OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
2. SEGMENT DATA (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor
|
|
|
Predecessor
|
|
|
|
Twelve Months
Ended
December 31,
2007
|
|
|
Two Months
Ended
December 31,
2006
|
|
|
Ten Months
Ended
October 31,
2006
|
|
|
Twelve Months
Ended
December 31,
2005
|
|
|
|
(in millions)
|
|
EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE INTEREST AND TAXES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reportable Segments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insulating Systems
|
|
$
|
192
|
|
|
$
|
59
|
|
|
$
|
408
|
|
|
$
|
424
|
|
Roofing and Asphalt
|
|
|
27
|
|
|
|
(23
|
)
|
|
|
95
|
|
|
|
139
|
|
Other Building Materials and Services
|
|
|
14
|
|
|
|
(1
|
)
|
|
|
2
|
|
|
|
3
|
|
Composite Solutions
|
|
|
126
|
|
|
|
37
|
|
|
|
117
|
(a)
|
|
|
121
|
(b)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total reportable segments
|
|
$
|
359
|
|
|
$
|
72
|
|
|
$
|
622
|
|
|
$
|
687
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation to Consolidated Earnings (Loss) From Continuing Operations Before Interest and Taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chapter 11-related reorganization items
|
|
$
|
|
|
|
$
|
(10
|
)
|
|
$
|
(45
|
)
|
|
$
|
(45
|
)
|
Asbestos litigation (claims) recoveries
|
|
|
|
|
|
|
|
|
|
|
13
|
|
|
|
(4,267
|
)
|
Restructuring and other (costs) credits
|
|
|
(54
|
)(c)
|
|
|
(32
|
)(d)
|
|
|
(11
|
)(e)
|
|
|
18
|
(f)
|
Impact of acquisition accounting
|
|
|
(13
|
)(g)
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition transaction costs
|
|
|
(28
|
)
|
|
|
(6
|
)
|
|
|
(7
|
)
|
|
|
|
|
Losses related to the exit of our HOMExperts service line
|
|
|
(7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee emergence equity program
|
|
|
(37
|
)
|
|
|
(6
|
)
|
|
|
|
|
|
|
|
|
Fresh-start accounting impact
|
|
|
|
|
|
|
(63
|
)(h)
|
|
|
|
|
|
|
|
|
Asset impairments
|
|
|
(60
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
General corporate expense
|
|
|
(15
|
)
|
|
|
1
|
|
|
|
(121
|
)
|
|
|
(194
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE INTEREST AND TAXES
|
|
$
|
145
|
|
|
$
|
(44
|
)
|
|
$
|
451
|
|
|
$
|
(3,801
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Includes $45 million of gains on the sale of metal and $20 million of gains from insurance recoveries, for business interruption losses and other items, related to the July 2005
flood of our Taloja, India manufacturing facility. Both of these gains are reflected in the Consolidated Statement of Earnings (Loss) under the caption gain on sale of fixed assets and other.
|
(b)
|
Includes $7 million of gains on the sale of metals.
|
(c)
|
Includes $28 million of restructuring cost and $26 million of other costs.
|
(d)
|
Includes $20 million of restructuring cost and $12 million of other costs.
|
(e)
|
Includes $12 million of restructuring cost and $1 million of other gains.
|
(f)
|
Includes income of $13 million due to changes in the Ohio tax law during 2005 and gains of $5 million on the early extinguishment of Asian debt.
|
(g)
|
Includes $12 million related to the impact of inventory write-up and $1 million related to the write-off of in-process research and development.
|
(h)
|
Includes $42 million related to the impact of inventory write-up and $21 million related to the write-off of in-process research and development.
|
-116-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
2. SEGMENT DATA (continued)
|
|
|
|
|
|
|
|
|
Successor
|
ASSETS
|
|
December 31,
2007
|
|
December 31,
2006
|
|
|
(in millions)
|
TOTAL ASSETS
|
|
|
|
|
|
|
|
|
|
Reportable Segments
|
|
|
|
|
|
|
|
|
|
Insulating Systems
|
|
$
|
2,750
|
|
$
|
2,820
|
Roofing and Asphalt
|
|
|
972
|
|
|
1,018
|
Other Building Materials and Services
|
|
|
356
|
|
|
689
|
Composite Solutions
|
|
|
2,789
|
|
|
1,781
|
|
|
|
|
|
|
|
Total reportable segments
|
|
$
|
6,867
|
|
$
|
6,308
|
|
|
|
|
|
|
|
Reconciliation to Consolidated Total Assets
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
135
|
|
$
|
1,089
|
LIFO inventory valuation adjustment
|
|
|
36
|
|
|
37
|
Restricted cash disputed distribution reserve
|
|
|
33
|
|
|
85
|
Deferred income taxes
|
|
|
487
|
|
|
549
|
Pension-related assets
|
|
|
13
|
|
|
8
|
Investments in affiliates
|
|
|
53
|
|
|
97
|
Corporate fixed assets and other assets
|
|
|
248
|
|
|
297
|
|
|
|
|
|
|
|
CONSOLIDATED TOTAL ASSETS
|
|
$
|
7,872
|
|
$
|
8,470
|
|
|
|
|
|
|
|
LONG-LIVED ASSETS BY GEOGRAPHIC REGION
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
1,707
|
|
$
|
1,828
|
Europe
|
|
|
720
|
|
|
248
|
Canada and other
|
|
|
523
|
|
|
445
|
|
|
|
|
|
|
|
TOTAL LONG-LIVED ASSETS
|
|
$
|
2,950
|
|
$
|
2,521
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor
|
|
Predecessor
|
|
|
Twelve Months
Ended
December 31,
2007
|
|
Two Months
Ended
December 31,
2006
|
|
Ten Months
Ended
October 31,
2006
|
|
Twelve Months
Ended
December 31,
2005
|
|
|
(in millions)
|
PROVISION FOR DEPRECIATION AND
AMORTIZATION
|
|
|
|
|
|
|
|
|
|
|
|
|
Reportable Segments
|
|
|
|
|
|
|
|
|
|
|
|
|
Insulating Systems
|
|
$
|
125
|
|
$
|
20
|
|
$
|
65
|
|
$
|
68
|
Roofing and Asphalt
|
|
|
40
|
|
|
7
|
|
|
26
|
|
|
35
|
Other Building Materials and Services
|
|
|
10
|
|
|
2
|
|
|
10
|
|
|
5
|
Composite Solutions
|
|
|
104
|
|
|
16
|
|
|
74
|
|
|
83
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total reportable segments
|
|
|
279
|
|
|
45
|
|
|
175
|
|
|
191
|
Reconciliation to Consolidated Provision for Depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
General Corporate Depreciation
|
|
|
54
|
|
|
22
|
|
|
26
|
|
|
33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED PROVISION FOR DEPRECIATION AND AMORTIZATION
|
|
$
|
333
|
|
$
|
67
|
|
$
|
201
|
|
$
|
224
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-117-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
2. SEGMENT DATA (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor
|
|
Predecessor
|
|
|
Twelve Months
Ended
December 31,
2007
|
|
Two Months
Ended
December 31,
2006
|
|
Ten Months
Ended
October 31,
2006
|
|
Twelve Months
Ended
December 31,
2005
|
|
|
(in millions)
|
ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT
|
|
|
|
|
|
|
|
|
|
|
|
|
Reportable Segments
|
|
|
|
|
|
|
|
|
|
|
|
|
Insulating Systems
|
|
$
|
91
|
|
$
|
31
|
|
$
|
126
|
|
$
|
125
|
Roofing and Asphalt
|
|
|
41
|
|
|
19
|
|
|
23
|
|
|
22
|
Other Building Materials and Services
|
|
|
19
|
|
|
4
|
|
|
12
|
|
|
28
|
Composite Solutions
|
|
|
73
|
|
|
17
|
|
|
113
|
|
|
95
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Reportable Segments
|
|
|
224
|
|
|
71
|
|
|
274
|
|
|
270
|
Reconciliation to Consolidated Additions to Plant and Equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General Corporate Additions
|
|
|
23
|
|
|
6
|
|
|
10
|
|
|
18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT
|
|
$
|
247
|
|
$
|
77
|
|
$
|
284
|
|
$
|
288
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3. INVENTORIES
Inventories are summarized as follows (in millions):
|
|
|
|
|
|
|
|
|
Successor
|
|
|
December 31,
2007
|
|
December 31,
2006
|
Finished goods
|
|
$
|
578
|
|
$
|
518
|
Materials and supplies
|
|
|
207
|
|
|
194
|
|
|
|
|
|
|
|
FIFO inventory
|
|
|
785
|
|
|
712
|
LIFO adjustment
|
|
|
36
|
|
|
37
|
|
|
|
|
|
|
|
Total inventories
|
|
$
|
821
|
|
$
|
749
|
|
|
|
|
|
|
|
As a result of applying purchase accounting related to the acquisition of Saint-Gobains reinforcements and
composite fabrics businesses, inventories were stepped up to fair value resulting in an adjustment of approximately $12 million, which was charged to cost of sales in the Successor Companys Consolidated Statement of Earnings (Loss) for the
year ended December 31, 2007.
In connection with the adoption of fresh-start accounting, inventories were stepped up to fair value resulting in an
adjustment of approximately $246 million, of which $42 million was charged to cost of sales in the Successor Companys Consolidated Statement of Earnings for the period November 1, 2006 to December 31, 2006.
Approximately $406 million and approximately $399 million of FIFO inventories were valued using the LIFO method at December 31, 2007 and 2006, respectively.
-118-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
3. INVENTORIES (continued)
During the Predecessor ten months ended October 31, 2006, certain inventory quantities were reduced. This
reduction resulted in a liquidation of LIFO inventory quantities carried at lower costs prevailing in prior years as compared with current year purchases, the effect of which decreased cost of goods sold by approximately $1 million for the
Predecessor ten months ended October 31, 2006.
4. GOODWILL AND INTANGIBLE ASSETS
Intangible assets and goodwill consist of the following (in
millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor
|
|
|
|
|
December 31, 2007
|
|
|
Weighted
Average
Useful Life
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
|
Net
Carrying
Amount
|
Amortizable intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer relationships
|
|
18
|
|
$
|
173
|
|
$
|
(10
|
)
|
|
$
|
163
|
Technology
|
|
19
|
|
|
192
|
|
|
(12
|
)
|
|
|
180
|
Franchise and other agreements
|
|
14
|
|
|
32
|
|
|
(3
|
)
|
|
|
29
|
In process research and development
|
|
|
|
|
1
|
|
|
(1
|
)
|
|
|
|
Non-amortizable intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Trademarks
|
|
|
|
|
838
|
|
|
|
|
|
|
838
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,236
|
|
$
|
(26
|
)
|
|
$
|
1,210
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
|
$
|
1,174
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor
|
|
|
|
|
December 31, 2006
|
|
|
Weighted
Average
Useful Life
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
|
Net
Carrying
Amount
|
Amortizable intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer relationships
|
|
19
|
|
$
|
174
|
|
$
|
(2
|
)
|
|
$
|
172
|
Technology
|
|
20
|
|
|
198
|
|
|
(2
|
)
|
|
|
196
|
Franchise and other agreements
|
|
15
|
|
|
33
|
|
|
(1
|
)
|
|
|
32
|
In process research and development
|
|
|
|
|
21
|
|
|
(21
|
)
|
|
|
|
Non-amortizable intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Trademarks
|
|
|
|
|
898
|
|
|
|
|
|
|
898
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,324
|
|
$
|
(26
|
)
|
|
$
|
1,298
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
|
$
|
1,313
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As a result, the Company expects the ongoing amortization expense for amortizable intangible assets to be
approximately $21 million in each of the next five fiscal years.
-119-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
4. GOODWILL AND INTANGIBLE ASSETS (continued)
The changes in the net carrying amount of goodwill by segment are as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor
|
|
Insulating
Systems
|
|
|
Roofing
and
Asphalt
|
|
|
Other
Building
Materials
and Services
|
|
|
Composite
Solutions
|
|
Total
|
|
Balance as of December 31, 2006
|
|
$
|
852
|
|
|
$
|
261
|
|
|
$
|
142
|
|
|
$
|
58
|
|
$
|
1,313
|
|
Acquisitions (see Note 7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20
|
|
|
20
|
|
Divestitures (see Note 8)
|
|
|
|
|
|
|
|
|
|
|
(60
|
)
|
|
|
|
|
|
(60
|
)
|
Income tax adjustments (see Notes 17 and 22)
|
|
|
(31
|
)
|
|
|
(39
|
)
|
|
|
(30
|
)
|
|
|
|
|
|
(100
|
)
|
Foreign currency adjustments
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2007
|
|
$
|
821
|
|
|
$
|
222
|
|
|
$
|
53
|
|
|
$
|
78
|
|
$
|
1,174
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Successor Company has elected the fourth quarter to perform its annual testing for goodwill and indefinite
lived intangible asset impairment. The Company tests goodwill and indefinite lived intangible assets for impairment during the fourth quarter of each fiscal year, or more frequently should circumstances change or events occur that would more likely
than not reduce the fair value of a reporting unit below its carrying amount, as required in SFAS No. 142. The review performed in 2007 resulted in no impairment of goodwill.
5. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following (in millions):
|
|
|
|
|
|
|
|
|
|
|
Successor
|
|
|
|
December 31,
2007
|
|
|
December 31,
2006
|
|
Land
|
|
$
|
243
|
|
|
$
|
188
|
|
Buildings and leasehold improvements
|
|
|
537
|
|
|
|
470
|
|
Machinery and equipment
|
|
|
2,156
|
|
|
|
1,732
|
|
Construction in progress
|
|
|
131
|
|
|
|
171
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,067
|
|
|
|
2,561
|
|
Accumulated depreciation
|
|
|
(295
|
)
|
|
|
(40
|
)
|
|
|
|
|
|
|
|
|
|
Net property, plant and equipment
|
|
$
|
2,772
|
|
|
$
|
2,521
|
|
|
|
|
|
|
|
|
|
|
In the third quarter of 2007, the Company recorded an impairment loss on property, plant and equipment in
conjunction with the integration of manufacturing facilities associated with its acquisition of Saint-Gobains reinforcements and composite fabrics businesses of $10 million. The loss was measured using prices for similar assets, and was
recorded as a corporate charge to cost of sales on the Consolidated Statement of Earnings (Loss).
-120-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
6. INVESTMENTS IN AFFILIATES
At December 31, 2007 and 2006, the Companys ownership percentage in affiliates, which generally are
engaged in the manufacture of fibrous glass and related products for the insulation, construction, reinforcements, and textile markets, included:
|
|
|
|
|
|
|
Successor
|
|
|
2007
|
|
2006
|
Arabian Fiberglass Insulation Company, Ltd. (Saudi Arabia)
|
|
49%
|
|
49%
|
Automotive Composite Solutions (International)
|
|
26%
|
|
26%
|
Fiberteq LLC (U. S.)
|
|
50%
|
|
50%
|
Neptco LLC (U.S.)
|
|
50%
|
|
50%
|
Owens Corning South Africa (Pty) Ltd.
|
|
0%
|
|
40%
|
Violet Reinforcements, S. de R.L. (Mexico) (a)
|
|
100%
|
|
50%
|
(a)
|
The remaining interest in Violet Reinforcements, S. de R.L. (Mexico) was purchased as part of the Companys acquisition of Saint-Gobains reinforcements and composite
fabrics businesses. As of November 1, 2007 this entity is no longer accounted for as an equity affiliate, but is consolidated in the overall results of the Company.
|
The following tables provide summarized financial information on a combined 100% basis for the Companys affiliates accounted for under the equity method (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
Successor
|
|
Predecessor
|
|
|
2007
|
|
2006
|
|
2005
|
At December 31:
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
$
|
59
|
|
$
|
85
|
|
$
|
81
|
Noncurrent assets
|
|
|
57
|
|
|
135
|
|
|
145
|
Current liabilities
|
|
|
18
|
|
|
35
|
|
|
43
|
Noncurrent liabilities
|
|
|
10
|
|
|
6
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor
|
|
Predecessor
|
|
|
|
Twelve Months
Ended
December 31,
2007
|
|
Two Months
Ended
December 31,
2006
|
|
Ten Months
Ended
October 31,
2006
|
|
Twelve Months
Ended
December 31,
2005
|
|
Net sales
|
|
$
|
195
|
|
$
|
40
|
|
$
|
197
|
|
$
|
209
|
|
Gross margin
|
|
|
31
|
|
|
6
|
|
|
34
|
|
|
30
|
|
Net earnings (loss)
|
|
|
4
|
|
|
1
|
|
|
10
|
|
|
(2
|
)
|
The Companys carrying amount for entities accounted for under the equity method exceeded the Companys
underlying equity in net assets by $13 million. This difference is the result of adopting fresh-start accounting at the Effective Date, which resulted in a write-up of assets of $17 million.
Dividends received from entities accounted for under the equity method for the Successor year ended December 31, 2007, the Successor two months ended
December 31, 2006, the Predecessor ten months ended
-121-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
6. INVESTMENTS IN AFFILIATES (continued)
October 31, 2006 and the Predecessor year ended December 31, 2005 were $4 million, $3 million, $3 million, and $2 million, respectively.
Undistributed earnings of affiliates was a loss of less than $1 million for the Successor year ended December 31, 2007.
7. ACQUISITIONS
On November 1, 2007, the Company completed its acquisition of Saint-Gobains
reinforcements and composite fabrics businesses for $640 million, which included $56 million in acquired cash and the assumption of $51 million of debt, and excluded estimated transaction costs and purchase price adjustments. As part of the
Companys global growth strategy, this acquisition strengthens its position as a market leader in glass reinforcements and composites. Operating results of these businesses are included in the Companys Composite Solutions segment within
the Consolidated Financial Statements beginning November 1, 2007.
In connection with this acquisition, the Company initiated plans to integrate the
acquired operations and recorded $28 million in exit-related liabilities for severance to eliminate positions management believes will be redundant and cost related to exiting facilities and operations. When the Company finalizes its plans in 2008,
there may be increases or decreases to the estimated exit-related liabilities. The Company expects that these activities will be completed by 2011.
The
following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition (in millions). The Company is in the process of completing valuations of certain assets; thus, the allocation of the
purchase price is subject to refinement.
|
|
|
|
|
|
November 1,
2007
|
Cash
|
|
$
|
56
|
Current assets
|
|
|
452
|
Other assets
|
|
|
8
|
Intangible assets
|
|
|
10
|
Property, plant, and equipment
|
|
|
517
|
|
|
|
|
Total assets acquired
|
|
|
1,043
|
|
|
|
|
Current liabilities
|
|
|
280
|
Short-term debt
|
|
|
45
|
Long-term debt, current portion
|
|
|
3
|
Long-term debt
|
|
|
3
|
Pensions, OPEB and other
|
|
|
58
|
|
|
|
|
Total liabilities assumed
|
|
|
389
|
|
|
|
|
Net assets acquired
|
|
$
|
654
|
|
|
|
|
The initial value assigned to intangible assets acquired was $10 million, which consists of customer relationships
of $8 million, with a weighted average useful life of 20 years, and technology of $2 million, with a weighted average useful life of 15 years. Included in technology was in-process research and development of $1 million which was immediately
expensed in November and recorded within science and technology expense on the Consolidated Statements of Earnings (Loss). The pro-forma effect of this acquisition on revenues and earnings was not material.
