States. The Company also competes
outside the United States against a number of manufacturers of glass fibers
in primary forms.
Owens-Corning also competes with many manufacturers, fabricators and
distributors in the sale of products made from glass fibers. In addition,
the Company competes with many other manufacturers in the sale of industrial
asphalts, polyester resin products, and other products.
Methods of competition include product performance, price, terms, service and
warranty.
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ITEM 2. PROPERTIES
PLANTS
Owens-Corning's plants as of March 1, 1994 are listed below by industry
segment and primary products, and are owned except as noted. The Company
considers that these properties are in good condition and well maintained,
and are suitable and adequate to carry on the Company's business. The
capacity of each plant varies depending upon product mix. Actual production
of finished goods usually is less than capacity.
BUILDING PRODUCTS SEGMENT
Thermal And Acoustical Insulation
Barrington, New Jersey* Newark, Ohio
Delmar, New York Santa Clara, California
Fairburn, Georgia Waxahachie, Texas
Kansas City, Kansas
Candiac, Canada Scarborough, Canada
Edmonton, Canada Vise, Belgium
*Facility is mothballed.
Roofing And Asphalt Processing (one of each at every location, except as
noted)
Atlanta, Georgia Medina, Ohio
Brookville, Indiana (1) Memphis, Tennessee
Compton, California Minneapolis, Minnesota
Denver, Colorado Morehead City, North
Detroit, Michigan (2) Carolina (2) (3)
Houston, Texas Oklahoma City, Oklahoma (2)
Irving, Texas Portland, Oregon (4)
Jacksonville, Florida (3) Savannah Georgia
Jessup, Maryland Summit, Illinois (3)
Kearney, New Jersey
(1) Roofing plant only.
(2) Asphalt processing plant only.
(3) Facility is partially leased.
(4) Two asphalt processing plants, as well as one roofing plant.
Underground Storage Tanks
Auburndale, Florida Mount Union, Pennslyvania
Bakersfield, California Valparaiso, Indiana
Conroe, Texas
PAGE
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Windows
Hazelton, Pennsylvania Martinsville, Virginia*
*Facility is leased.
INDUSTRIAL MATERIALS SEGMENT
Textiles And Reinforcements
Aiken, South Carolina Fort Smith, Arkansas
Amarillo, Texas Huntingdon, Pennsylvania
Anderson, South Carolina Jackson, Tennessee*
Apeldoorn, The Netherlands Liversedge, Great Britain
Battice, Belgium Rio Claro, Brazil
Birkeland, Norway San Vincente deCastellet/
Guelph, Canada Barcelona, Spain
L'Ardoise, France Wrexham, Great Britain
*Facility is leased and will be reopened in 1994.
Resins And Coatings
Valparaiso, Indiana Guelph, Canada
OTHER PROPERTIES
Owens-Corning's general offices of approximately 300,000 square feet are
located in the Fiberglas Tower, Toledo, Ohio. The lease for these offices
terminates December 31, 1994. Under separate leases, the Company has
additional general office space of approximately 200,000 square feet, and
warehouse space of approximately 100,000 square feet, located in other
buildings in Toledo.
The Company's research and development function is conducted at its Science
and Technology Center, located on approximately 500 acres of land outside
Granville, Ohio. It consists of twenty-three structures totaling
approximately 635,000 square feet, of which 105,000 square feet were
mothballed at the end of 1993.
ITEM 3. LEGAL PROCEEDINGS
The paragraphs in Note 19 to the Company's Consolidated Financial Statements,
entitled "Contingent Liabilities", on pages 54 through 57 hereof, are
incorporated here by reference.
Securities and Exchange Commission rules require the Company to describe
certain governmental proceedings arising under federal, state or local
environmental provisions unless the Company reasonably believes that the
proceeding will result in monetary sanctions of less than $100,000. The
following proceedings are reported in response to this requirement since the
Company is unable to determine at this time that such proceedings will not
result in monetary sanctions in excess of the $100,000 reporting threshold.
However, based on the information presently available to it, the Company
believes that the costs which may be associated with these matters, including
any required remediation, will not have a materially adverse effect on the
Company's financial position or results of operations.
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As previously reported, the Company and more than 100 other companies have
signed individual agreements with the United States Environmental Protection
Agency (EPA) to conduct a Toxic Substance Control Act (TSCA) Audit Program to
determine compliance status under TSCA section 8(e). The agreement provides
that the Company will audit its records and report to the EPA any reportable
matters which were not reported or which were reported late. The Company
will pay stipulated penalties of up to $15,000 for each matter not timely
reported, with a maximum penalty of $1 million in the aggregate. The Company
has completed the portion of the audit dealing with substantial risk of
injury to health. It has not been notified as to the amount of penalties it
will be required to pay but estimates that the penalty for health related
filings will be less than $150,000. The final report to the EPA, regarding
environmental issues, is due six months after the EPA publishes final refined
guidance on such reporting.
In the first quarter of 1993, the Company received a letter, dated March 5,
1993, from the Division of Air Pollution Control (DAPC) of the State of Ohio
Environmental Protection Agency alleging that certain equipment at the
Company's Newark, Ohio facility was not operating in compliance with a 1980
consent decree and that the matter was being forwarded to the DAPC
Enforcement Committee for formal enforcement action, including consideration
of the imposition of monetary penalties. The Company has not completed
investigation of this matter and is unable to determine the amount of
penalties, if any, that may be sought.
In the second quarter of 1993, the Company received a Notice of Violation,
dated April 9, 1993, from the EPA alleging three violations of air emission
opacity, on two dates in 1992, at the Company's Kansas City, Kansas facility.
While the Notice indicated that EPA is authorized by applicable law to seek
a variety of remedies to address violations of the type alleged, the Company
has not been informed of the nature of the relief, if any, that may be sought
by EPA in this matter.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Owens-Corning has nothing to report under this Item.
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Executive Officers of the Company
(as of March 1, 1994)
The term of office for elected officers is one year from the annual election
of officers by the Board of Directors following the Annual Meeting of
Stockholders on the third Thursday of April. All those listed have been
employees of Owens-Corning during the past five years except as indicated.
Name and Age Position*
Glen H. Hiner (59) Chairman of the Board and Chief Executive
Officer since January 1992; formerly
Senior Vice President-G.E. Plastics at
General Electric Company (1983).
Director since 1992.
Alan D. Booth (51) Vice President and President, Insulation
- North America since January 1994;
formerly Vice President, Insulation
Division, Construction Products Group
(1993) and Vice President, Mechanical
Products Division (1986).
David T. Brown (45) Vice President and President,
Roofing/Asphalt since January 1994;
formerly Vice President, Roofing/Asphalt
Division (1993) and Vice President,
Atlanta Regional Sales, Building
Materials (1986).
Domenico Cecere (44) Vice President and Controller since
November 1993; formerly Vice President,
Finance and Administration, Europe
(1992), Vice President and Assistant
Controller (1991) and Vice President,
Finance, Industrial Business (1990) at
Honeywell, Inc.; and Vice President,
Finance at Federal Systems, Inc. (1988).
William W. Colville (59) Senior Vice President, General Counsel
and Secretary since January 1993;
formerly Senior Vice President-Law and
Secretary (1984).
Charles H. Dana (54) Executive Vice President since January
1994; formerly Senior Vice President,
OCF, and President - Industrial Materials
Group (1989) and Vice President,
Industrial Materials Operating Division
(1988).
David W. Devonshire (48) Senior Vice President and Chief Financial
Officer since July 1993; formerly
Corporate Vice President, Finance (1992)
and Corporate Vice President and
Controller (1990) at Honeywell, Inc.; and
Corporate Controller at Mead Corporation
(1987).
Robert D. Heddens (55) Senior Vice President-Human Resources
since December 1989; formerly Vice
President-Human Resources (1989) and Vice
President-Personnel Relations (1988).
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Name and Age Position*
Carl B. Hedlund (46) Vice President and President,
Retail/Distribution since January 1994;
formerly Vice President, Retail and
Distribution, Construction Products Group
(1993), Vice President, Roofing Products
Operating Division (1989) and Vice
President, Latin American Operations
(1988).
Sharell L. Mikesell (50) Vice President-Technology since May 1990;
formerly Vice President-Textile Materials
Marketing-Industrial Materials Operating
Division (1987).
Bradford C. Oelman (56) Vice President-Corporate Relations since
November 1986.
Efthimios O. Vidalis (39) Vice President and President, Composites
since January 1994; formerly Vice
President, Reinforcements Division,
Europe (1986).
*Information in parentheses indicates year in which service in position
began.
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Part II
ITEM 5. MARKET FOR OWENS-CORNING'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The principal market on which Owens-Corning's common stock is traded is the
New York Stock Exchange. The high and low sales prices in dollars per share
for Owens-Corning's common stock as reported in the consolidated transaction
reporting system for each quarter during 1993 and 1992 are set forth in the
following tables.
1993 High Low 1992 High Low
- ------------- ---------------- -------------- ---------------
First Quarter 47 34-3/8 First Quarter 39-3/4 22-3/8
Second Quarter 45-1/4 36-1/4 Second Quarter 37-3/8 29-3/4
Third Quarter 45-5/8 40-1/4 Third Quarter 36-1/8 29-3/8
Fourth Quarter 49-1/8 42-1/2 Fourth Quarter 36-5/8 27-3/4
- ------------- ---------------- -------------- ---------------
The number of stockholders of record of the Company's common stock on
February 22, 1994 was 7,535.
No dividends have been declared by the Company since the Company's November
5, 1986 recapitalization. In connection with certain of its current bank
credit facilities, the Company has agreed to restrictions affecting the
payment of cash dividends. As of January 1, 1994, these restrictions limited
funds available for the payment of cash dividends by the Company to
approximately $21 million. While the Company periodically evaluates the
advisability of paying dividends, it currently does not anticipate paying
dividends during 1994.
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ITEM 6. SELECTED FINANCIAL DATA
The following is a summary of certain financial information of the company.
1993 1992 1991 1990 1989(2)
-------- -------- -------- ------- --------
(In millions of dollars, except per share data and where noted)
Net sales $ 2,944 $ 2,878 $ 2,783 $ 3,069 $ 2,964
Cost of sales 2,293 2,261 2,186 2,304 2,161
Marketing, administrative
and other expenses (a,b,c,d,e) 346 339 1,171 414 323
Science and technology expenses 69 65 54 58 48
Income (loss) from operations 236 213 (628) 293 432
Cost of borrowed funds 89 110 131 165 166
Income (loss) before provision
for income taxes (a,b,c,d,e) 147 103 (759) 128 266
Provision (credit) for income taxes 47 33 (238) 58 103
Net income (loss) (a,b,c,d,e) 131 73 (742) 73 172
Net income (loss) per share
(a,b,c,d,e) 3.00 1.70 (18.13) 1.73 4.08
Dividends per share on common
stock
Declared - - - - -
Paid - - - - -
Weighted average number of shares
outstanding (in thousands) 43,593 43,013 40,924 42,019 42,170
Net cash flow from operations 253 192 253 361 395
Capital spending 164 130 96 121 125
Total assets (1) 3,013 3,162 3,511 1,807 1,924
Long-term debt 898 1,018 1,148 1,086 1,201
Average number of employees
(in thousands) 17 17 17 18 20
(1) Total assets in 1992 and 1991 have been restated to reflect the 1993
adoption of FIN 39.
(2) 1989 data consolidates results of Fiberglas Canada Inc. beginning in
the fourth quarter of 1989.
(a) During 1993, a restructuring charge of $23 million, or $.53 per share,
and a $26 million credit, or $.60 per share, for the cumulative effect
of the accounting change for income taxes were recorded.
(b) During 1992, a restructuring charge of $16 million, or $.25 per share,
was recorded.
(c) During 1991, a non-recurring $800 million charge, or $12.91 per share,
for unasserted asbestos litigation claims was recorded as was a $227
million after-tax charge, or $5.55 per share, for the cumulative
effect of the accounting change for other postretirement benefits.
(d) During 1990, a restructuring charge of $65 million was recorded.
(e) During 1989, an additional $50 million was added to existing asbestos-
related claims reserves, a $50 million credit was recorded resulting
from a settlement reached with the IRS and a restructuring charge of
$30 million was recorded.
Please also see Note 19 to the Company's Consolidated Financial Statements.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Owens-Corning reported net income for the year of $131 million, or $3.00 per
share, compared to reported net income of $73 million, or $1.70 per share,
and a net loss of $742 million, or $18.13 per share, in 1992 and 1991,
respectively. The stronger earnings reflect the Company's ongoing
productivity programs and improving economic conditions in the United States.
Excluding special items, 1993 net income from ongoing operations was $118
million, or $2.71 per share, compared to $83 million, or $1.93 per share, in
1992, and $41 million, or $1.01 per share, in 1991.
