Company Announces Share Buy-Back Program; Strategic Review of
Siding Solutions Business and Fabwel Unit TOLEDO, Ohio, Feb. 21
/PRNewswire-FirstCall/ -- Owens Corning (NYSE:OC) today reported
record consolidated net sales of $6.461 billion in 2006, compared
with $6.323 billion in 2005, a 2.2 percent increase. During the
fourth quarter of 2006, the company recorded sales of $1.477
billion, compared with record sales of $1.713 billion during the
same period in 2005. Fourth quarter sales declined 13.8 percent,
reflecting continued weakness in U.S. housing starts and a lack of
storm-related demand for roofing products. "2006 was a year of
accomplishments," said Dave Brown, president and chief executive
officer. "Owens Corning emerged from asbestos-related Chapter 11
with a strong balance sheet that positions the company to succeed
through a challenging cyclical downturn of housing starts. We
generated sales in 2006 that were the highest in our company's
history. During the fourth quarter, we demonstrated the strength of
our business portfolio with solid results in Composite Solutions to
help offset weakness in our Roofing and Asphalt segment. "We've
taken decisive action to position Owens Corning to generate
improved value for our shareholders," said Brown. "Yesterday, we
announced that we have signed a joint-venture agreement with
Saint-Gobain that will accelerate the growth of our Composite
Solutions business around the world. We also are announcing today
that we are evaluating strategic alternatives for our Siding
Solutions business and Fabwel, a unit of our Composites
organization. In addition to our strong balance sheet, our business
forecast for 2007 gives us confidence in our cash generation
ability. We are pleased that our Board of Directors has authorized
a share buy-back program that delivers on our commitment to
building shareholder value." As a result of the application of
Fresh Start Accounting on Oct. 31, 2006, and in accordance with SOP
90-7, the post-emergence financial results of the company for the
period starting Nov. 1, 2006 are presented as the "Successor" and
the pre-emergence financial results of the company for the periods
ending on or prior to Oct. 31, 2006 are presented as the
"Predecessor." GAAP financial statements do not straddle the
Effective Date because, in effect, the Successor represents a new
entity. For the readers' convenience in this financial news
release, the Successor two months ended Dec. 31, 2006 and the
Predecessor ten months ended Oct. 31, 2006 have been combined and
are collectively referred to as "Fiscal 2006." The Successor two
months ended Dec. 31, 2006 and the Predecessor one month ended Oct.
31, 2006 have been combined and are collectively referred to as
"Fiscal fourth quarter of 2006." When reviewing the operating
performance of the company with its Board of Directors and
employees, management uses adjusted income from operations. To
calculate adjusted income from operations, management excludes from
net income and income from operations certain items, including
those related to the company's Chapter 11 proceedings, asbestos
liabilities, restructuring and other activities and the impact of
Fresh Start Accounting, so as to improve comparability over time
(the "Comparability Items"). As described more fully in the
attached financial schedules, such Comparability Items amounted to
charges of $136 million in Fiscal 2006, $4.287 billion in 2005, and
$152 million in the Fiscal fourth quarter of 2006, and a credit of
$81 million in the fourth quarter of 2005. Consolidated 2006 and
Fourth-Quarter Results * Reported income from operations in Fiscal
2006 was $433 million, compared with a loss of $3.743 billion in
2005. Excluding the Comparability Items, Fiscal 2006 adjusted
income from operations was $569 million, compared with $544 million
in 2005, an increase of 4.6 percent. * For the Fiscal fourth
quarter of 2006, reported income from operations was a loss of $9
million, compared to income of $230 million in 2005. Excluding the
Comparability Items, adjusted income from operations for the Fiscal
fourth quarter of 2006 was $143 million, compared with $149 million
for the same period of 2005, a decrease of 4.0 percent. * In the
second half of Fiscal 2006, restructuring and other charges were
taken to realign production capacity with projected demand, exit
non- core businesses, combine distribution facilities, and reduce
selling, general and administrative expenses. The restructuring
charges and other actions taken totaled $55 million. The expected
annual improvement in operating results related to these actions is
approximately $44 million. * Gross margin as a percentage of
consolidated net sales, excluding charges related to the adoption
of Fresh Start Accounting and other restructuring charges that
together totaled $63 million, was 17.5 percent in Fiscal 2006
compared to 18.3 percent in 2005, a decrease of 0.8 percent. *
Selling, General and Administrative (SG&A) expenses, as a
percentage of consolidated net sales, were 8.3 percent for Fiscal
2006, compared with 8.9 percent in 2005. This improvement in
productivity was primarily due to increased net sales and lower
performance-based compensation. Business Highlights: * 2006 was the
safest year in Owens Corning's history. The company's continued
focus on employee safety resulted in a 13 percent reduction in the
number of injuries compared with 2005. * The Insulating Systems
segment introduced marketing programs to promote the sale of
insulation as an energy conservation and noise- reduction solution.
