TOLEDO, Ohio, Feb. 18 /PRNewswire-FirstCall/ -- Owens Corning (NYSE: OC)
reported today that consolidated net sales increased 17 percent to $5.8
billion in 2008, compared with $5.0 billion in 2007. Sales were up because of
higher revenue from the company's Composites business due to the acquisition
in November 2007, and improved selling prices and sales volumes in the
company's Roofing and Asphalt segment.
Consolidated net sales for the fourth quarter of 2008 were $1.3 billion,
down 1 percent compared with the same quarter in 2007. Higher sales in the
Roofing and Asphalt segment offset lower sales in the Composites and
Insulation businesses, which were impacted by the global economic slowdown and
the continued decline in U.S. new residential construction.
Excluding comparability items, Owens Corning's 2008 adjusted earnings from
continuing operations were $124 million, or $0.95 per adjusted diluted share,
compared with $162 million, or $1.23 per adjusted diluted share in 2007.
Adjusted earnings from continuing operations in the fourth quarter of 2008
were $16 million, or $0.13 per adjusted diluted share, compared with $40
million, or $0.31 per adjusted diluted share in the fourth quarter of 2007. In
the fourth quarter of 2008, Owens Corning reported a net loss of $45 million,
or $0.36 per share. See Tables 3 through 6 for a discussion and reconciliation
of these items.
Primarily as the result of a non-cash charge of $909 million recorded in
2008 to establish an accounting valuation allowance against net U.S. deferred
tax assets related to its net operating losses, Owens Corning recorded a net
loss in 2008 of $839 million, or $6.56 per share. The non-cash charge will
have no impact on the company's ability to utilize the net operating losses to
offset future U.S. profits.
Consolidated Fourth-Quarter and 2008 Results
-- Earnings before interest and taxes (EBIT) from continuing operations
for the year ending Dec. 31, 2008, were $196 million, compared with $145
million during the same period in 2007. Excluding comparability items (see
Table 3), adjusted EBIT from continuing operations for 2008 was $290 million,
compared with $341 million in 2007.
-- Fourth-quarter 2008 EBIT from continuing operations was $15 million,
compared with a loss of $46 million during 2007. Excluding comparability
items (see Table 4), adjusted EBIT from continuing operations for the fourth
quarter of 2008 was $48 million, compared with $88 million during the same
period in 2007.
-- Gross margin as a percentage of sales was 15 percent in 2008, compared
with 16 percent in 2007. The decline was a result of lower margins in the
Insulating Systems segment that were only partially offset by margin
improvements in the Composite Solutions and Roofing and Asphalt segments.
-- The company's continued focus on safety resulted in a 36-percent
reduction in injuries in 2008 versus 2007.
"The company demonstrated great progress in 2008. It's now evident that we
have established a tremendous franchise in composites," said Mike Thaman,
chairman and chief executive officer. "Our Roofing and Asphalt business
emerged as a strong performer in our portfolio. Our Insulation business
remained profitable despite the worst U.S. housing year on record. We managed
cost and capacity effectively throughout the year. We concluded the year with
solid results and a strong balance sheet.
"We expect 2009 to be difficult," added Thaman. "Investors can expect
continued aggressive cost and capacity management. In 2009, we will maintain
profitability in our Building Materials Group in aggregate and in our
Composites business. The strength of our portfolio will generate positive free
cash flow, supported by our cost reductions and management actions to reduce
capital expenditures and working capital."
Other Financial Items
-- During the first quarter of 2007, Owens Corning announced a share buy-
back program under which the company was authorized to repurchase up to 5
percent of Owens Corning's outstanding common stock. During the fourth quarter
of 2008, the company repurchased approximately 1.8 million shares at an
average price of $19.43 per share. For the full-year 2008, the company
repurchased nearly 4.7 million shares at an average price of $21.47 per share.
Approximately 1.9 million shares remain available for repurchase under the
current program.
-- The company reduced its precious metal lease exposure resulting from
the composites acquisition to less than $25 million, from more than $300
million.
-- Acquisition-related synergies in the Composites business totaled $50
million in 2008.
-- At the end of 2008, Owens Corning had net debt of $1.98 billion,
comprised of $2.22 billion of short- and long-term bank debt and cash-on-hand
of $236 million.
-- Owens Corning's federal tax net operating loss (NOL) carryforward,
primarily resulting from the distribution of cash and stock to settle its
prior Chapter 11 case in 2006, was $2.7 billion at the end of 2008.