The special items for 1993 included a) a credit of $26 million, or $.60 per
share, for the cumulative effect of adopting the new accounting standard for
income taxes (SFAS No. 109), b) a one-time gain of $14 million, or $.33 per
share, reflecting a tax benefit resulting from a re-evaluation of deferred
taxes necessitated by the new federal tax law, offset, in part, by c) an $8
million charge, or $.11 per share, for the writedown of the Company's
hydrocarbon ventures to their net realizable value, and d) a $23 million, or
$.53 per share, charge for a restructuring to improve the competitive
position of the Company's European Composites business.
The special items for 1992 included a) a charge of $16 million, or $.25 per
share, for costs related to the reorganization of the Building Products
businesses and centralization of the Company's accounting and information
systems, and b) a net extraordinary gain of $1 million, or $.02 per share,
resulting from the utilization of tax losses, partially offset by a loss on
the early retirement of debt. The reorganization in Building Products was
designed to strengthen its focus on customers, enhance its competitive
position, and further improve its efficiency. Please see Notes 2, 4 and 5 to
the Consolidated Financial Statements.
The 1991 special items included charges for uninsured asbestos litigation
claims and the adoption of the accounting standard for other postretirement
benefits (SFAS No. 106). Please see Notes 15 and 19 to the Consolidated
Financial Statements.
Net sales were $2.9 billion in 1993, an increase of $66 million, or 2
percent, from 1992. Excluding the currency exchange impact of a stronger
dollar, 1993 sales increased 4 percent. Sales in 1991 were $2.8 billion.
Owens-Corning's Building Products segment benefitted from an improving
economy in North America during 1993. Insulation sales were particularly
strong, increasing nearly ten percent from 1992 as a result of an increase in
housing starts and growth in the "do-it-yourself" market. In response to
demand in Europe, the Company has announced an expansion of its insulation
facility in Vise, Belgium, which is expected to be operational by early 1995.
Roofing and asphalt sales in 1993 were flat compared to 1992 when there was
strong reroofing activity and demand created by storm damage in Texas,
Louisiana, and Florida. In January 1994, the Company exchanged its
commercial roofing business for Schuller International's residential roofing
business. This transaction tripled the Company's capacity to produce high-
style laminated shingles.
In the second half of 1993, the Company launched a nation-wide roll-out of
PINKPLUS (TM), a new Pink Fiberglas (R) insulation product wrapped in pink
polyethylene. This product is expected to help build the Company's share of
the do-it-yourself home insulation market because of its ease of handling and
installation characteristics.
In September 1993, the Company introduced AURA (TM), a high R-value vacuum
panel insulation concept. Several global appliance manufacturers are
evaluating this new product to increase the useable space and reduce energy
consumption in refrigerators, ovens, and other appliances.
PAGE
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In 1993, the Company divested its rockwool insulation plant in Guararema,
Brazil, and closed its calcium silicate insulation facility in Berlin, New
Jersey. These businesses did not use core technologies and did not fit the
Company's long-term strategy for profitable growth.
In the Composites business, demand for reinforcements during 1993 was strong
and exceeded capacity in the Company's North American facilities. The
Company is preparing to meet that demand with the reactivation of its
Jackson, Tennessee plant, scheduled for April 1994, as well as by continuing
to import products from other worldwide operations during scale-up. The
Jackson plant, which was mothballed in 1987, will reopen employing fewer than
100 individuals in a state-of-the-art facility with advanced environmental
systems to minimize solid waste and other air and water emissions. The plant
will be capable of manufacturing the same amount of product as in 1986, when
it had approximately 500 employees, and is expected to be in full production
by 1995.
Economic conditions remained weak in Europe during 1993. The Company does
not expect significant improvement in the European industrial economy in
1994. As a result of the European restructuring, which is expected to reduce
costs and increase productivity beginning in 1994, Owens-Corning expects to
be well positioned to benefit when the economic upturn does begin.
As part of its growth strategy, Owens-Corning established an Asia/Pacific
unit, headquartered in Hong Kong, with corporate-wide responsibility for
current operations and future developments in that market. The Company also
completed the acquisition of the assets of Vera A/S, a manufacturer of glass-
reinforced plastic pipe in Sandefjord, Norway.
The Company's gross margin percentage of net sales was 22% for 1993, compared
to 21% in both 1992 and 1991. The increase was primarily due to volume and
price increases in the insulation market and productivity improvements,
partially offset by the effects of currency exchange and the cost of
importing products into the United States from the Company's worldwide
operations. Earnings before interest and taxes (EBIT) from ongoing
operations increased to $267 million in 1993, from $229 million in 1992 and
$196 million in 1991. As a percentage of sales, EBIT from ongoing operations
increased to 9.1% in 1993, compared to 8.0% and 7.0% in 1992 and 1991,
respectively.
Operating expenses were higher in 1993 due to the charge for the European
restructuring and the write-down of the Company's hydrocarbon ventures to net
realizable value. The Company continued to increase its research and
development spending for long-term projects, placing a greater emphasis on
developing new products and product applications. The decrease in "Other"
expenses in 1992 compared to 1991 reflects reduced charges for stock
appreciation rights, foreign exchange losses, and product liability expenses
related to the Company's non-asbestos products.
The Company continues to evaluate actions to manage rising health care
expenses. During 1993, the Company approved changes in its postretirement
health care plans for retirees and active employees which reduced ongoing
expenses by $18 million for 1993. Approximately three-quarters of the
reduction was reflected in cost of sales and the balance in operating
expenses. Please see Note 15 to the Consolidated Financial Statements.
In 1993, the Company changed its depreciable asset lives for certain assets
to be consistent with industry practice and actual experience. This change
reduced depreciation expense in 1993 and will result in lower ongoing
depreciation expense. Please see Note 6 to the Consolidated Financial
Statements.
Cost of borrowed funds declined by $21 million in 1993 compared to 1992. The
decrease was due to a $95 million reduction in debt since December 31, 1992,
and lower interest rates on the Company's debt. The reduction in debt was
funded by the Company's cash flow from operations. Please see Note 2 to the
Consolidated Financial Statements.
PAGE
-15-
General corporate expenses, reported on a segment basis, increased slightly
in 1993 compared to 1992, but were $817 million lower in 1992 compared to
1991, reflecting the charge of $824 million for uninsured asbestos personal
injury claims. Please see Notes 1 and 19 to the Consolidated Financial
Statements.
Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS No. 109).
The standard changes the criteria for measuring the provision for income
taxes and recognizing deferred tax assets and liabilities. As noted above,
the cumulative effect of adopting SFAS No. 109 increased earnings by $26
million (or $.60 per share). As discussed in Note 4 to the Consolidated
Financial Statements, the Company's net deferred tax assets arise primarily
as a result of the temporary differences associated with its provisions for
asbestos litigation claims and other postretirement benefits. Management
fully expects to realize its net deferred tax assets through income from
future operations.
LIQUIDITY, CAPITAL RESOURCES AND OTHER RELATED MATTERS
Cash flow from operations was $253 million for 1993, compared to $192 million
for 1992 and $253 million for 1991. The increase in cash flow from
operations, compared to 1992, was primarily due to an increase in trade
payables. Receivables were $324 million at December 31, 1993, compared to
$309 million at the end of 1992 and $308 million at the end of 1991. Net
inventories were $221 million at year-end 1993 compared to $233 million and
$219 million at year-end 1992 and 1991, respectively. Inventories at
December 31, 1993, as a percentage of the fourth quarter's annualized sales,
were 7%, a one percentage point decrease from the end of 1992 and 1991.
During 1993, the Company adopted Financial Accounting Standards Board
Interpretation No.39 (FIN 39). FIN 39 requires the Company to present
separately in the balance sheet its estimated contingent liabilities and
related insurance assets. Accordingly, the accompanying consolidated balance
sheet as of December 31, 1992 and consolidated statement of cash flows for
the years ended December 31, 1992 and 1991 have been restated to conform to
the 1993 presentation. Please see Note 19 to the Consolidated Financial
Statements and the Summary of Significant Accounting Policies.
At year-end 1993, the Company's working capital was a negative $49 million
and its current ratio decreased to .94, compared to working capital of $123
million and a current ratio of 1.2 at year-end 1992, and $171 million and
1.2, respectively, at year-end 1991. The 1992 and 1991 working capital and
current ratios have been restated to conform to FIN 39. The decrease in 1993
was primarily due to the increase in trade payables and the timing of receipt
of the insurance proceeds for asbestos litigation claims. Please see Note 19
to the Consolidated Financial Statements and the Summary of Significant
Accounting Policies.
The Company's total borrowings at December 31, 1993, were $1.0 billion,
compared to $1.1 billion at December 31, 1992, and $1.2 billion at December
31, 1991. At year-end 1993, the Company had unused lines of credit of $376
million under its long-term bank loan facilities and an additional $115
million under short-term facilities. In the fourth quarter of 1993, the
Company established a $375 million credit facility with a syndicate of
banks, replacing the previous facility due to expire in July 1994. This
syndicate of banks significantly expands both the number and geographic
distribution of lenders to include commercial banks headquartered in the
U.S., Europe, Canada, and Japan. This new combination will complement the
Company's global growth strategy. The facility agreement is for a four year
term, effective November 2, 1993, and will lower the Company's cost of bank
financing as well as generate greater flexibility for investment purposes.
In 1992, the Company issued $300 million in 10 and 20 year debentures at an
average interest rate of 9 1/8%. The majority of the proceeds were used to
redeem $240 million in higher cost debentures. Please see Note 2 to the
Consolidated Financial Statements.
-16-
General corporate identifiable assets have been restated in 1992 and 1991 to
conform to the 1993 reporting format with the adoption of FIN 39. General
corporate identifiable assets for 1993 and 1992 decreased compared to 1991,
primarily due to the consumption of the insurance for asbestos litigation
claims asset. Please see Notes 1 and 19 to the Consolidated Financial
Statements and the Summary of Significant Accounting Policies.
Capital spending for property, plant and equipment was $164 million in 1993,
compared to $130 million in 1992 and $96 million in 1991. At the end of
1993, approved capital projects, excluding furnace rebuilds, were $162
million. Funding for these expenditures will be from the Company's
operations and external sources as required.
Payments for asbestos litigation claims in 1993, including defense costs,
were $283 million as 22,300 claims were resolved. Proceeds from insurance
were $224 million.
The Company's total payments for asbestos claims and defense costs in 1994
are expected to be approximately $275 million and proceeds from insurance of
about $125 million are expected to be available to cover these costs.
Please see Note 19 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. 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 1993, the Company was designated as a PRP in such
federal, state, local or private proceedings for 14 additional sites. At
year-end 1993, a total of 43 such PRP designations remained unresolved by the
Company, some of which designations the Company believes to be erroneous.
The Company has established reserves for its Superfund (and similar state,
local and private action) contingent liabilities which are reflected in the
financial statements. The Company believes these reserves are adequate to
cover these liabilities and are not material to the financial position or
results of operations of the Company. In addition, 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 the
Act will affect it. The Company anticipates that its sources to be regulated
will include glass fiber manufacturing, resin manufacturing and asphalt
processing activities. The Company currently expects glass fiber
manufacturing to be regulated by 1997. 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 material adverse effect
on the Company's results of operations, financial condition, or long-term
liquidity.
PAGE
-17-
FUTURE REQUIRED ACCOUNTING CHANGES
The Company has estimated that the foreign portion of Financial Accounting
Standard No. 106, "Employers' Accounting for Postretirement Benefits Other
Than Pensions," will be a charge of $12-20 million. Adoption of the foreign
portion is required for 1995 financial reporting.
In November 1992, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 112, "Employers' Accounting for
Postemployment Benefits" (SFAS No. 112). This standard requires employers to
recognize the obligation to provide benefits to former or inactive employees
after employment but before retirement under certain conditions. The
obligation should be recognized if it is attributable to employees' service
already rendered, the rights to these benefits accumulate or vest, payment of
the benefits is probable and the amount can be reasonably estimated. SFAS
No. 112 is effective for the Company beginning in 1994. The impact of SFAS
No. 112 on the Company in the year of adoption is estimated to be a charge of
less than $50 million.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Pages 20 through 59 hereof are incorporated here by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Owens-Corning has nothing to report under this Item.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF OWENS-CORNING
The information required by this Item is incorporated by reference from the
Company's 1994 Proxy Statement except that certain information concerning
Owens-Corning's executive officers is included on pages 9 through 10 hereof.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated by reference from the
Company's 1994 Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is incorporated by reference from the
Company's 1994 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is incorporated by reference from the
Company's 1994 Proxy Statement.