-122-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
7. ACQUISITIONS (continued)
During the second quarter of 2007, the Company increased its ownership in Owens Corning India Limited
(OCIL) from 60% to 78.5%. The purchase price was approximately $28 million and was recorded as an increase in goodwill of approximately $20 million, an increase in plant and equipment of approximately $1 million and a decrease in
minority interest of approximately $7 million on its Consolidated Balance Sheet. OCIL is a growing, profitable business with a low cost production platform that supplies Composites Solutions customers in India and exports to other markets.
On May 1, 2006, the Company completed its acquisition of Asahi Glass Co. Ltd.s composite manufacturing facility located near Tokyo, Japan. The
purchase price was approximately $8 million, subject to adjustment up to an additional $5 million, to be paid out in the future, if certain income thresholds are met. The pro-forma effect of this acquisition on revenues and earnings was not
material.
In September 2006, the Company acquired the Modulo/ParMur Group, a market-leading producer and distributor of manufactured stone veneer in
Europe, for approximately $32 million. The acquisition furthered the global expansion of the Companys manufactured stone veneer business in the European building products market. The pro-forma effect of this acquisition on revenues and
earnings was not material.
8. DIVESTITURES
In August 2007, the Company completed the sale of its Siding Solutions business, a
component of its Other Building Materials and Services segment, for net proceeds of approximately $368 million. The sale was a result of the Companys strategic review of this business. The Company recognized a gain of approximately $115
million on the sale, which is inclusive of an estimated purchase price adjustment related to working capital. The divested business includes the Norandex/Reynolds distribution business and three siding manufacturing facilities. The results of
operations for the Siding Solutions business and the gain on the sale are reported within discontinued operations in the Consolidated Statements of Earnings (Loss), and prior period Consolidated Statements of Earnings (Loss) have been recast. The
prior period Consolidated Balance Sheet and Consolidated Statements of Cash Flow have not been recast.
The disposed assets and liabilities of the Siding
Solutions business at the closing date of the sale included the following (in millions):
|
|
|
|
Current assets
|
|
|
|
Receivables, less allowance for doubtful accounts of $7
|
|
$
|
109
|
Inventories
|
|
|
86
|
Other current assets
|
|
|
5
|
|
|
|
|
Total current assets
|
|
|
200
|
Property, plant and equipment, net
|
|
|
56
|
Goodwill
|
|
|
60
|
Intangible assets
|
|
|
32
|
|
|
|
|
Total assets
|
|
$
|
348
|
|
|
|
|
Current liabilities
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
90
|
|
|
|
|
Total current liabilities
|
|
|
90
|
Other long-term liabilities
|
|
|
12
|
|
|
|
|
Total liabilities
|
|
$
|
102
|
|
|
|
|
-123-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
8. DIVESTITURES (continued)
Operating results of the Siding Solutions business were as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor
|
|
|
Predecessor
|
|
|
Twelve Months
Ended
December 31,
2007
|
|
Two Months
Ended
December 31,
2006
|
|
|
Ten Months
Ended
October 31,
2006
|
|
|
Twelve Months
Ended
December 31,
2005
|
Net sales
|
|
$
|
529
|
|
$
|
118
|
|
|
$
|
765
|
|
|
$
|
916
|
Fresh start accounting adjustments
|
|
$
|
|
|
$
|
|
|
|
$
|
(94
|
)
|
|
$
|
|
Earnings (loss) from discontinued operations before income tax expense
|
|
$
|
28
|
|
$
|
(10
|
)
|
|
$
|
124
|
|
|
$
|
38
|
Income tax expense (benefit)
|
|
|
10
|
|
|
(3
|
)
|
|
|
26
|
|
|
|
16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from discontinued operations, net of taxes
|
|
$
|
18
|
|
$
|
(7
|
)
|
|
$
|
98
|
|
|
$
|
22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In September 2007, the Company completed the sale of its Fabwel unit, a component of its Composite Solutions
segment, for net proceeds of approximately $57 million, which is inclusive of an estimated contingent liability. The sale was a result of the Companys strategic review of this business. The Company recognized a loss of $15 million on the sale,
which is included in discontinued operations on the Consolidated Statement of Earnings (Loss). The results of operations for Fabwel are reported within discontinued operations in the accompanying Consolidated Statements of Earnings (Loss), and prior
period Consolidated Statements of Earnings (Loss) have been recast. The prior period Consolidated Balance Sheet and Consolidated Statements of Cash Flow have not been recast.
The disposed assets and liabilities of Fabwel at the closing date of the sale included the following (in millions):
|
|
|
|
Current assets
|
|
|
|
Receivables
|
|
$
|
7
|
Inventories
|
|
|
17
|
|
|
|
|
Total current assets
|
|
|
24
|
Property, plant and equipment
|
|
|
19
|
Intangible assets
|
|
|
33
|
|
|
|
|
Total assets
|
|
$
|
76
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
4
|
|
|
|
|
Total liabilities
|
|
$
|
4
|
|
|
|
|
-124-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
8. DIVESTITURES (continued)
Operating results of Fabwel were as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor
|
|
|
Predecessor
|
|
|
Twelve Months
Ended
December 31,
2007
|
|
|
Two Months
Ended
December 31,
2006
|
|
|
Ten Months
Ended
October 31,
2006
|
|
|
Twelve Months
Ended
December 31,
2005
|
Net sales
|
|
$
|
97
|
|
|
$
|
19
|
|
|
$
|
160
|
|
|
$
|
230
|
Fresh start accounting adjustments
|
|
$
|
|
|
|
$
|
|
|
|
$
|
(36
|
)
|
|
$
|
|
Earnings (loss) from discontinued operations before income tax expense
|
|
$
|
(14
|
)
|
|
$
|
(6
|
)
|
|
$
|
48
|
|
|
$
|
21
|
Income tax expense (benefit)
|
|
|
(5
|
)
|
|
|
(2
|
)
|
|
|
19
|
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from discontinued operations, net of taxes
|
|
$
|
(9
|
)
|
|
$
|
(4
|
)
|
|
$
|
29
|
|
|
$
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In the first quarter of 2007, the Company sold its remaining 40% ownership interest in Owens Corning South Africa
(Pty) Ltd, for $12 million.
9. ASSETS AND LIABILITIES HELD FOR SALE
In the third quarter of 2007, the Company committed to a plan
to sell composite manufacturing facilities located in Battice, Belgium and Birkeland, Norway to gain regulatory approval for the acquisition of Saint-Gobains reinforcements and composite fabrics businesses. A definitive agreement to sell these
facilities to Platinum Equity was reached on January 23, 2008. The divestitures are subject to regulatory approval, and are expected to close during the first quarter of 2008. These facilities are included in the Companys Composite
Solutions segment.
At December 31, 2007, assets and liabilities held for sale at these facilities is comprised of $53 million of current assets, $171
million of property, plant and equipment and $48 million of liabilities. In the fourth quarter of 2007, the Company recorded an impairment loss of $50 million as a corporate charge to cost of sales on the Consolidated Statement of Earnings (Loss) to
write the property, plant and equipment of these facilities down to fair value less costs to sell.
In the fourth quarter of 2007, the Company committed to
plans to sell the assets of certain manufacturing facilities as part of its restructuring plans described in Note 13. The divestitures of these facilities are expected to close during 2008. At December 31, 2007, assets held for sale at these
facilities were a combined total of $7 million of property, plant and equipment. The Company recorded an impairment loss of $4 million as a corporate charge to cost of sales on the Consolidated Statement of Earnings (Loss) to write the property,
plant and equipment of these facilities down to fair value less costs to sell. These costs are further described in Note 13 as other charges.
-125-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
9. ASSETS AND LIABILITIES HELD FOR SALE (continued)
As of December 31, 2007, the assets and liabilities held for sale consist of
the following (in millions):
|
|
|
|
|
|
Successor
|
|
|
December 31,
2007
|
Current assets
|
|
|
|
Receivables, net
|
|
$
|
22
|
Inventories
|
|
|
31
|
Other current assets
|
|
|
|
|
|
|
|
Total current assets
|
|
|
53
|
Property, plant and equipment, net
|
|
|
178
|
|
|
|
|
Total assets
|
|
$
|
231
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
40
|
|
|
|
|
Total current liabilities
|
|
|
40
|
Other liabilities
|
|
|
8
|
|
|
|
|
Total liabilities
|
|
$
|
48
|
|
|
|
|
10. LEASES
The Company leases certain equipment and facilities under operating leases expiring on
various dates through 2025. Some of these leases include cost-escalation clauses. Such cost-escalation clauses are recognized on a straight-line basis over the lease term. Total rental expense charged to operations was $93 million, $14 million, $64
million, and $77 million in the Successor year ended December 31, 2007, the Successor two months ended December 31, 2006, the Predecessor ten months ended October 31, 2006, and the Predecessor year ended December 31, 2005,
respectively. At December 31, 2007, the minimum future rental commitments under non-cancelable operating leases with initial maturities greater than one year payable over the remaining lives of the leases are (in millions):
|
|
|
|
Period
|
|
Minimum Future
Rental Commitments
|
2008
|
|
$
|
66
|
2009
|
|
|
42
|
2010
|
|
|
29
|
2011
|
|
|
21
|
2012
|
|
|
18
|
2013 and beyond
|
|
|
100
|
-126-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
11. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities consist of the following as of December 31, 2007 and 2006 (in
millions):
|
|
|
|
|
|
|
|
|
Successor
|
|
|
2007
|
|
2006
|
Accounts payable
|
|
$
|
569
|
|
$
|
507
|
Payroll and vacation pay
|
|
|
102
|
|
|
131
|
Payroll, property, and miscellaneous taxes
|
|
|
164
|
|
|
110
|
Accrued pre-petition liabilities
|
|
|
125
|
|
|
93
|
Other employee benefits liability
|
|
|
50
|
|
|
50
|
Legal and audit fees
|
|
|
6
|
|
|
42
|
Restructure
|
|
|
26
|
|
|
29
|
Warranty (current portion)
|
|
|
15
|
|
|
28
|
Other
|
|
|
80
|
|
|
91
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,137
|
|
$
|
1,081
|
|
|
|
|
|
|
|
12. WARRANTIES
The Company records a liability for warranty obligations at the date the related
products are sold. Adjustments are made as new information becomes available. A reconciliation of the warranty liabilities for the years ended December 31, 2007 and 2006 is as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
Successor
|
|
|
|
December 31,
2007
|
|
|
December 31,
2006
|
|
Beginning balance
|
|
$
|
50
|
|
|
$
|
51
|
|
Amounts accrued for current year
|
|
|
13
|
|
|
|
2
|
|
Adjustments of prior accrual estimates
|
|
|
5
|
|
|
|
|
|
Settlements of warranty claims
|
|
|
(25
|
)
|
|
|
(3
|
)
|
Fresh-start present value adjustment
|
|
|
3
|
|
|
|
|
|
Siding Solutions divestiture
|
|
|
(13
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
33
|
|
|
$
|
50
|
|
|
|
|
|
|
|
|
|
|
13. RESTRUCTURING OF OPERATIONS AND OTHER CHARGES (CREDITS)
2007 CHARGES
As a result of evaluating market conditions in 2007, actions were taken to close facilities and reduce operating costs. The Company initiated actions which resulted in
approximately $57 million in charges, comprised of a $31 million restructure charge and $26 million of other charges. The $26 million of other charges were included in the Consolidated Statement of Earnings (Loss) under the caption cost of sales.
The Company anticipates an additional $7 million in restructuring cost to be incurred in 2008, and that payments related to these activities will continue into 2009.
-127-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
13. RESTRUCTURING OF OPERATIONS AND OTHER CHARGES (CREDITS) (continued)
Corporate
In
2007, the Company initiated actions which resulted in $7 million in restructure charges related to severance costs and equity awards. Included in the $7 million were severance costs for approximately 60 corporate employees and equity awards costs
for all employees terminated as part of the restructuring plan.
Insulating Systems
In 2007, this business initiated actions which resulted in $20 million in restructure charges and other charges, comprised of $7 million in restructure charges and $13 million in other charges. The $7 million in
restructure charges is related to severance costs associated with the elimination of approximately 230 employees due to work force reduction and plant closures. The $13 million in other charges related to accelerated depreciation of fixed assets to
be abandoned associated with the plant closures and capacity reductions.
Roofing and Asphalt
In 2007, this business initiated actions which resulted in $10 million in restructure charges and other charges, comprised of $4 million in restructure charges and $6
million in other charges. The $4 million in restructure charges is comprised of $3 million related to severance costs associated with the elimination of approximately 80 employees due to work force reduction and plant closures and $1 million
associated with the termination of a contract. The $6 million in other charges related to $5 million of accelerated depreciation of fixed assets to be abandoned and $1 million impairment of fixed assets associated with a plant closure.
Composite Solutions
In 2007, this business initiated actions
which resulted in $10 million in restructure and other charges, comprised of $7 million in restructure charges and $3 million in other charges. The $7 million in restructure charges is comprised of cost associated with the severance of approximately
240 positions. The $3 million in other charges related to impairment of fixed assets.
Other Building Materials and Services
In 2007, this business initiated actions which resulted in $10 million in restructure and other charges, comprised of $6 million in restructure charges and $4 million in
other charges. The $6 million in restructure charges is comprised of $2 million of severance costs associated with the elimination of approximately 130 positions due to reduction in work force and plant closures and $4 million associated with the
termination of a contract. The $4 million in other charges related to $3 million of accelerated depreciation of fixed assets to be abandoned and a $1 million write-off of inventory due to plant closures.
-128-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
13. RESTRUCTURING OF OPERATIONS AND OTHER CHARGES (CREDITS) (continued)
Status of Liability for Restructuring Programs 2007 Restructuring Plan
The following table summarizes the status of the unpaid liabilities from the Companys restructuring actions (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor
|
|
|
Beginning
Balance
December 31,
2006
|
|
Accruals
|
|
Payments
|
|
|
Ending
Balance
December 31,
2007
|
Severance
|
|
$
|
|
|
$
|
26
|
|
$
|
(4
|
)
|
|
$
|
22
|
Contract termination
|
|
|
|
|
|
5
|
|
|
(1
|
)
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
|
|
$
|
31
|
|
$
|
(5
|
)
|
|
$
|
26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006 CHARGES
As a result of evaluating market conditions in the second half of 2006 actions were taken to close facilities, exit certain product lines and reduce operating costs. The Successor initiated actions which resulted in approximately $32
million in charges, comprised of a $20 million restructure charge and $12 million of other charges. The $12 million of other charges were included in the Consolidated Statement of Earnings (Loss) under the caption cost of sales.
The Predecessor initiated actions which resulted in approximately $11 million in charges during the ten months ended October 31, 2006, comprised of a $12 million
restructure charge and $1 million of other income. The $1 million of other income was reported as a $2 million charge to the Consolidated Statement of Earnings (Loss) under the caption cost of sales and $3 million of income to the Consolidated
Statement of Earnings (Loss) under the caption (gain) loss on sale of fixed assets and other.
Insulating Systems
In the Successor period, this business initiated actions which resulted in $2 million in restructure charges related to severance costs associated with the elimination
of approximately 40 employees due to a plant closure.
Roofing and Asphalt
In the Successor period, this business initiated actions which resulted in $13 million in restructure charges comprised of severance costs of $3 million associated with the elimination of approximately 20 positions,
primarily administrative personnel, and contract termination costs of $10 million associated with the termination of two supply contracts.
In the
Predecessor period, this business initiated actions which resulted in $1 million in restructure and other charges, comprised of $2 million in restructure charges and $1 million in other income. The restructure charges of $2 million were related to
the severance of approximately 110 positions associated with the closure of two facilities. Other income of $1 million were related to an $11 million gain on sale of one facility offset by a $7 million charge for excess costs associated with
servicing storm-related demand in the southeastern United States and $3 million impairment of fixed assets and inventory associated with the closure of the two facilities.
-129-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
13. RESTRUCTURING OF OPERATIONS AND OTHER CHARGES (CREDITS) (continued)
Composite Solutions
In the Successor period, this business initiated actions which resulted in $5 million in other charges, related to impairment of fixed assets and inventory associated with the discontinuation of a product.
In the Predecessor period, this business initiated actions which resulted in $10 million in restructure charges, comprised of $8 million associated with the severance of
approximately 160 positions and $2 million for dismantling of production equipment.
Other Building Materials and Services
In the Successor period, this business initiated actions which resulted in $17 million in restructure and other charges, comprised of $5 million in restructure charges
and $12 million in other charges. The $5 million in restructure charges includes $5 million of severance costs associated with the elimination of approximately 670 positions due to the exit of the HOMExperts business. The $12 million in other
charges related to costs associated with the exit of the HOMExperts business consisting of $2 million in impairment of fixed assets, $8 million of additional uncollectible receivables, and $2 million of additional warranty costs.
Status of Liability for Restructuring Programs 2006 Restructuring Plan
The following table summarizes the status of the unpaid liabilities from the Companys restructuring actions (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor
|
|
|
Predecessor
|
|
|
|
Twelve Months
Ended
December 31,
2007
|
|
|
Two Months
Ended
December 31,
2006
|
|
|
Ten Months
Ended
October 31,
2006
|
|
Beginning Balance
|
|
$
|
29
|
|
|
$
|
8
|
|
|
$
|
|
|
Accrual
|
|
|
(3
|
)
|
|
|
27
|
|
|
|
12
|
|
Cash Payments
|
|
|
(26
|
)
|
|
|
(6
|
)
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance
|
|
$
|
|
|
|
$
|
29
|
|
|
$
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005 Credits
During 2005, due to new Ohio state tax legislation, the Predecessor recorded a credit in the Consolidated Statement of Earnings (Loss) under the caption gain (loss) on the sale of fixed assets and other of approximately $13 million
representing the present value of the net operating losses that will be allowed to be taken as credits against a new gross receipts tax. The Predecessor also renegotiated certain Asian debt, resulting in a gain of $5 million related to the
forgiveness of such debt. This gain was also recorded in the Consolidated Statement of Earnings (Loss) under the caption gain (loss) on the sale of fixed assets and other.
-130-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
14. DEBT
Details of our outstanding long-term debt for the years ended December 31, 2007 and 2006 is as follows (in
millions):
|
|
|
|
|
|
|
|
|
Successor
|
|
|
2007
|
|
2006
|
Long-Term Debt:
|
|
|
|
|
|
|
6.50% Senior Notes, net of discount, due 2016
|
|
$
|
648
|
|
$
|
648
|
7.00% Senior Notes, net of discount, due 2036
|
|
|
539
|
|
|
539
|
Senior Term Facility, maturing 2011
|
|
|
600
|
|
|
|
Revolving Credit Facility
|
|
|
140
|
|
|
|
Internal Revenue Service note, maturing 2012, 8.00%
|
|
|
|
|
|
89
|
Various foreign bank variable interest loans maturing through 2009
|
|
|
|
|
|
25
|
Various capital leases due through and beyond 2050
|
|
|
47
|
|
|
20
|
Various floating rate debt with maturities up to 2017
|
|
|
20
|
|
|
|
Other long-term debt with maturities up to 2020, at rates from 0% to 11%
|
|
|
9
|
|
|
14
|
|
|
|
|
|
|
|
|
|
$
|
2,003
|
|
$
|
1,335
|
Less current portion
|
|
|
10
|
|
|
39
|
|
|
|
|
|
|
|
Total long-term debt
|
|
$
|
1,993
|
|
$
|
1,296
|
|
|
|
|
|
|
|
Senior Notes
We issued $1.2 billion of senior notes (collectively, the Senior Notes) concurrently with our emergence from bankruptcy on the Effective Date. The proceeds of this offering were used to pay certain unsecured and administrative
claims, finance general working capital needs and for general corporate purposes.