Outlook
Current indicators point to a challenging business environment for Owens
Corning. Weakness experienced in the U.S. new construction market and global
economy is expected to carry into 2009.
Fourth-quarter weakness in the Composites business is expected to persist
in 2009 until industry inventory levels return to equilibrium. When
equilibrium is reached, the company expects margins to return to levels
exhibited in the first three quarters of 2008.
The Roofing and Asphalt business finished 2008 with strong margin rates,
providing momentum that is expected to carry into 2009.
The Insulation business fell to a loss position during the fourth quarter
of 2008. Another difficult year in new residential construction is expected in
the United States. Despite significant cost and capacity actions, it is likely
this business will struggle to achieve profitability in 2009.
Owens Corning is taking aggressive action to manage its cost structure.
The company will further curtail capacity across its operations, reduce SG&A
and head count, and delay capital projects such as the previously announced
expansion in Russia.
The recently enacted U.S. economic stimulus plan encourages the
re-insulation of homes and buildings and promotes further development of wind
power as a source of renewable energy. Owens Corning will focus efforts on
ensuring that these initiatives benefit its Insulation and Composites
businesses.
In 2009, depreciation and amortization is estimated to be $350 million,
compared with $331 million in 2008. Capital expenditures for 2009 will be less
than $275 million, excluding precious metal purchases, compared with $366
million in 2008, a reduction of almost $100 million.
Owens Corning expects its cash taxes in 2009 to be less than the $33
million paid in 2008. The company estimates a long-term effective book tax
rate of 25 percent based on the blend of its U.S. and non-U.S. operations. A
tax rate of 25 percent will be applied to the company's quarterly and annual
calculation of its adjusted earnings per share to provide better comparability
from period to period.
First-quarter 2009 results are scheduled to be announced on April 30,
2009.
Business Segment Highlights
Composite Solutions
Net sales for 2008 were $2.4 billion, a 39-percent increase from $1.7
billion in 2007. Substantially all of the increase was the result of
incremental sales from the company's composites acquisition, net of
divestitures. Excluding the acquisition, net of divestitures, volumes
decreased due to the global economic slowdown in the fourth quarter.
EBIT from continuing operations for 2008 was $208 million, compared to
$123 million in 2007, an increase of 69 percent. More than three-quarters of
the increase was due to incremental earnings associated with the company's
composites acquisition, net of divestitures. The remainder of the increase was
due to improved manufacturing productivity, reduced marketing and
administrative costs (excluding the company's acquisition, net of
divestitures), and the effect of translating profits from foreign currencies
into U.S. dollars.
Through the third quarter of 2008, the EBIT margin in this segment was 10
percent. The EBIT margin in the fourth quarter dropped to 4 percent due to
rapid and significant declines in worldwide demand.
Insulating Systems
Net sales for 2008 were $1.6 billion, an 11-percent decrease from $1.8
billion in 2007. The continued decline in new residential construction in the
United States significantly impacted demand for insulation products. Housing
starts in the United States have been declining for more than two years and
were down 33 percent from 2007 to 2008.
EBIT from continuing operations for 2008 was $14 million, compared with
$192 million in 2007, a drop of 93 percent. The decrease in EBIT was primarily
the result of lower margins and lower sales volumes. Lower margins, due to
high levels of inflation in energy and energy-related costs, such as materials
and delivery, coupled with price declines, accounted for more than half of the
decrease in EBIT. Lower sales volumes, which drove underutilization of
production capacity, accounted for the remainder of the decrease in EBIT. This
impact was mitigated through actions the company took beginning in the fourth
quarter of 2007 to reduce production capacity and align its cost structure
with market demand expectations.
Roofing and Asphalt
Net sales for 2008 were a record $1.9 billion, a 35-percent increase from
$1.4 billion in 2007. More than three-quarters of the increase was because of
higher selling prices, which were implemented to recover inflation, primarily
in asphalt, and improve margins. Higher volumes were driven by strong,
damaging U.S. storms in the spring and summer and an improved product mix
related to increased sales of Duration(R) Series shingles and roofing
accessories.
EBIT from continuing operations for 2008 was $185 million, compared with
$27 million in 2007. Nearly half of the increase in EBIT was the result of
productivity improvements. In 2008, the company made significant gains in
manufacturing and material efficiencies and realized benefits from a
streamlined asset base resulting from our 2007 and 2008 cost-cutting actions.