A first-time program called R's on Us(TM) provides pricing
incentives that encourage builders to increase the R-value of
insulation in new homes to promote energy efficiency. * The Roofing
and Asphalt segment completed market testing and began a national
roll-out of the new and innovative Duration(TM) Series roofing
shingle with SureNail(R) technology. This installer-friendly
product features a fast-install extra-wide nailing zone and
improved wind performance. * Owens Corning took aggressive steps
within the Other Building Materials & Services segment to
improve operating performance. Owens Corning is announcing today
that it is exploring strategic alternatives for the Siding
Solutions business, which includes its vinyl siding manufacturing
operations and Norandex/Reynolds distribution business.
Additionally, Owens Corning exited the HOMExperts business in
December of 2006 to focus on growing its services business through
franchising. The company's manufactured stone veneer business also
completed the integration of Modulo/Parmur, a previously announced
European acquisition. * The Composite Solutions segment showed
improvement throughout 2006 and finished the year with strong
performance. A major milestone in the proposed global joint venture
with Saint-Gobain was announced yesterday with the signing of a
joint-venture agreement. This transaction is intended to deliver
increased customer value through improved regional and global reach
in our Composite Solutions business. Owens Corning is exploring
strategic alternatives for its Fabwel unit, which produces and
fabricates composite components and sidewalls for recreational
vehicles and cargo trailers. Update: Proposed Owens Corning and
Saint-Gobain Joint Venture On July 27, 2006, Owens Corning and
Saint-Gobain announced that they were in discussions to merge their
respective reinforcements and composites businesses, thereby
creating a global company in reinforcements and composite fabrics
products with worldwide revenues of approximately $1.8 billion
(euro 1.5 billion) and 10,000 employees. The parties announced
yesterday that they have signed a joint-venture agreement to merge
those businesses to form a new company that will be named "OCV
Reinforcements" that will serve customers with improved technology,
an expanded product range and a strengthened presence in both
developed and emerging markets. The agreement contemplates that the
joint venture will be owned 60 percent by Owens Corning and 40
percent by Saint- Gobain. After a minimum of four years,
Saint-Gobain will have the option to sell its 40 percent stake to
Owens Corning, and Owens Corning will have the option to buy
Saint-Gobain's stake in the joint venture. The transaction, which
has been approved by the Boards of Directors of both parent
companies, is expected to close in mid-2007 and is subject to
customary closing conditions and regulatory and antitrust
approvals. Announcing: Strategic Business Review: Siding Solutions
Business & Fabwel Unit Consistent with Owens Corning's ongoing
review of its portfolio of businesses, the company today announced
that it will explore strategic alternatives for the company's
Siding Solutions business, which includes its vinyl siding
manufacturing operations and Norandex/Reynolds distribution
business, and the company's Fabwel unit, the leading producer and
fabricator of components and sidewalls for recreational vehicles
and cargo trailers. The Siding Solutions business is the largest
component of the Other Building Materials and Services segment.
