owens corning07_at_a_glance

2007 AT A GLANCE

Positioned to Perform

Welcome to the Owens Corning 2007 At a Glance report, which profi les Owens Corning’s core business groups, business performance in 2007 and growth objectives for 2008.

As a global leader in building materials and glass fi ber reinforcements, we are committed to winning in the marketplace with our customers.

Owens Corning took strategic actions in 2007 that position the company to perform. Most notably, we completed a large composites acquisition, further globalizing the business and transforming the footprint of the company.

We also completed a $100 million cost-reduction program and successfully divested the vinyl siding business unit.

In addition to our growth in composites, energy effi ciency continues to present a growing market opportunity for our building materials businesses. The strength of our composites business and our excellent market position in building materials will position the company to perform through an otherwise weak U.S. housing market in 2008.

We greatly appreciate your interest in Owens Corning.

Michael H. ThamanChairman and Chief Executive Offi cer

1

OWENS CORNINGFounded in 1938, Owens Corning is a market-leading innovator of glass fi ber technology with sales of $5 billion in 2007 and 18,000 employees in 26 countries on fi ve continents.

Financial HIGHLIGHTS Successor Combined 12 months ended

Successor2 months ended

Predecessor 10 months ended 12 months ended

2007 2006 Dec. 31, 2006 Oct. 31, 2006 2005 2004 2003

Net sales $4,978 $5,399 $772 $4,627 $5,177 $4,626 $4,061

Gross margin 777 1,002 116 886 1,070 928 757

Gross margin percentage 15.6% 18.6% 15.0% 19.1% 20.7% 20.1% 18.6%

Marketing, administrative & other expenses 498 494 86 408 521 490 422

Marketing, administrative & other expenses as a percentage of sales 10.0% 9.1% 11.1% 8.8% 10.1% 10.6% 10.4%

Science & technology expenses 63 78 30 48 56 44 41

Adjusted earnings before interest and income taxes 344 529 73 456 486 391 308

Net cash fl ow provided by (used for) operating activities 182 (1,888) 15 (1,903) 746 449 295

Additions to plant and equipment 247 361 77 284 288 232 208

Total assets $7,872 $8,470 $8,470 $8,714 $8,735 $7,639 $7,358

(in millions)

2

COMPOSITE SOLUTIONSOwens Corning’s composites business provides high-performance

materials for a broad range of markets including transportation, wind energy, infrastructure and aerospace. The composite

materials market is expected to continue to grow at about twice the rate of the global gross domestic product (GDP). Glass-reinforced

composites are a durable, light-weight, corrosion-resistant solution to traditional materials like aluminum, wood or steel.

• World’s leading producer of glass fi ber composites

• One of the largest acquisitions in Owens Corning’s history in 2007 changed the company’s global footprint

• Synergies of $100 million by 2011; $30 million expected in 2008

INSULATING SYSTEMSMarket opportunity exists in re-insulation. Insulating Systems is

meeting market demand for increased energy effi ciency and greenhouse gas reduction in the midst of a weak U.S. housing

market. Buildings are the single largest opportunity in these areas.

•The leading producer of residential insulation in North America

• The leading producer of commercial and industrial insulation in North America

• Insulation recognized as the single, most cost-effective greenhouse gas abatement measure

ROOFING AND ASPHALTThe Duration® Series Shingle with SureNail® technology is a

roofi ng innovation that completed its rollout six months ahead of schedule in the U.S. in 2007. The new product is leading

the market in its transition to higher-margin, laminated shingles.

• A leading producer of residential shingles in North America

• The leading producer of roofi ng asphalts in North America

• Roofi ng essentials offers a market opportunity for growth in 2008

OTHER BUILDING MATERIALS AND SERVICES

Owens Corning strengthened this business segment in 2007 with the divestiture of its vinyl siding business unit and the

complete closure of its HOMExpertsTM service line. The segment is now comprised of the company’s masonry

products and construction services businesses.

• Expanded its masonry product line with the addition of ProStone,TM an entry-level brand

• Basement Finishing SystemTM availability extended into Canada

BUSINESS OVERVIEW

29% U.S. & Canada Commercial & Industrial

61% International

10% U.S. & Canada Residential Construction

40% U.S. & Canada New Residential Construction

20% U.S. & Canada Repair & Remodel


11% International







10% International

INVESTING IN GLOBAL GROWTH

Newly Acquired FacilitiesAlcala, Spain

Bangpakong, Thailand

Besana, Italy

Brunswick, Maine, U.S.

Capivari, Brazil

Chambéry, France

Changzhou, China

Doudian (Beijing), China

Gous-Khroustalny, Russia

Gunsan, Korea

Hangzhou, China

Jiading, China

Thimmapur, India

Tsu, Japan

Vado Ligure, Italy

Vendome, France

Vercelli, Italy

Wichita Falls, Texas, U.S.