Another one-third of the increase in EBIT was the result of improved margins
as price increases outpaced inflation in raw materials, labor and delivery.
Increased sales volumes and favorable product mix accounted for the remainder
of the increase in EBIT.
Other Building Materials and Services
Net sales for 2008 were $235 million, a 22-percent decrease from $301
million in 2007. More than three-quarters of the decrease was the result of
declines in the company's Masonry Products business related to the lower
demand in the new construction and repair and remodeling markets in the United
States.
EBIT from continuing operations for 2008 was a loss of $24 million,
compared with earnings of $14 million in 2007. More than two-thirds of the
change was due to the decline in sales volumes, including higher idle facility
costs, in Masonry Products related to the continued weakness in new
construction and repair and remodeling markets in the United States.
Conference Call and Presentation
Wednesday, Feb. 18, 2009
11 a.m. ET
All Callers
Live dial-in telephone number: 1-866-804-6922 or 1-857-350-1668
(Please dial in 10 minutes before conference call start time)
Passcode: 41654796
Presentation
To view the slide presentation during the conference call, please log on
to the live webcast at http://www.owenscorning.com/investors.
A telephone replay will be available through Feb. 25, 2009 at
1-888-286-8010 or 1-617-801-6888. Passcode: 80495635. A replay of the webcast
will also be available at www.owenscorning.com/investors.
About Owens Corning
Owens Corning (NYSE: OC) is a leading global producer of residential and
commercial building materials, glass fiber reinforcements and engineered
materials for composite systems. A Fortune 500 company for 54 consecutive
years, Owens Corning is committed to driving sustainability through delivering
solutions, transforming markets and enhancing lives. Founded in 1938, Owens
Corning is a market-leading innovator of glass fiber technology with sales of
$6 billion in 2008 and 18,000 employees in 26 countries on five continents.
Additional information is available at www.owenscorning.com.
This news release contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. These forward-looking statements are subject to risks,
uncertainties and other factors that could cause actual results to differ
materially from those projected in these statements. Such factors include,
without limitation: economic and political conditions, including new
legislation or other governmental actions; levels of residential and
commercial construction activity; competitive factors; pricing pressures;
weather conditions; our level of indebtedness; industry and economic
conditions that adversely affect the market and operating conditions of our
customers, suppliers or lenders; availability and cost of energy and
materials; availability and cost of credit; interest rate movements; issues
involving implementation of acquisitions, divestitures and joint ventures; our
ability to use our net operating loss carryforwards; achievement of expected
synergies, cost reductions and/or productivity improvements; issues involving
implementation of new business systems; foreign exchange fluctuations; the
success of research and development activities; difficulties in managing
production capacity; labor disputes; and factors detailed from time to time in
the Company's Securities and Exchange Commission filings. The information in
this news release speaks as of the date Feb. 18, 2009, and is subject to
change. The Company does not undertake any duty to update or revise forward-
looking statements. Any distribution of this news release after that date is
not intended and will not be construed as updating or confirming such
information.
Table 1
Owens Corning and Subsidiaries
Consolidated Statements of Earnings (Loss)
(in millions, except per share data)
Twelve Twelve
Months Ended Months Ended
December 31, December 31,
2008 2007
Net sales $5,847 $4,978
Cost of sales 4,963 4,201
Gross margin 884 777
OPERATING EXPENSES
Marketing and administrative expenses 617 498
Science and technology expenses 69 63
Restructuring costs 7 28
Chapter 11-related reorganization items 1 -
Employee emergence equity program expense 26 37