PAGE
-18-
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) DOCUMENTS FILED AS PART OF THIS REPORT
1. See Index to Financial Statements on page 20 hereof
2. See Index to Financial Statement Schedules on page 60 hereof
3. See Exhibit Index beginning on page 68 hereof
Management contracts and compensatory plans and arrangements required
to be filed as an exhibit pursuant to Item 14(c) of Form 10-K are
denoted in the Exhibit Index by an asterisk ("*").
(b) REPORTS ON FORM 8-K
No report on Form 8-K was filed during the fourth quarter of 1993.
PAGE
-19-
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
OWENS-CORNING FIBERGLAS CORPORATION
By /s/ G. H. Hiner Date March 28, 1994
Glen H. Hiner, Chairman of the Board
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
/s/ G. H. Hiner Date March 28, 1994
Glen H. Hiner, Chairman of the Board,
Chief Executive Officer and Director
/s/ David W. Devonshire Date March 28, 1994
David W. Devonshire, Senior Vice President
and Chief Financial Officer
/s/ Domenico Cecere Date March 28, 1994
Domenico Cecere, Vice President and
Controller
/s/ Norman P. Blake Date March 28, 1994
Norman P. Blake, Jr., Director
/s/ W. W. Boeschenstein Date March 17, 1994
William W. Boeschenstein, Director
/s/ C. E. Exley, Jr. Date March 18, 1994
Charles E. Exley, Jr., Director
/s/ Landon Hilliard Date March 21, 1994
Landon Hilliard, Director
/s/ Jon M. Huntsman, Jr. Date March 18, 1994
Jon M. Huntsman, Jr., Director
/s/ W. Walker Lewis Date March 17, 1994
W. Walker Lewis, Director
/s/ David T. McGovern Date March 18, 1994
David T. McGovern, Director
/s/ Furman C. Moseley Date March 18, 1994
Furman C. Moseley, Jr., Director
/s/ W. Ann Reynolds Date March 28, 1994
W. Ann Reynolds, Director
/s/ Peter L. Scott Date March 17, 1994
Peter L. Scott, Director
PAGE
-20-
INDEX TO FINANCIAL STATEMENTS
Item Page
Report of Independent Public Accountants 21
Summary of Significant Accounting Policies 22-23
Consolidated Statement of Income - for the
years ended December 31, 1993, 1992 and 1991 24-25
Consolidated Balance Sheet - December 31, 1993 and 1992 26-27
Consolidated Statement of Stockholders' Equity - 28
for the years ended December 31, 1993, 1992 and 1991
Consolidated Statement of Cash Flows - for the years
ended December 31, 1993, 1992 and 1991 29-30
Notes to Consolidated Financial Statements
Notes 1 through 20 31-59
PAGE
-21-
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of
Owens-Corning Fiberglas Corporation:
We have audited the accompanying consolidated balance sheet of OWENS-
CORNING FIBERGLAS CORPORATION (a Delaware corporation) and subsidiaries as
of December 31, 1993 and 1992, and the related consolidated statements of
income, stockholders' equity and cash flows for each of the three years in
the period ended December 31, 1993. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Owens-Corning Fiberglas
Corporation and subsidiaries as of December 31, 1993 and 1992, and the
results of their operations and their cash flows for each of the three
years in the period ended December 31, 1993, in conformity with generally
accepted accounting principles.
As discussed in Notes 4 and 15 to the consolidated financial statements,
the Company changed its methods of accounting for income taxes and
postretirement benefits other than pensions effective January 1, 1993 and
1991, respectively.
Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules listed in the Index
to Financial Statement Schedules are presented for the purposes of
complying with the Securities and Exchange Commission's rules and are not
part of the basic financial statements. These schedules have been
subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, fairly state in all material
respects the financial data required to be set forth therein in relation to
the basic financial statements taken as a whole.
ARTHUR ANDERSEN & CO.
January 21, 1994
Toledo, Ohio
PAGE
-22-
OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of subsidiaries.
Significant intercompany accounts and transactions are eliminated.
Net Income per Share
Net income per share is computed using the weighted average number of common
shares outstanding and common equivalent shares during the period.
Inventory Valuation
Inventories are stated at cost, which is less than market value, and include
material, labor, and manufacturing overhead. U.S. inventories are primarily
valued using the last-in, first-out (LIFO) method and the balance of
inventories are generally valued using the first-in, first-out (FIFO) method.
Goodwill
Goodwill is amortized on a straight-line basis over a period of forty years.
The Company continually evaluates whether events and circumstances have
occurred that indicate the remaining estimated useful life of goodwill may
warrant revision or that the remaining balance of goodwill may not be
recoverable. When factors indicate that goodwill should be evaluated for
possible impairment, the Company uses an estimate of the related business
segment's undiscounted net income over the remaining life of the goodwill in
measuring whether the goodwill is recoverable.
Investments in Affiliates
Investments in affiliates are accounted for using the equity method, under
which the Company's share of earnings of these affiliates is reflected in
income as earned and dividends are credited against the investment in
affiliates when received.
PAGE
-23-
OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Depreciation
For assets placed in service prior to January 1, 1992, the Company's plant
and equipment is depreciated primarily using the double-declining balance
method for the first half of an asset's estimated useful life and the
straight-line method is used thereafter. For assets placed in service after
December 31, 1991, the Company's plant and equipment is depreciated using the
straight-line method.
Reserve for Rebuilding Furnaces
The Company's glass melting furnaces and related machines periodically
require substantial rebuilding. The estimated future cost of such rebuilding
is charged to operations and credited to the reserve on a straight-line basis
over the estimated period to the next rebuild date. Actual costs are charged
to the reserve when the furnaces are rebuilt.
Income Taxes
Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes," which requires
recognition of deferred tax liabilities and assets for the expected future
tax consequences of events that have been included in the financial
statements or tax returns. Under this method, deferred tax liabilities and
assets are determined based on the difference between the financial statement
and tax bases of assets and liabilities using enacted tax rates in effect for
the year in which the differences are expected to reverse.
Reserve for Contingent Liabilities
As described in Note 19, in 1993, the Company adopted the provisions of
Financial Accounting Standards Board Interpretation No. 39 (FIN 39). FIN 39
requires the Company to present separately in the balance sheet its estimated
contingent liabilities and related insurance assets. Accordingly, the
accompanying consolidated balance sheet as of December 31, 1992 and
consolidated statement of cash flows for the years ended December 31, 1992
and 1991 have been restated to conform to the 1993 presentation.
Reclassifications
Certain reclassifications have been made to 1992 and 1991 to conform with the
classifications used in 1993, including the reclassification of restructure
costs from other expenses.
PAGE
-24-
OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1993 1992 AND 1991
1993 1992 1991
-------- -------- --------
(In millions of dollars, except share data)
NET SALES $ 2,944 $ 2,878 $ 2,783
COST OF SALES 2,293 2,261 2,186
-------- -------- --------
Gross margin 651 617 597
-------- -------- --------
OPERATING EXPENSES
Marketing and administrative expenses 297 307 285
Science and technology expenses
(Note 7) 69 65 54
Provision for uninsured asbestos
litigation claims (Note 19) - - 824
Restructure costs (Note 5) 23 16 -
Write-down of hydrocarbon ventures 8 - -
Other 18 16 62
-------- -------- --------
Total operating expenses 415 404 1,225
-------- -------- --------
INCOME (LOSS) FROM OPERATIONS 236 213 (628)
Cost of borrowed funds (Notes 2 and 3) (89) (110) (131)
-------- -------- --------
INCOME (LOSS) BEFORE PROVISION FOR
INCOME TAXES 147 103 (759)
Provision (credit) for income
taxes (Note 4) 47 33 (238)
-------- -------- --------
INCOME (LOSS) BEFORE EQUITY IN NET
INCOME OF AFFILIATES 100 70 (521)
Equity in net income of affiliates
(Note 9) 5 2 6
-------- -------- --------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS
AND CUMULATIVE EFFECT OF ACCOUNTING
CHANGES 105 72 (515)
Extraordinary items (Notes 2 and 4) - 1 -
Cumulative effect of accounting changes
(Notes 4 and 15) 26 - (227)
-------- -------- ---------
NET INCOME (LOSS) $ 131 $ 73 $ (742)
======== ======== =========
The accompanying summary of significant accounting policies and notes
are integral parts of this statement.
PAGE
-25-
OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(Continued)
1993 1992 1991
-------- -------- --------
(In millions of dollars, except share data)
NET INCOME (LOSS) PER COMMON SHARE
Primary:
Income (loss) before extraordinary
items and cumulative effect of
accounting changes $ 2.40 $ 1.68 $ (12.58)
Extraordinary items - .02 -
Cumulative effect of accounting changes .60 - (5.55)
-------- -------- --------
Net income (loss) per share $ 3.00 $ 1.70 $ (18.13)
======== ======== ========
Assuming full dilution:
Income (loss) before extraordinary
items and cumulative effect of
accounting changes $ 2.28 $ 1.65 $ (12.58)
Extraordinary items - .02 -
Cumulative effect of accounting changes .53 - (5.55)
-------- -------- --------
Net income (loss) per share $ 2.81 $ 1.67 $ (18.13)
======== ======== ========
Weighted average number of common shares
outstanding and common equivalent
shares during the period (in millions)
Primary: 43.6 43.0 40.9
Assuming full dilution: 49.4 48.8 40.9
The accompanying summary of significant accounting policies and notes
are integral parts of this statement.
PAGE
-26-
OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET - DECEMBER 31, 1993 AND 1992
ASSETS
- ------
1993 1992
-------- --------
(In millions of dollars)
CURRENT
Cash and cash equivalents $ 3 $ 2
Receivables, less allowances of
$16 million in 1993 and $20 million
in 1992 324 309
Inventories (Note 8) 221 233
Deferred income taxes (Note 4) 136 98
Insurance for asbestos litigation claims
- current portion (Note 19) 125 246
Other current assets 18 15
-------- --------
Total current 827 903
-------- --------
OTHER
Goodwill, less accumulated amortization of
$15 million in 1993 and $12 million
in 1992 77 84
Investments in affiliates (Note 9) 63 49
Deferred income taxes (Note 4) 428 465
Insurance for asbestos litigation claims
(Note 19) 643 746
Other noncurrent assets 81 69
-------- ---------
Total other 1,292 1,413
-------- ---------
PLANT AND EQUIPMENT, at cost
Land 44 46
Buildings and leasehold improvements 559 549
Machinery and equipment 1,978 1,886
Construction in progress 88 79
-------- --------
2,669 2,560
Less: Accumulated depreciation (1,775) (1,714)
-------- --------
Net plant and equipment 894 846
-------- --------
TOTAL ASSETS $ 3,013 $ 3,162
======== ========
The accompanying summary of significant accounting policies and notes
are integral parts of this statement.
PAGE
-27-
OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET - DECEMBER 31, 1993 AND 1992
(Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
1993 1992
(In millions of dollars)
CURRENT
Accounts payable and accrued
liabilities (Note 10) $ 495 $ 388
Reserve for asbestos litigation claims -
current portion (Note 19) 275 297
Short-term debt (Note 3) 77 56
Long-term debt - current portion (Note 2) 29 25
Accrued income taxes (Note 4) - 14
-------- --------
Total current 876 780
-------- --------
LONG-TERM DEBT (Note 2) 898 1,018
-------- --------
OTHER
Reserve for asbestos litigation claims
(Note 19) 1,385 1,646
Other postretirement benefits
liability (Note 15) 346 358
Reserve for rebuilding furnaces 124 124
Pension plan liability (Note 16) 78 62
Other 175 182
-------- --------
Total other 2,108 2,372
-------- --------
COMMITMENTS AND CONTINGENCIES
(Notes 12, 17, and 19)
STOCKHOLDERS' EQUITY
Preferred stock, no par value; authorized
8 million shares, none outstanding (Note 14)
Common stock, par value $.10 per share;
authorized 100 million shares; issued
1993--43.2 million and 1992--42.5 million
shares (Note 13) 315 299
Deficit (1,171) (1,302)
Foreign currency translation adjustments 5 4
Other (Note 16) (18) (9)
--------- --------
Total stockholders' equity (869) (1,008)
--------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 3,013 $ 3,162
========= ========
The accompanying summary of significant accounting policies and notes
are integral parts of this statement.