Zele, Belgium

CO

MP

OSI

TES

Owens Corning completed the most signifi cant acquisition in its history in 2007 with the purchase of Saint-Gobain’s reinforcements and composite fabrics businesses. The acquisition further extends Owens Corning’s position as the market leader in an industry that continues to grow at about twice the rate of the global gross domestic product (GDP).

The acquisition transformed the footprint of Owens Corning by further globalizing its composites business, and tripling the size of its composite fabrics business to serve the wind energy market. The newly combined business increases Owens Corning’s presence in fast-growing emerging markets around the world like China,

Russia, India, Mexico and Brazil, while profi tably growing its revenue from international, commercial and industrial sources. As a result, the acquisition positions the Owens Corning brand in global markets where the company does not have a building materials presence. In 2007, more than 60 percent of sales in the composites business came from outside of the United States.

Owens Corning expects that the acquisition will deliver cost synergies of more than $100 million by 2011, with at least $30 million in synergies achieved in 2008. Synergies will come primarily from reduced operating costs, improved energy effi ciency, and reduced shipping costs.

Growth in Emerging MarketsOwens Corning expects composites growth in Asia to continue to exceed global growth rates. The composites market in China and India alone are projected to grow by double-digits in 2008. Today, 25 percent of the company’s composite manufacturing capacity is located in developing countries around the world to meet that customer demand.

A composite is a reinforcing material like glass fi ber that is combined

with a polymer to produce structural or functional properties that

enhance performance in a variety of end-use applications.

Marcio Sandri VP & Managing Director, Americas

Steven VermeulenVP & Managing Director, Non-Woven TechnologiesArnaud Genis

VP & Managing Director, Europe, Global Technical Fabrics and Specialties

Geert De Landsheer VP & Managing Director, Global Technical Fabrics

Sangkyoo Han VP & Managing Director, Asia-Pacifi c

The Owens Corning composites business is managed by a global team that is based around the world to be closer to the customer.

43

4

A COMMON HERITAGEFor more than 70 years, Owens Corning and Saint-Gobain Vetrotex played key roles in the development and global use of composite materials. Owens Corning’s acquisition of Saint-Gobain’s reinforcement and composite fabrics businesses in 2007 combines a common heritage that serves as a foundation to a dynamic future.

1930s – 1940s• Owens Corning produces the fi rst

continuous glass fi lament material

• Saint-Gobain acquires glass fi ber patents in Europe

• Owens Corning develops fi berglass-reinforced plastic laminates for use in aircraft parts and boat hulls

1950s – 1960s• Owens Corning develops composite

materials for auto body applications

• Saint-Gobain’s facility in Chambéry, France, begins production of composite textiles

• Owens Corning develops high-strength glass reinforcements

1970s – 1980s• Owens Corning develops

composite material for large diameter pipe applications

• Saint-Gobain expands in Italy and Spain through acquisition

• Owens Corning introduces composite materials for auto components and armor

1990s – 2000s• Owens Corning introduces

Advantex® glass fi ber material

• Saint-Gobain introduces TWINTEX® reinforcement material

• Owens Corning develops new high-performance reinforcements platform

Global IntegrationOwens Corning is quickly capitalizing on its newly acquired composites assets to better serve customers, drive global growth and realize synergies.

The company is investing in its composites facilities to meet demand in fast-growing regions of the world. Beginning in 2008, the company announced that it is working to expand its glass reinforcements and composite fabrics production capabilities in China and Russia within the next two years to support market growth in Asia and Eastern Europe.

The expansion will position the company’s composites organization to serve a growing and diverse customer base in Asia and Eastern Europe with industry-leading products for key markets such as infrastructure, construction, automotive, wind energy and consumer goods.

Owens Corning is accelerating its plan to achieve synergies from its recent composites acquisition where possible. As part of its global integration strategy, Owens Corning is consolidating its composite fabrics manufacturing in North America from four to two facilities in 2008. This enables the company to serve its composite fabrics customers more effi ciently with the increased capabilities of its newly acquired facilities.

Energy Intensity ReductionIn 2007, Owens Corning’s composites business made signifi cant improvements in reducing the energy intensity, or energy usage, of its operations to optimize manufacturing productivity. Facilities in Fort Smith, Ark., United States, and Rio Claro, Brazil, reduced their energy use by double-digit percentages following capital improvement projects completed in 2006. The company is implementing similar changes at production facilities around the world and tracking the impact of these changes on its global energy footprint.

Owens Corning is expanding the use of its most advanced technologies for energy intensity reduction. These technologies bring world-class energy effi ciency and emissions control, while providing customers with unique product benefi ts including corrosion resistance and high strength.