Fabwel is a unit within Owens Corning's Composite Solutions segment
and is separate from the company's planned joint- venture with
Saint-Gobain's Vetrotex. The company expects a midyear completion
of this process. Announcing: Owens Corning Share Buy-Back Program
Owens Corning today announced that its Board of Directors has
approved a share buy-back program under which the company is
authorized to repurchase up to 5 percent of Owens Corning's
outstanding common stock. At current prices, this would represent
an investment of approximately $200 million. Shares may be
repurchased through open market, privately negotiated, or other
transactions. The timing and actual number of shares repurchased
will depend on market conditions and other factors and will be at
the company's discretion. This first-time program is intended to
further promote total return and value to Owens Corning
shareholders. 2007 Outlook Based on estimates of the National
Association of Home Builders (NAHB), the significant slow down in
U.S. housing starts is expected to carry well into 2007. This
continuing market softness will be reflected in first quarter
results, which seasonally is the company's weakest quarter. The
company's business results in the Insulating Systems and Roofing
and Asphalt segments tend to lag housing starts by approximately
one quarter. Many industry and economic analysts, including the
NAHB, believe that housing starts will stabilize through 2007.
Although Owens Corning expects that 2007 will be a challenging
year, the company expects its business results to improve
throughout the year if these forecasts materialize and as
seasonality in home building creates gradual improvement for our
businesses. In 2007, Owens Corning anticipates that the performance
of the Insulating Systems segment will reflect on a lagged basis
the trend in reported housing starts. Continued company initiatives
to create demand for insulation products, including our special R's
on Us(TM) promotion, noise-control solutions for homes and
businesses and promotion of the 2005 U.S. Energy Policy Act, should
bolster this segment. The performance of the Roofing and Asphalt
segment, which significantly underperformed in the second half of
2006, is expected to improve through 2007 as the excess inventory
that the industry produced, due to anticipated storm- related
demand which did not materialize, is gradually reduced. Financial
results for the first half of this year are expected to be less
than the record results reported in the first half of 2006, when
sales in this segment were up significantly because of the carry
over of demand due to the hurricanes of 2004 and 2005. Adding to
the results of this segment will be the continuing roll-out of the
new Owens Corning Duration(TM) Series Shingle. Given the recent
closure of the HOMExperts(R) business, continued growth of the
manufactured stone veneer business and the strategic review of
Owens Corning's Siding Solutions business, improved performance is
expected in the Other Building Materials and Services segment.
Revenue and profitability growth of our Composite Solutions segment
is expected in 2007. The closing of the proposed joint venture with
Saint- Gobain's Vetrotex business is planned by midyear. Going
forward, Owens Corning will continue a balanced approach to the use
of free cash flow. Strong operational cash flow is intended to fuel
company growth and innovation, with a focus on return on net
assets. Investments in maintenance and improving existing
operations are forecast to total $250 million in 2007. Depreciation
and amortization for the year is estimated to total $280 - 290
million, compared with $278 million in Fiscal 2006. Upon emergence
and subsequent distribution of contingent stock and cash to the
524(g) Trust in January 2007, Owens Corning generated a significant
U.S. Federal tax net operating loss of approximately $2.8 billion.
Based on current estimates, the company believes its cash taxes
will be about 10 to 15 percent of pre-tax income for the next five
to seven years. Allowing for significant uncertainty in the
marketplace and based upon the NAHB's current 2007 estimate of 1.54
million housing starts, the company projects that 2007 adjusted
income from operations should exceed $415 million, not including
the impact of the proposed Owens Corning -- Vetrotex joint venture
or other strategic organizational changes. This forecast will be
updated and communicated quarterly. 2006 and Fourth-Quarter
Business Segment Highlights Insulating Systems * Net sales for
Fiscal 2006 were $2.097 billion, a 6.1 percent increase from the
2005 level of $1.976 billion. This increase was primarily the
result of the continued strong demand from the U.S. housing and
remodeling markets during the first nine months of 2006, robust
demand in the commercial and industrial market, and favorable
pricing in major product categories, which allowed the company to
recover energy, material and transportation cost increases. Slowing
demand from the retail and residential construction markets became
evident in the fourth quarter of 2006. * Net sales in the Fiscal
fourth quarter of 2006 decreased 6.4 percent compared to the prior
year. The decrease in net sales was primarily the result of the
decline in demand in the fourth quarter of 2006, reflecting weaker
housing activity compared to the fourth quarter of 2005 during
which residential construction was very strong. * Income from
operations for Fiscal 2006 was $467 million, a 10.1 percent
increase from the 2005 level of $424 million. Favorable pricing and
improved operating efficiencies offset inflation in raw materials,
energy and labor, and approximately $6 million of additional cost,
primarily depreciation and amortization, resulting from the impact
of the adoption of Fresh Start Accounting. * Fiscal fourth quarter
of 2006 income from operations decreased 16.4 percent to $107
million, compared to $128 million during the same period in 2005.