PAGE
-28-
OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1993 1992 AND 1991
1993 1992 1991
-------- -------- --------
(In millions of dollars)
COMMON STOCK
Balance beginning of year $ 299 $ 285 $ 268
Issuance of stock and deferred
awards under stock compensation
plans (Note 13) 16 14 17
-------- -------- --------
Balance end of year 315 299 285
-------- -------- --------
DEFICIT
Balance beginning of year (1,302) (1,375) (633)
Net income (loss) 131 73 (742)
-------- -------- --------
Balance end of year (1,171) (1,302) (1,375)
-------- -------- --------
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS
Balance beginning of year 4 24 25
Translation adjustments 1 (20) (1)
-------- -------- --------
Balance end of year 5 4 24
--------- -------- --------
OTHER
Balance beginning of year (9) (10) (10)
Net increase (decrease) (9) 1 -
-------- -------- --------
Balance end of year (18) (9) (10)
-------- -------- --------
STOCKHOLDERS' EQUITY $ (869) $ (1,008) $ (1,076)
======== ======== ========
The accompanying summary of significant accounting policies and notes
are integral parts of this statement.
PAGE
-29-
OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
1993 1992 1991
-------- -------- --------
(In millions of dollars)
NET CASH FLOW FROM OPERATIONS
Net income (loss) $ 131 $ 73 $ (742)
Reconciliation of net cash provided
by operating activities:
Noncash items:
Cumulative effect of accounting
changes (Notes 4 and 15) (26) - 227
Provision for depreciation,
amortization, and rebuilding
furnaces (Note 6) 121 150 160
Provision (credit) for deferred
income taxes 10 (21) (308)
Provision for asbestos litigation
claims - - 1,634
Increase in insurance for asbestos
litigation claims - - (810)
Amortization of discount on
long-term debt - 1 20
Other 10 4 3
(Increase) decrease in receivables (22) (9) 60
(Increase) decrease in inventories 4 (17) 14
Increase (decrease) in accounts
payable and accrued liabilities 114 (9) 4
Proceeds from insurance for asbestos
litigation claims 224 413 286
Payments for asbestos litigation claims (283) (405) (297)
Increase (decrease) in accrued
income taxes (21) (2) (9)
Other (9) 14 11
-------- -------- --------
Net cash flow from operations 253 192 253
-------- -------- --------
The accompanying summary of significant accounting policies and notes
are integral parts of this statement.
PAGE
-30-
OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
1993 1992 1991
-------- -------- --------
(In millions of dollars)
NET CASH FLOW FROM INVESTING
Additions to plant and equipment $ (164) $ (130) $ (96)
Expenditures for rebuilding furnaces (14) (14) (18)
Other - 10 (6)
-------- -------- --------
Net cash flow from investing (178) (134) (120)
-------- -------- --------
NET CASH FLOW FROM FINANCING
Net additions (reductions) in
long-term credit facilities (90) (123) (152)
Other additions to long-term debt - 337 465
Other reductions to long-term debt (21) (330) (296)
Net increase (decrease) in
short-term debt 26 50 (159)
Other 11 7 5
-------- -------- --------
Net cash flow from financing (74) (59) (137)
-------- -------- --------
Net increase (decrease) in cash and
cash equivalents 1 (1) (4)
Cash and cash equivalents at beginning
of year 2 3 7
-------- -------- --------
Cash and cash equivalents at end
of year (Note 11) $ 3 $ 2 $ 3
======== ======== ========
The accompanying summary of significant accounting policies and notes
are integral parts of this statement.
-31-
OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Industry Segments
The Company operates in two industry segments, Building Products and
Industrial Materials and reports its results in two ways: by business
segment and geographically.
The business segments are as follows:
Building Products
Production and sale of glass wool fibers formed into thermal and
acoustical insulation and air ducts; roofing shingles, built-up
roofing systems and asphalt materials; underground storage tanks;
windows; and patio doors.
Industrial Materials
Production and sale of glass fiber yarns, rovings, mats and veils,
strand and reinforcement products, and polyester and vinyl ester
resins.
The geographic reporting combines the two business segments within the major
regions: United States, Europe and other, and Canada.
Intersegment sales are generally recorded at market or equivalent value.
Income (loss) from operations by industry segment consists of net sales less
related costs and expenses.
In computing income (loss) from operations by segment, cost of borrowed
funds and other general corporate income and expenses have been excluded.
Certain corporate operating expenses directly traceable to industry segments
have been allocated to those segments. The Company's European restructuring
(Note 5) reduced 1993 income from operations for Industrial Materials by $23
million. The $16 million charge related to the Company's 1992 restructuring
(Note 5) reduced income from operations for Building Products by $9 million
and increased the general corporate expense by $7 million. In addition, the
change in estimate of fixed asset lives reduced 1993 depreciation expense
for Building Products, Industrial Materials, and general corporate expense
by $9 million, $4 million, and $1 million, respectively. (Note 6)
Identifiable assets by business and geographic segment are those assets that
are used in the Company's operations in each business and geographic segment
and do not include general corporate assets. General corporate assets
consist primarily of cash and cash equivalents, deferred taxes, asbestos
insurance, and corporate property and equipment. General corporate assets
have been restated to reflect the insurance for asbestos litigation claims
required by the Financial Accounting Standards Board Interpretation No. 39
(Summary of Significant Accounting Policies).
PAGE
-32-
OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(1) Industry Segments (Continued)
BUSINESS SEGMENTS
1993 1992 1991
-------- -------- --------
(In millions of dollars)
NET SALES
Building Products $ 1,946 $ 1,899 $ 1,840
Industrial Materials 998 979 943
-------- -------- --------
2,944 2,878 2,783
-------- -------- --------
Intersegment sales
Building Products - - -
Industrial Materials 85 88 56
Eliminations (85) (88) (56)
-------- -------- --------
Consolidated net sales $ 2,944 $ 2,878 $ 2,783
======== ======== ========
INCOME (LOSS) FROM OPERATIONS
Building Products $ 175 $ 109 $ 96
Industrial Materials 98 138 127
General corporate expense (37) (34) (851)
-------- -------- --------
Income (loss) from operations 236 213 (628)
Cost of borrowed funds (89) (110) (131)
-------- -------- --------
Income (loss) before
provision for income taxes $ 147 $ 103 $ (759)
======== ======== ========
PAGE
-33-
OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(1) Industry Segments (Continued)
BUSINESS SEGMENTS
1993 1992 1991
-------- -------- --------
(In millions of dollars)
IDENTIFIABLE ASSETS AT DECEMBER 31
Building Products $ 797 $ 766 $ 798
Industrial Materials 715 711 667
General corporate 1,438 1,636 2,001
-------- -------- --------
2,950 3,113 3,466
Investments in affiliates
accounted for under the
equity method 63 49 45
-------- ------- ---------
Total assets $ 3,013 $ 3,162 $ 3,511
======== ======== ========
DEPRECIATION AND AMORTIZATION
Building Products $ 52 $ 66 $ 72
Industrial Materials 42 51 50
General corporate 11 6 10
-------- -------- --------
Total depreciation and
amortization $ 105 $ 123 $ 132
======== ======== ========
ADDITIONS TO PLANT AND EQUIPMENT
Building Products $ 81 $ 75 $ 56
Industrial Materials 64 50 35
General corporate 19 5 5
-------- -------- --------
Total additions $ 164 $ 130 $ 96
======== ======== ========
PAGE
-34-
OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
1. Industry Segments (Continued)
GEOGRAPHIC SEGMENTS
1993 1992 1991
-------- -------- --------
(In millions of dollars)
NET SALES
United States $ 2,227 $ 2,115 $ 2,000
Europe and other 511 544 529
Canada 206 219 254
-------- -------- --------
2,944 2,878 2,783
-------- -------- --------
Intersegment sales
United States 42 42 41
Europe and other 15 7 3
Canada 66 42 17
Eliminations (123) (91) (61)
-------- -------- --------
Consolidated net sales $ 2,944 $ 2,878 $ 2,783
======== ======== ========
INCOME (LOSS) FROM OPERATIONS
United States $ 254 $ 193 $ 150
Europe and other 2 48 67
Canada 17 6 6
General corporate expense (37) (34) (851)
-------- -------- --------
Income (loss) from operations 236 213 (628)
Cost of borrowed funds (89) (110) (131)
-------- -------- --------
Income (loss) before
provision for income taxes $ 147 $ 103 $ (759)
======== ======== ========
PAGE
-35-
OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
1. Industry Segments (Continued) GEOGRAPHIC SEGMENTS
1993 1992 1991
-------- -------- --------
(In millions of dollars)
IDENTIFIABLE ASSETS AT DECEMBER 31
United States $ 898 $ 875 $ 821
Europe and other 359 365 376
Canada 255 237 268
General corporate 1,438 1,636 2,001
-------- -------- --------
2,950 3,113 3,466
Investments in affiliates
accounted for under the
equity method 63 49 45
-------- -------- --------
Total assets $ 3,013 $ 3,162 $ 3,511
======== ======== ========
DEPRECIATION AND AMORTIZATION
United States $ 59 $ 79 $ 83
Europe and other 21 25 25
Canada 14 13 14
General corporate 11 6 10
-------- -------- --------
Total depreciation and
amortization $ 105 $ 123 $ 132
======== ======== ========
ADDITIONS TO PLANT AND EQUIPMENT
United States $ 103 $ 95 $ 66
Europe and other 34 21 18
Canada 8 9 7
General corporate 19 5 5
-------- -------- --------
Total additions $ 164 $ 130 $ 96
======== ======== ========
PAGE
-36-
OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
2. LONG-TERM DEBT
1993 1992
-------- --------
(In millions of dollars)
Unsecured credit facility,
terminated in 1993 $ - $ 81
Unsecured credit facility due in
1997, variable 30 -
Unsecured credit facility due in
1994, variable, payable in
Canadian dollars - 39
Convertible junior subordinated
debentures due in 2005, 8%,
convertible at $29.75 per share 173 173
Guaranteed debentures due in 2001, 10% 150 150
Debentures due in 2002, 8.875% 150 150
Debentures due in 2012, 9.375% 149 149
Guaranteed debentures due in 1998, 9.8% 100 100
Notes due through 2007, 6.1% to
14.2%, payable in foreign
currencies 77 92
Bonds due in 2000, 7.25%, payable
in Deutsche marks (Note 17) 50 50
Other long-term debt due through 2012,
at rates from 5.375% to 11.15% 48 59
-------- --------
927 1,043
Less: Current portion (29) (25)
-------- --------
Total long-term debt $ 898 $ 1,018
======== ========
PAGE
-37-
OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
2. Long-Term Debt (Continued)
The Company has two unsecured, variable rate, bank credit facilities. The
first facility has a maximum commitment of $375 million at December 31, 1993
(of which $274 million was unused). The rate of interest is either the
bank's base rate, or 13/16% over the certificate of deposit rate, or 11/16%
over the London Interbank Offered Rate (LIBOR). The rate of interest on
borrowings under this facility was 4.19% at December 31, 1993. A commitment
fee of 1/4 of 1% is charged on the unused portions of this facility.
The second facility is payable in Canadian dollars and has a maximum
commitment of 135 million Canadian dollars (102 million U.S. dollars) at
December 31, 1993, all of which was unused. A commitment fee of 3/8 of 1%
is charged on the unused portions of this facility.
As is typical for bank credit facilities, the agreements relating to the
facilities described above contain restrictive covenants, including
requirements for the maintenance of working capital, interest coverage, and
minimum coverage of fixed charges; and limitations on the early retirement
of debt, additional borrowings, certain investments, payment of dividends,
and purchase of Company stock. The agreements include a provision which
would result in all of the unpaid principal and accrued interest of the
facilities becoming due immediately upon a change of control in ownership of
the Company. A material adverse change in the Company's business, assets,
liabilities, financial condition or results of operations constitutes a
default under the agreements.
The convertible junior subordinated debentures are subordinated to all
present and future indebtedness of the Company and may be redeemed at the
option of the Company beginning June 30, 1994. Prior to redemption or
maturity, the debentures are convertible into shares of common stock of the
Company at a conversion price of $29.75 per share, subject to adjustment in
certain events. The Company has reserved approximately six million
additional shares of common stock necessary for conversion.
In May 1992, the Company issued $300 million of debentures in two parts.
The first part consisted of $150 million of debentures due June 1, 2002,
with an effective interest rate of 8.897%. The second part consisted of
$150 million of debentures due June 1, 2012, with an effective interest rate
of 9.418%. Interest is paid semi-annually for both issues.
During 1992, the Company called, prior to maturity, its 12% sinking fund
debentures having a face value of $46 million at a price in excess of book
value, which resulted in an extraordinary loss of $1 million ($.02 per
share), net of related income taxes of $1 million.
In June 1992, the Company called, prior to maturity, its senior subordinated
debentures having a face value of $240 million, which resulted in an
extraordinary loss of approximately $2 million ($.05 per share), net of
related income taxes of $1 million.