Advanced Glass Melting (AGM) is a technology where innovative furnace design allows for more effi cient heat transfer in glass batch melting processes, saving signifi cant energy while reducing environmental emissions. This advanced technology, which combines oxygen with natural gas to create a more effi cient combustion process, can save more than 40 percent of natural gas costs in glass reinforcement manufacturing. To learn more, see Owens Corning’s sustainability report at www. owenscorning.com/sustainability.

Wind energy is estimated to be the fastest growing

renewable energy source, but still accounts for only

1 percent of the world’s electricity consumption. Today,

a typical wind blade measures 40 meters in length

and contains 7 metric tons of glass fi ber per blade.

Global Growth in Wind EnergyThe increasing demand for renewable energy continues to drive the capacity expansion of the wind power market on a global scale. As a result, the demand for composite materials in wind power is expected to continue to see double-digit growth in 2008 and beyond.

Owens Corning is the leading provider of glass reinforcements for wind turbine blades. Glass reinforcements enable wind blade fabricators to make longer blades, which makes wind a more attractive, cost-competitive energy resource.

Owens Corning’s WindStrandTM is a new generation of high-performance reinforcements specifi cally developed for composite wind turbine applications. The product continues to capture market share by giving wind blade fabricators the ability to produce signifi cantly stronger and lighter composite parts at a substantial cost savings. This is an example of how Owens Corning is delivering shareholder value by growing its customers’ businesses.

INNOVATIVE CUSTOMER SOLUTIONS

65

7

Owens Corning high-performance reinforcements are meeting composite industry demand for large-volume production of high-strength glass. Large-volume reinforcement production allows composite manufacturers to favorably compete with traditional materials like wood, steel or aluminum. The innovative product platform is based on a patented technology designed to deliver superior mechanical properties with signifi cantly higher thermal and corrosion resistance.

In addition to WindStrand,TM these new reinforcements include FliteStrand,TM a light-weight, high-strength material for the aerospace industry; ShieldStrand,TM a high-strength material with signifi cantly higher thermal resistance for armor applications; and XStrand,TM a high-fatigue material with strong impact performance for industrial, sports and recreation applications.

6

HIGH PERFORMANCE SOLUTIONS

Market OpportunityDespite consistent year-over-year growth, the composites industry comprises a small percentage of the overall materials market – representing a signifi cant market opportunity. The per capita usage of composite materials around the world is seven times less than the amount consumed per capita in the United States today, while growing at a double-digit rate in developing countries.

Composite materials are increasingly used in automotive, infrastructure, construction and other applications because of their durable, high-strength, light-weight characteristics. These mechanical properties bring innovative value to customers while helping the world reduce its environmental footprint.

Market LeadershipOwens Corning is an industry leader in building materials with leading market share in North America in residential, commercial and industrial insulation, masonry products and roofi ng asphalts. Owens Corning products can be found throughout a residential home. According to a 2008 brand study from the publishers of BUILDER magazine, builders selected Owens Corning PINK FiberglasTM insulation as the product they prefer. Builders also chose the company’s Cultured Stone® product as the manufactured stone veneer most recognized and most used by builders. This same study voted Owens Corning as the most recognizable roofi ng brand in the market.

Creating a Re-Insulation IndustryOwens Corning is focused on developing a re-insulation industry in 2008. Based on the United States Department of Energy and Nielsen Claritas studies, nearly 80 million homes in the United States are under-insulated – a signifi cant market opportunity to help existing homeowners save energy, save money and reduce greenhouse gas emissions. Homeowners can save 20 percent on their heating and cooling costs by ensuring that the attic is properly insulated with a minimum of 15.5 inches of PINK insulation.

The U.S. Department of Energy estimates that as much as 45 percent of a home’s energy loss is through the attic. Owens Corning’s AttiCat® is a new system innovation that is making it simple and practical for homeowners to properly insulate their attics.

Owens Corning is also helping homeowners eliminate energy loss and reduce noise with fi berglass ducts, which are 75 percent more energy effi cient than standard metal ducts. Helping top builders capitalize on this growth trend is an emerging market opportunity for Owens Corning.

MANAGING THROUGH THE CYCLEFinancial results for Owens Corning’s building materials businesses in 2007 were in-line with the company’s expectations during one of the worst downturns in the history of the U.S. housing market. Owens Corning took signifi cant actions in 2007 that position the company to perform through the U.S. housing cycle. As a result, the company is poised to further profi t when the U.S. housing market strengthens.

The actual photograph has been modifi ed to illustrate Owens Corning’s building materials product lines.