(Gain) loss on sale of fixed assets and other (32) 6
Total operating expenses 688 632
EARNINGS FROM CONTINUING OPERATIONS BEFORE
INTEREST AND TAXES 196 145
Interest expense, net 116 122
EARNINGS FROM CONTINUING OPERATIONS BEFORE
TAXES 80 23
Income tax expense (benefit) 919 (8)
EARNINGS (LOSS) FROM CONTINUING OPERATIONS
BEFORE MINORITY INTEREST AND EQUITY IN NET
EARNINGS (LOSS) OF AFFILIATES (839) 31
Minority interest and equity in net earnings
(loss) of affiliates - (4)
EARNINGS (LOSS) FROM CONTINUING OPERATIONS (839) 27
Discontinued operations:
Earnings from discontinued operations,
net of tax - 9
Gain on sale of discontinued operations,
net of tax - 60
Total earnings from discontinued
operations - 69
NET EARNINGS (LOSS) $(839) $96
BASIC EARNINGS (LOSS) PER COMMON SHARE
Earnings (loss) from continuing operations $(6.56) $0.21
Earnings from discontinued operations - 0.54
Basic net earnings (loss) per common
share $(6.56) $0.75
DILUTED EARNINGS (LOSS) PER COMMON SHARE
Earnings (loss) from continuing operations $(6.56) $0.21
Earnings from discontinued operations - 0.53
Diluted net earnings (loss) per common
share $(6.56) $0.74
WEIGHTED AVERAGE COMMON SHARES
Basic 127.8 128.4
Diluted 127.8 129.0
Table 2
Owens Corning and Subsidiaries
Consolidated Statements of Earnings (Loss)
(Unaudited)
(in millions, except per share data)
Three Three
Months Ended Months Ended
December 31, December 31,
2008 2007
Net sales $1,291 $1,304
Cost of sales 1,102 1,165
Gross margin 189 139
OPERATING EXPENSES
Marketing and administrative expenses 159 133
Science and technology expenses 17 17
Restructuring costs (1) 31
Chapter 11-related reorganization items 1 (4)
Employee emergence equity program expense 6 9
Gain on sale of fixed assets and other (8) (1)
Total operating expenses 174 185
EARNINGS FROM CONTINUING OPERATIONS BEFORE
INTEREST AND TAXES 15 (46)
Interest expense, net 26 32
EARNINGS FROM CONTINUING OPERATIONS BEFORE
TAXES (11) (78)
Income tax expense (benefit) 35 (38)
EARNINGS (LOSS) FROM CONTINUING OPERATIONS
BEFORE MINORITY INTEREST AND EQUITY IN NET
EARNINGS (LOSS) OF AFFILIATES (46) (40)
Minority interest and equity in net earnings
(loss) of affiliates 1 -
EARNINGS (LOSS) FROM CONTINUING OPERATIONS (45) (40)
Discontinued operations:
Earnings from discontinued operations,
net of tax - -
Loss on sale of discontinued operations,
net of tax - (6)
Total earnings from discontinued
operations - (6)
NET EARNINGS (LOSS) $(45) $(46)
BASIC EARNINGS (LOSS) PER COMMON SHARE
Earnings (loss) from continuing operations $(0.36) $(0.31)
Earnings from discontinued operations - (0.05)
Basic net earnings (loss) per
common share $(0.36) $(0.36)
DILUTED EARNINGS (LOSS) PER COMMON SHARE
Earnings (loss) from continuing operations $(0.36) $(0.31)
Earnings from discontinued operations - (0.05)
Diluted net earnings (loss) per
common share $(0.36) $(0.36)
WEIGHTED AVERAGE COMMON SHARES
Basic 125.3 128.6
Diluted 125.3 128.6
Table 3
Owens Corning and Subsidiaries
EBIT Reconciliation Schedules
(Unaudited)
(in millions)
For purposes of internal review of Owens Corning's year-over-year
operational performance, management excludes from net earnings (loss)
certain items it believes are not the result of current operations, and
therefore affect comparability. Additionally, management views net
precious metal lease (expense) income as a financing item included in net
interest expense rather than as a product cost included in cost of sales.
The adjusted financial measures resulting from these adjustments are used
internally by Owens Corning for various purposes, including reporting
results of operations to the Board of Directors, analysis of performance
and related employee compensation measures. Although management believes
that these adjustments result in measurements that provides it a useful
representation of its operational performance, the adjusted measures
should not be considered in isolation or as a substitute for net earnings
(loss) as prepared in accordance with accounting principles generally
accepted in the United States. Items affecting comparability and a
reconciliation of net earnings (loss) to adjusted earnings from continuing
operations before interest and taxes are shown in the tables below.
