Owens Corning Fiberglass Corporation

For Immediate Release (February 6, 1992)

Owens Corning Takes $800 Million Non-Cash Charge to Accrue for Future Asbestos

Claims ‘‘

This action demonstrates our desire to put the asbestos situation behind us,’’ new chairman and CEO Glen H. Hiner says.

Toledo, Ohio, February 6, 1992—Owens Corning Fiberglass Corp. (NYSE:OCF) today announced that its results for the fourth quarter and year ended December 31, 1991, include a special non-cash charge of $800 million to accrue for the estimated uninsured cost of future asbestos claims the Company may receive through the balance of the decade. ‘‘This action demonstrates our desire to put the asbestos situation behind us,’’ said Glen Hiner, Owens Corning’s new chairman and chief executive officer. ‘‘After a thorough review of the situation with outside consultants, we believe this accrual will be sufficient to cover the company’s uninsured costs for cases received until the year 2000. We will, of course, make adjustments to our reserves if that becomes appropriate, but this is our best estimate of these uninsured costs. With this action,’’ Mr. Hiner continued, ‘‘everyone can now focus once again on the fundamental strengths of the Company. We generate considerable amounts of cash, our operating divisions are leaders in every market they serve throughout the world, and we have taken a number of steps in the last few years to strengthen our competitive position even further.’’

Owens Corning Fiberglass Corporation

For Immediate Release (June 20, 1996)

Required

a. In the long run, cash receipts from operations is equal to revenue from operations. Comment.

b. February 6, 1992—Owens Corning announced a special noncash charge of $800 million to accrue for the estimated uninsured cost of future asbestos claims the company may receive through the balance of the decade. How much will the noncash charge reduce gross earnings in 1992? Over what period of time is the expected outflow?

c. June 20, 1996—Owens Corning announced a net, after-tax charge of $545 million for asbestos claims received after 1999. How much will this charge reduce net income in 1996? Over what period of time is the cash outflow expected?

d. Assume Owens Corning receives money related to the federal lawsuit alleging falsified medical tests. In what period will the cash inflow be recorded? When will the related revenue be

recorded?

e. April 29, 1998—Owens Corning filed suit against Allstate Insurance Co. related to asbestos exposure coverage. What are the apparent implications if Owens Corning does not win the suit?

f. Owens Corning announced in March 1998 that it might have to spend more than expected to resolve asbestos claims. What does this imply as to future expenses and cash outflow related to asbestos claims?

g. Owens Corning, consolidated statement of cash flows, for the years ended December 31, 1997, 1996, and 1995.

1. What year has a charge for asbestos litigation claims?

2. What years have cash inflow from proceeds from insurance for asbestos litigation claims?

3. What years have payments for asbestos litigation claims?