INSULATED CONCRETE FORMS

WALL INSULATION

ROOFING UNDERLAYMENT

ATTIC INSULATION

HOUSE WRAP

RIGID FOAM

DUCT WORK

UNDER FLOOR INSULATION

ATTIC RAFTER VENTS

BASEMENT FINISHING SYSTEMTM

INTERIOR INSULATION

MANUFACTURED STONE VENEER

ROOFING HIP AND RIDGE

ICE & WATER BARRIER

NEARLY 80 MILLION HOMES IN THE UNITED STATES ARE UNDER-INSULATED

BU

ILD

ING

MA

TER

IALS

The company expects to grow its re-insulation business by 10 percent in 2008. While this will not offset the signifi cant impact of the current housing cycle, it will add to the company’s insulation sales in positioning this business for growth as the housing market begins to strengthen.

PINK is GreenTM

In a world of rapidly rising energy costs, energy effi ciency is a growing market opportunity for Owens Corning. According to the U.S. Department of Energy, buildings consume 40 percent of energy in the United States and account for more than 43 percent of the country’s greenhouse gas emissions, more than industry and more than transportation. Owens Corning is leading the way in delivering product solutions to meet this market need.

Building Materials Innovation Owens Corning is delivering innovations to the building materials market that help customers grow their businesses and provide a premium value to Owens Corning.

One example is the company’s Duration® Series Shingle with SureNail® Technology. Owens Corning completed the national

rollout of this industry-leading innovation in 2007, six months ahead of schedule. The laminate shingle product delivers

premium productivity value to roofi ng contractors and high performance to homeowners.

Owens Corning is driving profi table growth in its Roofi ng and Asphalt business by expanding its

roofi ng essentials product line in 2008, enabling contractors to create additional value for the

homeowner. These roofi ng accessories include ice and water barrier, roofi ng

felt, ridge vents, and hip and ridge shingles. The essentials product line

combines with Owens Corning roofi ng shingles to create a

complete roofi ng system for the homeowner.

A 2007 McKinsey & Company Report on Greenhouse Gas

Reduction identifi es insulation as “the single most

cost-effective greenhouse gas abatement measure.”

8

THE LARGEST CONSUMER OF ENERGY IN THE UNITED STATES IS BUILDINGS

Owens Corning is leading the industry with one of the broadest and most complete product lines of roofi ng shingles and masonry products. Aesthetic appeal and ease-of-application continue to make Owens Corning a preferred brand among building contractors.

The company’s Cultured Stone® manufactured stone veneer product has long been recognized as the premium brand in the industry. In 2007, Owens Corning launched ProStone,TM a quality, entry-level product line that offers the true look and feel of stone at a value price. The additional product line gives Owens Corning broader access to the growing manufactured stone veneer market.

International demand for Owens Corning’s Masonry Products grew at a faster rate than the U.S. market in 2007. The 2006 acquisition of the European leader in interior and exterior manufactured stone veneer continues to drive global growth.

MOST RECOGNIZED IN ROOFING AND MASONRY PRODUCTS

9

Owens Corning’s Basement Finishing SystemTM continued to provide year-over-year growth through 2007. The system allows remodeling contractors to provide customers with a completely fi nished basement in just a few weeks. In 2007, the company expanded the product availability into Canada. The expansion in geographic reach positions the company for additional growth in building fi nishing products.

In 2007, Owens Corning added SunSuitesTM sunrooms to its product portfolio, an energy-effi cient, multi-season living space added to a home in just a few weeks.

By 2008, Owens Corning further grew its product line to include Solace® windows, a fi berglass reinforced vinyl replacement window that provides thermal effi ciency.

LEADING WITH BEAUTY AND COMFORT

10

SUSTAINABILITYIs a Core Strategy of Owens CorningGreening our OperationsOwens Corning is elevating its manufacturing performance by improving safety, reducing costs, and shrinking its resource use and emissions footprint around the world.

Since 2002, the company has improved the safety of its operations by 75 percent. The goal is to create a company of zero injuries. Today, the majority of its facilities are operating injury free.

Owens Corning has reduced its global energy intensity by 16 percent during the last 5 years, and has a 10-year goal to reduce the amount of energy required to make its products by 25 percent from its 2002 baseline.

The employees of Owens Corning are engaged in hundreds of critical activities to meet similar aggressive goals across its entire environmental footprint.

Greening our ProductsOwens Corning’s products have a signifi cant positive impact on the environment. During their installed life, the products that Owens Corning produces each year result in the prevention of 1 billion tons of greenhouse gas emissions, equivalent to 200 million passenger cars not being driven for a year, or not using 2 billion barrels of oil.

The company is focused on the continuous life-cycle improvement or “greening” of its products. Building insulation, for example, is one of the most cost-effective energy and greenhouse-gas reduction technologies in the world. Owens Corning is also the world’s largest supplier of glass reinforcements for wind turbine blades – a growing source of renewable energy.