Twelve Twelve
Months Ended Months Ended
December 31, December 31,
2008 2007
ITEMS AFFECTING COMPARABILITY
Chapter 11-related reorganization items $(1) $-
Net precious metal lease (expense) income (9) 3
Restructuring and other costs (7) (54)
Acquisition integration and transaction
costs (75) (41)
Gains (losses) on sales of assets and
other 34 (7)
Employee emergence equity program expense (26) (37)
Asset impairments (10) (60)
Total items affecting comparability $(94) $(196)
RECONCILIATION TO ADJUSTED EARNINGS FROM
CONTINUING OPERATIONS BEFORE INTEREST AND
TAXES
NET EARNINGS (LOSS) $(839) $96
Discontinued operations
Earnings from discontinued operations - 9
Gain on sale of discontinued operations - 60
Total earnings from discontinued operations - 69
EARNINGS (LOSS) FROM CONTINUING OPERATIONS (839) 27
Minority interest and equity in net
earnings (loss) of affiliates - (4)
EARNINGS (LOSS) FROM CONTINUING OPERATIONS
BEFORE MINORITY INTEREST AND EQUITY IN NET
EARNINGS (LOSS) OF AFFILIATES (839) 31
Income tax expense (benefit) 919 (8)
EARNINGS FROM CONTINUING OPERATIONS BEFORE
TAXES 80 23
Interest expense, net 116 122
EARNINGS FROM CONTINUING OPERATIONS BEFORE
INTEREST AND TAXES 196 145
Adjustment to remove comparability items 94 196
ADJUSTED EARNINGS FROM CONTINUING
OPERATIONS BEFORE INTEREST AND TAXES $290 $341
Table 4
Owens Corning and Subsidiaries
EBIT Reconciliation Schedules
(Unaudited)
(in millions)
For purposes of internal review of Owens Corning's year-over-year
operational performance, management excludes from net earnings (loss)
certain items it believes are not the result of current operations, and
therefore affect comparability. Additionally, management views net
precious metal lease (expense) income as a financing item included in net
interest expense rather than as a product cost included in cost of sales.
The adjusted financial measures resulting from these adjustments are used
internally by Owens Corning for various purposes, including reporting
results of operations to the Board of Directors, analysis of performance
and related employee compensation measures. Although management believes
that these adjustments result in measurements that provides it a useful
representation of its operational performance, the adjusted measures
should not be considered in isolation or as a substitute for net earnings
(loss) as prepared in accordance with accounting principles generally
accepted in the United States. Items affecting comparability and a
reconciliation of net earnings (loss) to adjusted earnings from continuing
operations before interest and taxes are shown in the tables below.
Three Three
Months Ended Months Ended
December 31, December 31,
2008 2007
ITEMS AFFECTING COMPARABILITY
Chapter 11-related reorganization items $(1) $4
Net precious metal lease (expense) income (2) (3)
Restructuring and other (costs) credits 1 (57)
Acquisition integration and transaction
costs (23) (20)
Loss on sales of assets and other (2) -
Employee emergence equity program expense (6) (9)
Asset impairments - (49)
Total items affecting comparability $(33) $(134)
RECONCILIATION TO ADJUSTED EARNINGS FROM
CONTINUING OPERATIONS BEFORE INTEREST AND
TAXES
NET LOSS $(45) $(46)
Discontinued operations
Earnings from discontinued operations - -
Gain on sale of discontinued operations - (6)
Total earnings from discontinued operations - (6)
LOSS FROM CONTINUING OPERATIONS (45) (40)
Minority interest and equity in net
earnings (loss) of affiliates 1 -
LOSS FROM CONTINUING OPERATIONS BEFORE
MINORITY INTEREST AND EQUITY IN NET
EARNINGS (LOSS) OF AFFILIATES (46) (40)
Income tax expense (benefit) 35 (38)
LOSS FROM CONTINUING OPERATIONS BEFORE TAXES (11) (78)
Interest expense, net 26 32
EARNINGS (LOSS) FROM CONTINUING OPERATIONS
BEFORE INTEREST AND TAXES 15 (46)
Adjustment to remove items affecting
comparability 33 134
ADJUSTED EARNINGS FROM CONTINUING OPERATIONS
BEFORE INTEREST AND TAXES $48 $88
Table 5
Owens Corning and Subsidiaries
EPS Reconciliation Schedules
(Unaudited)
(in millions, except per share data)
For purposes of internal review of Owens Corning's year-over-year
operational performance, management excludes from net earnings (loss)
certain items it believes are not the result of current operations, and
therefore affect comparability. Additionally, management views net
precious metal lease (expense) income as a financing item included in net
interest expense rather than as a product cost included in cost of sales.
The adjusted financial measures resulting from these adjustments are used
internally by Owens Corning for various purposes, including reporting
results of operations to the Board of Directors, analysis of performance
and related employee compensation measures. Although management believes
that these adjustments result in measurements that provides it a useful
representation of its operational performance, the adjusted measures
should not be considered in isolation or as a substitute for net earnings
(loss) as prepared in accordance with accounting principles generally
accepted in the United States. Items affecting comparability and a
reconciliation of net earnings (loss) to adjusted earnings from continuing
operations before interest and taxes are shown in the tables below.
