Owens Corning posts $139 million third-quarter operating income; sales highest in company history

By Caroline Salls

Pittsburgh, Nov. 2 - Owens Corning reported third-quarter income from operations of $139 million on sales of $1.618 billion, the highest quarterly sales total in company history, according to a company news release.

Sales for the period were up 5% compared with $1.541 billion for the same quarter last year. For the first nine months of 2005, sales totaled $4.610 billion, a 10% increase from the previous year.

"Demand for our products and services remained strong during the quarter," president and chief executive officer Dave Brown said in the release.

"Our financial results were mixed due to increased costs for energy, energy-related commodities and transportation, partially offset by price increases. We expect these cost pressures to continue."

The income from operations was down 9% from $153 million in the same period of 2004.

For the first nine months of 2005, the company reported a loss from operations of $3.973 billion, including a $4.342 billion non-cash asbestos charge in the first quarter, compared to income from operations of $281million in the same period of 2004.

As previously reported, in the third quarter the U.S. Third Circuit Court of Appeals reversed the District Court's prior order that had approved substantive consolidation in Owens Corning's Chapter 11 proceedings.

As a result, the company has determined that certain post-petition interest and fees under its pre-bankruptcy credit facilities will probably be payable, and accordingly, it has accrued the expenses for the five-year period from the October 2000 bankruptcy filing date through the end of the third quarter of 2005.

According to the release, that accrual resulted in a non-cash charge of $538 million being recorded in the quarter. With the charge, the company recorded a net loss of $267 million in the third quarter, compared to net income of $94 million in the same period of 2004.

Longer term, the company said it is cautious about the ability of the U.S. economy to maintain the current level of housing demand and believes a continued rising interest rate environment could cause the U.S. housing market to soften from recent high levels.

The Energy Policy Act of 2005 and the effect of recent hurricanes in the Southeast United States may mitigate this softening, the release said, as the act is expected to increase demand for energy-efficient improvements in 2006 and 2007, particularly for insulation or other systems designed to reduce heat loss.

An increase in hurricane-related demand for residential roofing and siding is also expected.

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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