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Advanced Glassfiber Yarns Announces Second Quarter Earnings

18 August 2000

Advanced Glassfiber Yarns LLC announced that net sales for the quarter ended June 30, 2000 increased $7.1 million, or 11.5%, to $68.7 million as compared to $61.6 million in the three months ended June 30, 1999, and sales for the six months ended June 30, 2000 increased $15.6 million, or 12.6%, to $139.2 million as compared to $123.6 million in the six months ended June 30, 1999. The net increase in sales for the first half of 2000 resulted from a higher demand primarily in the electrical and specialty markets, for which sales increased by 34.2% and 14.5%, respectively. This was partially offset by selling price reductions, accentuated by a 12.0% decline of European currencies in the first half of 2000 as compared to the same period in 1999. Gross profit decreased from 29.2% of net sales for the six months ended June 30, 1999 to 26.8% of net sales for the six months ended June 30, 2000. Excluding the impact of changes in the exchange rate of European currencies, gross profit in the first half of 2000 would have been 27.6%. The remaining decline in gross profit is mainly attributable to selling price erosions that occurred throughout 1999, additional startup manufacturing costs related to increases in capacity in the first quarter of 2000 as well as a recent increase in energy costs. Higher volumes sold for all categories of yarns resulting in more absorption of fixed costs have partially offset this decrease in gross profit. Advanced Glassfiber Yarns, headquartered in Aiken, SC, is one of the largest global suppliers of glass yarns, which are a critical material used in a variety of electronic, industrial, construction and specialty applications. Prior to and including September 30, 1998, the Company was the glass yarns and specialty materials business of Owens Corning. Since September 30, 1998, Advanced Glassfiber Yarns has been a joint venture between Porcher Industries, S.A. and Owens Corning. Porcher Industries Group and Owens Corning have executed a memorandum of understanding setting forth the general parameters pursuant to which Porcher Industries Group intends to purchase Owens Corning's 49% economic interest in Advanced Glassfiber Yarns LLC. Owens Corning would retain at least 10% of the voting rights with respect to Advanced Glassfiber Yarns. As part of the proposed transaction, Porcher Industries and Owens Corning expect to amend and extend the terms of many of the supply agreements between Owens Corning and Advanced Glassfiber Yarns and resolve various other matters related to the initial formation of Advanced Glassfiber Yarns, including issues regarding use of intellectual property and others.