Twelve Twelve
Months Ended Months Ended
December 31, December 31,
2008 2007
RECONCILIATION TO ADJUSTED EARNINGS (LOSS)
FROM CONTINUING OPERATIONS
NET EARNINGS (LOSS) $(839) $96
Earnings from discontinued operations - 9
Gain on sale of discontinued operations - 60
EARNINGS (LOSS) FROM CONTINUING OPERATIONS (839) 27
Adjustment to remove items affecting
comparability 94 196
Adjustment to classify net metal lease
(expense) income as interest (9) 3
Adjustment to remove accounting valuation
for U.S. deferred tax assets 909 -
Adjustment to tax expense to reflect
an expected long-term rate of 25%* (31) (64)
ADJUSTED EARNINGS (LOSS) FROM CONTINUING
OPERATIONS $124 $162
RECONCILIATION TO ADJUSTED DILUTED
EARNINGS (LOSS) PER SHARE FROM
CONTINUING OPERATIONS
DILUTED EARNINGS (LOSS) PER SHARE FROM
CONTINUING OPERATIONS $(6.56) $0.21
Convert to diluted earnings per share
on net earnings 0.15 -
Adjustment to remove items affecting
comparability (see Table 3) 0.72 1.49
Adjustment to classify net precious
metal lease (expense) income as
interest (0.07) 0.02
Adjustment to remove accounting
valuation for U.S. deferred tax assets 6.95 -
EPS Reconciliation Schedules (0.24) (0.49)
ADJUSTED DILUTED EARNINGS PER SHARE
FROM CONTINUING OPERATIONS $0.95 $1.23
RECONCILIATION TO ADJUSTED DILUTED SHARES
OUTSTANDING
Weighted-average shares outstanding used
for diluted earnings per share 127.8 129.0
Non-vested restricted shares 0.9 -
Shares related to employee emergence
program 2.0 2.3
Adjusted diluted shares outstanding** 130.7 131.3
* The company estimates a long-term sustainable effective tax rate of 25%
based upon the projected blend of its U.S. and non-U.S. operations.
** The non-vested restricted shares were excluded from the reported
weighted-average shares outstanding due to their anti-dilutive effect.
The adjusted diluted shares outstanding need to be adjusted include the
dilutive effect of the non-vested restricted shares, as adjusted
earnings are positive. In addition, the employee emergence shares are
reflected as outstanding because the employee emergence equity expense
has been removed from adjusted earnings.
Table 6
Owens Corning and Subsidiaries
EPS Reconciliation Schedules
(Unaudited)
(in millions, except per share data)
For purposes of internal review of Owens Corning's year-over-year
operational performance, management excludes from net earnings (loss)
certain items it believes are not the result of current operations, and
therefore affect comparability. Additionally, management views net
precious metal lease (expense) income as a financing item included in net
interest expense rather than as a product cost included in cost of sales.
Furthermore, management believes the non-cash charge to establish an
accounting valuation allowance against U.S. deferred tax assets, should be
excluded from adjusted earnings from continuing operations. The adjusted
financial measures resulting from these adjustments are used internally by
Owens Corning for various purposes, including reporting results of
operations to the Board of Directors, analysis of performance and related
employee compensation measures. Although management believes that these
adjustments result in measurements that provides it a useful
representation of its operational performance, the adjusted measures
should not be considered in isolation or as a substitute for net earnings
(loss) as prepared in accordance with accounting principles generally
accepted in the United States. Items affecting comparability, a
reconciliation from net earnings (loss) to adjusted earning from
continuing operations, a reconciliation from diluted earnings (loss) per
share from continuing operations to adjusted diluted earnings per share
and a reconciliation from weighted-average shares outstanding used for
diluted earnings per share to adjusted diluted shares outstanding are
shown in the tables below.