Fiscal fourth quarter of 2006 results included approximately $6
million of additional cost resulting from the impact of the
adoption of Fresh Start Accounting. * During the fourth quarter of
2006, weaker housing activity combined with seasonal slow downs
resulted in production curtailments at selected Owens Corning
insulation manufacturing facilities. These curtailments were
expanded in the first quarter of 2007 to include the entire
Candiac, Quebec facility in Canada. Roofing and Asphalt * Net sales
for Fiscal 2006 were $1.723 billion, a 4.6 percent decrease from
the 2005 level of $1.806 billion. This decrease was primarily the
result of a decline in volume related to both lower new residential
construction activity and a lower level of storm-related demand,
particularly in the second half of 2006. This decrease was only
partially offset by price increases, which generally reflect the
partial pass through of higher energy, material and transportation
costs. Fiscal fourth quarter of 2006 net sales totaled $304
million, compared with $492 million in the fourth quarter of 2005.
* Income from operations for Fiscal 2006 was $72 million, a 48.2
percent decrease from the 2005 level of $139 million. This decrease
was primarily driven by lower volume resulting from declines in new
construction activity, combined with the abatement of demand from
2005 hurricane damage, and the inability to achieve sufficient
price increases in the second half of the year to offset
significant increases in asphalt coating cost. The adoption of
Fresh Start Accounting had no significant impact on income from
operations. * Fiscal fourth quarter of 2006 income from operations
was a loss of $25 million, compared to income of $34 million during
the same period in 2005. * Production at Owens Corning's roofing
and asphalt facilities in the U.S. was significantly curtailed
beginning in October 2006, bringing year-end inventories down to
more acceptable levels. Production operations at the Jessup,
Maryland roofing and asphalt facilities were closed in the fourth
quarter of 2006. Other Building Materials and Services * Net sales
for Fiscal 2006 were $1.260 billion, a 2.1 percent increase from
the 2005 level of $1.234 billion. This increase was primarily the
result of volume growth in North American manufactured stone veneer
products, and the impact of our European manufactured stone veneer
acquisition in mid-2006, partially offset by lower volumes in vinyl
siding products. Fiscal fourth quarter of 2006 net sales totaled
$288 million, compared with $325 million in the fourth quarter of
2005. * Income from operations for Fiscal 2006 was $13 million, a
23.5 percent decrease from the 2005 level of $17 million. The
decrease was due to losses in the HOMExperts portion of our
construction services business, from which we announced our exit in
the fourth quarter of 2006, and volume declines in vinyl siding
products, partially offset by increased volume and production
efficiencies in manufactured stone veneer products. The adoption of
Fresh Start Accounting had no significant impact on income from
operations. * Fiscal fourth quarter of 2006 income from operations
decreased to breakeven, compared to $5 million of income during the
same period in 2005. * Performance in this segment was lifted by
productivity improvements within our domestic manufactured stone
veneer organization and the midyear acquisition of a European
producer and distributor of such products. The financial results of
this acquisition are included in the Fiscal fourth quarter of 2006
reporting of this segment. Composite Solutions * Net sales for
Fiscal 2006 were $1.560 billion, a 4.3 percent increase from the
2005 level of $1.495 billion. The increase in sales was primarily
attributable to the acquisition of a manufacturing facility in