Accelerating Energy Effi ciency in the Built EnvironmentOwens Corning has amplifi ed its commitment to sustainability with additional organizational structure and focus, working closely with customers and partners to drive the market demand for energy effi ciency and a greener built environment.

Owens Corning

defi nes sustainability

as meeting the

needs of the

present without

compromising

the world that we

leave to the future.

This approach to

business energizes

our people, creates

growth opportunities

for our customers,

and drives value for

our shareholders.

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13

Consolidated Statement of Earnings (Loss)

Successor Predecessor

Twelve MonthsEnded

Two MonthsEnded

Ten MonthsEnded

Twelve MonthsEnded

December 31, December 31, October 31, December 31,2007 2006 2006 2005

Net sales $4,978 $772 $4,627 $5177

Cost of sales 4,201 656 3,741 4,107

Gross margin 777 116 886 1,070

Operating expensesMarketing and administrative expenses 498 86 408 521Science and technology expenses 63 30 48 56Restructure costs 28 20 12 –Chapter 11 related reorganization items – 10 45 45Provision (credit) for asbestos litigation

claims (recoveries) – – (13) 4,267Employee emergence equity program 37 6 – –(Gain) loss on sale of fi xed assets and other 6 8 (65) (18)

Total operating expenses $632 $160 $435 $4,871

Earnings (loss) from continuing operationsbefore interest and taxes 145 (44) 451 (3,801)

Interest expense, net 122 29 241 740Gain on settlement of liabilities subject

to compromise – – (5,864) –Fresh-start accounting adjustments – – (2,919) –

Earnings (loss) from continuing operations

before taxes 23 (73) 8,993 (4,541)

Income tax expense (benefi t) (8) (23) 980 (411)

Earnings (loss) from continuing operations

before minority interest and equity in

net earnings (loss) of affi liates 31 (50) 8,013 (4,130)Minority interest and equity in net (loss) of affi liates (4) (4) – (4)

Earnings (loss) from continuing operations 27 (54) 8,013 (4,134)Discontinued operations:Earnings (loss) from discontinued operations,

net of tax of $5, $(5), $45, and $24, respectively 9 (11) 127 35Gain on sale of discontinued operations,

net of tax of $40, $0, $0, and $0, respectively 60 – – –

Total earnings (loss) from discontinued operations 69 (11) 127 35

Net earnings (loss) $96 $(65) $8,140 $(4,099)

Basic earnings (loss) per common share Earnings (loss) from continuing operations $0.21 $(0.42) $144.90 $(74.73)

Earnings (loss) from discontinued operations $0.54 $(0.09) $2.30 $0.65

Diluted earnings (loss) per common share Earnings (loss) from continuing operations $0.21 $(0.42) $133.77 $(74.73)

Earnings (loss) from discontinued operations $0.54 $(0.09) $2.12 $0.65

Weighted average common shares Basic 128.1 128.1 55.3 55.3 Diluted 128.8 128.1 59.9 55.3

(in millions)

12

Consolidated Statements of Cash Flows Successor Predecessor

Twelve Months Ended

December 31,2007

Two Months Ended

December 31,2006

Ten Months Ended

October 31,2006

Twelve Months Ended

December 31,2005

Net cash fl ow provided by (used for) operating activitiesNet earnings (loss) $96 $(65) $8,140 $(4,099)Adjustments to reconcile net earnings

(loss) to cash provided by (used for) operating activitiesProvision for asbestos litigation claims – – 21 4,277Depreciation and amortization 343 69 209 234Gain on sale of businesses and fi xed assets (104) – (61) (14)Impairment of fi xed and intangible assets and investments in affi liates 76 – 2 8

Deferred income taxes – (48) 208 (467)Provision for pension and other employee benefi t liabilities 45 8 83 113Provision for post-petition interest/fees on pre-petition debt – – 247 735Fresh-start accounting adjustments, net of tax – – (2,243) –Gain on settlement of liabilities subject to compromise – – (5,864) –Employee emergence equity program 37 6 – –Stock based compensation expense 5 – – –Restricted cash 52 (85) – –

Payments related to Chapter 11 fi lings (109) (131) – –Payment of interest on pre-petition debt – (31) (944) –Payment to 524(g) Trust – – (1,250) –(Increase) decrease in receivables (9) 185 (78) (94)(Increase) decrease in inventories 3 97 (103) (42)(Increase) decrease in prepaid and other assets – 1 (36) 7Increase (decrease) in accounts payable and accrued liabilities (106) 30 (107) 160

Proceeds from insurance for asbestos litigation claims, excluding Fibreboard – – 18 10

Pension fund contribution (121) (6) (43) (49)Payments for other employee benefi ts liabilities (25) (4) (23) (29)Increase in restricted cash – asbestos and Fibreboard – – (87) (16)Other (1) (11) 8 12

