Owens Corning posts $168 million second-quarter income from operations

By Caroline Salls

Pittsburgh, Aug. 4 - Owens Corning reported $168 million income from operations for the second quarter on consolidated net sales of $1.722 billion, compared with income from operations of $169 million on $1.59 billion in net sales in the same period of 2005, according to a company news release.

"We're pleased with the results of the second quarter that reflected an environment of strong demand for many of our products," president and chief executive officer Dave Brown said in the release.

"While continued cost increases in energy-related commodities impacted most of our product lines, we were able to offset in part the impact of those higher costs through price increases and improved productivity.

"We continue to make significant progress toward emergence from Chapter 11 in 2006. Reaching agreement with our creditors on a plan of reorganization and the bankruptcy court approval of our disclosure statement have paved the way for our company to exit Chapter 11.

"In preparation for emergence, Standard & Poor's and Moody's both announced their intent to assign an investment-grade credit rating to Owens Corning, which affirms our company's strong balance sheet and market leadership.

For the first six months of 2006, income from operations was $283 million, compared with a loss from operations of $4.112 billion for the same period of 2005.

According to the release, the loss from operations for the first six months of 2005 was primarily a result of an additional $4.342 billion provision for asbestos liability, which the company recognized in the first quarter of 2005.

Net sales for the first six months of 2006 were $3.323 billion, compared with $2.992 billion in the first six months of 2005.

The company said the increase was driven by strong demand for building materials products and improved prices for some products.

For the first six months, cash flow from operations totaled $79 million, compared with $54 million the year before.

Owens Corning said the increase was due primarily to an increase in income from operations.

Although market demand for building materials products remained strong through the second quarter, the company said recent increases in U.S. housing inventory and higher interest rates are expected to exert pressure on demand, which could impact prices for certain products.

However, The Energy Policy Act of 2005 may somewhat offset this potential softening of demand and stimulate demand for some Owens Corning products in the United States because of potential tax credits offered to home builders for the construction of more energy-efficient homes, and to homeowners for some energy-efficient home improvements, the release said.

In addition, the release said global demand for energy-related commodities and services has resulted in continued cost increases, which will require the company to continue to achieve additional productivity gains to sustain margins.

Owens Corning, a Toledo, Ohio, building materials company, filed for bankruptcy on Oct. 5, 2000 in the U.S. Bankruptcy Court for the District of Delaware. Its Chapter 11 case number is 00-3837.

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