The Senior Notes were initially offered and sold to qualified
institutional buyers in reliance on Rule 144A of the Securities Act. In the second quarter of 2007, we filed a registration statement with the Securities and Exchange Commission for an offering pursuant to which notes substantially identical to the
original notes were offered in exchange for the then outstanding notes. Such offering was completed in late June 2007, and all of the original notes were exchanged for registered notes (collectively, the Senior Notes).
The Senior Notes consist of $650 million aggregate principal amount of 6.50% notes due December 1, 2016 and $550 million aggregate principal amount of 7.00% notes
due December 1, 2036, with effective interest rates of 6.62% and 7.23%, respectively. Interest on each series of notes is payable on June 1 and December 1 of each year, beginning on June 1, 2007. We may redeem some or all of the
Notes at any time at a make-whole redemption price. We are subject to certain covenants in connection with issuance of the Senior Notes.
The
Senior Notes are general unsecured obligations of the Company and rank
pari passu
with all existing and future unsecured senior indebtedness of the Company. The Senior Notes rank senior in right of payment to any subordinated indebtedness of
the Company and are effectively subordinated to the Companys secured indebtedness, to the extent of the value of the collateral securing such indebtedness.
The Senior Notes are also guaranteed by each of the Companys current and future material wholly-owned United States subsidiaries that is a borrower or a guarantor under the Credit Agreement (defined below). Each
-131-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
14. DEBT (continued)
guaranty of the Senior Notes is a general unsecured obligation of the guarantors and ranks
pari passu
with all existing and future unsecured senior
indebtedness of the subsidiary guarantors. The guarantees of the Senior Notes rank senior in right of payment to any subordinated indebtedness of the guarantors and are effectively subordinated to the guarantors secured indebtedness, to the
extent of the value of the collateral securing such indebtedness.
Senior Credit Facilities
On October 31, 2006, the Company entered into a credit agreement (the Credit Agreement) with Citibank, N.A., as administrative agent and various
lenders, which are parties thereto. The Credit Agreement created two credit facilities (the Credit Facilities), consisting of:
|
|
|
a $1.0 billion multi-currency senior Revolving Credit Facility; and
|
|
|
|
a $600 million delayed-draw Senior Term Facility.
|
The Credit Facilities each have a five-year maturity. Proceeds from the Revolving Credit Facility are available for general working capital needs and for other general corporate purposes. The term loan was used to partially fund payments to
the Owens Corning/Fibreboard Asbestos Personal Injury Trust (the 524(g) Trust) in January of 2007 (see Note 23). The Revolving Credit Facility is comprised of a U.S. facility, a Canadian facility and a European facility. The Credit
Agreement allows the Company to borrow under multiple options, which provide for varying terms and interest rates.
Any obligations under the Credit
Facilities are unconditionally and irrevocably guaranteed by the Companys current and future material wholly-owned United States subsidiaries. The Company had $85 million and $224 million of letters of credit outstanding under the Revolving
Credit Facility at December 31, 2007 and 2006, respectively.
The Credit Agreement also requires payment to the lenders of a commitment fee based on
the average daily unused commitments under the Credit Facilities at rates based upon the applicable corporate credit ratings of the Company. Voluntary prepayments of the loans and voluntary reductions of the unutilized portion of the commitments
under the Credit Facilities are permissible without penalty, subject to certain conditions.
The Credit Agreement contains financial, affirmative and
negative covenants that we believe are usual and customary for a senior unsecured credit agreement.
The aggregate maturities for all long-term debt issues
for each of the five years following December 31, 2007 and thereafter are:
|
|
|
Period
|
|
(in millions)
|
2008
|
|
$10
|
2009
|
|
10
|
2010
|
|
15
|
2011
|
|
743
|
2012
|
|
3
|
2013 and beyond
|
|
1,222
|
-132-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
14. DEBT (continued)
Short Term Debt
At December 31, 2007 and 2006, short-term borrowings were $47 million and $1.401 billion, respectively. The December 31, 2006, balance included a note payable to the 524(g) Trust of $1.390 billion, which was paid in January of
2007, see Note 23. The remaining short-term borrowings for both periods consisted of various operating lines of credit and working capital facilities maintained by certain of the Companys non-U.S. subsidiaries. Certain of these borrowings are
collateralized by receivables, inventories or property. The borrowing facilities are typically for one-year renewable terms. The weighted average interest rate on short-term borrowings was approximately 5.3% and 7.0% at December 31, 2007 and
2006, respectively.
15. PENSION PLANS
The Company sponsors defined benefit pension plans covering most employees. Under
the plans, pension benefits are based on an employees years of service and, for certain categories of employees, qualifying compensation. Company contributions to these pension plans are determined by an independent actuary to meet or exceed
minimum funding requirements. 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.
The Company adopted the provisions of Statement of Financial Accounting Standards No. 158, Employers Accounting for Defined Benefit Pension and Other
Postretirement Plans an amendment of FASB statements No. 87, 88, 106, and 132R (SFAS 158), including the requirement to measure plan assets and benefit obligations as of the date of the Companys fiscal year end,
upon emergence from bankruptcy. Prior to adoption of SFAS 158, the Company used an October 31 measurement date.
-133-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
15. PENSION PLANS (continued)
The following table provides a reconciliation of the change in the projected benefit obligation, the change in plan
assets and the net amount recognized in the Consolidated Balance Sheet for the periods January 1, 2007 to December 31, 2007 and November 1, 2006 to December 31, 2006 (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor
|
|
|
|
December 31, 2007
Measurement Date
|
|
|
December 31, 2006
Measurement Date
|
|
|
|
United States
Plans
|
|
|
Non-United
States Plans
|
|
|
Total
|
|
|
United States
Plans
|
|
|
Non-United
States Plans
|
|
|
Total
|
|
Change in Projected Benefit Obligation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit obligation at beginning of period
|
|
$
|
1,024
|
|
|
$
|
495
|
|
|
$
|
1,519
|
|
|
$
|
1,026
|
|
|
$
|
505
|
|
|
$
|
1,531
|
|
Service cost
|
|
|
23
|
|
|
|
6
|
|
|
|
29
|
|
|
|
4
|
|
|
|
1
|
|
|
|
5
|
|
Interest cost
|
|
|
58
|
|
|
|
26
|
|
|
|
84
|
|
|
|
10
|
|
|
|
4
|
|
|
|
14
|
|
Actuarial (gain) loss
|
|
|
(66
|
)
|
|
|
(54
|
)
|
|
|
(120
|
)
|
|
|
(5
|
)
|
|
|
(15
|
)
|
|
|
(20
|
)
|
Currency (gain) loss
|
|
|
|
|
|
|
33
|
|
|
|
33
|
|
|
|
|
|
|
|
3
|
|
|
|
3
|
|
Acquisitions/Divestitures
|
|
|
|
|
|
|
24
|
|
|
|
24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits paid
|
|
|
(91
|
)
|
|
|
(24
|
)
|
|
|
(115
|
)
|
|
|
(11
|
)
|
|
|
(3
|
)
|
|
|
(14
|
)
|
Curtailment loss
|
|
|
4
|
|
|
|
1
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
14
|
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit obligation at end of period
|
|
$
|
952
|
|
|
$
|
521
|
|
|
$
|
1,473
|
|
|
$
|
1,024
|
|
|
$
|
495
|
|
|
$
|
1,519
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Plan Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of assets at beginning of period
|
|
$
|
832
|
|
|
$
|
384
|
|
|
|
1,216
|
|
|
$
|
824
|
|
|
$
|
372
|
|
|
$
|
1,196
|
|
Actual return on plan assets
|
|
|
53
|
|
|
|
10
|
|
|
|
63
|
|
|
|
19
|
|
|
|
8
|
|
|
|
27
|
|
Currency gain (loss)
|
|
|
|
|
|
|
31
|
|
|
|
31
|
|
|
|
|
|
|
|
1
|
|
|
|
1
|
|
Company contributions
|
|
|
103
|
|
|
|
19
|
|
|
|
122
|
|
|
|
|
|
|
|
6
|
|
|
|
6
|
|
Benefits paid
|
|
|
(90
|
)
|
|
|
(24
|
)
|
|
|
(114
|
)
|
|
|
(11
|
)
|
|
|
(3
|
)
|
|
|
(14
|
)
|
Acquisitions/Divestitures
|
|
|
|
|
|
|
9
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
9
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of assets at end of period
|
|
$
|
898
|
|
|
$
|
438
|
|
|
$
|
1,336
|
|
|
$
|
832
|
|
|
$
|
384
|
|
|
$
|
1,216
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funded status
|
|
$
|
(54
|
)
|
|
$
|
(83
|
)
|
|
$
|
(137
|
)
|
|
$
|
(192
|
)
|
|
$
|
(111
|
)
|
|
$
|
(303
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts Recognized in the Consolidated Balance Sheet
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid pension cost
|
|
$
|
|
|
|
$
|
13
|
|
|
$
|
13
|
|
|
$
|
|
|
|
$
|
7
|
|
|
$
|
7
|
|
Accrued pension cost current
|
|
|
(2
|
)
|
|
|
(2
|
)
|
|
|
(4
|
)
|
|
|
(1
|
)
|
|
|
|
|
|
|
(1
|
)
|
Accrued pension cost noncurrent
|
|
|
(52
|
)
|
|
|
(94
|
)
|
|
|
(146
|
)
|
|
|
(191
|
)
|
|
|
(118
|
)
|
|
|
(309
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net amount recognized
|
|
$
|
(54
|
)
|
|
$
|
(83
|
)
|
|
$
|
(137
|
)
|
|
$
|
(192
|
)
|
|
$
|
(111
|
)
|
|
$
|
(303
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts Recorded in Accumulated Other Comprehensive Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net actuarial gain
|
|
$
|
(61
|
)
|
|
$
|
(53
|
)
|
|
$
|
(114
|
)
|
|
$
|
(13
|
)
|
|
$
|
(19
|
)
|
|
$
|
(32
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The $4 million curtailment loss for the United States plans shown above is attributable to the restructuring that
occurred in late 2007. This curtailment loss reduced the unrecognized net gain balance for the United States plans and, therefore, was not immediately recognized in 2007 net periodic pension cost. However, this curtailment loss was recognized in
accumulated other comprehensive income in 2007.
-134-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
15. PENSION PLANS (continued)
The following table provides a reconciliation of the change in the projected benefit obligation, the change in plan
assets and the net amount recognized in the Consolidated Balance Sheet for the period January 1, 2006 to October 31, 2006 (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor
|
|
|
|
October 31, 2006
Measurement Date
|
|
|
|
United
States Plans
|
|
|
Non-United
States Plans
|
|
|
Total
|
|
Change in Projected Benefit Obligation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit obligation at beginning of period
|
|
$
|
1,032
|
|
|
$
|
394
|
|
|
$
|
1,426
|
|
Service cost
|
|
|
18
|
|
|
|
4
|
|
|
|
22
|
|
Interest cost
|
|
|
48
|
|
|
|
18
|
|
|
|
66
|
|
Actuarial (gain) loss
|
|
|
15
|
|
|
|
58
|
|
|
|
73
|
|
Currency (gain) loss
|
|
|
|
|
|
|
34
|
|
|
|
34
|
|
Acquisitions
|
|
|
|
|
|
|
14
|
|
|
|
14
|
|
Plan amendments
|
|
|
(1
|
)
|
|
|
|
|
|
|
(1
|
)
|
Benefits paid
|
|
|
(84
|
)
|
|
|
(16
|
)
|
|
|
(100
|
)
|
Benefits paid directly by Company
|
|
|
(2
|
)
|
|
|
(1
|
)
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit obligation at end of period
|
|
$
|
1,026
|
|
|
$
|
505
|
|
|
$
|
1,531
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Plan Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of assets at beginning of period
|
|
$
|
813
|
|
|
$
|
320
|
|
|
$
|
1,133
|
|
Actual return on plan assets
|
|
|
61
|
|
|
|
31
|
|
|
|
92
|
|
Currency gain (loss)
|
|
|
|
|
|
|
25
|
|
|
|
25
|
|
Company contributions
|
|
|
34
|
|
|
|
9
|
|
|
|
43
|
|
Acquisitions
|
|
|
|
|
|
|
3
|
|
|
|
3
|
|
Benefits paid
|
|
|
(84
|
)
|
|
|
(16
|
)
|
|
|
(100
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of assets at end of period
|
|
$
|
824
|
|
|
$
|
372
|
|
|
$
|
1,196
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funded status
|
|
$
|
(202
|
)
|
|
$
|
(133
|
)
|
|
$
|
(335
|
)
|
Unrecognized net transition asset
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrecognized net actuarial loss
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrecognized prior service cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net amount recognized at October 31, 2006
|
|
$
|
(202
|
)
|
|
$
|
(133
|
)
|
|
$
|
(335
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts Recognized in the Consolidated Balance Sheet
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid pension cost
|
|
$
|
|
|
|
$
|
3
|
|
|
$
|
3
|
|
Accrued pension cost
|
|
|
(202
|
)
|
|
|
(136
|
)
|
|
|
(338
|
)
|
Intangible asset
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net amount recognized
|
|
$
|
(202
|
)
|
|
$
|
(133
|
)
|
|
$
|
(335
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-135-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
15. PENSION PLANS (continued)
The following table presents information about the projected benefit obligation, accumulated benefit obligation and
plan assets of the Companys pension plans (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007
Measurement Date
|
|
December 31, 2006
Measurement Date
|
|
October 31, 2006
Measurement Date
|
|
|
United
States
|
|
Non-United
States
|
|
Total
|
|
United
States
|
|
Non-United
States
|
|
Total
|
|
United
States
|
|
Non-United
States
|
|
Total
|
Plans with ABO in excess of fair value of plan assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Projected benefit obligation
|
|
$
|
952
|
|
$
|
343
|
|
$
|
1,295
|
|
$
|
1,024
|
|
$
|
356
|
|
$
|
1,380
|
|
$
|
1,026
|
|
$
|
432
|
|
$
|
1,458
|
Accumulated benefit obligation
|
|
|
951
|
|
|
324
|
|
|
1,275
|
|
|
1,022
|
|
|
337
|
|
|
1,359
|
|
|
1,024
|
|
|
409
|
|
|
1,433
|
Fair value of plan assets
|
|
|
898
|
|
|
245
|
|
|
1,143
|
|
|
832
|
|
|
238
|
|
|
1,070
|
|
|
824
|
|
|
295
|
|
|
1,119
|
|
|
|
|
|
|
|
|
|
|
Plans with fair value of assets in excess of ABO:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Projected benefit obligation
|
|
$
|
|
|
$
|
178
|
|
$
|
178
|
|
$
|
|
|
$
|
139
|
|
$
|
139
|
|
$
|
|
|
$
|
73
|
|
$
|
73
|
Accumulated benefit obligation
|
|
|
|
|
|
156
|
|
|
156
|
|
|
|
|
|
127
|
|
|
127
|
|
|
|
|
|
64
|
|
|
64
|
Fair value of plan assets
|
|
|
|
|
|
193
|
|
|
193
|
|
|
|
|
|
146
|
|
|
146
|
|
|
|
|
|
77
|
|
|
77
|
|
|
|
|
|
|
|
|
|
|
Total projected benefit obligation
|
|
$
|
952
|
|
$
|
521
|
|
$
|
1,473
|
|
$
|
1,024
|
|
$
|
495
|
|
$
|
1,519
|
|
$
|
1,026
|
|
$
|
505
|
|
$
|
1,531
|
Total accumulated benefit obligation
|
|
|
951
|
|
|
480
|
|
|
1,431
|
|
|
1,022
|
|
|
464
|
|
|
1,486
|
|
|
1,024
|
|
|
473
|
|
|
1,497
|
Total plan assets
|
|
|
898
|
|
|
438
|
|
|
1,336
|
|
|
832
|
|
|
384
|
|
|
1,216
|
|
|
824
|
|
|
372
|
|
|
1,196
|
Weighted-Average Assumptions Used to Determine Benefit Obligation
The following table presents weighted average assumptions used to determine the benefit obligations as of the measurement dates noted.
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007
Measurement Date
|
|
|
December 31, 2006
Measurement Date
|
|
|
October 31, 2006
Measurement Date
|
|
United States Plan
|
|
|
|
|
|
|
|
|
|
Discount rate
|
|
6.55
|
%
|
|
5.90
|
%
|
|
5.85
|
%
|
Rate of compensation increase
|
|
5.34
|
%
|
|
5.41
|
%
|
|
5.41
|
%
|
|
|
|
|
Non-United States Plans
|
|
|
|
|
|
|
|
|
|
Discount rate
|
|
5.66
|
%
|
|
4.95
|
%
|
|
4.78
|
%
|
Rate of compensation increase
|
|
3.89
|
%
|
|
3.90
|
%
|
|
3.90
|
%
|
-136-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
15. PENSION PLANS (continued)
Components of Net Periodic Pension Cost
The following table presents the components of net periodic pension cost for the periods noted (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor
|
|
|
Predecessor
|
|
|
|
Twelve Months
Ended
December 31,
2007
|
|
|
Two Months
Ended
December 31,
2006
|
|
|
Ten Months
Ended
October 31,
2006
|
|
|
Twelve Months
Ended
December 31,
2005
|
|
Service cost
|
|
$
|
29
|
|
|
$
|
5
|
|
|
$
|
22
|
|
|
$
|
25
|
|
Interest cost
|
|
|
84
|
|
|
|
14
|
|
|
|
66
|
|
|
|
79
|
|
Expected return on plan assets
|
|
|
(95
|
)
|
|
|
(15
|
)
|
|
|
(67
|
)
|
|
|
(80
|
)
|
Amortization of transition amount
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1
|
)
|
Amortization of prior service cost
|
|
|
|
|
|
|
|
|
|
|
5
|
|
|
|
4
|
|
Amortization of actuarial loss
|
|
|
|
|
|
|
|
|
|
|
41
|
|
|
|
49
|
|
Curtailment/settlement loss
|
|
|
1
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit cost
|
|
$
|
19
|
|
|
$
|
4
|
|
|
$
|
68
|
|
|
$
|
76
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-Average Assumptions Used to Determine Net Periodic Pension Cost
The following table presents weighted average assumptions as determined at the measurement dates noted (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor
|
|
|
Predecessor
|
|
|
|
Twelve Months
Ended
December 31,
2007
|
|
|
Two Months
Ended
December 31,
2006
|
|
|
Ten Months
Ended
October 31,
2006
|
|
|
Twelve Months
Ended
December 31,
2005
|
|
United States Plans
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate
|
|
5.90
|
%
|
|
5.85
|
%
|
|
5.80
|
%
|
|
5.85
|
%
|
Expected return on plan assets
|
|
8.00
|
%
|
|
8.00
|
%
|
|
7.50
|
%
|
|
7.50
|
%
|
Rate of compensation increase
|
|
5.41
|
%
|
|
5.41
|
%
|
|
5.44
|
%
|
|
5.44
|
%
|
|
|
|
|
|
Non-United States Plans
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate
|
|
4.95
|
%
|
|
4.78
|
%
|
|
5.10
|
%
|
|
5.59
|
%
|
Expected return on plan assets
|
|
6.92
|
%
|
|
6.94
|
%
|
|
6.68
|
%
|
|
6.70
|
%
|
Rate of compensation increase
|
|
3.90
|
%
|
|
3.90
|
%
|
|
3.69
|
%
|
|
3.72
|
%
|
The expected return on plan assets assumption is derived by taking into consideration the current plan asset
allocation, historical rates of return on those assets and projected future asset class returns. An asset return model is used to develop an expected range of returns on plan investments over a 20 year period, with the expected rate of return
selected from a best estimate range within the total range of projected results. The result is then rounded to the nearest 25 basis points.