Net cash fl ow provided by (used for) operating activities 182 15 (1,903) 746

Net cash fl ow used for investing activities

Additions to plant and equipment (247) (77) (284) (288)Investment in subsidiaries and affi liates, net of cash acquired (620) – (47) (14)Proceeds from the sale of assets or affi liates 437 – 82 19

Net cash fl ow used for investing activities (430) (77) (249) (283)

Net cash fl ow provided by (used for) fi nancing activities

Payment of equity commitment fees – – (115) –Proceeds from long-term debt 617 5 21 9Payments on long-term debt (85) (5) (13) (31)Proceeds from revolving credit facility 713 – – –Payments on revolving credit facility (573) – – –Payment of contingent note to 524(g) trust (1,390) – – –Net increase (decrease) in short-term debt (13) 1 3 (6)Payments to pre-petition lenders – (55) (1,461) –Proceeds from issuance of bonds – – 1,178 –Proceeds from issuance of new stock – – 2,187 –Debt issuance costs – – (10) –Net decrease in liabilities subject to compromise – – – (3)Other – – 2 1Net cash fl ow provided by (used for) fi nancing activities (731) 54 1,792 (30)

Effect of exchange rate changes on cash 25 – 6 1

Net increase (decrease) in cash and cash equivalents (954) (116) (354) 434

Cash and cash equivalents at beginning of year 1,089 1,205 1,559 1,125

Cash and cash equivalents at end of period $135 $1,089 $1,205 $1,559

Disclosure of cash fl ow informationCash paid during the year for income taxes $40 $8 $50 $51Cash paid during the year for interest expense $159 $35 $951 $6

(in millions)

13

Consolidated Balance Sheets

Successor

December 31,2007

December 31,2006

Assets

Current assets

Cash and cash equivalents $135 $1,089Receivables, less allowances of $23 in 2007 and $26 in 2006 721 573Inventories 821 749Restricted cash-disputed distribution reserve 33 85Assets held for sale – current 53 –Other current assets 89 56

Total current assets 1,852 2,552

Property, plant and equipment, net 2,772 2,521Goodwill 1,174 1,313Intangible assets 1,210 1,298Deferred income taxes 487 549Assets held for sale – non-current 178 –Other non-current assets 199 237

Total assets $7,872 $8,470

Liabilities and stockholders’ equity

Current Liabilities

Accounts payable and accrued liabilities $1,137 $1,081Accrued interest 12 39Short-term debt 47 1,401Long-term debt – current portion 10 39Liabilities held for sale – current 40 –

Total current liabilities $1,246 $2,560

Long-term debt, net of current portion 1,993 1,296

Pension plan liability 146 312Other employee benefi ts liability 293 325Liabilities held for sale – non-current 8 –Other liabilities 161 247Commitments and contingencies

Minority interest 37 44

Stockholders’ equity

Preferred stock, par value $0.01 per share 10 million shares authorized; none issued or outstanding at December 31, 2007

and December 31, 2006 – –

Common stock, par value $0.01 per share400 million shares authorized; 130.8 million issued and outstandingat December 31, 2007 and December 31, 2006 1 1

Additional paid in capital 3,783 3,733Accumulated earnings (defi cit) 31 (65)Accumulated other comprehensive earnings 173 17

Total stockholders’ equity 3,988 3,686

Total liabilities and stockholders’ equity $7,872 $8,470

(in millions)

14

15

Five-Year Reconciliation of EARNINGS (LOSS) TO ADJUSTED EBIT

Successor CombinedTwelve months ended Twelve months ended

December 31, December 31,(in millions) 2007 2006Net sales $4,978 $5,399 Cost of sales 4,201 4,397

Gross margin 777 1,002 Operating expenses

Marketing and administrative expenses 498 494 Science and technology expenses 63 78 Restructure costs 28 32 Chapter 11 related reorganization items – 55 Provision (credit) for asbestos litigation claims – (13)Employee emergence equity program 37 6 (Gain) loss on sale of fi xed assets and other 6 (57)Total operating expenses 632 595

Earnings (loss) from continuing operations before interest and taxes 145 407 Interest expense, net 122 Gain on settlement of liabilities subject to compromise – Fresh-start accounting adjustments – Earnings (loss) from continuing operations before taxes 23 Income tax expense (benefi t) (8)Minority interest and equity in net earnings (loss) of affi liates (4)Earnings (loss) from continuing operations 27

Earnings (loss) from discontinued operations, net of tax 9 Gain on sale of discontinued operations, net of tax 60

Net earnings (loss) $96 Reconciliation to adjusted earnings from continuing operations before interest and taxes