PAGE
-38-
OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
2. Long-Term Debt (Continued)
The aggregate maturities and sinking fund requirements for all long-term
debt issues for each of the five years following December 31, 1993 are:
Credit Other Long-
Year Facilities Term Debt
-------------------------------
(In millions of dollars)
1994 $ - $ 29
1995 - 24
1996 - 29
1997 30 10
1998 - 104
3. Short-Term Debt
1993 1992
-------- --------
(In millions of dollars)
Balance outstanding at December 31 $ 77 $ 56
Weighted average interest rates
on short-term debt outstanding
at December 31 6.6% 8.8%
The Company had short-term unused lines of credit totalling $115 million and
$134 million at December 31, 1993 and 1992, respectively.
4. Income Taxes
Effective January 1, 1993, the Company adopted Financial Accounting
Standards Board Statement No. 109, "Accounting for Income Taxes." Statement
No. 109 changes the criteria for measuring the provision for income taxes
and recognizing deferred tax assets and liabilities. The cumulative effect
of adopting the standard increased earnings by $26 million as of January 1,
1993.
PAGE
-39-
OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
4. Income Taxes (Continued)
1993 1992 1991
-------- -------- --------
(In millions of dollars)
Income (loss) before provision
(credit) for income taxes:
U.S. $ 163 $ 107 $ (749)
Foreign (16) (4) (10)
-------- -------- --------
Total $ 147 $ 103 $ (759)
======== ======== ========
Provision (credit) for income taxes:
Current
-------
U.S. $ 24 $ 41 $ 53
State and local 7 5 8
Foreign 6 8 9
-------- -------- --------
Total current 37 54 70
-------- -------- --------
Deferred
--------
U.S. 27 (5) (308)
State and local 1 (4) (9)
Foreign (4) (12) 9
-------- -------- --------
Total deferred 24 (21) (308)
-------- -------- --------
Adjustment to deferred tax
assets and liabilities for
an increase in the U.S.
federal statutory rate from
34% to 35% (14) - -
-------- -------- --------
Total provision (credit) for
income taxes $ 47 $ 33 $ (238)
======== ======== ========
PAGE
-40-
OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
4. Income Taxes (Continued)
The reconciliation between the U.S. federal statutory rate and the Company's
effective income tax rate is:
1993 1992 1991
-------- -------- --------
U.S. federal statutory rate 35% 34% 34%
Operating losses of foreign
subsidiaries 10 6 (2)
Utilization of losses of foreign
subsidiaries (2) - -
Enacted federal tax rate change (10) - -
Difference between foreign tax
rates and U.S. statutory rate - (2) 1
Provision (credit) for taxes on
undistributed earnings of foreign
subsidiaries (2) (6) (2)
State and local income taxes 3 1 -
Other (2) (1) -
---- ---- -----
Effective tax rate 32% 32% 31%
==== ==== ====
As of December 31, 1993, the Company has not provided for withholding or
U.S. federal income taxes on approximately $99 million of accumulated
undistributed earnings of its foreign subsidiaries as they are considered by
management to be permanently reinvested. If these undistributed earnings
were not considered to be permanently reinvested, approximately $10 million
of deferred income taxes would have been provided.
At December 31, 1993, the Company had tax net operating loss carryforwards
for certain of its foreign subsidiaries of approximately $35 million,
certain of which expire through 1999.
For the year ended December 31, 1992, the Company utilized book net
operating loss carryforwards which resulted in an extraordinary credit of
approximately $4 million, or $.09 per share.
PAGE
-41-
OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
4. Income Taxes (Continued)
The significant cumulative temporary differences giving rise to the
deferred tax assets and liabilities at December 31, 1993 are as
follows:
Deferred
Deferred Tax
Tax Assets Liabilities
---------- -----------
(In millions of dollars)
Asbestos litigation claims $ 363 $ -
Other postretirement benefits 148 -
Depreciation - 75
Furnace rebuild reserves 45 -
Warranty and product liability reserves 25 -
Operating loss carryforwards 35 -
State and local taxes - 23
Other 90 4
-------- --------
Subtotal 706 102
-------- --------
Valuation allowances (40) -
-------- --------
Total deferred taxes $ 666 $ 102
======== ========
During 1992 and 1991, deferred income taxes were provided for significant
timing differences in the recognition of certain items for income tax and
financial statement purposes, in accordance with Accounting Principles
Board Opinion No. 11. These items consisted of the following:
1992 1991
-------- --------
(In millions of dollars)
Asbestos litigation claims $ 2 $ (290)
Depreciation (9) (14)
Furnace rebuild reserves (3) (4)
Interest expense (1) 1
Undistributed earnings of
foreign subsidiaries (8) 10
State and local taxes 2 3
Warranty and product liability
reserves 1 (6)
Other postretirement benefits (6) (6)
Other 1 (2)
-------- --------
Deferred tax credit $ (21) $ (308)
======== ========
PAGE
-42-
OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
5. Restructuring of Operations
In the first quarter of 1993, the Company recorded a $23 million charge to
reorganize its European operations. This charge included $17 million for
personnel reductions and $6 million for the writedown of fixed assets.
During the fourth quarter of 1992, the Company recorded a $16 million
charge to reorganize its Building Products Group and to centralize its
accounting and information systems. This charge included $14 million for
personnel reductions and $2 million for the writedown of assets.
6. Depreciation of Plant and Equipment
During 1993, the Company completed a review of its fixed asset lives. The
Company determined that as a result of actions taken to increase its
preventative maintenance and programs initiated with its equipment
suppliers to increase the quality of their products, actual lives for
certain asset categories were generally longer than the useful lives for
depreciation purposes. Therefore, the Company extended the estimated
useful lives of certain categories of plant and equipment, effective April
1, 1993. The effect of this change in estimate reduced depreciation
expense for the year ended December 31, 1993 by $14 million and increased
income before cumulative effect of accounting change by $8 million ($.19
per share).
7. Science and Technology Expenses
Science and technology expenses include research and development costs of
$61 million in 1993, $55 million in 1992, and $47 million in 1991. In
addition to research and development costs, science and technology expenses
include continuing commercial activities such as engineering and product
modifications for special applications and testing.
8. Inventories
Inventories are summarized as follows:
1993 1992
-------- --------
(In millions of dollars)
Finished goods $ 195 $ 203
Materials and supplies 117 119
-------- --------
312 322
Less: Reduction to LIFO basis (91) (89)
-------- --------
$ 221 $ 233
======== ========
PAGE
-43-
OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
8. Inventories (Continued)
Approximately $87 million and $97 million of net inventories were valued
using the LIFO method at December 31, 1993 and 1992, respectively.
During 1993, 1992, and 1991, certain inventories were reduced, resulting in
the liquidation of LIFO inventory layers carried at lower costs in prior
years as compared with the current cost of inventory. The effect of these
inventory reductions was to reduce 1993, 1992, and 1991 cost of sales by $1
million, $4 million, and $6 million, respectively.
9. Investments in Affiliates
At December 31, 1993 and 1992, the Company's affiliates, which generally
are engaged in the manufacture of fibrous glass products for the
insulation, construction, reinforcements, and textile markets, include:
Percent Ownership
1993 1992
---- ----
Amiantit Fiberglass Industries, Ltd.
(Saudi Arabia) 30% 30%
Arabian Fiberglass Insulation Company
(Saudi Arabia) 49% 49%
Asahi Fiber Glass Company, Ltd. (Japan) 28% 28%
CAE Fiberglass, Ltd. (Canada) 25% 25%
Knytex Company, L.L.C. (USA) 50% -
Lucky Owens-Corning Corp. (Korea) 30% 30%
Owens-Corning Eternit Rohre GmbH (Germany) 50% -
Owens-Corning Pipe Botswana (Pty.), Ltd.
(Botswana) 49% -
Siam GRP Industries (Thailand) 20% 20%
Vitro-Fibras, S.A. (Mexico) 40% 40%
PAGE
-44-
OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
9. Investments in Affiliates (Continued)
Summarized financial information for the Company's affiliates:
1993 1992 1991
---- ---- ----
(In millions of dollars)
At December 31:
Current assets $ 214 $ 198 $ 164
Noncurrent assets 387 320 231
Current liabilities 240 233 206
Noncurrent liabilities 147 130 58
For the year:
Net sales 486 455 467
Gross margin 81 82 100
Net income 16 16 27
The Company's equity in undistributed net income of affiliates was $34
million at December 31, 1993.
10. Accounts Payable and Accrued Liabilities
1993 1992
---- ----
(In millions of dollars)
Accounts payable $ 244 $ 183
Payroll and vacation pay 74 57
Payroll, property, and miscellaneous
taxes 33 35
Other postretirement benefits
liability 25 21
Other 119 92
-------- --------
$ 495 $ 388
======== ========
11. Consolidated Statement of Cash Flows
Cash payments for income taxes and cost of borrowed funds are summarized as
follows:
1993 1992 1991
----- ----- -----
(In millions of dollars)
Income taxes $ 43 $ 49 $ 85
Cost of borrowed funds 95 125 108
The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.
PAGE
-45-
OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
12. Leases
The Company leases certain manufacturing equipment and office and warehouse
facilities under operating leases, some of which include cost escalation
clauses, expiring on various dates through 2011. Total rental expense
charged to operations was $42 million in 1993, $44 million in 1992, and
$44 million in 1991. At December 31, 1993, the minimum future rental
commitments under noncancellable leases payable over the remaining lives of
the leases are:
Minimum Future
Period Rental Commitments
------------------
(In millions of dollars)
1994 $ 34
1995 26
1996 17
1997 13
1998 6
1999 through 2011 23
-------
$ 119
=======
13. Stock Compensation Plans
The Company's Stock Performance Incentive Plan (SPIP), approved by
shareholders in 1992, permits up to two percent of common shares
outstanding at the beginning of each calendar year to be awarded as stock
options and restricted stock (with 25% of this amount as the maximum
permitted number of restricted stock awards). The Company may carry
forward unused shares from prior years and may increase the shares
available for awards in any calendar year through an advance of up to 25%
of the subsequent year's allocation (determined by using 25% of the current
year's allocation). These shares are also subject to the 25% limit for
restricted stock awards. For 1993, the total amount was 868,215 shares,
813,900 of which were awarded as stock options and 54,315 as restricted
stock, which includes an advance of 3,149 shares from the 1994 allocation.
595,189 shares are also available to be awarded under a prior plan;
however, the Company does not expect any awards to be made under that plan.
Additionally, the Company has a plan to award stock options to nonemployee
directors, of which 130,500 shares were available for this purpose as of
December 31, 1993.
During 1992, the total number of shares available for stock awards was
833,035 shares, 760,500 of which were awarded as stock options and 56,600
as restricted stock.
PAGE
-46-
OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
13. Stock Compensation Plans (Continued)
Stock Options
- -------------
Activity during 1993 and 1992 in shares under option:
1993 1992
----------------------------- -----------------------------
Number Price Number Price
of Range Per of Range of
Shares Share Shares Share
--------- -------------- --------- --------------
Beginning of year 2,171,251 $12.13 - 33.63 1,981,989 $12.13 - 26.88
Options granted 845,400 39.50 - 47.00 770,500 29.88 - 33.63
Options exercised (413,269) 12.13 - 30.63 (536,481) 12.13 - 26.75
Options cancelled (42,556) 18.75 - 40.50 (44,757) 18.75 - 30.63
--------- -------------- --------- --------------
End of year 2,560,826 $12.13 - 47.00 2,171,251 $12.13 - 33.63
========= ============== ========= ==============
Exercisable 987,089 $17.86 - 40.50 783,822 $12.13 - 30.63
========= ============== ========= ==============
Option prices represent the market price at date of grant. Shares issued
under options are recorded in the common stock accounts at the option
price. Options granted vest ratably through 1996.
Stock Appreciation Rights
- -------------------------
Stock appreciation rights (SARs) were granted to employees in tandem with
stock options awarded in 1986, and have been paid in cash or stock. During
1993, all remaining shares were exercised, leaving none outstanding at
December 31, 1993. The Company recognized compensation expense in
connection with the SARs to the extent that the market price of its common
stock exceeded the grant price of the shares subject to such rights. Total
SARs expense was less than $1 million for 1993, $4 million for 1992, and $7
million for 1991.
Deferred Stock Awards
- ---------------------
At December 31, 1993, the Company had 24,233 shares of deferred stock
outstanding. Deferred stock awards vest ratably over various periods
ending in 1994. During 1993, no shares of deferred stock were granted, and
295,730 shares were exercised.
Compensation expense is measured based on the market price of the stock at
date of grant and is recognized on a straight-line basis over the vesting
period.
PAGE
-47-
OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
13. Stock Compensation Plans (Continued)
Restricted Stock Awards
- -----------------------
At December 31, 1993, the Company had 398,432 shares of restricted stock
outstanding. Stock restrictions lapse, subject to alternate vesting plans
for approved early retirement and involuntary termination, over various
periods ending in 2003.