Three Three
Months Ended Months Ended
December 31, December 31,
2008 2007
RECONCILIATION TO ADJUSTED EARNINGS FROM
CONTINUING OPERATIONS
NET EARNINGS (LOSS) $(45) $(46)
Earnings from discontinued operations - -
Gain on sale of discontinued operations - (6)
EARNINGS (LOSS) FROM CONTINUING OPERATIONS (45) (40)
Adjustment to remove items affecting
comparability 33 134
Adjustment to classify net metal lease
expense as interest (2) (3)
Adjustment to remove accounting valuation
for U.S. deferred tax assets 10 -
Adjustment to tax expense to reflect an
expected long-term rate of 25%* 20 (51)
ADJUSTED EARNINGS FROM CONTINUING OPERATIONS $16 $40
RECONCILIATION TO ADJUSTED DILUTED EARNINGS
PER SHARE FROM CONTINUING OPERATIONS
DILUTED EARNINGS (LOSS) PER SHARE FROM
CONTINUING OPERATIONS $(0.36) $(0.30)
Convert to diluted earnings per share on
net earnings 0.01 -
Adjustment to remove items affecting
comparability (see Table 4) 0.26 1.02
Adjustment to classify net precious metal
lease (expense) income as interest (0.02) (0.02)
Adjustment to remove accounting valuation
for U.S. deferred tax assets 0.08 -
Adjustment to tax expense to reflect an
expected long-term rate of 25%* 0.16 (0.39)
ADJUSTED DILUTED EARNINGS PER SHARE FROM
CONTINUING OPERATIONS $0.13 $0.31
RECONCILIATION TO ADJUSTED DILUTED SHARES
OUTSTANDING
Weighted-average shares outstanding used for
diluted earnings per share 125.3 128.6
Non-vested restricted shares 1.6 0.5
Shares related to employee emergence
program 2.0 2.3
Adjusted diluted shares outstanding ** 128.9 131.4
* The company estimates a long-term sustainable effective tax rate of 25%
based upon the projected blend of its U.S. and non-U.S. operations.
** The non-vested restricted shares were excluded from the reported
weighted-average shares outstanding due to their anti-dilutive effect.
The adjusted diluted shares outstanding need to be adjusted include the
dilutive effect of the non-vested restricted shares, as adjusted
earnings are positive. In addition, the employee emergence shares are
reflected as outstanding because the employee emergence equity expense
has been removed from adjusted earnings.
Table 7
Owens Corning and Subsidiaries
Consolidated Balance Sheets
(in millions)
December 31, December 31,
2008 2007
ASSETS
CURRENT ASSETS
Cash and cash equivalents $236 $135
Receivables, less allowances of $21
in 2008 and $23 in 2007 576 721
Inventories 894 821
Restricted cash - disputed
distribution reserve 31 33
Assets held for sale - current 13 53
Other current assets 102 92
Total current assets 1,852 1,855
Property, plant and equipment, net 2,819 2,777
Goodwill 1,124 1,174
Intangible assets 1,190 1,210
Deferred income taxes 42 484
Assets held for sale - non-current 3 173
Other non-current assets 187 199
TOTAL ASSETS $7,217 $7,872
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $1,194 $1,137
Accrued interest 9 12
Short-term debt 30 47
Long-term debt - current portion 16 10
Liabilities held for sale - current 8 40
Total current liabilities 1,257 1,246
Long-term debt, net of current portion 2,172 1,993
Pension plan liability 308 146
Other employee benefits liability 270 293
Deferred income taxes 318 -
Liabilities held for sale - non-current - 8
Other liabilities 117 161
Commitments and contingencies
Minority interest 42 37
STOCKHOLDERS' EQUITY
Preferred stock, par value $0.01 per
share 10 shares authorized; none
issued or outstanding at December 31,
2008 and December 31,2007 - -
Common stock, par value $0.01 per
share 400 shares authorized; 131.7 and
130.8 issued and outstanding at
December 31, 2008 and December 31,
2007, respectively 1 1
Additional paid in capital 3,824 3,784
Accumulated earnings (deficit) (808) 31
Accumulated other comprehensive earnings
(deficit) (183) 173
Cost of common stock in treasury; 4.7
shares at December 31, 2008 (101) (1)
Total stockholders' equity 2,733 3,988
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $7,217 $7,872
Table 8
Owens Corning and Subsidiaries
Consolidated Statements of Cash Flows
(in millions)
Twelve Twelve
Months Ended Months Ended
December 31, December 31,
2008 2007
NET CASH FLOW PROVIDED BY OPERATING
ACTIVITIES
Net earnings (loss) $(839) $96