Japan from Asahi Glass Co. Ltd. during the second quarter of Fiscal
2006. Fiscal fourth quarter of 2006 net sales totaled $383 million,
compared with $373 million in the fourth quarter of 2005. * Income
from operations for Fiscal 2006 was $159 million, a 14.4 percent
increase from the 2005 level of $139 million. Gains on the sale of
metals used in certain production tooling accounted for $38 million
of the improvement. Without these gains, income from operations
would have declined by $18 million. Fiscal 2006 income from
operations also included a $20 million gain related to insurance
recoveries associated with the July 2005 flood of the Taloja, India
manufacturing facility, and was adversely impacted by an estimated
$8 million of losses due to downtime associated with a capacity
expansion and recovery from the flood. The decrease in income from
operations, excluding the effect of the gains on the sale of
metals, the insurance recovery and the downtime costs, was due to
cost inflation in raw materials and transportation. The adoption of
Fresh Start Accounting had no significant impact on income from
operations. * Fiscal fourth quarter of 2006 income from operations
increased 8.9 percent to $49 million, compared to $45 million
during the same period in 2005 which included a $7 million gain on
the sale of metals used in certain production tooling and $4
million in costs associated with the July 2005 flood of the Taloja,
India manufacturing facility. * During the second half of the year,
results improved due to stronger volumes, improved pricing,
increased manufacturing productivity (including the return to full
operation of our facilities in India and Brazil), reduced operating
expenses and benefits from the second quarter acquisition of
reinforcement capacity in Japan. The company continues to evaluate
its tax balance sheet accounts in light of the application of Fresh
Start Accounting related to emergence from Chapter 11. This review
will be completed prior to the filing of the company's annual
report on Form 10-K for 2006, which is currently scheduled to occur
on or about March 14, 2007. The results of that review will not
impact the operational results reported today but could result in
immaterial adjustments to the company's balance sheet. First
quarter 2007 results are currently scheduled to be announced on
Wednesday, May 2, 2007. Conference Call Information Owens Corning
will host a conference call for investors and analysts today to
discuss financial results. Wednesday, Feb. 21, 2007 11 a.m. Eastern
Standard Time Live dial-in telephone number: 800-573-4840 or
617-224-4326 (Please dial in 10 minutes before conference call
start time) Passcode: 58370563 Live Webcast:
http://www.owenscorning.com/investors A telephone replay will be
available through Feb. 28, 2007 at 888-286-8010 or 617-801-6888.
Passcode: 50698631. A replay of the web cast will also be available
at http://www.owenscorning.com/investors. About Owens Corning Owens
Corning is a world leader in building materials systems and
composite solutions. A Fortune 500 company for more than 50 years,
Owens Corning people redefine what is possible each day to deliver
high-quality products and services ranging from insulation,
roofing, siding and stone, to glass composite materials used in
transportation, electronics, telecommunications and other
high-performance applications. Since the company's founding in
1938, Owens Corning has been a market-leading innovator of
glass-fiber technology with sales of $6.5 billion in 2006 and
19,000 employees in 26 countries. Additional information is
available at http://www.owenscorning.com/. This news release
contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended. These
forward-looking statements are subject to risks and uncertainties
that could cause actual results to differ materially from those