14. Share Purchase Rights
Each outstanding share of the Company's common stock includes a preferred
share purchase right. Each right entitles the holder to buy from the
Company one one-hundredth of a share of Series A Participating Preferred
Stock of the Company at a price of $50. The Board of Directors has
designated 450,000 shares of the Company's authorized preferred stock as
Series A Participating Preferred Stock. There are currently no preferred
shares outstanding.
Rights become exercisable and detach from the common stock ten days after a
person or group acquires, or announces a tender offer for, 20% or more of
the Company's outstanding shares of common stock. The rights expire on
December 30, 1996, unless redeemed earlier by the Company. The rights are
redeemable by the Company at one cent each at any time prior to ten days
following public announcement or notice to the Company that an acquiring
person or group has purchased 20% or more of the Company's outstanding
common stock. If the Company is acquired in a merger or other business
combination at any time after the rights become exercisable, each right
would entitle its holder to buy shares of the acquiring or surviving
company having a market value of twice the exercise price of the right.
15. Postemployment and Postretirement Benefits Other Than Pensions
The Company and its subsidiaries maintain health care and life insurance
benefit plans for certain retired employees and their dependents. The
health care plans are unfunded and pay either 1) stated percentages of
covered medically necessary expenses, after subtracting payments by
Medicare or other providers and after stated deductibles have been met, or
2) fixed amounts of medical expense reimbursement. Employees become
eligible to participate in the health care plans upon retirement under one
of the Company's pension plans if they have accumulated 10 years of service
after age 45. Some of the plans are contributory, with some retiree
contributions adjusted annually. The Company has reserved the right to
change or eliminate these benefit plans subject to the terms of collective
bargaining agreements during their term. During 1993, the Company approved
changes in its postretirement health care plans for retirees and active
employees. These changes, which reduced the accumulated benefit obligation
by $120 million and 1993 expense by $18 million, resulted in an
unrecognized net reduction in prior service cost which will be amortized
through 1999.
PAGE
-48-
OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
15. Postemployment and Postretirement Benefits Other Than Pensions
(Continued)
The Company adopted Statement of Financial Accounting Standards No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions," as
of January 1, 1991, for its U.S. plans. Accordingly, the expected cost of
postretirement benefits is charged to expense during the years in which
eligible employees render service. The pre-tax cumulative effect of the
unfunded obligation of $344 million ($227 million after-tax) was charged
against earnings as of January 1, 1991.
Adoption of Statement No. 106 for non-U.S. plans is required for 1995
financial reporting. The estimated impact on the Company in the year of
adoption is a charge to earnings of $12-20 million.
The following table reconciles the status of the accrued postretirement
benefits cost liability at October 31, 1993 and 1992, as reflected on the
balance sheet as of December 31, 1993 and 1992:
1993 1992
-------- --------
(In millions of dollars)
Accumulated Postretirement Benefits
Obligation:
Retirees $ (182) $ (239)
Fully eligible active plan participants (32) (31)
Other active plan participants (39) (90)
-------- --------
Funded status (253) (360)
Unrecognized net loss (gain) (12) (19)
Unrecognized net reduction in prior
service cost (106) -
-------- --------
Accrued postretirement benefits
cost liability (includes current
liabilities of $25 million in 1993
and $21 million in 1992) $ (371) $ (379)
======== ========
PAGE
-49-
OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
15. Postemployment and Postretirement Benefits Other Than Pensions
(Continued)
The net postretirement benefits cost for 1993, 1992 and 1991 included the
following components:
1993 1992 1991
-------- -------- -------
(In millions of dollars)
Service cost $ 7 $ 7 $ 6
Interest cost on accumulated
postretirement benefits
obligation 23 30 29
Net amortization and deferral (13) - -
-------- -------- -------
Net postretirement benefits
cost $ 17 $ 37 $ 35
======== ======== ========
For measurement purposes, an 11% annual rate of increase in the per capita
cost of covered health care claims was assumed for 1994. The rate was
assumed to decrease to 10.5% for 1995, then decrease gradually to 6%. The
health care cost trend rate assumption has a significant effect on the
amounts reported. To illustrate, increasing the assumed health care cost
trend rates by one percentage point in each year would increase the
accumulated postretirement benefits obligation as of October 31, 1993, by
$12 million and the aggregate of the service and interest cost components
of net postretirement benefits cost for the year then ended by $1.8
million. The discount rate used in determining the accumulated
postretirement benefits obligation was 7.5% in 1993, 8.25% in 1992, and
8.6% in 1991.
In November 1992, the FASB issued Statement of Financial Accounting
Standards No. 112, "Employers' Accounting for Postemployment Benefits"
(SFAS 112). This standard requires employers to recognize the obligation
to provide benefits to former or inactive employees after employment but
before retirement under certain conditions. The obligation should be
recognized if it is attributable to employees' service already rendered,
the rights to these benefits accumulate or vest, payment of the benefits is
probable and the amount can be reasonably estimated. SFAS 112 is effective
for the Company beginning in 1994. The impact of SFAS 112 on the Company
in the year of adoption is estimated to be a charge of less than $50
million.
16. Pension Plans
The Company has several defined benefit pension plans covering most
employees. Under the plans, pension benefits are generally based on an
employee's number of years of service and compensation. Company
contributions to pension plans are based on the calculations of independent
actuaries using the projected unit credit method. Plan assets consist
primarily of equity securities with the balance in fixed income investments
or insurance contracts. The unrecognized cost of retroactive amendments
and actuarial gains and losses are amortized over the average future
service period of plan participants expected to receive benefits.
PAGE
-50-
OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
16. Pension Plans (Continued)
Pension expense for the Company's defined benefit pension plans includes
the following:
1993 1992 1991
-------- -------- --------
(In millions of dollars)
Service cost $ 23 $ 21 $ 18
Interest cost on projected
benefit obligation 62 59 58
Actual return on plan assets (124) (51) (147)
Net amortization and deferral 50 (20) 75
-------- -------- --------
Net pension expense $ 11 $ 9 $ 4
======== ======== ========
The funded status at October 31, 1993 and 1992 is as follows:
1993 1992
-------------- --------------
(In millions of dollars)
Over Under Over Under
Funded Funded Funded Funded
------- ------- ------- -------
Vested benefit obligation $ 288 $ 305 $ 254 $ 281
======= ======= ======= =======
Accumulated benefit obligation $ 323 $ 370 $ 301 $ 340
======= ======= ======= =======
Plan assets at fair value $ 444 $ 335 $ 395 $ 315
Projected benefit obligation 398 382 397 358
------- ------- ------- -------
Plan assets in excess of (less
than) projected benefit
obligation 46 (47) (2) (43)
Unrecognized loss (gain) (12) 56 35 59
Unrecognized prior service cost (13) (25) (3) (26)
Unrecognized transition amount (45) (14) (52) (17)
Adjustment to minimum liability - (11) - -
------- ------- ------- -------
Net pension liability (includes
current liabilities of $7
million in 1993 and $6 million
in 1992 and noncurrent
assets of $20 million in
1993 and $19 million in 1992) $ (24) $ (41) $ (22)$ (27)
======= ======= ======= =======
PAGE
-51-
OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
16. Pension Plans (Continued)
The 1993, 1992 and 1991 primary actuarial assumptions used for pension
plans were:
1993 1992 1991
---- ---- ----
Discount rate 7.5% 8.25% 8.60%
Expected long-term rate of
return on plan assets 10.00% 10.00% 10.00%
Rate of compensation
increase 4.10% 4.50% 4.50%
The Company also sponsors defined contribution plans available to
substantially all U.S. employees. Company contributions for the plans are
based on matching a percentage of employee savings up to a maximum savings
level. The Company's contributions were $9 million in 1993, $7 million in
1992, and $7 million in 1991.
17. Financial Instruments with Off-Balance-Sheet Risk and Significant
Group Concentrations of Credit Risk
The Company is a party to financial instruments with off-balance-sheet risk
in the normal course of business to help meet financing needs and to reduce
exposure to fluctuating foreign currency exchange rates. The Company is
exposed to credit loss in the event of nonperformance by the other parties
to the financial instruments described below. However, the Company does
not anticipate nonperformance by the other parties. The Company does not
generally require collateral or other security to support these financial
instruments.
The Company enters into forward currency exchange contracts to manage its
exposure against foreign currency fluctuations on certain assets and
liabilities denominated in foreign currencies. As of December 31, 1993,
the Company has forward currency exchange contracts maturing in 1994 which
exchange the following currencies: 4 billion Belgian francs, 62 million
U.S. dollars, 73 million French francs, 19 million British pounds, 30
million Dutch guilders, and various other currencies. The Company also has
three forward currency exchange contracts maturing in 1994 which exchange
150 million Swedish krona and 1.3 billion Belgian francs against
approximately 54 million U.S. dollars to hedge its equity investment in
certain European subsidiaries and to manage its exposure against
fluctuations in foreign currency rates. Gains and losses on hedges of net
investments in foreign subsidiaries are included in stockholders' equity.
Gains and losses on other foreign currency hedges are included in income in
the year in which the exchange rates change.
PAGE
-52-
OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
17. Financial Instruments with Off-Balance Sheet Risk and Significant
Group Concentrations of Credit Risk (Continued)
As of December 31, 1992, the Company had forward currency exchange
contracts maturing in 1993 which exchanged the following currencies: 2
billion Belgian francs, 19 million U.S. dollars, 68 million Swedish krona,
12 million British pounds, and various other currencies. The Company also
had two forward currency exchange contracts maturing in 1993 which
exchanged 150 million Swedish krona and 680 million Belgian francs against
approximately 42 million U.S. dollars to hedge its equity investment in
certain European subsidiaries.
As of December 31, 1993 and 1992, the Company has entered into four
interest rate swap agreements to reduce the interest rates on its fixed
rate borrowings. These agreements effectively convert an aggregate
principal amount of $150 million of fixed rate long-term debt into variable
rate borrowings with interest rates ranging from 3.5% to 5.65% in 1993 and
3.75% to 5.9% in 1992. The agreements mature in 1998. The differential
interest to be paid or received is accrued as interest rates change and is
recognized over the life of the agreements.
As of December 31, 1993 and 1992, the Company has a cross-currency interest
rate conversion agreement from Deutsche marks into U.S. dollars to hedge
the interest and principal payments of its 7.25% Deutsche mark bonds, due
in 2000. The agreement establishes a fixed interest rate of 11.1%.
As of December 31, 1993, the Company is contingently liable for guarantees
of indebtedness owed by certain unconsolidated affiliates of $27 million.
The Company is of the opinion that its unconsolidated affiliates will be
able to perform under their respective payment obligations in connection
with such guaranteed indebtedness and that no payments will be required and
no losses will be incurred by the Company under such guarantees.
As of December 31, 1993 and 1992, the Company has no significant group
concentrations of credit risk.
18. Disclosures about Fair Value of Financial Instruments
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments.
Cash and short-term financial instruments
-------------------------------------------
The carrying amount approximates fair value due to the short maturity
of these instruments.
Long-term notes receivable
--------------------------
The fair value has been estimated using the expected future cash flows
discounted at market interest rates.
PAGE
-53-
OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
18. Disclosures about Fair Value of Financial Instruments (Continued)
Long-term debt
--------------
The fair value of the Company's long-term debt has been estimated
based on quoted market prices for the same or similar issues, or on
the current rates offered to the Company for debt of the same
remaining maturities.
Foreign currency swaps and interest rate swaps
----------------------------------------------
The fair values of foreign currency swaps and interest rate swaps have
been estimated by traded market values or by obtaining quotes from
brokers.
Forward currency exchange contracts and financial guarantees
------------------------------------------------------------
The fair values of forward currency exchange contracts and financial
guarantees are based on fees currently charged for similar agreements
or on the estimated cost to terminate these agreements or otherwise
settle the obligations with the counter parties at the reporting date.
The estimated fair values of the Company's financial instruments as of
December 31, 1993 and 1992 are as follows:
1993 1992
----------------- ------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- ------- -------- -------
(In millions of dollars)
Cash and short-term financial
instruments $ 928 $ 928 $ 783 $ 783
Long-term notes receivable 7 5 8 7
Long-term debt 898 1,063 1,018 1,102
Foreign currency swaps and
interest rate swaps - 39 - 35
As of December 31, 1993, the Company is contingently liable for guarantees
of indebtedness owed by certain unconsolidated affiliates. There is no
market for these guarantees and they were issued without explicit cost.
Therefore, it is not practicable to establish their fair value.
As of December 31, 1993 and 1992, the Company has also entered into certain
forward currency exchange contracts, the fair values of which are not
material to the consolidated financial statements.