-137-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
15. PENSION PLANS (continued)
Other Comprehensive Income
For the year ended December 31, 2007, the Company recognized net actuarial gains of $82 million on the balance sheet, recorded as a $6 million increase in prepaid pension cost and a $76 million decrease in
accrued pension cost. This amount was recorded as a credit to other comprehensive income ($52 million, net of tax). Approximately $1 million of the $114 million balance in accumulated other comprehensive income is expected to be recognized as net
periodic pension cost during 2008.
For the two month period ended December 31, 2006, the Company recognized net actuarial gains of $32 million on the
balance sheet, recorded as a $4 million increase in prepaid pension cost and a $28 million decrease in accrued pension cost. This amount was recorded as a credit to other comprehensive income ($20 million net of tax).
For the ten month period ended October 31, 2006, there were no amounts recognized in other comprehensive income. All amounts previously recorded in other
comprehensive income were reversed as part of fresh-start accounting.
During 2005 adjustments to the additional minimum liability resulted in a charge to
other comprehensive income of $48 million.
Plan Assets
Asset allocations for the United States pension plan are presented below.
|
|
|
|
|
|
|
|
|
|
Asset Category
|
|
December 31, 2007
Measurement Date
|
|
|
December 31, 2006
Measurement Date
|
|
|
October 31, 2006
Measurement Date
|
|
Equity
|
|
41
|
%
|
|
42
|
%
|
|
40
|
%
|
Fixed income and cash equivalents
|
|
55
|
%
|
|
56
|
%
|
|
58
|
%
|
Real estate
|
|
4
|
%
|
|
2
|
%
|
|
2
|
%
|
Excluding foreseeable future contributions and other amounts necessary to pay benefits for the rolling upcoming
two years which are invested in a Lehman Aggregate Bond Index Fund, the U.S. pension plans current investment policy is to have plan assets invested 52% in equity securities, 5% in real estate, 5% in real assets, and 38% in a long bond
portfolio whose duration approximately matches certain expected future benefit payments.
Asset allocations for the Non-United States pension plan are
presented below.
|
|
|
|
|
|
|
|
|
|
Asset Category
|
|
December 31, 2007
Measurement Date
|
|
|
December 31, 2006
Measurement Date
|
|
|
October 31, 2006
Measurement Date
|
|
Equity
|
|
52
|
%
|
|
50
|
%
|
|
48
|
%
|
Fixed income and cash equivalents
|
|
46
|
%
|
|
50
|
%
|
|
51
|
%
|
Real estate
|
|
2
|
%
|
|
0
|
%
|
|
1
|
%
|
The above asset allocation percentages are in compliance with the Non-United States pension plans current
investment policy.
-138-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
15. PENSION PLANS (continued)
Estimated Future Benefit Payments
The following table shows estimated future benefit payments from the Companys pension plans (in millions):
|
|
|
|
Year
|
|
Estimated Benefit Payments
|
2008
|
|
$
|
130
|
2009
|
|
|
106
|
2010
|
|
|
106
|
2011
|
|
|
108
|
2012
|
|
|
108
|
2013-2017
|
|
|
555
|
Contributions
Owens Corning expects to contribute between $60 and $65 million in cash to the United States pension plan during 2008, and another $10 million to $15 million to non-United States plans. Actual contributions to the plans may change as a
result of a variety of factors, including changes in laws that impact funding requirements.
Defined Contribution Plans
The Company sponsors two defined contribution plans which are available to substantially all United States employees. The Company matches a percentage of employee
contributions up to a maximum level. The Company recognized expense of $25 million, $4 million, $25 million and $25 million during the year ended December 31, 2007, the two months ended December 31, 2006, the ten month period ended
October 31, 2006 and the year ended December 31, 2005, respectively, for matching contributions to these plans.
16. POSTEMPLOYMENT AND POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The Company maintains health care
and life insurance benefit plans for certain retired employees and their dependents. The health care plans in the United States are non-funded 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 United States health care plans upon retirement if they have accumulated 10 years of service after age 45, 48 or 50, depending on the category of employee. Effective January 1, 2006, the Predecessor
significantly reduced the subsidy for post-65 retiree health care coverage, except for certain grandfathered groups. For employees hired after December 31, 2005, the Company does not provide subsidized retiree health care. 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.
The Company adopted the provisions of SFAS 158, including the requirement to measure plan assets and benefit obligations as of the date of the Companys fiscal year
end, upon emergence from bankruptcy. Prior to adoption of SFAS 158, the Predecessor used an October 31 measurement date.
-139-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
16. POSTEMPLOYMENT AND POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
(continued)
The following tables provide a reconciliation of the change in the accumulated benefit obligation and amounts
recognized in the Consolidated Balance Sheet for the periods from January 1, 2007 to December 31, 2007 and November 1, 2006 to December 31, 2006 (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor
|
|
|
|
December 31, 2007
Measurement Date
|
|
|
December 31, 2006
Measurement Date
|
|
|
|
United
States Plans
|
|
|
Non-United
States Plans
|
|
|
Total
|
|
|
United
States Plans
|
|
|
Non-United
States Plans
|
|
|
Total
|
|
Change in Accumulated Postretirement Benefit Obligation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit obligation at beginning of period
|
|
$
|
302
|
|
|
$
|
25
|
|
|
$
|
327
|
|
|
$
|
302
|
|
|
$
|
26
|
|
|
$
|
328
|
|
Service cost
|
|
|
3
|
|
|
|
1
|
|
|
|
4
|
|
|
|
1
|
|
|
|
|
|
|
|
1
|
|
Interest cost
|
|
|
17
|
|
|
|
1
|
|
|
|
18
|
|
|
|
3
|
|
|
|
|
|
|
|
3
|
|
Actuarial (gain) loss
|
|
|
(35
|
)
|
|
|
(5
|
)
|
|
|
(40
|
)
|
|
|
(1
|
)
|
|
|
|
|
|
|
(1
|
)
|
Currency (gain) loss
|
|
|
|
|
|
|
3
|
|
|
|
3
|
|
|
|
|
|
|
|
(1
|
)
|
|
|
(1
|
)
|
Benefits paid
|
|
|
(19
|
)
|
|
|
(1
|
)
|
|
|
(20
|
)
|
|
|
(3
|
)
|
|
|
|
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit obligation at end of period
|
|
$
|
268
|
|
|
$
|
24
|
|
|
$
|
292
|
|
|
$
|
302
|
|
|
$
|
25
|
|
|
$
|
327
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funded status
|
|
$
|
(268
|
)
|
|
$
|
(24
|
)
|
|
$
|
(292
|
)
|
|
$
|
(302
|
)
|
|
$
|
(25
|
)
|
|
$
|
(327
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts Recognized in the Consolidated Balance Sheet
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued benefit obligation current
|
|
$
|
(23
|
)
|
|
$
|
(1
|
)
|
|
$
|
(24
|
)
|
|
$
|
(24
|
)
|
|
$
|
(1
|
)
|
|
$
|
(25
|
)
|
Accrued benefit obligation noncurrent
|
|
|
(245
|
)
|
|
|
(23
|
)
|
|
|
(268
|
)
|
|
|
(278
|
)
|
|
|
(24
|
)
|
|
|
(302
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net amount recognized
|
|
$
|
(268
|
)
|
|
$
|
(24
|
)
|
|
$
|
(292
|
)
|
|
$
|
(302
|
)
|
|
$
|
(25
|
)
|
|
$
|
(327
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts Recorded in Accumulated Other Comprehensive Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net actuarial gain
|
|
$
|
(36
|
)
|
|
$
|
(5
|
)
|
|
$
|
(41
|
)
|
|
$
|
(1
|
)
|
|
$
|
|
|
|
$
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-140-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
16. POSTEMPLOYMENT AND POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
(continued)
The following table provides a reconciliation of the change in the accumulated benefit obligation and amounts
recognized in the Consolidated Balance Sheet for the period from January 1, 2006 to October 31, 2006 (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor
|
|
|
|
October 31, 2006
Measurement Date
|
|
|
|
United
States Plans
|
|
|
Non-United
States Plans
|
|
|
Total
|
|
Change in Accumulated Postretirement Benefit Obligation
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit obligation at beginning of period
|
|
$
|
359
|
|
|
$
|
24
|
|
|
$
|
383
|
|
Service cost
|
|
|
4
|
|
|
|
|
|
|
|
4
|
|
Interest cost
|
|
|
16
|
|
|
|
1
|
|
|
|
17
|
|
Amendments
|
|
|
(40
|
)
|
|
|
|
|
|
|
(40
|
)
|
Actuarial (gain) loss
|
|
|
(18
|
)
|
|
|
1
|
|
|
|
(17
|
)
|
Currency loss
|
|
|
|
|
|
|
1
|
|
|
|
1
|
|
Benefits paid
|
|
|
(20
|
)
|
|
|
(1
|
)
|
|
|
(21
|
)
|
Medicare Part D reimbursement
|
|
|
1
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit obligation at end of period
|
|
$
|
302
|
|
|
$
|
26
|
|
|
$
|
328
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funded status
|
|
$
|
(302
|
)
|
|
$
|
(26
|
)
|
|
$
|
(328
|
)
|
Amounts Recognized in the Consolidated Balance Sheet
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued benefit obligation current
|
|
$
|
(25
|
)
|
|
$
|
(2
|
)
|
|
$
|
(27
|
)
|
Accrued benefit obligation noncurrent
|
|
|
(277
|
)
|
|
|
(24
|
)
|
|
|
(301
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net amount recognized
|
|
$
|
(302
|
)
|
|
$
|
(26
|
)
|
|
$
|
(328
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-Average Assumptions Used to Determine Benefit Obligations
The following table presents the discount rates used to determine the benefit obligations as of the measurement dates noted.
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007
Measurement Date
|
|
|
December 31, 2006
Measurement Date
|
|
|
October 31, 2006
Measurement Date
|
|
United States Plans
|
|
6.45
|
%
|
|
5.80
|
%
|
|
5.80
|
%
|
Non-United States Plans
|
|
5.75
|
%
|
|
5.05
|
%
|
|
5.00
|
%
|
-141-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
16. POSTEMPLOYMENT AND POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
(continued)
Components of Net Periodic Postretirement Benefit Cost
The following table presents the components of net periodic postretirement benefit cost for the periods noted (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor
|
|
Predecessor
|
|
|
|
Twelve Months
Ended
December 31,
2007
|
|
Two Months
Ended
December 31,
2006
|
|
Ten Months
Ended
October 31,
2006
|
|
|
Twelve Months
Ended
December 31,
2005
|
|
Service cost
|
|
$
|
4
|
|
$
|
1
|
|
$
|
4
|
|
|
$
|
9
|
|
Interest cost
|
|
|
18
|
|
|
3
|
|
|
17
|
|
|
|
25
|
|
Amortization of prior service cost
|
|
|
|
|
|
|
|
|
(11
|
)
|
|
|
(6
|
)
|
Amortization of actuarial loss
|
|
|
|
|
|
|
|
|
1
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic postretirement benefit cost
|
|
$
|
22
|
|
$
|
4
|
|
$
|
11
|
|
|
$
|
31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-Average Assumptions Used to Determine Net Periodic Postretirement Benefit Cost
The following table presents the discount rates used to determine net periodic postretirement benefit cost for the periods noted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor
|
|
|
Predecessor
|
|
|
|
Twelve Months
Ended
December 31,
2007
|
|
|
Two Months
Ended
December 31,
2006
|
|
|
Ten Months
Ended
October 31,
2006
|
|
|
Twelve Months
Ended
December 31,
2005
|
|
United States Plans
|
|
5.80
|
%
|
|
5.80
|
%
|
|
5.80
|
%
|
|
5.85
|
%
|
Non-United States Plans
|
|
5.05
|
%
|
|
5.00
|
%
|
|
5.25
|
%
|
|
5.85
|
%
|
The following table presents health care cost trend rates used to determine net periodic postretirement benefit
cost for the periods noted, as well as information regarding the ultimate rate and the year in which the ultimate rate is reached (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor
|
|
|
Predecessor
|
|
|
|
Twelve Months
Ended
December 31,
2007
|
|
|
Two Months
Ended
December 31,
2006
|
|
|
Ten Months
Ended
October 31,
2006
|
|
|
Twelve Months
Ended
December 31,
2005
|
|
United States Plans
|
|
|
|
|
|
|
|
|
|
|
|
|
Initial rate at end of year
|
|
9.00
|
%
|
|
9.00
|
%
|
|
10.00
|
%
|
|
8.00-9.50
|
%
|
Ultimate rate
|
|
5.00
|
%
|
|
4.75
|
%
|
|
5.00
|
%
|
|
5.00
|
%
|
Year in which ultimate rate is
reached
|
|
2015
|
|
|
2014
|
|
|
2010
|
|
|
2007
|
|
Non-United States Plans
|
|
|
|
|
|
|
|
|
|
|
|
|
Initial rate at end of year
|
|
9.00
|
%
|
|
7.80
|
%
|
|
10.00
|
%
|
|
10.00
|
%
|
Ultimate rate
|
|
5.00
|
%
|
|
4.50
|
%
|
|
5.00
|
%
|
|
4.50
|
%
|
Year in which ultimate rate is reached
|
|
2013
|
|
|
2009
|
|
|
2009
|
|
|
2009
|
|
-142-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
16. POSTEMPLOYMENT
|
AND POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
|
The health care cost trend rate assumption can have a significant effect on the amounts reported. To illustrate, a
one-percentage point change in the December 31, 2007 assumed health care cost trend rate would have the following effects (in millions):
|
|
|
|
|
|
|
|
|
|
1-Percentage Point
|
|
|
|
Increase
|
|
Decrease
|
|
Increase (decrease) in total service cost and interest cost components of net periodic postretirement benefit cost
|
|
$
|
1
|
|
$
|
(1
|
)
|
Increase (decrease) of accumulated postretirement benefit obligation
|
|
|
13
|
|
|
(12
|
)
|
Other Comprehensive Income
For the year ended December 31, 2007, the Company recognized net actuarial gains of approximately $40 million on the balance sheet. This amount was recorded as a
credit to other comprehensive income ($25 million net of tax). Approximately $1 million of the $41 million balance in accumulated other comprehensive income is expected to be recognized as net periodic postretirement benefit cost during 2008.
Estimated Future Benefit Payments
The following table shows estimated future benefit payments from the Companys postretirement benefit plans:
|
|
|
|
|
|
|
|
|
|
|
Year
|
|
Estimated Benefit Payments
Before Medicare Subsidy
|
|
Estimated Medicare
Subsidy
|
|
|
Estimated Benefit Payments
Net of Medicare Subsidy
|
|
|
(dollars in millions)
|
2008
|
|
$
|
27
|
|
$
|
(2
|
)
|
|
$
|
25
|
2009
|
|
|
28
|
|
|
(2
|
)
|
|
|
26
|
2010
|
|
|
28
|
|
|
(2
|
)
|
|
|
26
|
2011
|
|
|
29
|
|
|
(2
|
)
|
|
|
27
|
2012
|
|
|
29
|
|
|
(2
|
)
|
|
|
27
|
2013-2017
|
|
|
136
|
|
|
(11
|
)
|
|
|
125
|
Impact of Adopting SFAS 158
SOP 90-7, Financial Reporting by Entities in Reorganization Under the Bankruptcy Code, requires that a company, at the time it adopts fresh-start accounting,
adopt changes in accounting principles that will be required in the financial statements within twelve months. As a result, the Company adopted the provisions of SFAS 158, including the requirement to measure the benefit obligation as of the date of
the Companys fiscal year end, upon emergence from bankruptcy. Because the accounting for other postretirement benefit plans under fresh-start accounting, specifically SFAS 141, requires a company to record a liability equal to the accumulated
postretirement benefit obligation, there was no impact of adopting SFAS 158.
-143-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
16. POSTEMPLOYMENT AND POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
(continued)
Plan Amendment
During the third quarter of 2005, the Company announced plans to amend certain provisions of the United States postretirement health care plans, effective January 1, 2006. Depending on the category of the employee, the changes consist
of discontinuing subsidized post-65 retiree health care coverage, except for certain grandfathered groups, and providing only non-subsidized retiree health care coverage for employees hired after December 31, 2005. The changes to the plan
resulted in a net decrease of the accumulated postretirement benefit obligation of $42 million. This amount was accounted for as prior service cost, and a portion was amortized into net periodic postretirement benefit cost in the first ten months of
2006. The remaining gain was subsequently recognized upon adoption of fresh-start accounting.
Postemployment Benefits
The Company may also provide benefits to former or inactive employees after employment but before retirement under certain conditions. These benefits include
continuation of benefits such as health care and life insurance coverage. The accrued postemployment benefits liability at December 31, 2007, December 31, 2006 and October 31, 2006 were $28 million, $28 million and $28 million,
respectively, including current liabilities of $5 million in all years. The net periodic postemployment benefit expense was approximately $6 million, $1 million, and $3 million for the year ended December 31, 2007, two months ended
December 31, 2006, and the ten months ended October 31, 2006, respectively.
17. CONTINGENT LIABILITIES AND OTHER MATTERS
Bankruptcy Related-Matters
In accordance with the terms of the Plan, the Company established a Disputed Distribution Reserve (as defined in the Plan) funded in the initial amount of approximately
$85 million, which is reflected as restricted cash on the Consolidated Balance Sheet as of December 31, 2006, for the potential payment of certain non-tax claims against the Debtors that were disputed as of the Effective Date. During 2007,
approximately $52 million of the claims were settled. The remaining reserve, in the amount of $33 million is reflected as restricted cash on the Consolidated Balance Sheet as of December 31, 2007. See Note 23 to the Consolidated Financial
Statements for a discussion of certain other bankruptcy-related matters.
Securities and Certain Other Litigation
On September 1, 2006, various members of OCDs Investment Review Committee were named as defendants in a lawsuit captioned Brown v. Owens Corning Investment
Review Committee, et al., in the United States District Court for the Northern District of Ohio (Western Division). Neither the Company nor OCD is named in the lawsuit but such individuals would have a contingent indemnification claim against OCD.
The suit, brought by former employees of OCD, was brought under ERISA alleging that the defendants breached their fiduciary duties to certain pension benefit plans and to class members in connection with the investments in an OCD company common
stock fund. A motion to dismiss was filed on behalf of the defendants on March 5, 2007. Subsequently, the court converted the Motion to Dismiss to a Motion for Summary Judgment. The court ordered limited discovery, the parties filed written
argument and a hearing on the Motion was held on January 18, 2008.
-144-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
17. CONTINGENT LIABILITIES AND OTHER MATTERS (continued)
Environmental Liabilities
We have 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. We have also been deemed a PRP under similar state or local laws and in other instances other PRPs have brought suits against us as a PRP for contribution under such federal, state, or local laws. At December 31,
2007, we had environmental remediation liabilities as a PRP at 43 sites. Our environmental liabilities at 22 of these sites will be resolved pursuant to the terms of the Plan and will be paid out of the Non-Tax Bankruptcy Reserve. At the other 21
sites, we have a continuing legal obligation to either complete remedial actions or contribute to the completion of remedial actions as part of a group of PRPs. For these sites we estimate a reserve in accordance with accounting principles generally
accepted in the United States to reflect environmental liabilities that have been asserted or are probable of assertion, in which liabilities are probable and reasonably estimable. At December 31, 2007, our reserve for such liabilities was $9
million, of which $4 million is recorded in the Non-Tax Bankruptcy Reserve as discussed in Note 23. We will continue to review our environmental reserve and make such adjustments as appropriate.