Net earnings (loss) $96 Earnings (loss) from discontinued operations, net of tax 9 Gain on sale of discontinued operations, net of tax 60

Earnings (loss) from continuing operations 27

Minority interest and equity in net earnings (loss) of affi liates (4)

Earnings (loss) from continuing operations before minority interest and equity in net earnings (loss) of affi liates 31

Income tax expense (benefi t) (8)Earnings (loss) from continuing operations before taxes 23 Interest expense, net 122 Gain on settlement of liabilities subject to compromise –

Fresh-start accounting adjustments –

Earnings (loss) from continuing operations before interest and taxes 145 407

Adjustments to remove items impacting comparability:Chapter 11 related reorganization costs – 55 Provision (credit) for asbestos litigation claims – (13)Restructuring and other costs (credits) 54 (2)Impact of acquisition accounting 28 13 Acquisition, integration and transaction costs 13 – (Gains) losses on sales of assets and other 7 – Employee emergence equity program expense 37 6 Fresh-start accounting impact – 63 Asset impairments 60 –

Total adjustments to remove comparability items 199 122

Adjusted earnings from continuing operations before interest and taxes $344 $529

16

Successor Two months ended Ten months ended Twelve months ended Twelve months ended Twelve months ended

December 31, October 31, December 31, December 31, December 31,2006 2006 2005 2004 2003

$772 $4,627 $5,177 $4,626 $4,061 656 3,741 4,107 3,698 3,304 116 886 1,070 928 757

86 408 521 497 425 30 48 56 44 41 20 12 – – (2) 10 45 45 54 85

– (13) 4,267 (24) (5) 6 – – – –

8 (65) (18) (9) (16) 160 435 4,871 562 528

(44) 451 (3,801) 366 229 29 241 740 (12) 8

– (5,864) – – – – (2,919) – – –

(73) 8,993 (4,541) 378 221 (23) 980 (411) 202 131 (4) – (4) (8) 1 (54) 8,013 (4,134) 168 91 (11) 127 35 36 24

– – – – –

$(65) $8,140 $(4,099) $204 $115

$(65) $8,140 $(4,099) $204 $115 (11) 127 35 36 24

– – – – – (54) 8,013 (4,134) 168 91

(4) – (4) (8) 1

(50) 8,013 (4,130) 176 90

(23) 980 (411) 202 131 (73) 8,993 (4,541) 378 221 29 241 740 (12) 8

– (5,864) – – – – (2,919) – – –

(44) 451 (3,801) 366 229

10 45 45 54 85 – (13) 4,267 (24) (5)

32 11 (18) (5) (1) 6 7 – – –

– – – – –

– (45) (7) – –

6 – – – –

63 – – – –

– – – – –

117 5 4,287 25 79

$73 $456 $486 $391 $308

Predecessor

17

Business Segment Information

Successor Predecessor

Twelve MonthsEnded

December 31,2007

Two MonthsEnded

December 31, 2006

Ten MonthsEnded

October 31,2006

Twelve MonthsEnded

December 31,2005

Net sales

Reportable segments

Insulating Systems $1,776 $331 $1,766 $1,976Roofi ng and Asphalt 1,375 167 1,556 1,806Other Building Materials and Services 301 60 317 318Composite Solutions 1,695 227 1,155 1,265

Total reportable segments 5,147 785 4,794 5,365

Corporate Eliminations (1) (169) (13) (167) (188)

Consolidated net sales $4,978 $772 $4,627 $5,177

External Customer Sales by Geographic Region

United States $3,445 $541 $3,648 $4,171Europe 601 84 358 399Canada and other 932 147 621 607

Net sales $4,978 $772 $4,627 $5,177

Earnings (loss) from continuing operations before interest and taxes

Reportable Segments

Composite Solutions $126 $37 $72 $114

Insulating Systems 192 59 408 424Roofi ng and Asphalt 27 (23) 95 139Other Building Materials and Services 14 (1) 2 3

Total reportable segments $359 $72 $577 $680

Reconciliation to Consolidated Earnings (Loss) From Continuing Operations Before Interest and Taxes

Chapter 11-related reorganization items – $(10) $(45) $(45)Asbestos litigation (claims) recoveries – – 13 (4,267)Restructuring and other (costs) credits (54) (32) (11) 18

Impact of acquisition accounting (13) – – –

Acquisition integration and transaction costs (28) (6) (7) –

Gains (losses) on sales of assets and other (7) – 45 7

Employee emergence equity program expense (37) (6) – –Fresh-start accounting impact – (63) – –Asset impairments (60) – – –General corporate expense (15) 1 (121) (194)

Consolidated earnings (loss) from continuing operations before interest and taxes

$145 $(44) $451 $(3,801)

(in millions)

18

BOARD OF DIRECTORS

NORMAN P. BLAKE, JR. (66)Former Chairman, President and Chief Executive Offi cer of Comdisco, Inc. and served as the chief executive of several other major companies. Awarded the Ellis Island Medal of Honor. Director since 1992.