projected in these statements. Further information on factors that
could affect the company's financial and other results is included
in the company's Forms 10-Q and 10-K, filed with the Securities and
Exchange Commission. Owens Corning and Subsidiaries Consolidated
Statement of Income (Loss) (Unaudited) (Dollars in millions)
Combined Successor Predecessor Twelve Two Ten Twelve Months Months
Months Months Ended Ended Ended Ended December December October
December 31, 2006 31, 2006 31, 2006 31, 2005 NET SALES $6,461 $909
$5,552 $6,323 COST OF SALES 5,395 799 4,596 5,165 Gross margin
1,066 110 956 1,158 Operating Expenses Marketing and administrative
expenses 537 92 445 565 Science and technology expenses 80 30 50 58
Restructure costs 39 27 12 - Chapter 11 related reorganization
items 55 10 45 45 Provision for asbestos litigation claims - Owens
Corning - - - 3,365 Provision (credit) for asbestos litigation
claims - Fibreboard (13) - (13) 902 Employee emergence equity
program 6 6 - - (Gain) loss on sale of fixed assets and other (71)
5 (76) (34) Total operating expenses 633 170 463 4,901 INCOME
(LOSS) FROM OPERATIONS 433 (60) 493 (3,743) Interest expense, net
270 29 241 739 Gain on settlement of liabilities subject to
compromise (5,864) - (5,864) - Fresh-start accounting adjustments
(3,049) - (3,049) - INCOME (LOSS) BEFORE INCOME TAX EXPENSE 9,076
(89) 9,165 (4,482) Income tax expense (benefit) 997 (28) 1,025
(387) INCOME (LOSS) BEFORE MINORITY INTEREST AND EQUITY IN NET
EARNINGS OF AFFILIATES 8,079 (61) 8,140 (4,095) Minority interest
and equity in net earnings (loss) of affiliates (4) (4) - (4) NET
INCOME (LOSS) $8,075 $(65) $8,140 $(4,099) RECONCILIATION TO
ADJUSTED INCOME FROM OPERATIONS: NET INCOME (LOSS) $8,075 $(65)
$8,140 $(4,099) Minority interest and equity in net earnings (loss)
of affiliates (4) (4) - (4) INCOME (LOSS) BEFORE MINORITY INTEREST
AND EQUITY IN NET EARNINGS OF AFFILIATES 8,079 (61) 8,140 (4,095)
Income tax expense (benefit) 997 (28) 1,025 (387) INCOME (LOSS)
BEFORE INCOME TAX EXPENSE 9,076 (89) 9,165 (4,482) Gain on
settlement of liabilities subject to compromise (5,864) - (5,864) -
Fresh-start accounting adjustments (3,049) - (3,049) - Interest
expense, net 270 29 241 739 INCOME (LOSS) FROM OPERATIONS 433 (60)
493 (3,743) Adjustments to remove items impacting comparability:
Provision for asbestos litigation (13) - (13) 4,267 Chapter 11
related reorganization items 55 10 45 45 Impact of inventory
write-up 44 44 - - In-process research and development 21 21 - -
Restructuring activities 55 44 11 - Gain on sale of metals (45) -
(45) (7) Other 19 12 7 (18) Total adjustments to remove items
impacting comparability 136 131 5 4,287 ADJUSTED INCOME FROM
OPERATIONS $569 $71 $498 $544 DEPRECIATION AND AMORTIZATION $278
$69 $209 $234 Owens Corning and Subsidiaries Consolidated Statement
of Income (Loss) (Unaudited) (Dollars in millions) Combined
Successor Predecessor Three Two One Three Months Months Month
Months Ended Ended Ended Ended December December October December
31, 2006 31, 2006 31, 2006 31, 2005 NET SALES $1,477 $909 $568
$1,713 COST OF SALES 1,269 799 470 1,405 Gross margin 208 110 98
308 Operating Expenses Marketing and administrative expenses 125 92
33 156 Science and technology expenses 35 30 5 15 Restructure costs
29 27 2 - Chapter 11 related reorganization items 27 10 17 5
Provision (credit) for asbestos litigation claims - Owens Corning -
- - (69) Provision (credit) for asbestos litigation claims -
Fibreboard - - - (5) Employee emergence equity program 6 6 - -
(Gain) loss on sale of fixed assets and other (5) 5 (10) (24) Total
operating expenses 217 170 47 78 INCOME (LOSS) FROM OPERATIONS (9)
(60) 51 230 Interest expense, net 48 29 19 199 Gain on settlement
of liabilities subject to compromise (5,864) - (5,864) -
Fresh-start accounting adjustments (3,049) - (3,049) - INCOME