18. STOCK COMPENSATION PLANS
On October 31, 2006, all stock and stock options of the Predecessor
were extinguished in accordance with the plan of reorganization (the Plan) confirmed as a part of the Debtors emergence from Chapter 11 bankruptcy proceedings.
2006 Stock Plan
In conjunction with the confirmation of the Plan, the Companys 2006 Stock Plan was approved
by the United States Bankruptcy Court for the District of Delaware (the USBC). In accordance with Section 303 of the Delaware General Corporation Law, such approval constituted stockholder approval of the 2006 Stock Plan. The 2006
Stock Plan became effective on October 31, 2006, the date that the Debtors emerged from Chapter 11 Bankruptcy. In December 2007, the stockholders approved the Amended and Restated Owens Corning 2006 Stock Plan.
The 2006 Stock Plan authorizes grants of stock options, stock appreciation rights, restricted stock awards, restricted stock units, bonus stock awards and performance
stock awards to be made pursuant to the plan. At December 31, 2007 and 2006, the maximum number of shares remaining available under the Amended and Restated 2006 Stock Plan for all stock awards was 6,942,886 and 3,696,250 shares, respectively.
Stock Options
The Company granted stock options
under its employee emergence equity program and its executive compensation plan. The Company calculates a weighted-average grant date fair value, using a Black-Scholes valuation model for options granted. The weighted-average grant date fair value
of stock options granted during the Successor year ended December 31, 2007 and the Successor two months ended December 31, 2006 was $9.28 and $10.99, respectively.
-145-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
18. STOCK COMPENSATION PLANS (continued)
The following table summarizes the assumptions that were used in the Companys Black-Scholes valuation model to
estimate the grant date fair value of options granted:
|
|
|
|
|
|
|
|
|
Successor
|
|
|
|
Twelve Months
Ended
December 31,
2007
|
|
|
Two Months
Ended
December 31,
2006
|
|
Expected volatility
|
|
33.3
|
%
|
|
34.0
|
%
|
Expected dividends
|
|
1.5
|
%
|
|
1.5
|
%
|
Expected term (in years)
|
|
6.5
|
|
|
6.5
|
|
Risk-free rate
|
|
4.3
|
%
|
|
4.6
|
%
|
In general, the exercise price of each option awarded under the Plan equals the market price of the Companys
common stock on the date of grant and an options maximum term is 10 years. Shares issued from the exercise of options are recorded in the common stock accounts at the option price. The awards and vesting periods of such awards are determined
at the discretion of the Compensation Committee of the Board of Directors. The volatility assumption was based on a benchmark study of our peers.
The
following table summarizes our share option activity during the Successor year ended December 31, 2007 and the Successor two months ended December 31, 2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor
|
|
|
Twelve Months Ended
December 31, 2007
|
|
Two Months Ended
December 31, 2006
|
Successor
|
|
Number
of
Shares
|
|
|
Weighted-
Average
Exercise
Price
|
|
Number of
Shares
|
|
|
Weighted-
Average
Exercise
Price
|
Beginning balance
|
|
2,123,100
|
|
|
$
|
30.00
|
|
|
|
|
|
|
Options granted
|
|
69,470
|
|
|
$
|
26.99
|
|
2,127,100
|
|
|
$
|
30.00
|
Options exercised
|
|
|
|
|
|
|
|
|
|
|
|
|
Options forfeited
|
|
(29,400
|
)
|
|
$
|
30.00
|
|
(4,000
|
)
|
|
$
|
30.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
2,163,170
|
|
|
$
|
29.90
|
|
2,123,100
|
|
|
$
|
30.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options Outstanding
|
|
Options Exercisable
|
Range of Exercise Prices
|
|
Number
Outstanding
at 12/31/07
|
|
Weighted-Average
|
|
Number
Exercisable
at 12/31/07
|
|
Weighted-Average
Exercise Price
|
|
|
Remaining
Contractual Life
|
|
Exercise
Price
|
|
|
$26.99 $30.00
|
|
2,163,170
|
|
9.29
|
|
$
|
29.90
|
|
|
|
$
|
|
During the Successor year ended December 31, 2007 and the Successor two months ended December 31, 2006,
the Company recognized expense of $10 million and $1 million, respectively, related to the Companys stock options of which $9 million and $1 million, respectively, were recorded under the caption employee emergence equity program on the
Consolidated Statements of Earnings (Loss). For the Successor year ended December 31, 2007, $1 million was recorded as a reclassification of stock option compensation expense to discontinued
-146-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
18
.
STOCK COMPENSATION PLANS
(continued)
operations and restructuring. As of December 31, 2007, there was $10 million of total unrecognized compensation cost related to stock option awards. The
total aggregate intrinsic value of options outstanding as of December 31, 2007 and 2006 was less than $1 million and $23 million, respectively.
Restricted Stock Awards
The Company granted restricted stock awards and restricted stock units under its employee emergence equity
program, Board of Director compensation plan, and its long-term incentive plan (LTIP). Compensation expense for restricted stock awards 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. Stock restrictions are subject to alternate vesting plans for death, disability, approved early retirement and involuntary termination, over various periods ending in 2009.
A summary of the status of the Companys plans that had restricted stock issued as of December 31, 2007 and December 31, 2006, and changes during the
Successor year ended December 31, 2007 and Successor two months ended December 31, 2006, are presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor
|
|
|
Twelve Months
Ended
December 31, 2007
|
|
Two Months
Ended
December 31, 2006
|
Successor
|
|
Number
of
Shares
|
|
|
Weighted-
Average
Grant-
Date Fair
Value
|
|
Number
of
Shares
|
|
|
Weighted-
Average
Grant-
Date Fair
Value
|
Beginning Balance
|
|
3,030,150
|
|
|
$
|
30.00
|
|
|
|
|
|
|
Restricted stock granted
|
|
502,833
|
|
|
$
|
27.09
|
|
3,057,050
|
|
|
$
|
30.00
|
Restricted stock exercised
|
|
(2,600
|
)
|
|
$
|
30.00
|
|
(500
|
)
|
|
$
|
30.00
|
Restricted stock forfeited
|
|
(163,101
|
)
|
|
$
|
30.00
|
|
(26,400
|
)
|
|
$
|
30.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance
|
|
3,367,282
|
|
|
$
|
29.57
|
|
3,030,150
|
|
|
$
|
30.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the Successor year ended December 31, 2007 and the Successor two months ended December 31, 2006,
the Company recognized expense of $39 million and $5 million, respectively, related to the Companys restricted stock, of which $28 million and $5 million, respectively, was recorded under the caption employee emergence equity program on the
Consolidated Statements of Earnings (Loss). For the Successor year ended December 31, 2007, $3 million was recorded under the caption marketing and administrative expenses in the Consolidated Statements of Earnings (Loss) and $5 million was
recorded as a reclassification of stock compensation to discontinued operations in the Consolidated Statements of Earnings (Loss). For the Successor year ended December 31, 2007 and the Successor two months ended December 31, 2006, less
than $1 million and $3 million, respectively, were recorded as reclassification of restricted stock expense to restructuring. As of December 31, 2007 and 2006, there was $41 million and $68 million, respectively, of total unrecognized
compensation expense related to restricted stock. As of December 31, 2007 and 2006 that cost is expected to be recognized over a weighted average period of 2.38 years and 2.83 years, respectively. The total fair value of shares vested during
each the Successor year ended December 31, 2007 and the Successor two months ended December 31, 2006 was less than $1 million.
Performance
Stock Awards and Performance Stock Units
The Company grants performance stock awards and performance stock units as a part of its LTIP. In the second
quarter of 2007, the Company granted performance stock, of which fifty percent will be settled in stock and fifty
-147-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
18
.
STOCK COMPENSATION PLANS
(continued)
percent will be settled in cash. The amount of the performance stock ultimately distributed is contingent on meeting various company-wide performance goals,
including cumulative earnings per share. Compensation expense for performance stock settled in stock is measured based on the market price of the stock on the date of grant and is recognized on a straight-line basis over the vesting period.
Compensation expense for performance stock settled in cash is measured based on the market price of the stock at the end of each quarter and is recognized on a straight-line basis over the vesting period. The initial valuation of all performance
stock granted assumes that performance goals will be achieved. This assumption is monitored each quarter and if it becomes probable that such goals will not be achieved or will be exceeded, compensation cost recognized will be adjusted and previous
surplus compensation cost recognized will be reversed or additional cost will be recognized. This assumption was adjusted during the quarter ended September 30, 2007 due to significantly weaker than expected market conditions, which resulted in
a downward adjustment to performance-based compensation expense. Stock restrictions are subject to alternate vesting plans for death, disability, approved early retirement and involuntary termination, over various periods ending in 2009.
A summary of the status of the Companys plans that had performance stock issued as of December 31, 2007, and changes during the Successor year ended
December 31, 2007, are presented below. At December 31, 2006, the Company had no performance share awards outstanding. The weighted-average grant date fair value for performance stock issued in 2007 that will be settled in stock is $27.14.
|
|
|
|
Successor
|
|
Number
of
Shares
|
|
Outstanding at December 31, 2006
|
|
|
|
Granted
|
|
129,772
|
|
Vested
|
|
|
|
Forfeited
|
|
(6,210
|
)
|
|
|
|
|
Outstanding at December 31, 2007
|
|
123,562
|
|
|
|
|
|
During the Successor year ended December 31, 2007, the Company recognized expense of $1 million related to
the Companys performance stock. As of December 31, 2007, there was $2 million of total unrecognized compensation expense related to performance stock. That cost is expected to be recognized over a weighted average period of 2 years.
Stock Appreciation Rights (SARs)
Stock
appreciation rights represent the opportunity to receive stock or cash or a combination thereof granted by the Committee. The SAR can be issued in tandem with Incentive Stock Option or free-standing. If the SAR is issued in tandem then the base
price shall be the purchase price per share of Common Stock of the related option. If the SAR is issued free-standing then the base price shall be determined by the Committee. As of December 31, 2007 no SARs have been granted.
Bonus Stock Awards
Bonus stock is a reward granted by the
Committee that is not subject to performance measures or restriction periods. The stock is issued at the fair value of the stock on the grant date. As of December 31, 2007 no bonus stock awards have been granted.
-148-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
19. WARRANTS
Upon the Companys emergence from bankruptcy, holders of the company obligated securities of entities holding
solely parent debentures subject to compromise and old common stock received warrants to purchase the Companys new common stock. Each holder of old OCD Subordinated Claims received one Series A warrant (representing the right to
purchase one share of the Companys new common stock for $43.00). Each holder of existing OCD common stock claims received one Series B warrant (representing the right to purchase one share of the Companys new common stock for $45.25).
The Company issued 17.5 million Series A warrants and 7.8 million Series B warrants on the Effective Date, of which 17.5 million Series A warrants and 7.8 million Series B warrant remain outstanding as of December 31, 2007.
The Company has accounted for these warrants as equity instruments in accordance with EITF 00-19, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Companys Own Stock since there is no option
for cash or net-cash settlement when the warrants are exercised. Future exercises and forfeitures will reduce the amount of warrants. Exercises will increase the amount of common stock outstanding and additional paid in capital.
The aggregate fair value of the warrants at October 31, 2006 of $142.6 million and $60.2 million for the Series A warrants and Series B warrants, respectively, was
estimated using the Black-Scholes valuation method with the following weighted-average assumptions:
|
|
|
|
|
|
|
|
|
Warrants
|
|
|
|
Series A
|
|
|
Series B
|
|
Expected annual dividends
|
|
1.49
|
%
|
|
1.49
|
%
|
Risk free interest rate
|
|
4.6
|
%
|
|
4.6
|
%
|
Expected term (in years)
|
|
7.00
|
|
|
7.00
|
|
Volatility
|
|
34.0
|
%
|
|
34.0
|
%
|
No Series A warrants or Series B warrants have been exercised into common stock.
-149-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
20. EARNINGS PER SHARE
The following table reconciles the weighted average number of shares used in the basic earnings per share calculation
to the weighted average number of shares used to compute diluted earnings per share (in millions, except per share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor
|
|
|
Predecessor
|
|
|
|
Twelve Months
Ended
December 31,
2007
|
|
Two Months
Ended
December 31,
2006
|
|
|
Ten Months
Ended
October 31,
2006
|
|
Twelve Months
Ended
December 31
2005
|
|
Earnings (loss) from continuing operations
|
|
$
|
27
|
|
$
|
(54
|
)
|
|
$
|
8,013
|
|
$
|
(4,134
|
)
|
Earnings (loss) from discontinued operations, net of tax
|
|
|
69
|
|
|
(11
|
)
|
|
|
127
|
|
|
35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss)
|
|
$
|
96
|
|
$
|
(65
|
)
|
|
$
|
8,140
|
|
$
|
(4,099
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of shares outstanding used for basic earnings per share
|
|
|
128.1
|
|
|
128.1
|
|
|
|
55.3
|
|
|
55.3
|
|
Non-vested restricted shares
|
|
|
0.7
|
|
|
|
|
|
|
|
|
|
|
|
Shares from assumed conversion of preferred securities
|
|
|
|
|
|
|
|
|
|
4.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of shares outstanding and common equivalent shares used for diluted earnings per share
|
|
|
128.8
|
|
|
128.1
|
|
|
|
59.9
|
|
|
55.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per common share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) from continuing operations
|
|
$
|
0.21
|
|
$
|
(0.42
|
)
|
|
$
|
144.90
|
|
$
|
(74.73
|
)
|
Basic earnings (loss) from discontinued operations
|
|
$
|
0.54
|
|
$
|
(0.09
|
)
|
|
$
|
2.30
|
|
$
|
0.65
|
|
Diluted earnings (loss) per common share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) from continuing operations
|
|
$
|
0.21
|
|
$
|
(0.42
|
)
|
|
$
|
133.77
|
|
$
|
(74.73
|
)
|
Diluted earnings (loss) from discontinued operations
|
|
$
|
0.54
|
|
$
|
(0.09
|
)
|
|
$
|
2.12
|
|
$
|
0.65
|
|
For the successor year ended December 31, 2007, the number of shares used in the calculation of diluted
earnings per share did not include, 2.2 million common equivalent shares of deferred awards, 17.5 million common equivalent shares from Series A Warrants and 7.8 million common equivalent shares from Series B Warrants due to their
anti-dilutive effect.
For the successor two months ended December 31, 2006, the number of shares used in the calculation of diluted earnings per
share did not include 2.7 million common equivalent shares of non-vested restricted stock, 0.3 million common equivalent shares of restricted stock units, 2.1 million common equivalent shares of deferred awards, 17.5 million
common equivalent shares from Series A Warrants and 7.8 million common equivalent shares from Series B Warrants due to their anti-dilutive effect.
-150-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
20. EARNINGS PER SHARE (continued)
For the Predecessor twelve months ended December 31, 2005, the number of shares used in the calculation of
diluted earnings per share did not include 14 thousand common equivalent shares of non-vested restricted stock, 24 thousand common equivalent shares of deferred awards and 4,566 thousand common equivalent shares from assumed
conversion of preferred securities due to their anti-dilutive effect.
21.
|
DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS
|
The Company is exposed to the impact of changes in commodity prices and foreign currency exchange rates in the normal course of business. The Companys risk management program is designed to manage the exposure and volatility arising
from these risks by offsetting them with gains and losses on derivative financial instruments. The policy of the Company is to use derivative financial instruments only to the extent necessary to hedge identified business risks. The Company does not
enter into such transactions for trading purposes.
The Company generally does not require collateral or other security with counterparties to these
financial instruments and is therefore subject to credit risk in the event of nonperformance; however, the Company monitors credit risk and currently does not anticipate nonperformance by other parties. Contracts with counterparties contain right of
setoff provisions. These provisions effectively reduce the Companys exposure to credit risk in situations where the Company has gain and loss positions outstanding with a single counterparty. Positions under such provisions are reported on a
net basis in the Consolidated Balance Sheet.
The Company performs an analysis for effectiveness of its derivative financial instruments at the end of each
quarter based on the terms of the contract and the underlying item being hedged. Any portion of the change in fair value of the derivative that is determined to be ineffective is recorded as (gain) loss on sale of fixed assets and other in the
Consolidated Statement of Earnings (Loss).
Assets and liabilities designated as hedged items are assessed for impairment or for the need to recognize an
increased obligation, respectively, according to generally accepted accounting principles that apply to those assets or liabilities. Such assessments are made after hedge accounting has been applied to the asset or liability and exclude a
consideration of (1) any anticipated effects of hedge accounting and (2) the fair value of any related hedging instrument that is recognized as a separate asset or liability. The assessment for an impairment of an asset, however, includes
a consideration of the losses that have been deferred in other comprehensive income (OCI) as a result of a cash flow hedge of that asset.
Cash Flow Hedges
The Company uses forward and swap contracts, which qualify as cash flow hedges, to manage forecasted exposure to
foreign exchange and natural gas price risk. The effective portion of the change in the fair value of cash flow hedges is deferred in accumulated OCI and is subsequently recognized in (gain) loss on sale of fixed assets and other on the Consolidated
Statement of Earning (Loss) for foreign exchange hedges, and in cost of sales on the Consolidated Statement of Earning (Loss) for commodity hedges, when the hedged item impacts earnings. The ineffective portion is recognized in (gain) loss on sale
of fixed assets and other. The ineffective portion of changes in the fair value of cash flow hedges recognized was less than $1 million for the year ended December 31, 2007 and the two month period ended December 31, 2006, and was a $12
million loss in the ten month period ended October 31, 2006 and a $9 million gain during the year ended December 31, 2005.
-151-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
21. DERIVATIVE
|
FINANCIAL INSTRUMENTS AND FAIR VALUE OF FINANCIAL
|
The Company typically enters into financial instruments that mature within thirty-six months. As of December 31,
2007, approximately $4 million of losses included in accumulated OCI in the Consolidated Balance Sheet relate to contracts that will impact earnings during the next twelve months as the underlying hedges are realized. Transactions and events that
are expected to occur over the next twelve months that will necessitate recognizing these deferred losses include actual foreign currency denominated sales or purchases and, for commodity hedges, the recognition of the hedged item through earnings.
Summary of OCI Activity
The following table
summarizes activity in OCI resulting from the Companys cash flow hedging activities for the periods noted (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor
|
|
Predecessor
|
|
|
|
Twelve Months
Ended
December 31,
2007
|
|
|
Two Months
Ended
December 31,
2006
|
|
Ten Months
Ended
October 31,
2006
|
|
Beginning balance (gains) losses
|
|
$
|
8
|
|
|
$
|
|
|
$
|
(16
|
)
|
Change in fair value of derivatives
|
|
|
2
|
|
|
|
8
|
|
|
41
|
|
Reclassification from OCI
|
|
|
(8
|
)
|
|
|
|
|
|
(11
|
)
|
Fresh-start adjustment
|
|
|
N/A
|
|
|
|
N/A
|
|
|
(14
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance losses
|
|
$
|
2
|
|
|
$
|
8
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company adopted fresh-start accounting as of October 31, 2006. As a result of fresh-start accounting, all
derivatives designated as cash flow hedges were adjusted to fair value as of the Effective Date and all associated amounts in OCI were adjusted to zero. The net adjustment to OCI was a credit of $14 million.