GASTON CAPERTON (68)President and Chief Executive Offi cer of The College Board. Former Governor of the State of West Virginia. Serves as a Director of United Bankshares, Inc., Energy Corporation of America, and Prudential Financial. Director since 1997.

WILLIAM W. COLVILLE (73)Retired, former Senior Vice President, General Counsel and Secretary of Owens Corning. Serves as a Director of Nordson Corporation. Director since 1995.

RALPH F. HAKE (59)Former Chairman and Chief Executive Offi cer of the Maytag Corporation. Served as a Director for the National Association of Manufacturers and is a current Director of ITT Corporation. Director since 2006.

F. PHILIP HANDY (63)Chief Executive Offi cer of Strategic Industries. Serves as a Director of Anixter International, Inc., and Rewards Network, Inc. Director since 2006.

LANDON HILLIARD (68)Partner with Brown Brothers Harriman & Co. Serves as a Director of Norfolk Southern Corporation, WesternWorld Insurance Company and Russell Reynolds Associates, Inc. Director since 1989.

ANN IVERSON (64)Chief Executive Offi cer of International Link. Serves as a Director of Shoe Pavillion. Former Chief Executive Offi cer of Laura Ashley Holdings, Kay-Bee Toy stores and Mothercare plc. Awarded the Ellis Island Medal of Honor. Director since 1996.

DAVID J. LYON (35)Vice President at D. E. Shaw & Co., L.P. Former Managing Director at The Cypress Group, LLC. Director since 2008.

JAMES J. MCMONAGLE (63)Of Counsel at Vorys, Sater, Seymour & Pease LLP. Serves as a Director and Chairman for the Board of Selected Family Funds. Director since 2007.

W. HOWARD MORRIS (47)Chief Investment Offi cer of Prairie & Tireman Capital Management. Former Vice President and Senior Portfolio Manager of Comerica Asset Management. Director since 2007.

JOSEPH F. NEELY (67)Former Chief Executive Offi cer of GoldToe Brands, Inc. Served as Senior Vice President of Sara Lee Corporation. Director since 2006.

W. ANN REYNOLDS (70)Former President and Professor of Biology at The University of Alabama at Birmingham. Serves as a Director of Humana, Inc., Abbott Laboratories, Invitrogen Corporation and the News-Gazette, Champaign, Illinois. Director since 1993.

ROBERT B. SMITH, JR. (70)Director of Virginia Environmental Endowment. Member of Board of Managers of Kentucky River Properties. Formerly, Trustee of Dalkon Shield Claimants Trust, and Chief Counsel and Staff Director U.S. Senate Government Operations Committee. Director since 2004.

MICHAEL H. THAMAN (44)Chairman and Chief Executive Offi cer of Owens Corning. Served as Chairman since 2002 and Chief Financial Offi cer from 2000-2006. Serves as a Director of Florida Power & Light Group, Inc. Director since 2002.

DANIEL K. TSEUNG (36)Managing Director of Sun Hung Kai Properties Direct Investments Ltd. Serves as a Director of RCN Corporation and Chinacast Education Corporation. Director since 2006.

CORPORATE OFFICERS• Michael H. Thaman, Chairman of the Board & Chief Executive Offi cer • Duncan Palmer, Chief Financial Offi cer • Joseph High, Senior Vice President, Human Resources • David Johns, Senior Vice President, Chief Information & Supply Chain Offi cer • Stephen Krull, Senior Vice President, General Counsel & Secretary • Sheree Bargabos, President, Roofi ng and Asphalt • Chuck Dana, President, Composite Solutions • Roy Dean, President, Insulating Systems • Bill LeBaron, President, Owens Corning Construction Services • Chuck Stein, President, Masonry Products & Chief Marketing Offi cer, Building Materials• Scott Deitz, Vice President, Investor Relations & Corporate Communications • John Hillenbrand, Vice President & Chief Innovation Offi cer • Frank O’Brien-Bernini, Vice President & Chief Sustainability Offi cer • Mark Mayer, Vice President & Chief Accounting Offi cer

Governance and Nominating committee

OWENS CORNING ONE OWENS CORNING PARKWAYTOLEDO, OHIO, USA 43659

1-800-GET-PINKTM

www.owenscorning.com

Pub. No.10009997. Printed in U.S.A. August 2008. THE PINK PANTHER™ & © 1964–2008 Metro-Goldwyn-Mayer Studios Inc. All Rights Reserved. The color PINK is a registered trademark of Owens Corning. © 2008 Owens Corning.

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