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Owens disappoints again
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January 9, 1998: 8:48 a.m. ET
Fiberglass maker to cut 2,200 jobs, to take $250 million restructuring charge
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NEW YORK (CNNfn) - Owens Corning, the world's leading producer of fiberglass, on Friday said it will lay off 2,200 employees and reorganize operations, a move that will cost it $250 million in pretax charges.
In addition, the Toledo, Ohio-based company said -- even excluding the restructuring and other charges -- its 1997 earnings will fall short of expectations because of continued pricing pressures in the insulation business. The company made similar predictions in September prior to its third quarter report.
Owens Corning said it now expects earnings for the full-year to total $3.00 a share. Analysts had been estimating profits of $3.73 a share.
"We have exerted tight controls and oversight in the pricing arena, but we are still being impacted by overall market conditions," said Owens Corning Chairman and Chief Executive Glen H. Hiner.
Of the total restructuring charge, about $140 million will be recorded in the fourth quarter of 1997, while the remaining charge will be taken in the first quarter of 1998.
In addition to the job reductions (which are equivalent to about 9 percent of its work force), the pretax charge will cover costs to reduce overhead, close manufacturing facilities and enhance manufacturing.
"These programs are expected to decrease operating costs by approximately $100 million in 1998, and by an additional $75 million when fully implemented in 1999, resulting in ongoing savings of $175 million per year," Hiner said.
Owens Corning also said it will take a pretax charge of $25 million against fourth quarter 1997 earnings to comply with a newly adopted accounting rule affecting the capitalization of computer systems development projects.
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Owens Corning
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