Fair Value Hedges
The Company uses forward currency exchange
contracts, which qualify as fair value hedges, to manage existing exposures to foreign exchange risk related to assets and liabilities recorded in the Consolidated Balance Sheet. Gains and losses resulting from the changes in fair value of these
instruments are recorded in (gain) loss on sale of fixed assets and other, the effect of which was not material in any year presented. The fair value of these instruments, which are recorded as other current assets in the Consolidated Balance Sheet,
was not material for any dates presented.
Other Financial Instruments with Off-Balance-Sheet Risk
As of December 31, 2006, the Company was contingently liable for guarantees of indebtedness owed by a third party of approximately $4 million. There were no such
guarantees as of December 31, 2007.
The Company enters into standby letters of credit agreements to guarantee various operating activities. These
agreements provide credit availability to beneficiaries if certain contractual events occur. As of December 31, 2007 and 2006, the Successor has approximately $85 million and $224 million, respectively, of unused letters of credit outstanding.
-152-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
21. DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE OF FINANCIAL
INSTRUMENTS (continued)
Concentrations of Credit Risk
As of December 31, 2007, no customers balance exceeded 10% of the Companys consolidated trade receivables balance. As of December 31, 2006 , one customers balance represented 11% of the
Companys consolidated trade receivables balance, and virtually all amounts with this customer were current.
Fair Value of Financial
Instruments
The following methods and assumptions were used to determine the fair value of each category 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 calculated using
the expected future cash flows discounted at market interest rates. The Company believes that the carrying amounts reasonably approximate the fair values of long-term notes receivable. Long-tem notes receivable were $16 million and $18 million as of
December 31, 2007 and 2006, respectively.
Long-term debt
The fair value of the Companys long-term debt has been calculated 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.
As of December 31, 2007, the Companys 6.50% Senior Notes due December 1, 2016 were trading at approximately 91% of par value and the 7.00% Senior Notes
due December 1, 2036 were trading at approximately 88% of par value. The Notes were issued in October 2006 at approximately 100% of par value and approximately 98% of par value, respectively, which reflected the differential between market
interest rates and the coupon rate at the time of issuance. As of December 31, 2006, the carrying amounts reasonably approximated the fair values of these financial instruments.
The Company believes that the carrying amounts reasonably approximate the fair values of the remaining long-term debt instruments as of December 31, 2007 and 2006.
Fair Value of Derivative Financial Instruments
Forward
currency exchange contracts and financial guarantees
The fair values of forward currency exchange contracts and financial guarantees are based on the
estimated cost to acquire similar agreements or on the estimated cost to terminate these agreements or otherwise settle the obligations with the counter parties at the reporting date.
Commodity swap contracts
The fair values of natural gas commodity contracts are
calculated based on traded market values.
The carrying value for all derivative financial instruments approximates the
Companys estimates of fair value.
-153-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
22. INCOME TAXES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor
|
|
|
Predecessor
|
|
|
|
Twelve Months
Ended
December 31,
2007
|
|
|
Two Months
Ended
December 31,
2006
|
|
|
Ten Months
Ended
October 31,
2006
|
|
|
Twelve Months
Ended
December 31,
2005
|
|
|
|
(in millions)
|
|
Earnings (loss) from continuing operations before income taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
(100
|
)
|
|
$
|
(130
|
)
|
|
$
|
8,952
|
|
|
$
|
(4,700
|
)
|
Foreign
|
|
|
123
|
|
|
|
57
|
|
|
|
41
|
|
|
|
159
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
23
|
|
|
$
|
(73
|
)
|
|
$
|
8,993
|
|
|
$
|
(4,541
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense (benefit):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
2
|
|
|
$
|
1
|
|
|
$
|
49
|
|
|
$
|
(10
|
)
|
State and local
|
|
|
1
|
|
|
|
|
|
|
|
1
|
|
|
|
7
|
|
Foreign
|
|
|
30
|
|
|
|
13
|
|
|
|
57
|
|
|
|
29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current
|
|
|
33
|
|
|
|
14
|
|
|
|
107
|
|
|
|
26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
(38
|
)
|
|
|
(39
|
)
|
|
|
766
|
|
|
|
(416
|
)
|
State and local
|
|
|
(10
|
)
|
|
|
(3
|
)
|
|
|
149
|
|
|
|
(45
|
)
|
Foreign
|
|
|
7
|
|
|
|
5
|
|
|
|
(42
|
)
|
|
|
24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deferred
|
|
|
(41
|
)
|
|
|
(37
|
)
|
|
|
873
|
|
|
|
(437
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income tax expense (benefit)
|
|
$
|
(8
|
)
|
|
$
|
(23
|
)
|
|
$
|
980
|
|
|
$
|
(411
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The reconciliation between the United States federal statutory rate and the Companys effective income tax
rate from continuing operations is:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor
|
|
|
Predecessor
|
|
|
|
Twelve Months
Ended
December 31,
2007
|
|
|
Two Months
Ended
December 31,
2006
|
|
|
Ten Months
Ended
October 31,
2006
|
|
|
Twelve Months
Ended
December 31,
2005
|
|
United States federal statutory rate
|
|
35
|
%
|
|
35
|
%
|
|
35
|
%
|
|
35
|
%
|
State and local income taxes, net of federal tax benefit
|
|
(41
|
)
|
|
4
|
|
|
4
|
|
|
5
|
|
Foreign tax rate differential
|
|
(123
|
)
|
|
3
|
|
|
|
|
|
|
|
Change in valuation allowance
|
|
39
|
|
|
|
|
|
(3
|
)
|
|
(30
|
)
|
Fresh-start accounting adjustments
|
|
|
|
|
(10
|
)
|
|
(4
|
)
|
|
|
|
Effect of gain on settlement of liabilities subject to compromise
|
|
|
|
|
|
|
|
(22
|
)
|
|
|
|
Other, net
|
|
55
|
|
|
|
|
|
1
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate
|
|
(35
|
)%
|
|
32
|
%
|
|
11
|
%
|
|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-154-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
22. INCOME TAXES (continued)
As of December 31, 2007, the Company has not provided for withholding or United States federal income taxes on
approximately $810 million of accumulated undistributed earnings of its foreign subsidiaries as they are considered by management to be either permanently reinvested or, if such earnings were remitted, the taxes payable on such remittance would not
be material. On October 22, 2004, the President signed the American Jobs Creation Act of 2004 (the Act). The Act created a temporary incentive for United States corporations to repatriate accumulated income earned abroad by
providing an 85 percent dividend received deduction for certain dividends from controlled foreign corporations. During 2005, under this Act we repatriated $220 million of earnings previously considered permanently reinvested outside the United
States and recognized $12 million of additional tax provision for the taxes associated with this repatriation.
At December 31, 2007, the Company
had federal, state and foreign net operating loss carryforwards of $3.020 billion, $4.702 billion and $429 million, respectively. If not utilized, the federal and state net operating loss carryforwards will expire through 2027 while the foreign net
operating loss carryforwards will begin to expire in 2008, with the majority having no expiration date.
The cumulative temporary differences giving rise
to the deferred tax assets and liabilities at December 31, 2007 and 2006 are as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor
|
|
|
2007
|
|
2006
|
|
|
Deferred Tax
Assets
|
|
|
Deferred Tax
Liabilities
|
|
Deferred Tax
Assets
|
|
|
Deferred Tax
Liabilities
|
Asbestos litigation claims
|
|
$
|
|
|
|
$
|
|
|
$
|
870
|
|
|
$
|
|
Other employee benefits
|
|
|
132
|
|
|
|
|
|
|
148
|
|
|
|
|
Pension plans
|
|
|
22
|
|
|
|
|
|
|
101
|
|
|
|
21
|
Operating loss carryforwards
|
|
|
1,255
|
|
|
|
|
|
|
378
|
|
|
|
|
Depreciation
|
|
|
|
|
|
|
372
|
|
|
16
|
|
|
|
412
|
Amortization
|
|
|
|
|
|
|
461
|
|
|
|
|
|
|
453
|
State and local taxes
|
|
|
16
|
|
|
|
|
|
|
15
|
|
|
|
4
|
Other
|
|
|
41
|
|
|
|
|
|
|
308
|
|
|
|
244
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
1,466
|
|
|
|
833
|
|
|
1,836
|
|
|
|
1,134
|
Valuation allowances
|
|
|
(125
|
)
|
|
|
|
|
|
(146
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deferred taxes
|
|
$
|
1,341
|
|
|
$
|
833
|
|
$
|
1,690
|
|
|
$
|
1,134
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A valuation allowance is established to reflect deferred tax assets at amounts expected to be realized. As a
result of OCDs emergence from bankruptcy, the valuation allowance previously established for tax assets related to charges for asbestos-related liabilities was eliminated. The valuation allowance as of December 31, 2007 consisted of $122
million related to tax assets for certain state and foreign loss carryforwards and $3 million related to other items. The valuation allowance as of December 31, 2006 consisted of $99 million related to tax assets for certain state and foreign
loss carryforwards and $47 million related to other items.
Management expects to realize its net deferred tax assets
through income from future operations.
At the time of emergence, the Company was required to adopt FASB Interpretation No. 48, Accounting for
Uncertainty in Income Taxes an Interpretation of FASB Statement No. 109 (FIN 48) as of November 1, 2006. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in companies financial
-155-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
22. INCOME TAXES (continued)
statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. As a result, the Company applies now a more-likely-than-not
recognition threshold for all tax uncertainties. Since FIN 48 only allows the recognition of these tax benefits that have a greater than 50% likelihood of being sustained upon examination by the taxing authorities.
The Company, or one of its subsidiaries, files income tax returns in the United States and other foreign jurisdictions. With limited exceptions, the Company is no longer
subject to U.S. federal tax examinations for years before 2004 or state and local examinations for years before 2001. The Internal revenue Service (IRS) commenced an examination of the Companys U.S. income tax returns for 2004 and
2005 in the first quarter of 2007 and will be examining the years the Company was in bankruptcy. The IRS has not proposed any adjustments to date and the examination is expected to end in 2010. The Company is also under examination for the income
tax filings in various state and foreign jurisdictions. Due to the potential for resolution of federal, state and foreign examinations, and the expiration of various statutes of limitation, it is reasonably possible that the gross unrecognized tax
benefits balance may change within the next 12 months by a range of zero to $44 million.
A reconciliation of the beginning and ending amount of
unrecognized tax benefits is as follows:
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
Balance at beginning of period (in millions)
|
|
$
|
152
|
|
|
$
|
149
|
Tax positions related to the current year
|
|
|
|
|
|
|
|
Gross additions
|
|
|
3
|
|
|
|
3
|
Gross reductions
|
|
|
|
|
|
|
|
Tax positions related to prior years
|
|
|
|
|
|
|
|
Gross additions
|
|
|
13
|
|
|
|
|
Gross reductions
|
|
|
(6
|
)
|
|
|
|
Settlements
|
|
|
1
|
|
|
|
|
Lapses on statutes of limitations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of period
|
|
$
|
163
|
|
|
$
|
152
|
|
|
|
|
|
|
|
|
The above reconciliation of the gross unrecognized tax benefit will differ from the amount which would affect the
effective tax rate due to the impact of the recognition of the federal and state benefits, utilization of foreign tax credits, and foreign country offsets relating to transfer pricing adjustments.
The Company classifies all interest and penalties as income tax expense. As of December 31, 2007 and 2006, the Company recognized $21 million and $31 million in
liabilities for tax related interest and penalties on its Consolidated Balance Sheets, respectively and $2 million of interest expense on its Consolidated Statement of Earnings (Loss) for the year ended December 31, 2007.
-156-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
23. EMERGENCE FROM CHAPTER 11 PROCEEDINGS
On October 5, 2000 (the Petition Date), OCD and the 17 United States subsidiaries listed below
(collectively with OCD, the Debtors) filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code (the Bankruptcy Code) in the United States Bankruptcy Court for the District of Delaware (the
USBC):
|
|
|
CDC Corporation
|
|
Integrex Testing Systems LLC
|
Engineered Yarns America, Inc.
|
|
HOMExperts LLC
|
Falcon Foam Corporation
|
|
Jefferson Holdings, Inc.
|
Integrex
|
|
Owens-Corning Fiberglas Technology, Inc.
|
Fibreboard Corporation
|
|
Owens Corning HT, Inc.
|
Exterior Systems, Inc.
|
|
Owens-Corning Overseas Holdings, Inc.
|
Integrex Ventures LLC
|
|
Owens Corning Remodeling Systems, LLC
|
Integrex Professional Services LLC
|
|
Soltech, Inc.
|
Integrex Supply Chain Solutions LLC
|
|
|
Until October 31, 2006, the date on which the Debtors emerged from bankruptcy, the Debtors operated their
businesses as debtors-in-possession in accordance with the Bankruptcy Code. The Chapter 11 cases of the Debtors (collectively, the Chapter 11 Cases) were jointly administered under Case No. 00-3837 (JKF). The Debtors filed for relief
under Chapter 11 of the Bankruptcy Code to address the growing demands on cash flow resulting from the multi-billion dollars of asbestos personal injury claims that had been asserted against OCD and Fibreboard Corporation.
Following a Confirmation Hearing on September 18, 2006, the USBC entered an Order on September 26, 2006 (the Confirmation Order), confirming the
Debtors Sixth Amended Joint Plan of Reorganization for Owens Corning and Its Affiliated Debtors and Debtors-In-Possession (as Modified) (the Plan), and the Findings of Fact and Conclusions of Law Regarding Confirmation of the Sixth
Amended Joint Plan of Reorganization for Owens Corning and Its Affiliated Debtors and Debtors-In-Possession (the Findings of Fact and Conclusions of Law). On September 28, 2006, the United States District Court for the District of
Delaware entered an order affirming the Confirmation Order and the Findings of Fact and Conclusions of Law. Pursuant to the Confirmation Order, the Plan became effective in accordance with its terms on October 31, 2006 (the Effective
Date).
Under the terms of the Plan and related Confirmation Order, asbestos personal injury claims against each of OCD and Fibreboard will be
administered and distributions on account of such claims will be made, exclusively from the 524(g) Trust that has been established and funded pursuant to the Plan. In addition, all asbestos property damage claims against OCD or Fibreboard either
(i) have been resolved, (ii) will be resolved pursuant to the Plan, along with certain other unsecured claims for an aggregate amount within the Companys Non-Tax Bankruptcy Reserve (defined below), or (iii) are barred pursuant
to the Plan and Confirmation Order. Accordingly, other than the limited number and value of property damage claims being resolved pursuant to clause (ii) above, the Company has no further asbestos liabilities.
Pursuant to the terms of the Plan, the Company is obligated to make certain additional payments to certain creditors, including certain payments to holders of
administrative expense priority claims and professional advisors in the Chapter 11 Cases. The Company had reserved approximately $36 million as of December 31, 2007 to pay remaining claims in the Bankruptcy of which approximately $34 million
relates to non-tax claims (the Non-Tax Bankruptcy Reserve). Pursuant to the Plan, the Company has established a Disputed Distribution Reserve, funded in the amount of approximately $33 million as of December 31, 2007, which is
reflected as restricted cash in the Consolidated Balance Sheet, for the potential payment of certain non-tax claims against the Debtors that were disputed as of the Effective Date.
-157-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
23. EMERGENCE FROM CHAPTER 11 PROCEEDINGS (continued)
The amount for Chapter 11-related reorganization items in the Consolidated Statements of Earnings (Loss) consist of
the following (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor
|
|
Predecessor
|
|
|
|
Twelve Months
Ended
December 31,
2007
|
|
|
Two Months
Ended
December 31,
2006
|
|
Ten Months
Ended
October 31,
2006
|
|
|
Twelve Months
Ended
December 31,
2005
|
|
Professional fees
|
|
$
|
2
|
|
|
$
|
8
|
|
$
|
111
|
|
|
$
|
64
|
|
Payroll and compensation
|
|
|
|
|
|
|
|
|
|
11
|
|
|
|
20
|
|
Investment income
|
|
|
|
|
|
|
1
|
|
|
(79
|
)
|
|
|
(39
|
)
|
Other, net
|
|
|
(2
|
)
|
|
|
1
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
|
|
|
$
|
10
|
|
$
|
45
|
|
|
$
|
45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24. ACCOUNTING PRONOUNCEMENTS
In September 2006, the FASB issued Statement of Financial Accounting
Standards No. 157, Fair Value Measurements. This statement defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. The statement is effective for financial
statements issued for fiscal years beginning after November 15, 2007, and interim periods within that fiscal year. The FASB, on February 12, 2008, issued FASB Staff Position (FSP) FAS 157-2. This FSP permits a delay in the effective date
of SFAS 157 to fiscal years beginning after November 15, 2008, for nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least
annually). The delay is intended to allow the Board and constituents additional time to consider the effect of various implementation issues that have arisen, or that may arise, from the application of SFAS 157. On February 14, 2008, the FASB
issued FSP FAS 157-1 to exclude SFAS 13, Accounting for Leases, and its related interpretive accounting pronouncements from the scope of SFAS 157. The Company is in the process of evaluating the impact of adopting this statement.
In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial Assets and Financial Liabilities
including an amendment of FAS 115. This statement permits entities to choose to measure many financial instruments and certain other items at fair value. This statement is effective for financial statements issued for fiscal years
beginning after November 15, 2007, including interim periods within that fiscal year. The Company is in the process of evaluating the impact of adopting this statement.
In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141(R), Business Combinations. This statement requires that in a business combination the acquirer recognize all
purchased assets and assumed liabilities at fair value, that negative goodwill due to bargain purchases be recognized as a gain in the income statement and that acquisition costs and planned restructuring costs associated with the acquisition be
separately recognized. This statement is effective beginning of the first annual reporting period beginning on or after December 15, 2008 and is to be applied prospectively.
-158-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
24. ACCOUNTING PRONOUNCEMENTS (continued)
In December 2007, the FASB issued Statement of Financial Accounting Standards No. 160, Noncontrolling
Interests in Consolidated Financial Statements an Amendment of ARB 51. This statement requires minority interests be reported as equity on the balance sheet, changes the reporting of net earnings to include both the amounts attributable to the
affiliates parent and the noncontrolling interest and clarifies the accounting for changes in a parents interest in an affiliate. This statement is effective for financial statements issued for fiscal years beginning on or after
December 15, 2008, including interim periods within that fiscal year. The provisions of this statement are to be applied prospectively, except that the presentation and disclosure requirements are to be applied retrospectively for all periods
presented. The Company is in the process of evaluating the impact of adopting this statement.