(LOSS) BEFORE INCOME TAX EXPENSE 8,856 (89) 8,945 31 Income tax
expense (benefit) 1,151 (28) 1,179 (304) INCOME (LOSS) BEFORE
MINORITY INTEREST AND EQUITY IN NET EARNINGS OF AFFILIATES 7,705
(61) 7,766 335 Minority interest and equity in net earnings (loss)
of affiliates (6) (4) (2) 3 NET INCOME (LOSS) $7,699 $(65) $7,764
$338 RECONCILIATION TO ADJUSTED INCOME FROM OPERATIONS: NET INCOME
(LOSS) $7,699 $(65) $7,764 $338 Minority interest and equity in net
earnings (loss) of affiliates (6) (4) (2) 3 INCOME (LOSS) BEFORE
MINORITY INTEREST AND EQUITY IN NET EARNINGS OF AFFILIATES 7,705
(61) 7,766 335 Income tax expense (benefit) 1,151 (28) 1,179 (304)
INCOME (LOSS) BEFORE INCOME TAX EXPENSE 8,856 (89) 8,945 31 Gain on
settlement of liabilities subject to compromise (5,864) - (5,864) -
Fresh-start accounting adjustments (3,049) - (3,049) - Interest
expense, net 48 29 19 199 INCOME (LOSS) FROM OPERATIONS (9) (60) 51
230 Adjustments to remove items impacting comparability: Provision
for asbestos litigation - - - (74) Chapter 11 related
reorganization items 27 10 17 5 Impact of inventory write-up 44 44
- - In-process research and development 21 21 - - Restructuring
activities 45 44 1 - Gain on sale of metals - - - (7) Other 15 12 3
(5) Total adjustments to remove items impacting comparability 152
131 21 (81) ADJUSTED INCOME FROM OPERATIONS $143 $71 $72 $149
DEPRECIATION AND AMORTIZATION $94 $69 $25 $53 Owens Corning and
Subsidiaries Condensed Consolidated Balance Sheet (Unaudited)
(Dollars in millions) Successor Predecessor December 31, December
31, 2006 2005 ASSETS Current Cash and cash equivalents $1,089
$1,559 Receivables, net 573 608 Inventories 749 477 Other current
assets 141 61 Total current 2,552 2,705 Other Restricted cash -
1,622 Deferred income taxes 549 1,432 Goodwill and other intangible
assets 2,611 226 Other noncurrent assets 237 738 Total other 3,397
4,018 Net plant and equipment 2,521 2,012 TOTAL ASSETS $8,470
$8,735 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current
Accounts payable and accrued liabilities $1,081 $1,026 Accrued
interest 39 741 Short-term debt and current portion of long-term
debt 1,440 19 Total current 2,560 1,786 Long-term debt 1,296 36
Other long-term liabilities 884 1,293 Liabilities subject to
compromise - 13,520 Company obligated securities of entities
holding solely parent debentures - subject to compromise - 200
Minority interest 44 47 Stockholders' equity (deficit) 3,686
(8,147) TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $8,470
$8,735 Owens Corning and Subsidiaries Condensed Consolidated
Statement of Cash Flows (Unaudited) (Dollars in millions) Combined
Successor Predecessor Twelve Two Ten Twelve Months Months Months
Months Ended Ended Ended Ended December December October December
31, 2006 31, 2006 31, 2006 31, 2005 NET CASH FLOW FROM OPERATIONS
Net income (loss) $8,075 $(65) $8,140 $(4,099) Adjustments to
reconcile net income (loss) to cash provided by operating
activities Provision for asbestos litigation claims 21 - 21 4,277
Depreciation and amortization 278 69 209 234 Change in deferred
taxes 160 (48) 208 (467) Provision for (payment of) post-petition
interest/fees on pre- petition obligations (728) (31) (697) 735
Fresh-start accounting adjustments, net of tax (2,243) - (2,243) -
Gain on settlement of liabilities subject to compromise (5,864) -
(5,864) - Payments related to Chapter 11 filings (131) (131) - -
Payment to asbestos trust (1,250) - (1,250) - Changes in
receivables, inventories, accounts payable and accrued liabilities
24 312 (288) 24 Other (230) (91) (139) 42 Net cash flow from
operating activities (1,888) 15 (1,903) 746 NET CASH FLOW FROM
INVESTING Additions to plant and equipment (361) (77) (284) (288)
Investment in subsidiaries, net of cash acquired (47) - (47) (14)
Proceeds from the sale of assets or affiliate 82 - 82 19 Net cash