PAGE
-54-
OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
19. Contingent Liabilities
ASBESTOS LIABILITIES
- --------------------
The Company 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 the Company'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 the Company 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 December 31, 1993, approximately 97,800 asbestos personal injury
claims were pending against the Company, 31,700 of which were received in
1993. The Company received approximately 26,600 such claims in 1992, and
20,900 in 1991.
Through December 31, 1993, the Company had resolved (by settlement or
otherwise) approximately 120,700 asbestos personal injury claims, 22,300 of
which were resolved in 1993. During 1991, 1992 and 1993, the Company
resolved approximately 62,600 such claims and incurred total indemnity
payments of $620 million (an average of less than $10,000 per case). As of
December 31, 1993, the Company had agreed in principle to settle
approximately 17,000 additional cases which will be processed and reflected
in settlements during 1994 and future years. Although the precise amounts
are subject to certain contingencies, the average payment in these
additional cases is expected to be somewhat higher than the Company's
settlement average for 1991 through 1993. The Company'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 the Company; 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; and
whether the claim was resolved on an individual basis or as part of a group
settlement.
The Company incurred defense costs of approximately $61 million in respect
of asbestos personal injury claims in 1993.
PAGE
-55-
OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
19. Contingent Liabilities (Continued)
Insurance
- ---------
As of December 31, 1993, the Company had approximately $429 million in
unexhausted products hazard 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.
Of this amount, $144 million will not be available until the years 1996
through 2000 under an agreement with the carrier confirming such insurance.
An additional $31 million (out of the $429 million coverage) is presently
the subject of coverage litigation or alternate dispute resolution
procedures. All of the Company's liability insurance policies cover
indemnity payments and defense fees and expenses subject to applicable
policy limits.
In addition, the Company has substantial unexhausted non-products coverage
under such liability insurance policies; an as yet undetermined amount of
such non-products coverage is expected to be available for payment of
asbestos personal injury claims and associated defense fees and expenses.
The Company has commenced arbitration with its primary level insurance
carrier seeking to confirm the availability of certain of its non-products
coverage for payment of certain asbestos personal injury liabilities,
involving the activities of the Company's former insulation contracting
business. The Company is seeking prompt rulings on the issues presented,
and the arbitration agreement contemplates a schedule that would result in
resolution (subject to appeal) no later than mid-1994. For purposes of
calculating the amount of insurance applicable to asbestos liabilities, the
Company has estimated its recoveries in respect of non-products coverage
for claims received through 1999 at approximately $310 million, which
represents the Company's best estimate of such recoveries for such claims.
The Company cautions, however, that this coverage is unconfirmed and that
the actual amounts recovered by the Company could, depending upon the
outcome of the arbitration, be much higher or much lower.
Reserve
- -------
As a result of its pre-1992 charges for asbestos litigation, the Company
had a reserve for asbestos claims, net of estimated insurance recoveries,
of $892 million, $951 million, and $955 million (including $150 million,
$51 million, and $5 million as the current portion of the liability net of
estimated insurance recoveries) as of December 31, 1993, 1992, and 1991,
respectively. This Reserve is intended to provide for the estimated
indemnity and defense costs associated with pending and unasserted asbestos
personal injury claims that may be received by the Company through the year
1999. As a result of the adoption of FIN 39 (see Summary of Significant
Accounting Policies), the Reserve is no longer reported net of insurance
recoveries in the consolidated financial statements. The Company's
estimated total liabilities in respect of indemnity and defense costs
associated with pending and unasserted asbestos personal injury claims that
may be received through the year 1999, and its estimated insurance
recoveries in respect of such claims, are reported separately.
PAGE
-56-
OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
19. Contingent Liabilities (Continued)
The Company notes, however, that recent case filing rates have been at
historically high levels (approximately 26,600 new claims in 1992 and
approximately 31,700 claims in 1993). Many of these new claims appear to
be the product of mass screening programs and not to involve significant
asbestos-related impairment. The large number of recent filings and the
uncertain value of these claims have added to the uncertainties involved in
calculating the Company's reserve. The Company notes that the courts have
treated unimpaired claims in very different ways. For example, the Circuit
Court for Kanawha County, West Virginia has scheduled a consolidated trial
in early 1994 of so-called common issues (including punitive damage issues)
of several thousand asbestos personal injury claims (most of which appear
to be unimpaired). On the other hand, the Pennsylvania Superior Court has
recently held that asymptomatic asbestos-related pleural changes do not
state a cause of action under Pennsylvania law; unless this ruling is
overturned by the state Supreme Court, it is likely to result in large
numbers of case dismissals in Pennsylvania (which has the largest backlog
of asbestos claims of any state).
Moreover, certain of the Company's principal co-defendants, the 20 members
of the Center for Claims Resolution, have entered into a proposed "global"
settlement which would require future claimants to satisfy certain medical
criteria indicative of significant asbestos-related impairment as a pre-
condition to their eligibility for settlement payments. The Company is
using similar criteria in the implementation of its own settlement and
litigation strategy and is also seeking to require more careful proof than
in the past that claimants had significant exposure to the Company's
asbestos-containing product or operations. Depending upon the outcome of
the various uncertainties described above, particularly as they relate to
unimpaired claims, it may be necessary at some point in the future for the
Company to make additional provision for the uninsured costs of asbestos
personal injury claims received through the year 1999 (although no such
amounts are reasonably estimable at this time). The Company remains
confident that its Reserve will be sufficient to provide for the uninsured
costs of all such claims that involve malignancies or significant asbestos-
related functional impairment. The Company will continue to review the
adequacy of its Reserve on a periodic basis and make such adjustments to
the Reserve as may be appropriate.
The Company 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,
applicable insurance coverage beyond the $429 million referenced above, are
influenced by numerous variables that are difficult to predict, and that
estimates, such as the Company's, which attempt to take account of such
variables, are subject to considerable uncertainty. Accordingly, the
actual uninsured costs associated with asbestos personal injury claims
received by the Company through 1999 may be higher or lower than those
provided for by the Company's Reserve.
The Company cannot estimate and is not providing for the cost of unasserted
claims which may be received by the Company after the year 1999 because
management is unable to predict the number of claims to be received after
1999, the severity of disease which may be involved and other factors which
would affect the cost of such claims.
PAGE
-57-
OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
19. Contingent Liabilities (Continued)
Cash Expenditures
- -----------------
The Company's anticipated cash expenditures for uninsured asbestos-related
costs of claims received through 1999 are expected to approximate the
Company's existing reserve (net of estimated insurance recoveries) of $892
million. They will vary annually depending upon a number of factors,
including the pace of the Company's resolution of claims and the timing of
payment of its insurance.
Management Opinion
- ------------------
Although any opinion is necessarily judgmental and must be based on
information now known to the Company, in the opinion of management, the
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 will not have a materially adverse
effect on the Company's financial position. While such additional
uninsured and unreserved costs incurred in and after the year 2000 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.
NON-ASBESTOS LIABILITIES
- ------------------------
In October 1991, the Company and certain of its officers and directors were
named as defendants in a lawsuit captioned Gaetana Lavalle v. Owens-Corning
Fiberglas Corporation, et al. in the United States District Court for the
Northern District of Ohio. Lavalle purports to be a securities class
action on behalf of all purchasers of the Company's common stock during the
period November 1, 1988 through October 18, 1991. The complaint alleges
that the Company's disclosures during the alleged class period contained
material misstatements and omissions concerning its contingent liabilities
for asbestos claims. The complaint seeks an unspecified amount of damages
(including punitive damages) on the theory that such alleged misstatements
and omissions artificially inflated the price of the Company's stock.
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.
PAGE
-58-
OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
20. Quarterly Financial Information (Unaudited)
Quarter
-------------------------------------
First Second Third Fourth
------- ------- ------- -------
(In millions of dollars, except share data)
1993
----
Net sales $ 651 $ 754 $ 785 $ 754
Cost of sales 516 586 613 578
------- ------- ------- -------
Gross margin $ 135 $ 168 $ 172 $ 176
======= ======= ======= =======
Income before cumulative effect
of accounting change $ (9) $ 33 $ 48 $ 33
Cumulative effect of accounting
change for income taxes (Note 4) 26 - - -
------- ------- ------- -------
Net income $ 17 $ 33 $ 48 $ 33
======= ======= ======= =======
Net income per share:
Primary
Income before cumulative effect
of accounting change $ (.20) $ .76 $ 1.09 $ .75
Cumulative effect of accounting
change for income taxes .60 - - -
------- ------- ------- -------
Net income per share $ .40 $ .76 $ 1.09 $ .75
======= ======= ======= =======
Fully diluted
Income before cumulative effect
of accounting change $ (.13) $ .71 $ 1.01 $ .70
Cumulative effect of accounting
change for income taxes .53 - - -
------- ------- ------- -------
Net income per share $ .40 $ .71 $ 1.01 $ .70
======= ======= ======= =======
-59-
OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
20. Quarterly Financial Information (Unaudited) (Continued)
Quarter
-------------------------------------
First Second Third Fourth
------- ------- ------- -------
(In millions of dollars, except share data)
1992
----
Net sales $ 626 $ 732 $ 786 $ 734
Cost of sales 496 576 613 576
------- ------- ------- -------
Gross margin $ 130 $ 156 $ 173 $ 158
======= ======= ======= =======
Income before extraordinary items $ 6 $ 22 $ 32 $ 12
Extraordinary items - (1) - 2
------- ------- ------- -------
Net income $ 6 $ 21 $ 32 $ 14
======= ======= ======= =======
Net income per share:
Primary
Income before extraordinary items $ .13 $ .52 $ .75 $ .30
Extraordinary items - (.03) - .03
------- ------- ------- -------
Net income per share $ .13 $ .49 $ .75 $ .33
======= ======= ======= =======
Fully diluted
Income before extraordinary items $ .13 $ .51 $ .71 $ .30
Extraordinary items - (.03) - .03
------- ------- ------- -------
Net income per share $ .13 $ .48 $ .71 $ .33
======= ======= ======= =======
Net income per share and primary and fully diluted weighted average shares
are computed independently for each of the quarters presented. Therefore,
the sum of the quarterly net income per share may not equal the per share
total for the year.
PAGE
-60-
INDEX TO FINANCIAL STATEMENT SCHEDULES
--------------------------------------
Number Description Page
- ------ ----------- ----
II Amounts Receivable from Related Parties and 61
Underwriters, Promoters, and Employees Other
Than Related Parties as of December 31, 1993
V Property, Plant, and Equipment - for the years 62
ended December 31, 1993, 1992 and 1991
VI Accumulated Depreciation and Amortization of 63
Property, Plant, and Equipment - for the years
ended December 31, 1993, 1992 and 1991
VII Guarantees of Securities of Other Issuers 64
as of December 31, 1993
VIII Valuation and Qualifying Accounts and Reserves - 65
for the years ended December 31, 1993, 1992 and 1991
IX Short-Term Borrowings - for the years ended 66
December 31, 1993, 1992 and 1991
X Supplementary Income Statement Information - for the 67
years ended December 31, 1993, 1992 and 1991
PAGE
-61-
OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
SCHEDULE II - AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS,
PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES
AS OF DECEMBER 31, 1993
Column A Column B Column C Column D Column E
Balance at End
of Period
Deductions --------------
----------
Balance at Amounts
Beginning Amounts Written Not
Name of Debtor of Period Additions Collected Off Current Current
- -------------- ---------- --------- --------- -------- ------- -------
(In thousands of dollars)
Owens-Corning
Eternit Rohre GmbH(1) - $532 - - - $532
(1) In November 1993, the Company made a loan of 900,000 Deutsche marks
(532,000 U. S. dollars at December 31, 1993) to Owens-Corning Eternit
Rohre GmbH, its 50% owned German affiliate. Such loan was evidenced
by a promissory note which bears interest at a rate of 5.50% per year,
payable annually. This instrument matures in November 1998, at which
time the outstanding balance becomes due and payable.