25. QUARTERLY FINANCIAL INFORMATION (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor
|
|
|
|
Quarter
|
|
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
|
|
(in millions, except share data)
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
1,124
|
|
$
|
1,282
|
|
$
|
1,268
|
|
$
|
1,304
|
|
Cost of sales
|
|
|
937
|
|
|
1,044
|
|
|
1,055
|
|
|
1,165
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin
|
|
|
187
|
|
|
238
|
|
|
213
|
|
|
139
|
|
Earnings (loss) from continuing operations before interest and taxes
|
|
|
32
|
|
|
76
|
|
|
83
|
|
|
(46
|
)
|
Interest expense, net
|
|
|
32
|
|
|
31
|
|
|
27
|
|
|
32
|
|
Income tax expense
|
|
|
|
|
|
14
|
|
|
16
|
|
|
(38
|
)
|
Earnings (loss) from continuing operations
|
|
|
|
|
|
29
|
|
|
38
|
|
|
(40
|
)
|
Earnings (loss) from discontinued operations, net of tax
|
|
|
1
|
|
|
|
|
|
8
|
|
|
|
|
Gain (loss) on sale of discontinued operations, net of tax
|
|
|
|
|
|
|
|
|
66
|
|
|
(6
|
)
|
Net earnings
|
|
|
1
|
|
|
29
|
|
|
112
|
|
|
(46
|
)
|
|
|
|
|
|
BASIC EARNINGS (LOSS) PER COMMON SHARE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from continuing operations
|
|
$
|
|
|
$
|
0.23
|
|
$
|
0.29
|
|
$
|
(0.31
|
)
|
Earnings (loss) from discontinued operations
|
|
$
|
0.01
|
|
$
|
|
|
$
|
0.58
|
|
$
|
(0.05
|
)
|
|
|
|
|
|
DILUTED EARNINGS (LOSS) PER COMMON SHARE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from continuing operations
|
|
$
|
|
|
$
|
0.22
|
|
$
|
0.29
|
|
$
|
(0.31
|
)
|
Earnings (loss) from discontinued operations
|
|
$
|
0.01
|
|
$
|
|
|
$
|
0.57
|
|
$
|
(0.05
|
)
|
-159-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
25. QUARTERLY FINANCIAL INFORMATION (unaudited) (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor
|
|
|
Successor
|
|
|
|
Quarter
|
|
|
One Month
Ended
October 31
|
|
|
Two Months
Ended
December 31
|
|
|
|
First
|
|
|
Second
|
|
|
Third
|
|
|
|
|
|
(in millions, except share data)
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
1,335
|
|
|
$
|
1,428
|
|
|
$
|
1,386
|
|
|
$
|
478
|
|
|
$
|
772
|
|
Cost of sales
|
|
|
1,081
|
|
|
|
1,155
|
|
|
|
1,114
|
|
|
|
391
|
|
|
|
656
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin
|
|
|
254
|
|
|
|
273
|
|
|
|
272
|
|
|
|
87
|
|
|
|
116
|
|
Provision (credit) for asbestos litigation claims
(recoveries)
|
|
|
(3
|
)
|
|
|
|
|
|
|
(10
|
)
|
|
|
|
|
|
|
|
|
Earnings (loss) from continuing operations before
interest and taxes
|
|
|
109
|
|
|
|
154
|
|
|
|
145
|
|
|
|
43
|
|
|
|
(44
|
)
|
Interest expense, net
|
|
|
65
|
|
|
|
86
|
|
|
|
71
|
|
|
|
19
|
|
|
|
29
|
|
Gain on cancellation of liabilities subject to
compromise
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,864
|
)
|
|
|
|
|
Fresh-start accounting adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,919
|
)
|
|
|
|
|
Income tax expense (benefit)
|
|
|
(13
|
)
|
|
|
(176
|
)
|
|
|
20
|
|
|
|
1,149
|
|
|
|
(23
|
)
|
Earnings (loss) from continuing operations, net of tax
|
|
|
60
|
|
|
|
244
|
|
|
|
53
|
|
|
|
7,656
|
|
|
|
(54
|
)
|
Earnings (loss) from discontinued operations, net of
tax
|
|
|
3
|
|
|
|
7
|
|
|
|
9
|
|
|
|
108
|
|
|
|
(11
|
)
|
Net earnings (loss)
|
|
|
63
|
|
|
|
251
|
|
|
|
62
|
|
|
|
7,764
|
|
|
|
(65
|
)
|
|
|
|
|
|
|
BASIC EARNINGS (LOSS) PER COMMON
SHARE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from continuing operations
|
|
$
|
1.09
|
|
|
$
|
4.41
|
|
|
$
|
0.97
|
|
|
$
|
138.45
|
|
|
|
(0.42
|
)
|
Earnings (loss) from discontinued operations
|
|
$
|
0.05
|
|
|
$
|
0.13
|
|
|
$
|
0.16
|
|
|
$
|
1.95
|
|
|
|
(0.09
|
)
|
|
|
|
|
|
|
DILUTED EARNINGS (LOSS) PER COMMON
SHARE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from continuing operations
|
|
$
|
1.00
|
|
|
$
|
4.07
|
|
|
$
|
0.88
|
|
|
$
|
127.81
|
|
|
|
(0.42
|
)
|
Earnings (loss) from discontinued operations
|
|
$
|
0.05
|
|
|
$
|
0.12
|
|
|
$
|
0.16
|
|
|
$
|
1.80
|
|
|
|
(0.09
|
)
|
26. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
The following Condensed Consolidating Financial
Statements present the financial information required with respect to those entities which guarantee certain of the Companys debt. The Condensed Consolidating Financial Statements are presented on the equity method. Under this method, the
investments in subsidiaries are recorded at cost and adjusted for the Companys share of the subsidiaries cumulative results of operations, capital contributions, distributions and other equity changes. The principal elimination entries
eliminate investment in subsidiaries and intercompany balances and transactions.
-160-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
26. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS (continued)
Guarantor and Nonguarantor Financial Statements
As described in Note 14, Owens Corning issued $1.2 billion aggregate principal amount of Senior Notes. The Senior Notes and the Senior Credit Facilities are guaranteed,
fully, unconditionally and jointly and severally, by each of Owens Cornings current and future 100% owned material domestic subsidiaries that are a borrower or a guarantor under Owens Cornings Credit Facilities, which permits changes to
the named guarantors in certain situations (collectively, the Guarantor Subsidiaries). The remaining subsidiaries have not guaranteed the Senior Notes and the Senior Credit Facilities (collectively, the Nonguarantor
Subsidiaries). As disclosed in Note 1, Owens Corning became the holding company and ultimate parent company of OCD and the other Owens Corning companies on October 31, 2006, as a part of the restructuring that was conducted in connection
with OCDs emergence from bankruptcy.
-161-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
26. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS (continued)
OWENS CORNING AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS (LOSS)
FOR THE SUCCESSOR TWELVE MONTHS
ENDED DECEMBER 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidated
|
|
|
|
(in millions)
|
|
NET SALES
|
|
$
|
|
|
|
$
|
3,525
|
|
|
$
|
1,701
|
|
|
$
|
(248
|
)
|
|
$
|
4,978
|
|
COST OF SALES
|
|
|
(39
|
)
|
|
|
3,033
|
|
|
|
1,455
|
|
|
|
(248
|
)
|
|
|
4,201
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Margin
|
|
|
39
|
|
|
|
492
|
|
|
|
246
|
|
|
|
|
|
|
|
777
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketing and administrative expenses
|
|
|
85
|
|
|
|
315
|
|
|
|
98
|
|
|
|
|
|
|
|
498
|
|
Science and technology expenses
|
|
|
|
|
|
|
54
|
|
|
|
9
|
|
|
|
|
|
|
|
63
|
|
Restructure costs
|
|
|
|
|
|
|
24
|
|
|
|
4
|
|
|
|
|
|
|
|
28
|
|
Chapter 11 related reorganization items
|
|
|
|
|
|
|
(1
|
)
|
|
|
1
|
|
|
|
|
|
|
|
|
|
Employee emergence equity program
|
|
|
3
|
|
|
|
27
|
|
|
|
7
|
|
|
|
|
|
|
|
37
|
|
(Gain) loss on sale of fixed assets and other
|
|
|
(90
|
)
|
|
|
95
|
|
|
|
1
|
|
|
|
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
(2
|
)
|
|
|
514
|
|
|
|
120
|
|
|
|
|
|
|
|
632
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE INTEREST AND TAXES
|
|
|
41
|
|
|
|
(22
|
)
|
|
|
126
|
|
|
|
|
|
|
|
145
|
|
Interest (income) expense, net
|
|
|
130
|
|
|
|
(9
|
)
|
|
|
1
|
|
|
|
|
|
|
|
122
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES
|
|
|
(89
|
)
|
|
|
(13
|
)
|
|
|
125
|
|
|
|
|
|
|
|
23
|
|
Income tax expense (benefit)
|
|
|
(20
|
)
|
|
|
(43
|
)
|
|
|
55
|
|
|
|
|
|
|
|
(8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE MINORITY INTEREST AND EQUITY IN NET EARNINGS (LOSS) OF AFFILIATES
|
|
|
(69
|
)
|
|
|
30
|
|
|
|
70
|
|
|
|
|
|
|
|
31
|
|
Equity in net earnings (loss) of subsidiaries
|
|
|
165
|
|
|
|
86
|
|
|
|
|
|
|
|
(251
|
)
|
|
|
|
|
Minority interest and equity in net earnings (loss) of affiliates
|
|
|
|
|
|
|
|
|
|
|
(4
|
)
|
|
|
|
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS (LOSS) FROM CONTINUING OPERATIONS
|
|
|
96
|
|
|
|
116
|
|
|
|
66
|
|
|
|
(251
|
)
|
|
|
27
|
|
Discontinued Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from discontinued operations, net of tax
|
|
|
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
9
|
|
Gain on sale of discontinued operations, net of tax
|
|
|
|
|
|
|
40
|
|
|
|
20
|
|
|
|
|
|
|
|
60
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total earnings (loss) from discontinued operations
|
|
|
|
|
|
|
49
|
|
|
|
20
|
|
|
|
|
|
|
|
69
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET EARNINGS (LOSS)
|
|
$
|
96
|
|
|
$
|
165
|
|
|
$
|
86
|
|
|
$
|
(251
|
)
|
|
$
|
96
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-162-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
26. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS (continued)
OWENS CORNING AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS (LOSS)
FOR THE SUCCESSOR TWO MONTHS ENDED
DECEMBER 31, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidated
|
|
|
|
(in millions)
|
|
NET SALES
|
|
$
|
|
|
|
$
|
557
|
|
|
$
|
260
|
|
|
$
|
(45
|
)
|
|
$
|
772
|
|
COST OF SALES
|
|
|
|
|
|
|
485
|
|
|
|
216
|
|
|
|
(45
|
)
|
|
|
656
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Margin
|
|
|
|
|
|
|
72
|
|
|
|
44
|
|
|
|
|
|
|
|
116
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketing and administrative expenses
|
|
|
|
|
|
|
73
|
|
|
|
13
|
|
|
|
|
|
|
|
86
|
|
Science and technology expenses
|
|
|
|
|
|
|
30
|
|
|
|
|
|
|
|
|
|
|
|
30
|
|
Restructure costs
|
|
|
|
|
|
|
19
|
|
|
|
1
|
|
|
|
|
|
|
|
20
|
|
Chapter 11 related reorganization items
|
|
|
|
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
10
|
|
Employee emergence equity program
|
|
|
|
|
|
|
5
|
|
|
|
1
|
|
|
|
|
|
|
|
6
|
|
(Gain) loss on sale of fixed assets and other
|
|
|
|
|
|
|
9
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
|
|
|
|
146
|
|
|
|
14
|
|
|
|
|
|
|
|
160
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE INTEREST AND TAXES
|
|
|
|
|
|
|
(74
|
)
|
|
|
30
|
|
|
|
|
|
|
|
(44
|
)
|
Interest expense, net
|
|
|
15
|
|
|
|
13
|
|
|
|
1
|
|
|
|
|
|
|
|
29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES
|
|
|
(15
|
)
|
|
|
(87
|
)
|
|
|
29
|
|
|
|
|
|
|
|
(73
|
)
|
Income tax expense (benefit)
|
|
|
(6
|
)
|
|
|
(23
|
)
|
|
|
6
|
|
|
|
|
|
|
|
(23
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE MINORITY INTEREST AND EQUITY IN NET EARNINGS (LOSS) OF AFFILIATES
|
|
|
(9
|
)
|
|
|
(64
|
)
|
|
|
23
|
|
|
|
|
|
|
|
(50
|
)
|
Equity in net earnings (loss) of subsidiaries
|
|
|
(56
|
)
|
|
|
17
|
|
|
|
|
|
|
|
39
|
|
|
|
|
|
Minority interest and equity in net earnings (loss) of affiliates
|
|
|
|
|
|
|
|
|
|
|
(4
|
)
|
|
|
|
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS (LOSS) FROM CONTINUING OPERATIONS
|
|
|
(65
|
)
|
|
|
(47
|
)
|
|
|
19
|
|
|
|
39
|
|
|
|
(54
|
)
|
Discontinued Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from discontinued operations, net of tax
|
|
|
|
|
|
|
(9
|
)
|
|
|
(2
|
)
|
|
|
|
|
|
|
(11
|
)
|
Gain on sale of discontinued operations, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total earnings (loss) from discontinued operations
|
|
|
|
|
|
|
(9
|
)
|
|
|
(2
|
)
|
|
|
|
|
|
|
(11
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET EARNINGS (LOSS)
|
|
$
|
(65
|
)
|
|
$
|
(56
|
)
|
|
$
|
17
|
|
|
$
|
39
|
|
|
$
|
(65
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-163-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
26. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS (continued)
OWENS CORNING AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS (LOSS)
FOR THE PREDECESSOR TEN MONTHS
ENDED OCTOBER 31, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Guarantor
Subsidiaries
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidated
|
|
|
|
(in millions)
|
|
NET SALES
|
|
$
|
|
|
$
|
3,751
|
|
|
$
|
1,175
|
|
|
$
|
(299
|
)
|
|
$
|
4,627
|
|
COST OF SALES
|
|
|
|
|
|
3,107
|
|
|
|
933
|
|
|
|
(299
|
)
|
|
|
3,741
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Margin
|
|
|
|
|
|
644
|
|
|
|
242
|
|
|
|
|
|
|
|
886
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketing and administrative expenses
|
|
|
|
|
|
339
|
|
|
|
69
|
|
|
|
|
|
|
|
408
|
|
Science and technology expenses
|
|
|
|
|
|
41
|
|
|
|
7
|
|
|
|
|
|
|
|
48
|
|
Restructure costs
|
|
|
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
12
|
|
Chapter 11 related reorganization items
|
|
|
|
|
|
45
|
|
|
|
|
|
|
|
|
|
|
|
45
|
|
Provision (credit) for asbestos litigation claims (recoveries)
|
|
|
|
|
|
(125
|
)
|
|
|
125
|
|
|
|
|
|
|
|
|
|
Employee emergence equity program
|
|
|
|
|
|
(13
|
)
|
|
|
|
|
|
|
|
|
|
|
(13
|
)
|
(Gain) loss on sale of fixed assets and other
|
|
|
|
|
|
(133
|
)
|
|
|
68
|
|
|
|
|
|
|
|
(65
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
|
|
|
166
|
|
|
|
269
|
|
|
|
|
|
|
|
435
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE INTEREST AND TAXES
|
|
|
|
|
|
478
|
|
|
|
(27
|
)
|
|
|
|
|
|
|
451
|
|
Interest expense, net
|
|
|
|
|
|
238
|
|
|
|
3
|
|
|
|
|
|
|
|
241
|
|
Gain on settlement of liabilities subject to compromise
|
|
|
|
|
|
(5,853
|
)
|
|
|
(11
|
)
|
|
|
|
|
|
|
(5,864
|
)
|
Fresh-start accounting adjustments
|
|
|
|
|
|
(3,144
|
)
|
|
|
225
|
|
|
|
|
|
|
|
(2,919
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES
|
|
|
|
|
|
9,237
|
|
|
|
(244
|
)
|
|
|
|
|
|
|
8,993
|
|
Income tax expense (benefit)
|
|
|
|
|
|
982
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
980
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE MINORITY INTEREST AND EQUITY IN NET EARNINGS (LOSS) OF AFFILIATES
|
|
|
|
|
|
8,255
|
|
|
|
(242
|
)
|
|
|
|
|
|
|
8,013
|
|
Equity in net earnings of subsidiaries
|
|
|
8,140
|
|
|
(243
|
)
|
|
|
|
|
|
|
(7,897
|
)
|
|
|
|
|
Minority interest and equity in net earnings (loss) of affiliates
|
|
|
|
|
|
3
|
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS (LOSS) FROM CONTINUING OPERATIONS
|
|
|
8,140
|
|
|
8,015
|
|
|
|
(245
|
)
|
|
|
(7,897
|
)
|
|
|
8,013
|
|
Discontinued Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from discontinued operations, net of tax
|
|
|
|
|
|
125
|
|
|
|
2
|
|
|
|
|
|
|
|
127
|
|
Gain on sale of discontinued operations, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total earnings (loss) from discontinued operations
|
|
|
|
|
|
125
|
|
|
|
2
|
|
|
|
|
|
|
|
127
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET EARNINGS (LOSS)
|
|
$
|
8,140
|
|
$
|
8,140
|
|
|
$
|
(243
|
)
|
|
$
|
(7,897
|
)
|
|
$
|
8,140
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-164-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
26. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS (continued)
OWENS CORNING AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS (LOSS)
FOR THE PREDECESSOR TWELVE MONTHS
ENDED DECEMBER 31, 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Guarantor
Subsidiaries
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidated
|
|
|
|
(in millions)
|
|
NET SALES
|
|
$
|
|
|
$
|
4,314
|
|
|
$
|
1,217
|
|
|
$
|
(354
|
)
|
|
$
|
5,177
|
|
COST OF SALES
|
|
|
|
|
|
3,544
|
|
|
|
917
|
|
|
|
(354
|
)
|
|
|
4,107
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Margin
|
|
|
|
|
|
770
|
|
|
|
300
|
|
|
|
|
|
|
|
1,070
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketing and administrative expenses
|
|
|
|
|
|
453
|
|
|
|
68
|
|
|
|
|
|
|
|
521
|
|
Science and technology expenses
|
|
|
|
|
|
49
|
|
|
|
7
|
|
|
|
|
|
|
|
56
|
|
Restructure costs
|
|
|
|
|
|
45
|
|
|
|
|
|
|
|
|
|
|
|
45
|
|
Provision for asbestos litigation claims
|
|
|
|
|
|
4,267
|
|
|
|
|
|
|
|
|
|
|
|
4,267
|
|
Employee emergence equity program
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Gain) loss on sale of fixed assets and other
|
|
|
|
|
|
(77
|
)
|
|
|
59
|
|
|
|
|
|
|
|
(18
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
|
|
|
4,737
|
|
|
|
134
|
|
|
|
|
|
|
|
4,871
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE INTEREST AND TAXES
|
|
|
|
|
|
(3,967
|
)
|
|
|
166
|
|
|
|
|
|
|
|
(3,801
|
)
|
Interest expense, net
|
|
|
|
|
|
740
|
|
|
|
|
|
|
|
|
|
|
|
740
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES
|
|
|
|
|
|
(4,707
|
)
|
|
|
166
|
|
|
|
|
|
|
|
(4,541
|
)
|
Income tax expense (benefit)
|
|
|
|
|
|
(464
|
)
|
|
|
53
|
|
|
|
|
|
|
|
(411
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE MINORITY INTEREST AND EQUITY IN NET EARNINGS
(LOSS) OF
AFFILIATES
|
|
|
|
|
|
(4,243
|
)
|
|
|
113
|
|
|
|
|
|
|
|
(4,130
|
)
|
Equity in net earnings (loss) of subsidiaries
|
|
|
|
|
|
102
|
|
|
|
|
|
|
|
(102
|
)
|
|
|
|
|
Minority interest and equity in net earnings (loss) of affiliates
|
|
|
|
|
|
1
|
|
|
|
(5
|
)
|
|
|
|
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS (LOSS) FROM CONTINUING OPERATIONS
|
|
|
|
|
|
(4,140
|
)
|
|
|
108
|
|
|
|
(102
|
)
|
|
|
(4,134
|
)
|
Discontinued Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from discontinued operations, net of tax
|
|
|
|
|
|
41
|
|
|
|
(6
|
)
|
|
|
|
|
|
|
35
|
|
Gain on sale of discontinued operations, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total earnings (loss) from discontinued operations
|
|
|
|
|
|
41
|
|
|
|
(6
|
)
|
|
|
|
|
|
|
35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET EARNINGS (LOSS)
|
|
$
|
|
|
$
|
(4,099
|
)
|
|
$
|
102
|
|
|
$
|
(102
|
)
|
|
$
|
(4,099
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-165-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
26. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS (continued)
OWENS CORNING AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
FOR THE SUCCESSOR AS OF DECEMBER 31,
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidated
|
|
|
(in millions)
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
|
|
|
$
|
36
|
|
$
|
99
|
|
|
$
|
|
|
|
$
|
135
|
Receivables, net
|
|
|
|
|
|
|
237
|
|
|
484
|
|
|
|
|
|
|
|
721
|
Due from affiliates
|
|
|
135
|
|
|
|
632
|
|
|
112
|
|
|
|
(879
|
)
|
|
|
|
Inventories
|
|
|
|
|
|
|
485
|
|
|
336
|
|
|
|
|
|
|
|
821
|
Restricted cash disputed claims reserve
|
|
|
|
|
|
|
33
|
|
|
|
|
|
|
|
|
|
|
33
|
Assets held for sale current
|
|
|
|
|
|
|
|
|
|
53
|
|
|
|
|
|
|
|
53
|
Other current assets
|
|
|
|
|
|
|
45
|
|
|
44
|
|
|
|
|
|
|
|
89
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
135
|
|
|
|
1,468
|
|
|
1,128
|
|
|
|
(879
|
)
|
|
|
1,852
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in subsidiaries
|
|
|
5,868
|
|
|
|
1,425
|
|
|
|
|
|
|
(7,293
|
)
|
|
|
|
Due from affiliates
|
|
|
|
|
|
|
25
|
|
|
|
|
|
|
(25
|
)
|
|
|
|
Property, plant and equipment
|
|
|
472
|
|
|
|
1,248
|
|
|
1,052
|
|
|
|
|
|
|
|
2,772
|
Goodwill
|
|
|
|
|
|
|
1,146
|
|
|
28
|
|
|
|
|
|
|
|
1,174
|
Intangible assets
|
|
|
|
|
|
|
1,095
|
|
|
115
|
|
|
|
|
|
|
|
1,210
|
Deferred income taxes
|
|
|
20
|
|
|
|
504
|
|
|
(37
|
)
|
|
|
|
|
|
|
487
|
Assets held for sale non-current
|
|
|
|
|
|
|
5
|
|
|
173
|
|
|
|
|
|
|
|
178
|
Other non-current assets
|
|
|
16
|
|
|
|
79
|
|
|
104
|
|
|
|
|
|
|
|
199
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
6,511
|
|
|
$
|
6,995
|
|
$
|
2,563
|
|
|
$
|
(8,197
|
)
|
|
$
|
7,872
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
(2
|
)
|
|
$
|
546
|
|
$
|
593
|
|
|
$
|
|
|
|
$
|
1,137
|
Due to affiliates
|
|
|
587
|
|
|
|
83
|
|
|
209
|
|