Adjustments to reconcile net earnings
to cash used for operating activities:
Depreciation and amortization 331 343
Gain on sale of businesses and fixed
assets (51) (104)
Impairment of fixed and intangible
assets 11 76
Deferred income taxes 881 -
Provision for pension and other
employee benefits liabilities 30 45
Employee emergence equity program
expense 26 37
Stock-based compensation expense 17 5
Decrease in restricted cash - disputed
distribution reserve 2 52
Payments related to Chapter 11 filings (3) (109)
Increase (decrease) in receivables 74 (9)
Increase in inventories (100) 3
Increase in prepaid and other assets (23) 7
Decrease in accounts payable and accrued
liabilities (64) (106)
Pension fund contribution (73) (121)
Payments for other employee benefits
liabilities (24) (25)
Other (2) (8)
Net cash flow provided by operating
activities 193 182
NET CASH FLOW USED FOR INVESTING
ACTIVITIES
Additions to plant and equipment (434) (247)
Investment in subsidiaries and
affiliates, net of cash acquired - (620)
Proceeds from the sale of assets or
affiliates 272 437
Net cash flow used for investing
activities (162) (430)
NET CASH FLOW PROVIDED BY (USED FOR)
FINANCING ACTIVITIES
Proceeds from long-term debt 12 617
Payments on long-term debt (9) (85)
Proceeds from revolving credit facility 1,135 713
Payments on revolving credit facility (955) (573)
Payment of note payable to 524(g) Trust - (1,390)
Net increase (decrease) in short-term debt (16) (13)
Purchase of treasury stock (100) -
Net cash flow provided by (used for)
financing activities 67 (731)
Effect of exchange rate changes on cash 3 25
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 101 (954)
Cash and cash equivalents at beginning of
period 135 1,089
CASH AND CASH EQUIVALENTS AT END OF PERIOD $236 $135
Table 9
Owens Corning and Subsidiaries
Segment Data
(in millions)
Twelve Twelve
Months Ended Months Ended
December 31, December 31,
2008 2007
NET SALES
Reportable Segments
Composite Solutions $2,363 $1,695
Insulating Systems 1,573 1,776
Roofing and Asphalt 1,863 1,375
Other Building Materials and Services 235 301
Total reportable segments 6,034 5,147
Corporate eliminations (187) (169)
Consolidated net sales $5,847 $4,978
EARNINGS (LOSS) FROM CONTINUING OPERATIONS
BEFORE INTEREST AND TAXES
Reportable Segments
Composite Solutions $208 $123
Insulating Systems 14 192
Roofing and Asphalt 185 27
Other Building Materials and Services (24) 14
Total reportable segments $383 $356
RECONCILIATION TO CONSOLIDATED EARNINGS
FROM CONTINUING OPERATIONS BEFORE INTEREST
AND TAXES
Chapter 11-related reorganization items $(1) $-
Net precious metal lease (expense) income (9) 3
Restructuring and other (costs) credits (7) (54)
Acquisition integration and transaction
costs (75) (41)
Gains (losses) on sales of assets and other 34 (7)
Employee emergence equity program expense (26) (37)
Asset impairments (10) (60)
General corporate (expense) income (93) (15)
CONSOLIDATED EARNINGS FROM CONTINUING
OPERATIONS BEFORE INTEREST AND TAXES $196 $145
Table 10
Owens Corning and Subsidiaries
Segment Data
(Unaudited)
(in millions)
Three Three
Months Ended Months Ended
December 31, December 31,
2008 2007
NET SALES
Reportable Segments
Composite Solutions $448 $543
Insulating Systems 375 454
Roofing and Asphalt 466 276
Other Building Materials and Services 46 67
Total reportable segments 1,335 1,340
Corporate eliminations (44) (36)
Consolidated net sales $1,291 $1,304
EARNINGS (LOSS) FROM CONTINUING OPERATIONS
BEFORE INTEREST AND TAXES
Reportable Segments
Composite Solutions $19 $46
Insulating Systems (9) 55
Roofing and Asphalt 70 (9)
Other Building Materials and Services (13) (4)
Total reportable segments $67 $88
RECONCILIATION TO CONSOLIDATED EARNINGS
FROM CONTINUING OPERATIONS BEFORE INTEREST
AND TAXES
Chapter 11-related reorganization items $(1) $4
Net precious metal lease expense (2) (3)
Restructuring and other (costs) credits 1 (57)
Acquisition integration and transaction
costs (23) (20)
Loss on sales of assets and other (2) -
Employee emergence equity program expense (6) (9)
Asset impairments - (49)
General corporate expense (19) -
CONSOLIDATED EARNINGS (LOSS) FROM CONTINUING
OPERATIONS BEFORE INTEREST AND TAXES $15 $(46)