PAGE
-62-
OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
SCHEDULE V - PROPERTY, PLANT, AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
Column A Column B Column C Column D Column E Column F
Balance at Other Balance
Beginning Additions Retirements Changes - at End
Classification of Period at Cost or Sales Add (Deduct) of Period
- -------------- ----------- --------- ----------- ------------ ---------
FOR THE YEAR ENDED DECEMBER 31, 1993:
Land $ 46 $ - $ (1) $ (1) $ 44
Buildings and leasehold
improvements 549 23 (5) (8) 559
Machinery and equipment 1,886 131 (27) (12) 1,978
Construction in progress 79 10 - (1) 88
------ ------ ------ ------ ------
$2,560 $ 164 $ (33) $ (22)(A) $ 2,669
======= ======= ======= ======= =======
FOR THE YEAR ENDED DECEMBER 31, 1992:
Land $ 51 $ - $ (4) $ (1) $ 46
Buildings and leasehold
improvements 555 10 (15) (1) 549
Machinery and
equipment 1,880 82 (65) (11) 1,886
Construction in progress 41 38 - - 79
------ ------ ------ ------ ------
$2,527 $ 130 $ (84) $ (13)(B) $2,560
====== ====== ====== ====== ======
FOR THE YEAR ENDED DECEMBER 31, 1991
Land $ 52 $ - $ - $ (1) $ 51
Buildings and leasehold
improvements 545 18 (4) (4) 555
Machinery and equipment 1,838 97 (47) (8) 1,880
Construction in progress 60 (19) - - 41
------ ------ ------ ------ ------
$2,495 $ 96 $ (51) $ (13)(C) $2,527
====== ====== ====== ====== ======
Notes:
(A) Includes a $39 million deduction for FASB Statement 52 translation
adjustments and a $17 million addition for FASB Statement 109 deferred
tax adjustments.
(B) Includes a $13 million deduction for FASB Statement 52 translation
adjustments.
(C) Includes a $13 million deduction for FASB Statement 52 translation
adjustments.
PAGE
-63-
OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
SCHEDULE VI - ACCUMULATED DEPRECIATION AND AMORTIZATION
OF PROPERTY, PLANT, AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
Column A Column B Column C Column D Column E Column F
Balance at Additions Other Balance
Beginning Charged Retirements Changes - at End
Classification of Period to Cost or Sales Add (Deduct) of Period
- -------------- ----------- --------- ----------- ------------ ---------
FOR THE YEAR ENDED DECEMBER 31, 1993:
Land $ - $ - $ - $ - $ -
Buildings and leasehold
improvements 350 17 (3) (4) 360
Machinery and equipment 1,364 88 (22) (15) 1,415
------ ------ ------ ------ ------
$1,714 $ 105 $ (25) $ (19)(A) $1,775
====== ====== ====== ====== ======
FOR THE YEAR ENDED DECEMBER 31, 1992:
Land $ - $ - $ - $ - $ -
Buildings and leasehold
improvements 317 18 (11) 26 350
Machinery and equipment 1,340 105 (61) (20) 1,364
------ ------ ------ ------ ------
$1,657 $ 123 $ (72) $ 6(B) $1,714
====== ====== ====== ====== ======
FOR THE YEAR ENDED DECEMBER 31, 1991
Land $ - $ - $ - $ - $ -
Buildings and leasehold
improvements 302 18 (3) - 317
Machinery and equipment 1,261 114 (42) 7 1,340
------ ------ ------ ------ ------
$1,563 $ 132 $ (45) $ 7(C) $1,657
====== ====== ====== ====== ======
Notes:
(A) Includes a $22 million deduction for FASB Statement 52 translation
adjustments and a $3 million addition for the write down of fixed
assets to their realizable value.
(B) Includes a $6 million addition for FASB Statement 52 translation
adjustments.
(C) Includes a $7 million deduction for FASB Statement 52 translation
adjustments and a $14 million addition for write down of Fiberglas
Canada Inc. fixed assets to their realizable value.
PAGE
-64-
OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
SCHEDULE VII - GUARANTEES OF SECURITIES OF OTHER ISSUERS
AS OF DECEMBER 31, 1993
Column A Column B Column C Column D
Name of Issuer of
Securities Guaranteed Title of Issue Total Amount
By Person for Which of Each Class of Guaranteed and
Statement is Filed Securities Guaranteed Outstanding (3) Nature of Guarantee
- --------------------- --------------------- --------------- -------------------
(In millions
of dollars)
Knytex Company, L.L.C. (1) Bank Loans $ 6 Principal and Interest
Lucky Owens-Corning Corp. (2) Bank Loans 21 Principal and Interest
(1) 50% owned affiliate in the United States
(2) 30% owned affiliate in Korea
(3) This represents the Company's portion of the outstanding loans,
none of which were in default.
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OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
AS OF DECEMBER 31, 1993, 1992 AND 1991
Column A Column B Column C Column D Column E
Additions
--------------------------
(1) (2)
Balance at Charged to Charged to Balance
Beginning Costs and Other at End
Classification of Period Expenses Accounts Deductions of Period
- -------------- ---------- ---------- ---------- ---------- ---------
(In millions of dollars)
FOR THE YEAR ENDED DECEMBER 31, 1993:
Allowance deducted from asset
to which it applies -
Doubtful Accounts $ 20 $ 1 $ - $ 5(A) $ 16
Deferred taxes 33(C) 7 - - 40
Shown separately -
Rebuilding furnaces 124 17 - 17(B) 124
FOR THE YEAR ENDED DECEMBER 31, 1992:
Allowance deducted from asset
to which it applies -
Doubtful Accounts $ 18 $ 11 $ - $ 9(A) $ 20
Shown separately -
Rebuilding furnaces 113 27 - 16(B) 124
FOR THE YEAR ENDED DECEMBER 31, 1991:
Allowance deducted from asset
to which it applies -
Doubtful Accounts $ 15 $ 15 $ - $ 12(A) $ 18
Shown separately -
Rebuilding furnaces 105 28 - 20(B) 113
Notes:
(A) Uncollectible accounts written off, net of recoveries.
(B) Expenditures for purposes for which reserve was created.
(C) Balance of deferred tax asset valuation allowance on January 1, 1993
after adoption of FASB Statement No. 109, "Accounting for Income
Taxes."
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OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
SCHEDULE IX - SHORT-TERM BORROWINGS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
Column A Column B Column C Column D Column E Column F
Maximum Average Weighted
Weighted Amount Amount Average
Balance at Average Outstanding Outstanding Interest
Category of Aggregate End Interest During During Rate During
Short-Term Borrowings of Period Rate the Period the Period the Period
- --------------------- ---------- -------- ----------- ----------- -----------
(In millions of dollars, except percent data)
FOR THE YEAR ENDED DECEMBER 31, 1993:
Short-Term Notes
Payable $ 77 6.6% $ 77 $ 63 9.3%
FOR THE YEAR ENDED DECEMBER 31, 1992:
Short-Term Notes
Payable $ 56 8.8% $ 81 $ 39 14.7%
FOR THE YEAR ENDED DECEMBER 31, 1991
Short-Term Notes
Payable $ 6 11.5% $ 175 $ 70 10.5%
Column E - The average amount outstanding during the period is calculated
by using month end balances.
Column F - Weighted average interest rate during the period is calculated
by dividing the sum of interest expense by the aggregate of the
principal amounts, factored by the time outstanding.
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OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
Column A Column B
Charged to Costs and Expenses
-------------------------------------
Description 1993 1992 1991
- ----------- ------ ------ ------
(In millions of dollars)
Maintenance and repairs $ 215 $ 218 $ 198
Provision for depreciation and
amortization of plant
and equipment 105 123 132
Taxes, other than income taxes -
Social security taxes 74 72 71
Other taxes 27 29 28
PAGE
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EXHIBIT INDEX
Exhibit
Number Document Description
- ------- --------------------
(3) Articles of Incorporation and By-Laws.
Certificate of Incorporation of Owens-Corning Fiberglas
Corporation, as amended (incorporated herein by reference to
Exhibit (3) to the Company's annual report on Form 10-K for
1986).
By-Laws of Owens-Corning Fiberglas Corporation, as amended
(incorporated herein by reference to Exhibit (19) to the
Company's quarterly report on Form 10-Q for the quarter
ended March 31, 1988).
(4) Instruments Defining the Rights of Security Holders,
Including Indentures.
Credit Agreement, dated as of November 2, 1993, among Owens-
Corning Fiberglas Corporation, the Banks listed on Annex A
thereto, and Credit Suisse, as Agent for the Banks
(incorporated herein by reference to Exhibit (4) to the
Company's quarterly report on Form 10-Q for the quarter
ended September 30, 1993).
Form of Indenture between Owens-Corning Fiberglas
Corporation and The Bank of New York, as Trustee, relating
to the Company's 8-7/8% Debentures due 2002 and 9-3/8%
Debentures due 2012 (incorporated herein by reference to
Exhibit 4 to the Company's Registration Statement on Form S-
3 (Registration No. 33-46849)) and related forms of such
Debentures (incorporated herein by reference to Exhibit (4)
to the Company's quarterly report on Form 10-Q for the
quarter ended June 30, 1992).
The Company agrees to furnish to the Securities and Exchange
Commission, upon request, copies of all instruments defining
the rights of holders of long-term debt of the Company where
the total amount of securities authorized under each issue
does not exceed ten percent of the Company's total assets.
(10) Material Contracts.
Credit Agreement, dated as of November 2, 1993, among Owens-
Corning Fiberglas Corporation, the Banks listed on Annex A
thereto, and Credit Suisse, as Agent for the Banks
(incorporated herein by reference to Exhibit (4) to the
Company's quarterly report on Form 10-Q for the quarter
ended September 30, 1993).
Rights Agreement, dated as of December 18, 1986, between
Owens-Corning Fiberglas Corporation and Manufacturers
Hanover Trust Company, as Rights Agent, including, as
Exhibit B of such Rights Agreement, the form of Right
Certificate (incorporated herein by reference to Exhibits 1
and 2 to the Company's Registration Statement on Form 8-A,
dated December 23, 1986).
PAGE
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EXHIBIT INDEX
Exhibit
Number Document Description
- ------- --------------------
* 1994 Corporate Incentive Plan - General Terms (filed
herewith).
* Agreement, dated February 11, 1994, with Larry T. Solari
(filed herewith).
* Owens-Corning Fiberglas Corporation Director's
Charitable Award Program (incorporated herein by
reference to Exhibit (10) to the Company's quarterly
report on Form 10-Q for the quarter ended September 30,
1993).
* Owens-Corning Fiberglas Corporation Executive
Supplemental Benefit Plan, as amended (incorporated
herein by reference to Exhibit (10) to the Company's
quarterly report on Form 10-Q for the quarter ended
March 31, 1993).
* Employment Agreement, dated as of December 15, 1991,
with Glen H. Hiner (incorporated herein by reference to
Exhibit (10) to the Company's annual report on Form 10-K
for 1991), as amended by First Amending Agreement made
as of April 1, 1992 (incorporated herein by reference to
Exhibit (19) to the Company's quarterly report on Form
10-Q for the quarter ended June 30, 1992).
* Owens-Corning Fiberglas Corporation Stock Performance
Incentive Plan (incorporated herein by reference to
Exhibit (19) to the Company's quarterly report on Form
10-Q for the quarter ended June 30, 1992).
* Owens-Corning Fiberglas Corporation 1987 Stock Plan for
Directors, as amended (incorporated herein by reference
to Exhibit (19) to the Company's quarterly report on
Form 10-Q for the quarter ended March 31, 1992).
* Form of Key Management Severance Benefits Agreement
(incorporated herein by reference to Exhibit (10) to the
Company's annual report on Form 10-K for 1991).
* Consulting Agreement, dated September 27, 1990, with
William W. Boeschenstein (incorporated herein by
reference to Exhibit (10) to the Company's annual report
on Form 10-K for 1990).
* Owens-Corning Fiberglas Corporation 1986 Equity
Partnership Plan, as amended (incorporated herein by
reference to Exhibit (19) to the Company's quarterly
report on Form 10-Q for the quarter ended March 31,
1988), as amended by Amendment 1 thereto (incorporated
herein by reference to Exhibit (19) to the Company's
quarterly report on Form 10-Q for the quarter ended
March 31, 1989), by Amendment 2 thereto (incorporated
herein by reference to Exhibit (10) to the Company's
annual report on Form 10-K for PAGE
-70-
EXHIBIT INDEX
Exhibit
Number Document Description
- ------- --------------------
1989) and by Amendment 3 thereto (incorporated herein by
reference to Exhibit (10) to the Company's annual report
on Form 10-K for 1990).
The following documents are incorporated herein by
reference to Exhibit (10) to the Company's annual report
on Form 10-K for 1989:
* - Pension Agreement, dated April 16, 1984, with
William W. Colville.
* - Form of Directors' Indemnification Agreement.
The following documents are incorporated herein by reference
to Exhibit (10) to the Company's annual report on Form 10-K
for 1987:
* - Owens-Corning Fiberglas Corporation Officers
Deferred Compensation Plan.
* - Owens-Corning Fiberglas Corporation Deferred
Compensation Plan for Directors, as amended.
(11) Statement re Computation of Per Share Earnings (filed
herewith).
(21) Subsidiaries of Owens-Corning Fiberglas Corporation (filed
herewith).
(23) Consent of Arthur Andersen & Co. (filed herewith).
* Denotes management contract or compensatory plan or arrangement
required to be filed as an exhibit pursuant to Item 14(c) of Form 10-K.
PAGE