|
|
(879
|
)
|
|
|
|
Accrued interest
|
|
|
10
|
|
|
|
1
|
|
|
1
|
|
|
|
|
|
|
|
12
|
Short-term debt
|
|
|
|
|
|
|
|
|
|
47
|
|
|
|
|
|
|
|
47
|
Long-term debt current portion
|
|
|
|
|
|
|
1
|
|
|
9
|
|
|
|
|
|
|
|
10
|
Liabilities held for sale current
|
|
|
|
|
|
|
|
|
|
40
|
|
|
|
|
|
|
|
40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
595
|
|
|
|
631
|
|
|
899
|
|
|
|
(879
|
)
|
|
|
1,246
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt, net of current portion
|
|
|
1,928
|
|
|
|
20
|
|
|
45
|
|
|
|
|
|
|
|
1,993
|
Due to affiliates
|
|
|
|
|
|
|
|
|
|
25
|
|
|
|
(25
|
)
|
|
|
|
Pension plan liability
|
|
|
|
|
|
|
53
|
|
|
93
|
|
|
|
|
|
|
|
146
|
Other employee benefits liability
|
|
|
|
|
|
|
269
|
|
|
24
|
|
|
|
|
|
|
|
293
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities held for sale non-current
|
|
|
|
|
|
|
|
|
|
8
|
|
|
|
|
|
|
|
8
|
|
|
|
|
|
|
Other liabilities
|
|
|
|
|
|
|
154
|
|
|
7
|
|
|
|
|
|
|
|
161
|
Minority interest
|
|
|
|
|
|
|
|
|
|
37
|
|
|
|
|
|
|
|
37
|
STOCKHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor preferred stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor common stock
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Additional paid in capital
|
|
|
3,783
|
|
|
|
5,759
|
|
|
1,322
|
|
|
|
(7,081
|
)
|
|
|
3,783
|
Retained earnings (accumulated deficit)
|
|
|
31
|
|
|
|
109
|
|
|
103
|
|
|
|
(212
|
)
|
|
|
31
|
Accumulated other comprehensive earnings
|
|
|
173
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
173
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
3,988
|
|
|
|
5,868
|
|
|
1,425
|
|
|
|
(7,293
|
)
|
|
|
3,988
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
|
|
$
|
6,511
|
|
|
$
|
6,995
|
|
$
|
2,563
|
|
|
$
|
(8,197
|
)
|
|
$
|
7,872
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-166-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
26. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS (continued)
OWENS CORNING AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
FOR THE SUCCESSOR AS OF DECEMBER 31,
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidated
|
|
|
|
(in millions)
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
|
|
|
$
|
906
|
|
|
$
|
183
|
|
|
$
|
|
|
|
$
|
1,089
|
|
Receivables, net
|
|
|
|
|
|
|
328
|
|
|
|
245
|
|
|
|
|
|
|
|
573
|
|
Due from affiliates
|
|
|
6
|
|
|
|
192
|
|
|
|
40
|
|
|
|
(238
|
)
|
|
|
|
|
Inventories
|
|
|
|
|
|
|
579
|
|
|
|
170
|
|
|
|
|
|
|
|
749
|
|
Restricted cash disputed claims reserve
|
|
|
|
|
|
|
85
|
|
|
|
|
|
|
|
|
|
|
|
85
|
|
Assets held for sale current
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other current assets
|
|
|
|
|
|
|
27
|
|
|
|
29
|
|
|
|
|
|
|
|
56
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
6
|
|
|
|
2,117
|
|
|
|
667
|
|
|
|
(238
|
)
|
|
|
2,552
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in subsidiaries
|
|
|
4,948
|
|
|
|
774
|
|
|
|
|
|
|
|
(5,722
|
)
|
|
|
|
|
Due from affiliates
|
|
|
|
|
|
|
28
|
|
|
|
|
|
|
|
(28
|
)
|
|
|
|
|
Property, plant and equipment
|
|
|
|
|
|
|
1,816
|
|
|
|
705
|
|
|
|
|
|
|
|
2,521
|
|
Goodwill
|
|
|
|
|
|
|
1,307
|
|
|
|
6
|
|
|
|
|
|
|
|
1,313
|
|
Intangible assets
|
|
|
|
|
|
|
1,191
|
|
|
|
107
|
|
|
|
|
|
|
|
1,298
|
|
Deferred income taxes
|
|
|
|
|
|
|
555
|
|
|
|
(6
|
)
|
|
|
|
|
|
|
549
|
|
Assets held for sale non-current
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other non-current assets
|
|
|
18
|
|
|
|
103
|
|
|
|
116
|
|
|
|
|
|
|
|
237
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
4,972
|
|
|
$
|
7,891
|
|
|
$
|
1,595
|
|
|
$
|
(5,988
|
)
|
|
$
|
8,470
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
(6
|
)
|
|
$
|
759
|
|
|
$
|
328
|
|
|
$
|
|
|
|
$
|
1,081
|
|
Due to affiliates
|
|
|
|
|
|
|
27
|
|
|
|
211
|
|
|
|
(238
|
)
|
|
|
|
|
Accrued interest
|
|
|
15
|
|
|
|
23
|
|
|
|
1
|
|
|
|
|
|
|
|
39
|
|
Short-term debt
|
|
|
|
|
|
|
1,390
|
|
|
|
11
|
|
|
|
|
|
|
|
1,401
|
|
Long-term debt current portion
|
|
|
15
|
|
|
|
19
|
|
|
|
5
|
|
|
|
|
|
|
|
39
|
|
Liabilities held for sale current
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
24
|
|
|
|
2,218
|
|
|
|
556
|
|
|
|
(238
|
)
|
|
|
2,560
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt, net of current portion
|
|
|
1,262
|
|
|
|
1
|
|
|
|
33
|
|
|
|
|
|
|
|
1,296
|
|
Due to affiliates
|
|
|
|
|
|
|
|
|
|
|
28
|
|
|
|
(28
|
)
|
|
|
|
|
Pension plan liability
|
|
|
|
|
|
|
192
|
|
|
|
120
|
|
|
|
|
|
|
|
312
|
|
Other employee benefits liability
|
|
|
|
|
|
|
300
|
|
|
|
25
|
|
|
|
|
|
|
|
325
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities held for sale non-current
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other liabilities
|
|
|
|
|
|
|
232
|
|
|
|
15
|
|
|
|
|
|
|
|
247
|
|
Minority interest
|
|
|
|
|
|
|
|
|
|
|
44
|
|
|
|
|
|
|
|
44
|
|
STOCKHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor preferred stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor common stock
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Additional paid in capital
|
|
|
3,733
|
|
|
|
5,004
|
|
|
|
757
|
|
|
|
(5,761
|
)
|
|
|
3,733
|
|
Retained earnings (accumulated deficit)
|
|
|
(65
|
)
|
|
|
(56
|
)
|
|
|
17
|
|
|
|
39
|
|
|
|
(65
|
)
|
Accumulated other comprehensive earnings
|
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
3,686
|
|
|
|
4,948
|
|
|
|
774
|
|
|
|
(5,722
|
)
|
|
|
3,686
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS
EQUITY
|
|
$
|
4,972
|
|
|
$
|
7,891
|
|
|
$
|
1,595
|
|
|
$
|
(5,988
|
)
|
|
$
|
8,470
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-167-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
26. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS (continued)
OWENS CORNING AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SUCCESSOR TWELVE
MONTHS ENDED DECEMBER 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
Eliminations
|
|
Consolidated
|
|
|
|
(in millions)
|
|
NET CASH FLOW PROVIDED BY (USED FOR) OPERATING ACTIVITIES
|
|
$
|
|
|
|
$
|
(325
|
)
|
|
$
|
507
|
|
|
$
|
|
|
$
|
182
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CASH FLOW PROVIDED BY (USED FOR) INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to plant and equipment
|
|
|
|
|
|
|
(194
|
)
|
|
|
(53
|
)
|
|
|
|
|
|
(247
|
)
|
Investment in subsidiaries and affiliates, net of cash acquired
|
|
|
|
|
|
|
(53
|
)
|
|
|
(567
|
)
|
|
|
|
|
|
(620
|
)
|
Proceeds from the sale of assets or affiliates
|
|
|
394
|
|
|
|
12
|
|
|
|
31
|
|
|
|
|
|
|
437
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flow provided by (used for) investing activities
|
|
|
394
|
|
|
|
(235
|
)
|
|
|
(589
|
)
|
|
|
|
|
|
(430
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CASH FLOW PROVIDED BY (USED FOR) FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from long-term debt
|
|
|
600
|
|
|
|
|
|
|
|
17
|
|
|
|
|
|
|
617
|
|
Payments on long-term debt
|
|
|
(54
|
)
|
|
|
|
|
|
|
(31
|
)
|
|
|
|
|
|
(85
|
)
|
Payments of note payable to 524(g) Trust
|
|
|
|
|
|
|
(1,390
|
)
|
|
|
|
|
|
|
|
|
|
(1,390
|
)
|
Payments on revolving credit facility
|
|
|
(573
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(573
|
)
|
Proceeds from revolving credit facility
|
|
|
713
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
713
|
|
Net increase (decrease) in short-term debt
|
|
|
|
|
|
|
|
|
|
|
(13
|
)
|
|
|
|
|
|
(13
|
)
|
Parent loans and advances
|
|
|
(1,080
|
)
|
|
|
1,080
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flow provided by (used for) financing activities
|
|
|
(394
|
)
|
|
|
(310
|
)
|
|
|
(27
|
)
|
|
|
|
|
|
(731
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash
|
|
|
|
|
|
|
|
|
|
|
25
|
|
|
|
|
|
|
25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET DECREASE IN CASH AND CASH EQUIVALENTS
|
|
|
|
|
|
|
(870
|
)
|
|
|
(84
|
)
|
|
|
|
|
|
(954
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
|
|
|
|
906
|
|
|
|
183
|
|
|
|
|
|
|
1,089
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
|
$
|
|
|
|
$
|
36
|
|
|
$
|
99
|
|
|
$
|
|
|
$
|
135
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-168-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
26. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS (continued)
OWENS CORNING AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SUCCESSOR TWO MONTHS
ENDED DECEMBER 31, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Guarantor
Subsidiaries
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidated
|
|
|
|
(in millions)
|
|
NET CASH FLOW PROVIDED BY (USED FOR) OPERATING ACTIVITIES
|
|
$
|
|
|
$
|
19
|
|
|
$
|
(4
|
)
|
|
$
|
|
|
|
$
|
15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CASH FLOW PROVIDED BY (USED FOR) INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to plant and equipment
|
|
|
|
|
|
(60
|
)
|
|
|
(17
|
)
|
|
|
|
|
|
|
(77
|
)
|
Investment in subsidiaries and affiliates, net of cash acquired
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from the sale of assets or affiliates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flow provided by (used for) investing activities
|
|
|
|
|
|
(60
|
)
|
|
|
(17
|
)
|
|
|
|
|
|
|
(77
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CASH FLOW PROVIDED BY (USED FOR) FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from long-term debt
|
|
|
|
|
|
24
|
|
|
|
5
|
|
|
|
(24
|
)
|
|
|
5
|
|
Payments on long-term debt
|
|
|
|
|
|
|
|
|
|
(29
|
)
|
|
|
24
|
|
|
|
(5
|
)
|
Net increase (decrease) in short-term debt
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
1
|
|
Payments to pre-petition lenders
|
|
|
|
|
|
(55
|
)
|
|
|
|
|
|
|
|
|
|
|
(55
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flow provided by (used for) financing activities
|
|
|
|
|
|
(31
|
)
|
|
|
(23
|
)
|
|
|
|
|
|
|
(54
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET DECREASE IN CASH AND CASH EQUIVALENTS
|
|
|
|
|
|
(72
|
)
|
|
|
(44
|
)
|
|
|
|
|
|
|
(116
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
|
|
|
978
|
|
|
|
227
|
|
|
|
|
|
|
|
1,205
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
|
$
|
|
|
$
|
906
|
|
|
$
|
183
|
|
|
$
|
|
|
|
$
|
1,089
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-169-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
26. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS (continued)
OWENS CORNING AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE PREDECESSOR TEN
MONTHS ENDED OCTOBER 31, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
Eliminations
|
|
Consolidated
|
|
|
|
(in millions)
|
|
NET CASH FLOW PROVIDED BY (USED FOR) OPERATING ACTIVITIES
|
|
$
|
|
|
|
$
|
(2,044
|
)
|
|
$
|
141
|
|
|
$
|
|
|
$
|
(1,903
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CASH FLOW PROVIDED BY (USED FOR) INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to plant and equipment
|
|
|
|
|
|
|
(218
|
)
|
|
|
(66
|
)
|
|
|
|
|
|
(284
|
)
|
Investment in subsidiaries and affiliates, net of cash acquired
|
|
|
|
|
|
|
|
|
|
|
(47
|
)
|
|
|
|
|
|
(47
|
)
|
Proceeds from the sale of assets or affiliates
|
|
|
|
|
|
|
82
|
|
|
|
|
|
|
|
|
|
|
82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flow provided by (used for) investing activities
|
|
|
|
|
|
|
(136
|
)
|
|
|
(113
|
)
|
|
|
|
|
|
(249
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CASH FLOW PROVIDED BY (USED FOR) FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payment of equity commitment fees
|
|
|
(115
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(115
|
)
|
Proceeds from long-term debt
|
|
|
|
|
|
|
|
|
|
|
21
|
|
|
|
|
|
|
21
|
|
Payments on long-term debt
|
|
|
|
|
|
|
|
|
|
|
(13
|
)
|
|
|
|
|
|
(13
|
)
|
Net increase (decrease) in short-term debt
|
|
|
|
|
|
|
|
|
|
|
3
|
|
|
|
|
|
|
3
|
|
Payments to pre-petition lenders
|
|
|
|
|
|
|
(1,461
|
)
|
|
|
|
|
|
|
|
|
|
(1,461
|
)
|
Proceeds from issuance of bonds
|
|
|
1,178
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,178
|
|
Proceeds from issuance of new stock
|
|
|
2,187
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,187
|
|
Debt issuance costs
|
|
|
(10
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10
|
)
|
Parent loans and advances
|
|
|
(3,240
|
)
|
|
|
3,240
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flow provided by (used for) financing activities
|
|
|
|
|
|
|
1,781
|
|
|
|
11
|
|
|
|
|
|
|
1,792
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash
|
|
|
|
|
|
|
|
|
|
|
6
|
|
|
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET DECREASE IN CASH AND CASH EQUIVALENTS
|
|
|
|
|
|
|
(399
|
)
|
|
|
45
|
|
|
|
|
|
|
(354
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
|
|
|
|
1,377
|
|
|
|
182
|
|
|
|
|
|
|
1,559
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
|
$
|
|
|
|
$
|
978
|
|
|
$
|
227
|
|
|
$
|
|
|
$
|
1,205
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-170-
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
26. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS (continued)
OWENS CORNING AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE PREDECESSOR TWELVE
MONTHS ENDED DECEMBER 31, 2005
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Parent
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Guarantor
Subsidiaries
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Non-Guarantor
Subsidiaries
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Eliminations
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Consolidated
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(in millions)
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NET CASH FLOW PROVIDED BY (USED FOR) OPERATING ACTIVITIES
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$
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$
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819
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$
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(73
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)
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$
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$
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746
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NET CASH FLOW PROVIDED BY (USED FOR) INVESTING ACTIVITIES
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Additions to plant and equipment
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(202
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)
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(86
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)
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(288
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)
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Investment in subsidiaries and affiliates, net of cash acquired
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(11
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)
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(3
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)
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(14
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)
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Proceeds from the sale of assets or affiliates
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18
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1
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19
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Net cash flow provided by (used for) investing activities
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(195
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)
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(88
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)
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(283
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)
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NET CASH FLOW PROVIDED BY (USED FOR) FINANCING ACTIVITIES
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Proceeds from long-term debt
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9
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9
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Payments on long-term debt
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(31
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)
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(31
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)
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Net increase (decrease) in short-term debt
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(6
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)
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(6
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)
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Net decrease in liabilities subject to
compromise
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(3
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)
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(3
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)
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Other
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1
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1
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Net cash flow provided by (used for) financing activities
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(2
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)
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(28
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)
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(30
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)
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Effect of exchange rate changes on cash
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1
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1
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NET DECREASE IN CASH AND CASH EQUIVALENTS
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622
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(188
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)
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434
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Cash and cash equivalents at beginning of period
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755
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370
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1,125
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CASH AND CASH EQUIVALENTS AT END OF PERIOD
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$
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$
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1,377
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$
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182
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$
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$
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1,559
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-171-
INDEX TO FINANCIAL STATEMENT SCHEDULE
-172-