flow from investing activities (326) (77) (249) (283) NET CASH FLOW
FROM FINANCING Proceeds from issuance of bonds 1,178 - 1,178 -
Proceeds from issuance of new common stock 2,187 - 2,187 - Payments
to pre-petition lenders (1,516) (55) (1,461) - Other cash used for
financing activities (111) 1 (112) (30) Net cash flow from
financing activities 1,738 (54) 1,792 (30) Effect of exchange rate
changes on cash 6 - 6 1 NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS (470) (116) (354) 434 Cash and cash equivalents at
beginning of period 1,559 1,205 1,559 1,125 CASH AND CASH
EQUIVALENTS AT END OF PERIOD $1,089 $1,089 $1,205 $1,559 Owens
Corning and Subsidiaries Business Segment Information (Unaudited)
(Dollars in millions) Combined Successor Predecessor Twelve Two Ten
Twelve Months Months Months Months Ended Ended Ended Ended December
December October December 31, 2006 31, 2006 31, 2006 31, 2005 NET
SALES Insulating Systems $2,097 $331 $1,766 $1,976 Roofing and
Asphalt 1,723 167 1,556 1,806 Other Building Materials and Services
1,260 178 1,082 1,234 Composite Solutions 1,560 245 1,315 1,495
Total reportable segments 6,640 921 5,719 6,511 Corporate
Eliminations (179) (12) (167) (188) Consolidated $6,461 $909 $5,552
$6,323 INCOME BEFORE INCOME TAX EXPENSE Insulating Systems $467 $59
$408 $424 Roofing and Asphalt 72 (23) 95 139 Other Building
Materials and Services 13 (4) 17 17 Composite Solutions 159 34 125
139 Total reportable segments $711 $66 $645 $719 RECONCILIATION TO
INCOME (LOSS) BEFORE INCOME TAX EXPENSE Chapter 11 related
reorganization items $(55) $(10) $(45) $(45) Credit (provisions)
for asbestos litigation claims 13 - 13 (4,267) Restructure costs
and other (charges) credits (68) (50) (18) 18 Employee emergence
equity program (6) (6) - - Impact of fresh-start accounting (65)
(65) - - General corporate income (expense) (97) 5 (102) (168)
Interest expense, net (270) (29) (241) (739) Gain on settlement of
liabilities subject to compromise 5,864 - 5,864 - Fresh-start
accounting adjustments 3,049 - 3,049 - RECONCILIATION TO INCOME
(LOSS) BEFORE INCOME TAX EXPENSE $9,076 $(89) $9,165 $(4,482) Owens
Corning and Subsidiaries Business Segment Information (Unaudited)
(Dollars in millions) Combined Successor Predecessor Three Two One
Three Months Months Month Months Ended Ended Ended Ended December
December October December 31, 2006 31, 2006 31, 2006 31, 2005 NET
SALES Insulating Systems $527 $331 $196 $563 Roofing and Asphalt
304 167 137 492 Other Building Materials and Services 288 178 110
325 Composite Solutions 383 245 138 373 Total reportable segments
1,502 921 581 1,753 Corporate Eliminations (25) (12) (13) (40)
Consolidated $1,477 $909 $568 $1,713 INCOME BEFORE INCOME TAX
EXPENSE Insulating Systems $107 $59 $48 $128 Roofing and Asphalt
(25) (23) (2) 34 Other Building Materials and Services - (4) 4 5
Composite Solutions 49 34 15 45 Total reportable segments $131 $66
$65 $212 RECONCILIATION TO INCOME (LOSS) BEFORE INCOME TAX EXPENSE
Chapter 11 related reorganization items $(27) $(10) $(17) $(5)
Credit (provisions) for asbestos litigation claims - - - 74
Restructure costs and other (charges) credits (54) (50) (4) 5
Employee emergence equity program (6) (6) - - Impact of fresh-start
accounting (65) (65) - - General corporate expense 12 5 7 (56)
Interest expense, net (48) (29) (19) (199) Gain on settlement of
liabilities subject to compromise 5,864 - 5,864 - Fresh-start
accounting adjustments 3,049 - 3,049 - RECONCILIATION TO INCOME
(LOSS) BEFORE INCOME TAX EXPENSE $8,856 $(89) $8,945 $31
DATASOURCE: Owens Corning CONTACT: Media Inquiries, Jason Saragian,
+1-419-248-8987, or Investor Inquiries, Scott Deitz,
+1-419-248-8935, both of Owens Corning Company News On-Call:
http://www.prnewswire.com/comp/677350.html
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